1
EXHIBIT 2.02
UNIMEDIA CLASS B STOCK PURCHASE AGREEMENT
DATED AS OF APRIL 18, 1997
AMONG
XXXXXXXXX INC.,
UNIMEDIA HOLDING COMPANY
AND
XXXXXXXXX INTERNATIONAL INC.
2
TABLE OF CONTENTS
ARTICLE 1.
SALE AND PURCHASE OF SHARES.
1.1. Purchase Price....................................................... 2
ARTICLE 2.
CLOSING; DELIVERY OF SHARES.
2.1. Date and Place....................................................... 2
2.2. Delivery of Shares................................................... 2
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF XXXXXXXXX AND THE VENDOR.
3.1. Due Incorporation; Authority Concerning this Agreement............... 3
3.2. Capitalization; Title to Shares and Assets; Subsidiaries............. 3
3.3. Newspaper Financial Statements....................................... 5
3.4. Indebtedness; Absence of Undisclosed Liabilities..................... 5
3.5. Governmental Filings................................................. 6
3.6. No Violations........................................................ 6
3.7. Litigation and Other Proceedings..................................... 6
3.8. Compliance with Laws................................................. 7
3.9. Material Facts Disclosed............................................. 7
3.10. Brokers and Finders.................................................. 7
3.11. Securities Act Compliance............................................ 7
3.12. Taxes................................................................ 8
3.13. Employment Matters................................................... 9
3.14. Certain Forecasts.................................................... 9
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF INTERNATIONAL.
4.1. Due Incorporation of International; Authority Concerning
this Agreement........................................................9
4.2. Capitalization.......................................................10
4.3. Governmental Filings.................................................11
4.4. No Violations........................................................11
4.5. Brokers and Finders..................................................11
4.6. Private Offering.....................................................12
ARTICLE 5.
COVENANTS OF THE PARTIES.
5.1. Standstill...........................................................12
5.2. International Stockholders' Approval.................................13
3
- ii -
5.3. Filings; Other Actions...............................................13
5.4. Registration of Certain Securities...................................15
5.5. Assumptions of Obligations under SOGIC Agreement.....................15
5.6. Non-Competition......................................................15
5.7. Ownership Changes....................................................16
ARTICLE 6.
CONDITIONS TO THE OBLIGATIONS OF INTERNATIONAL.
6.1. Representations and Warranties True..................................16
6.2. Performance by Xxxxxxxxx and the Vendor..............................17
6.3. Legal Opinions.......................................................17
6.4. No Suits or Proceedings Challenging Transaction......................17
6.5. Certain Consents.....................................................17
6.6. Income Tax Act.......................................................17
6.7. RBC Dominion Fairness Opinion........................................17
6.8. Exchange Agreement...................................................18
6.9. Other Transaction Documents..........................................18
ARTICLE 7.
CONDITIONS TO THE OBLIGATIONS OF XXXXXXXXX AND THE VENDOR.
7.1. Representations and Warranties True..................................19
7.2. Performance by International.........................................19
7.3. Legal Opinions.......................................................19
7.4. No Suits or Proceedings Challenging Transaction......................19
7.5. Certain Consents.....................................................19
7.6. Income Tax Act.......................................................19
7.7. Exchange Agreement...................................................20
7.8. RBC Dominion Fairness Opinion........................................20
7.9. Other Transaction Documents..........................................20
ARTICLE 8.
TERMINATION.
8.1. Termination by Mutual Consent........................................20
8.2. Termination by either Xxxxxxxxx or International.....................20
8.3. Termination by Xxxxxxxxx.............................................21
8.4. Termination by International.........................................21
8.5. Special Committee....................................................21
8.6. Effect of Termination and Abandonment................................21
4
- iii -
ARTICLE 9.
INDEMNIFICATION.
9.1. Indemnity............................................................21
9.2. Limitations..........................................................22
ARTICLE 10.
MISCELLANEOUS.
10.1. Survival.............................................................22
10.2. Certain Expenses.....................................................22
10.3. Dollar Amounts.......................................................23
10.4. Further Assurances...................................................23
10.5. Press Releases, Announcements and Communications.....................23
10.6. Amendment and Modification...........................................23
10.7. Waiver of Compliance; Consents.......................................23
10.8. Notices..............................................................24
10.9. Assignment...........................................................26
10.10. Governing Law and Jurisdiction.......................................26
10.11. Counterparts.........................................................26
10.12. No Third Party Beneficiaries.........................................26
10.13. Interpretation.......................................................26
10.14. Entire Agreement.....................................................27
5
- iv -
LIST OF SCHEDULES
Schedule A List of Newspapers and Related Publications
Schedule 1.1.3 Form of Certificate of Designations of Series 1
Preferred Stock
Schedule 3.2.1 Bank Indebtedness of Xxxxxxxxx and Encumbrances Affecting
the Shares
Schedule 3.2.2(A) Credit Facilities of the Company and its Subsidiaries
Schedule 3.2.2(B) Permitted Encumbrances
Schedule 3.2.2(C) Registrations to be Discharged
Schedule 3.2.2(D) Encumbrances Relating to Leased Assets and Properties
Schedule 3.2.3 Shares Owned by the Company and its Subsidiaries and
Encumbrances and Agreements Relating Thereto
Schedule 3.4 Undisclosed Liabilities
Schedule 3.5 Governmental Filings or Consents
Schedule 3.11.3 Form of Stock Certificate Legends
Schedule 3.13 Employment Matters
Schedule 6.3(a) Form of Opinion of Tory Xxxx XxxXxxxxxxx & Xxxxxxxxxx
Schedule 6.3(b) Form of Opinion of Xxxxxxxx Xxxxxxxxxx
Schedule 6.3(c) Form of Opinion of Xxxxxxx XxXxxxxx Stirling Scales
Schedule 6.8 Form of Exchange Agreement
Schedule 7.3 Form of Opinion of Xxxxxxxxxxx & Xxxxxxxx LLP
THE SCHEDULES TO THIS AGREEMENT HAVE NOT BEEN FILED WITH THIS
EXHIBIT BUT WILL BE FILED SUPPLEMENTALLY UPON REQUEST.
6
- v -
INDEX OF DEFINED TERMS
DEFINED TERMS SECTION IN WHICH DEFINED
------------- ------------------------
Class A Stock Recitals
Class B Stock Recitals
Cash Purchase Price Section 1.1.1
Class A Common Stock Section 4.2
Class B Common Stock Section 4.2
Closing Section 2.1
Closing Date Section 2.1
Company Recitals
Encumbrances Section 2.2
Exchange Act Section 4.3
Governmental Entity Section 3.5
HCPH Section 5.1.3
HCPH Shares Section 5.7
Xxxxxxxxx Recitals
International Recitals
International Common Stock Section 4.2
International 1994 Stock Option Plan Section 4.2
International Preferred Stock Section 4.2
International Proposals Section 5.2
Newspaper Financial Statements Section 3.3
Newspaper Tangible Assets Recitals
Newspapers Recitals
Permitted Encumbrances Section 3.2.2
PRIDES Section 4.2
Preliminary Proxy Statement Section 5.3.1
Proceedings Section 3.7
Proxy Statement Section 5.3.1
RBC Dominion Securities Section 4.5
Registration Statements Section 5.4
SEC Section 3.11.2
Securities Act Section 3.11.1
Series 1 Preferred Stock Section 1.1.3
Series A Preferred Stock Section 4.2
Series B Preferred Stock Section 4.2
Shares Section 1.1.1
SOGIC Agreement Section 5.5
Special Committee Section 3.14
7
- vi -
DEFINED TERMS SECTION IN WHICH DEFINED
------------- ------------------------
Total Purchase Price Section 1.1.1
UniMedia Group Recitals
Vendor Recitals
8
UNIMEDIA CLASS B STOCK PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT, made as of this 18th day of April, 1997, among
XXXXXXXXX INC., a corporation continued under the laws of Canada ("XXXXXXXXX"),
and UNIMEDIA HOLDING COMPANY, a company formed under the laws of Nova Scotia
(the "VENDOR"), and XXXXXXXXX INTERNATIONAL INC., a Delaware corporation
("INTERNATIONAL")
WITNESSETH:
WHEREAS, Xxxxxxxxx has agreed to transfer to International its indirect
interests in the daily newspapers and related publications listed on Schedule A
attached hereto and certain other assets related thereto (collectively, the
"NEWSPAPERS");
WHEREAS, the Vendor is a wholly-owned subsidiary of Xxxxxxxxx;
WHEREAS, prior to the consummation of the sale transaction contemplated
hereby, Xxxxxxxxx intends to reorganize its interests in the Newspapers with
the result that the Vendor will own all of the outstanding shares in the
capital of UniMedia Newspapers Company, a Nova Scotia unlimited liability
company (the "COMPANY"), which will own directly the intangible assets of the
Newspapers and all of the outstanding capital stock of UniMedia Inc., a
corporation incorporated under the laws of Canada which in turn owns all of the
outstanding capital stock of UniMedia Group Inc. ("UNIMEDIA GROUP"), a Quebec
company which owns the tangible assets of the Newspapers (collectively, the
"NEWSPAPER TANGIBLE ASSETS");
WHEREAS, the outstanding shares of the Company consists of two classes of
stock, 6600 shares of Class A Stock, without par value (the "CLASS A STOCK");
and 1100 shares of Class B Stock, without par value (the "CLASS B STOCK") which
entitles the holder thereof to receive dividends payable out of funds or other
property, legally available for the purpose, and attributable to the UniMedia
Inc. shares and to receive upon liquidation of the Company the UniMedia Inc.
shares;
WHEREAS, Xxxxxxxxx is proposing that the Vendor sell all of the
outstanding shares of the Class B Stock of the Company to International in
exchange for cash and shares of Series 1 Preferred Stock of International;
NOW THEREFORE, in consideration of the premises and the respective
covenants herein contained, the parties, intending to be legally bound, hereby
agree as follows:
9
- 2 -
ARTICLE 1.
SALE AND PURCHASE OF SHARES.
1.1. PURCHASE PRICE.
1.1.1. Upon the terms and subject to the conditions set forth herein, the
Vendor shall sell, transfer and deliver to International at Closing (as
hereinafter defined) all of the issued and outstanding shares of the Class
B Stock of the Company (collectively, the "SHARES") for a purchase price
of Cdn. $23,367,000 (the "TOTAL PURCHASE PRICE"), subject to adjustment
pursuant to section 1.1.2, payable as follows: (x) as to Cdn.$100,000, in
cash in immediately available funds in Canadian dollars (the "CASH
PURCHASE PRICE") and (y) as to Cdn.$23,267,000, in 23,267 newly issued
shares of Series 1 Preferred Stock.
1.1.2. The Total Purchase Price shall be increased by an amount equal to
interest on the Total Purchase Price calculated from and including January
1, 1997 to but excluding the Closing Date at an annual rate equal to
7.75%. The increase to the Total Purchase Price resulting from the
adjustment set out herein shall be paid in Canadian dollars by
International to the Vendor within 60 days of the Closing Date.
1.1.3. As used herein, "SERIES 1 PREFERRED STOCK" means Series 1 Nonvoting
Preferred Stock, $.01 par value of International having the relative
rights and preferences set forth in Schedule 1.1.3 attached hereto.
ARTICLE 2.
CLOSING; DELIVERY OF SHARES.
2.1. DATE AND PLACE.
Subject to the fulfilment or waiver of the respective covenants and
conditions set forth herein, the closing of the transactions contemplated
hereby (the "CLOSING") will take place at the offices of Tory Xxxx XxxXxxxxxxx
& Binnington, Suite 3000, Xxxxx Xxxxx, Xxxxxxx-Xxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxx X0X 0X0, at 10:00 a.m., local time, on the first business day
subsequent to the fulfilment or waiver of all conditions set forth in Articles
6 and 7 hereof, or at such other time and place as the parties hereto may
determine (the date on which the Closing occurs being hereinafter referred to
as the "CLOSING DATE").
2.2. DELIVERY OF SHARES.
At the Closing, The Vendor shall deliver stock certificates representing
all of the Shares, accompanied by stock transfer forms duly executed in blank
in respect of the Shares against delivery by International of the Cash Purchase
Price and Series 1 Preferred Stock to be issued in accordance with section 1.1
hereof registered in the name of the Vendor or its nominee, as the Vendor may
direct. The Vendor shall deliver the Shares to International free and clear of
10
- 3 -
any mortgage, pledge, lien, encumbrance, charge, security interest, pledge,
right of first refusal, option, adverse claim of ownership or use, or any other
encumbrance of any kind or nature whatsoever (collectively, "ENCUMBRANCES").
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF XXXXXXXXX AND THE VENDOR.
Xxxxxxxxx and the Vendor hereby jointly and severally represent and
warrant to International as follows:
3.1. DUE INCORPORATION; AUTHORITY CONCERNING THIS AGREEMENT.
3.1.1. Each of Xxxxxxxxx, UniMedia Inc. and UniMedia Group is a
corporation subsisting under the laws of its jurisdiction of
incorporation. Each of the Vendor and the Company is an unlimited
liability company existing under the laws of Nova Scotia. Each of
Xxxxxxxxx, the Vendor, the Company, UniMedia Inc. and UniMedia Group has
the requisite corporate power and authority to carry on its business and
operations as presently conducted by it and to own, lease and operate its
properties and assets. Xxxxxxxxx and the Vendor each has the requisite
corporate power and authority to execute and deliver this Agreement, to
perform its obligations hereunder, and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement, the
performance by Xxxxxxxxx and the Vendor of their respective obligations
hereunder, and the consummation by Xxxxxxxxx and the Vendor of the
transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of Xxxxxxxxx and the Vendor.
This Agreement has been duly and validly executed and delivered by
Xxxxxxxxx and the Vendor and (assuming due and valid authorization,
execution and delivery by International) constitutes the legal, valid and
binding agreement of Xxxxxxxxx and the Vendor, enforceable in accordance
with its terms.
3.1.2. There has been no order or resolution for the winding up of any of
the Company, UniMedia Inc. or UniMedia Group, and no appointment of a
receiver, administrative receiver or administrator with respect thereto.
3.2. CAPITALIZATION; TITLE TO SHARES AND ASSETS; SUBSIDIARIES.
3.2.1. The authorized share capital of the Company consists solely of
Class A Shares and Class B Shares, of which 6600 Class A Shares and 1100
Class B Shares are issued and outstanding and held by the Vendor. The
Shares and the Class A Stock constitute the only voting securities of the
Company, and the Shares are validly issued, fully paid and non-assessable.
Except as set forth in Schedule 3.2.1 attached hereto, the Vendor has good
and marketable title to the Shares, free and clear of any Encumbrances,
and has full right and authority to transfer and deliver the Shares to
International as contemplated hereby. Upon
11
- 4 -
consummation of the transactions contemplated hereby, the Vendor will have
transferred to International good and marketable title to the Shares, free
and clear of all Encumbrances. There are no outstanding or authorized
subscriptions, agreements (other than this Agreement), options, warrants,
calls or other commitments, rights (including conversion rights) or
privileges (whether preemptive or contractual) pursuant to which the
Company is or may become obligated to issue, sell or transfer any shares
of its capital or any debt or other security of the Company which is
convertible or exchangeable into, or evidences the right to subscribe for,
any share capital of the Company. There are no shareholder agreements,
voting trust agreements, rights of first refusal, options to purchase, or
restrictions upon transfer or alienability of or with respect to the
Shares, or any other similar agreement or understanding otherwise
affecting the Shares.
3.2.2. The Company owns, or as of Closing will own, directly or through
wholly-owned subsidiaries, good and marketable title, free and clear of
any Encumbrances, to all of the tangible and intangible assets of every
kind and nature (including intellectual property), used in or held for use
in the business and operations of the Newspapers as historically conducted
by UniMedia Inc. and its subsidiaries, except for (A) Encumbrances arising
under the credit facilities of UniMedia Inc. and its subsidiaries
described on Schedule 3.2.2(A), all of which will be released and
terminated as of the Closing Date; (B) Encumbrances and leasehold
interests in real properties described on Schedule 3.2.2(B) which will
remain in effect as of the Closing (collectively, the "PERMITTED
ENCUMBRANCES"); (C) Encumbrances in effect as of the Closing Date
described on Schedule 3.2.2(C) which will be discharged at the expense of
the Vendor as soon as practicable, but in any event not less than 28 days
after the Closing Date; and (D) Encumbrances relating to leased assets and
properties described on Schedule 3.2.2(D).
3.2.3. Except as set forth on Schedule 3.2.3 attached hereto, the Company
does not own directly or indirectly through subsidiaries securities
representing or convertible into more than 5% of the outstanding capital
stock of any corporation or more than 5% of the equity interest in any
partnership or other entity. The authorized and issued share capital and
any other outstanding securities of each such corporation, partnership or
other entity are set forth on Schedule 3.2.3. Except as set forth on
Schedule 3.2.3, in the case of each such corporation, partnership or other
entity, the securities owned by the Company constitute all of the issued
and outstanding share capital of such corporation, partnership or other
entity, and all the securities are validly issued, fully paid and
non-assessable with no personal liability attached to the ownership
thereof. Except as set forth on Schedule 3.2.3, the Company has good and
marketable title to the securities of the corporations, partnerships and
other entities reflected on Schedule 3.2.3, free and clear of all
Encumbrances. Except as set forth on Schedule 3.2.3, there are no
outstanding or authorized subscriptions, agreements
12
- 5 -
(other than this Agreement), options, warrants, calls or other
commitments, rights (including conversion rights) or privileges (whether
preemptive or contractual) pursuant to which any such corporation,
partnership or other entity is or may become obligated to issue, sell or
transfer any shares of its capital or any debt or other security
convertible into or evidencing the right to subscribe for any share
capital of any such corporation, partnership or other entity.
3.3. NEWSPAPER FINANCIAL STATEMENTS.
Xxxxxxxxx and the Vendor have delivered to International an unaudited
balance sheet of the Newspapers and certain other Canadian newspapers and
publications of Xxxxxxxxx and its subsidiaries other than the Company
(collectively, the "Canadian Newspaper Group") on a combined basis as at
December 31, 1995 and 1996 and unaudited combined statements of earnings,
shareholders' interests and changes in financial position for the periods ended
December 31, 1994, 1995 and 1996 (collectively, the "NEWSPAPER FINANCIAL
STATEMENTS"). The Newspaper Financial Statements (i) have been prepared in
accordance with the books and records of Xxxxxxxxx, the Company, their
respective subsidiaries and the Newspapers, (ii) present fairly in all material
respects the financial position of the Canadian Newspaper Group as at the dates
indicated and the results of operations and cash flows of the Canadian
Newspaper Group on a combined basis as of the dates and for the respective
periods indicated, (iii) have been prepared in conformity with generally
accepted accounting principles applicable to Canadian companies, and (iv) will
be used as the basis for the financial statements prepared in accordance with
generally accepted accounting principles applicable to U.S. companies to be
included in the Proxy Statement (as defined in Section 5.1).
The Canadian Newspaper Group is comprised of the Newspaper Tangible
Assets, the Newspapers (as defined in the Sterling Purchase Agreement dated the
date hereof made between Xxxxxxxxx and HCPH (the "Sterling Purchase
Agreement")) and the Newspaper Intangible Assets (as defined in the UniMedia
Class A Stock Purchase Agreement dated the date hereof made between the parties
hereto (the "UniMedia A Agreement")).
3.4. INDEBTEDNESS; ABSENCE OF UNDISCLOSED LIABILITIES.
The Company has no outstanding indebtedness for borrowed money,
capitalized leases or any other indebtedness not incurred in the ordinary
course of business (including without limitation any indebtedness of any
affiliate or associated corporation of the Company or of any other person that
is guaranteed, directly or indirectly, by the Company) other than those matters
disclosed in the Newspaper Financial Statements or the notes thereto or as set
forth in Schedule 3.4 attached hereto. Since December 31, 1996, neither the
Company nor any of the Newspapers has incurred any liabilities or obligations
of any nature, whether accrued, contingent or otherwise, which reasonably could
be expected to have, individually or in the aggregate, a material adverse
effect on the business, assets, financial condition or results of operations of
the Company or the Newspapers, taken as a whole.
13
- 6 -
3.5. GOVERNMENTAL FILINGS.
Except as set forth in Schedule 3.5, no notice, report or other filing is
required to be made by Xxxxxxxxx, the Vendor, the Company, UniMedia Inc. or
UniMedia Group or any of the Newspapers with, nor is any material consent,
registration, approval, permit or authorization required to be obtained by them
or any of the Newspapers from, any governmental or regulatory authority,
agency, court, commission or other similar entity, domestic or foreign
("GOVERNMENTAL ENTITY") in connection with the execution and delivery of this
Agreement by Xxxxxxxxx and the Vendor or the consummation by them of the
transactions contemplated hereby.
3.6. NO VIOLATIONS.
The execution and delivery of this Agreement by Xxxxxxxxx and the Vendor
does not, and the consummation by it of the transactions contemplated hereby
will not, require the consent or approval of any unrelated party or constitute
or result in (i) a breach or violation of, or a default (or an event which with
notice or lapse of time or both would become a default) under, Xxxxxxxxx'x and
the Vendor's Articles or By-laws or the Articles (or other comparable governing
documents) or By-laws of the Company, UniMedia Inc. or UniMedia Group (ii) a
breach or violation of, a default (or an event which with notice or lapse of
time or both would become a default) under, a right to terminate, amend,
cancel, or accelerate, or the creation of a lien, pledge, security interest or
other encumbrance on assets (with or without the giving of notice or the lapse
of time) pursuant to, any provision of any material agreement, lease, contract,
note, mortgage, indenture, arrangement or other obligation of Xxxxxxxxx, the
Vendor, the Company, UniMedia Inc. or UniMedia Group or any law, statute, rule,
ordinance or regulation or judgment, decree, order, award, injunction or
governmental or non-governmental permit or license to which Xxxxxxxxx, the
Vendor, the Company, UniMedia Inc. or UniMedia Group is subject or by which any
of them or their respective properties is bound or affected, except, in the
case of clause (ii) above, (A) such breaches, violations, defaults,
terminations, amendments, cancellations, accelerations, encumbrances or changes
that, individually or in the aggregate, have not had and are not reasonably
likely to have a material adverse effect on the Company and (B) certain
provisions of the existing loan agreements of Xxxxxxxxx and UniMedia Group
described in Schedules 3.2.1 and 3.2.2(A) attached hereto.
3.7. LITIGATION AND OTHER PROCEEDINGS.
There is no court, administrative, regulatory or similar proceeding,
arbitration or other dispute settlement procedure, investigation or inquiry by
or before any Governmental Entity or any similar matter or proceeding
(collectively "PROCEEDINGS") against or involving Xxxxxxxxx, the Vendor, the
Company, UniMedia Inc. or UniMedia Group with respect to any of the Newspapers
(whether in progress or threatened), which if determined adversely would be
likely to have a material adverse effect on the Company or the Newspapers; and
there is no judgment, decree, injunction, rule, award or order of any
Governmental Entity outstanding against the Company, UniMedia Inc. or UniMedia
Group with respect to any of the Newspapers.
14
- 7 -
3.8. COMPLIANCE WITH LAWS.
To Xxxxxxxxx'x and the Vendor's best knowledge, the Company is conducting
the business and operations of the Newspapers directly and indirectly through
subsidiaries in compliance with all statutes, laws, rules, regulations,
ordinances, decrees and orders applicable to them and the Newspapers and the
ownership of their assets, which are in effect as of the date hereof
(including, without limitation, those relating to environmental and health and
safety matters), except for violations which would not be likely to have a
material adverse effect on the Company and its consolidated subsidiaries, taken
as a whole. Neither the Vendor, the Company, UniMedia Inc. nor UniMedia Group
has received any written complaint or written notice from any Governmental
Entity alleging that they or any of the Newspapers has violated any law,
ordinance, regulation or order and, to the Vendor's best knowledge, no such
complaint or notice is threatened, except those violations which would not be
likely to have a material adverse effect on the Company and its consolidated
subsidiaries, taken as a whole.
3.9. MATERIAL FACTS DISCLOSED.
Xxxxxxxxx, its management and the Vendor have disclosed to International
all facts known to them relating to the Newspapers and the cash flow generated
therefrom which could reasonably be expected to be material to an intending
purchaser of the Shares.
3.10. BROKERS AND FINDERS.
Neither Xxxxxxxxx, the Vendor nor any of their respective officers,
directors or employees has employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees, commissions or
finders' fees in connection with the transactions contemplated hereby, except
that Xxxxxxxxx has retained Xxxxx Van Essen & Associates as its financial
advisor.
3.11. SECURITIES ACT COMPLIANCE.
3.11.1. The shares of Series 1 Preferred Stock issuable to the Vendor
hereunder and the Class A Common Stock issuable upon exchange thereof
following the approval of the International Proposals by the stockholders
of International are being acquired by the Vendor for its own account, not
as a nominee or agent, and not with a view to sale or distribution within
the meaning of the U.S. Securities Act of 1933, as amended (the
"SECURITIES ACT") and the rules and regulations thereunder, and the Vendor
will not distribute such shares in violation of the Securities Act.
3.11.2. The Vendor (A) acknowledges that as of the Closing Date the shares
of Series 1 Preferred Stock issuable hereunder and the Class A Common
Stock issuable upon exchange thereof will not have been registered under
the Securities Act and must be held indefinitely by the Vendor unless they
are subsequently registered under the Securities Act pursuant to section
5.4 hereof or
15
- 8 -
otherwise or an exemption from registration is available, (B) is aware
that any routine sale of shares of Class A Common Stock under Rule 144
promulgated by the U.S. Securities and Exchange Commission ("SEC") under
the Securities Act may be made only in limited amounts and in accordance
with the terms and conditions of the Rule and that in such cases where
that Rule is not applicable, compliance with some other registration
exemption will be required, and (C) is aware that Rule 144 is not
presently available for use by the Vendor for resale of any such shares.
3.11.3. The Vendor acknowledges that the certificates evidencing the
shares of Series 1 Preferred Stock issuable to it hereunder will bear the
legend set forth in Schedule 3.11.3 attached hereto.
3.11.4. As the controlling stockholder of International, Xxxxxxxxx
confirms that it has had access to all information about the business and
financial condition of International that it requires in order to effect
the transactions contemplated by this Agreement.
3.12. TAXES
3.12.1. Xxxxxxxxx and the Company (or a predecessor thereof) have paid,
or accrued on the Newspaper Financial Statements, all foreign, federal,
provincial and local taxes in respect of the Newspapers and filed or
caused to be filed all tax returns on or prior to the Closing Date
required to be filed in respect of the Newspapers and accurately reported
in all material respects all information required to be included on such
returns in respect of the Newspapers. Neither Xxxxxxxxx in respect of the
Newspapers nor the Company (or any predecessor thereof) has received
written notice of or otherwise has actual knowledge of an audit or
examination currently in progress of any tax return of the Newspapers.
There are no proposed assessments of taxes asserted in writing against
Xxxxxxxxx or the Company (or any predecessor thereof) in respect of any of
the Newspapers or proposed adjustments asserted in writing to any tax
returns filed by Xxxxxxxxx or the Company (or any predecessor thereof) in
respect of any of the Newspapers. None of Xxxxxxxxx or the Company (or any
predecessor thereof) is a party to any material action or proceeding by
any governmental authority for assessment or collection of taxes or
penalties or interest in respect of the Newspapers, nor has any material
claim for such assessment or collection been asserted in writing against
any of them.
3.12.2. The Canadian Newspaper Group qualifies as "Canadian Newspapers or
periodicals" as defined in section 19 of the Income Tax Act (Canada) and,
after giving effect to the transactions contemplated by this Agreement,
the UniMedia A Agreement, the Sterling Purchase Agreement and the Exchange
Agreement (as defined in Section 6.8), the Canadian Newspaper Group
16
- 9 -
will continue to so qualify.
3.13. EMPLOYMENT MATTERS
Schedule 3.13 sets forth the collective bargaining agreements that expire
within seven (7) years of the date hereof with respect to the Newspapers.
Except as referred to in Schedule 3.13, there is no material work stoppage or
other concerted action or material grievance, strike or dispute existing or
threatened against any of the Newspapers. Except as set out in Schedule 3.13,
Xxxxxxxxx, the Company and the Newspapers are in material compliance with all
applicable laws and regulations relating to employees of the Newspapers,
including those related to terms and conditions of employment, collective
bargaining and discrimination.
3.14. CERTAIN FORECASTS
The financial forecasts of the Canadian Newspaper Group that were provided
by Xxxxxxxxx to the special committee of independent directors of the Board of
Directors of International (the "SPECIAL COMMITTEE") (i) were developed by
management of Xxxxxxxxx and its subsidiaries based on information that
management of Xxxxxxxxx and the Company prepared in good faith, (ii) utilize
assumptions which management of Xxxxxxxxx and the Company believe to be
reasonable under the circumstances, (iii) represent the good faith estimate and
judgment of management of Xxxxxxxxx, as of the date of such forecasts, of the
Canadian Newspaper Group's expected future financial performance and (iv) do
not reflect the expected results of any newspaper or publication that is not
included in the Canadian Newspaper Group or omit the expected results of any
newspapers or publication that is included in the Canadian Newspaper Group.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF INTERNATIONAL.
International hereby represents and warrants to Xxxxxxxxx and the Vendor
as follows:
4.1. DUE INCORPORATION OF INTERNATIONAL; AUTHORITY CONCERNING THIS AGREEMENT.
International is a corporation incorporated and existing and in good
standing under the laws of the State of Delaware, and has the requisite
corporate power and authority to carry on its business and operations as
presently conducted by it and to own, lease and operate its properties and
assets. International has the requisite corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder, and
to consummate the transactions contemplated hereby. The Special Committee,
pursuant to authority duly delegated to it by the Board of Directors of
International has approved this Agreement and the Exchange Agreement. The Board
of Directors of International has ratified this Agreement and the Exchange
Agreement and recommended approval by International stockholders of the
issuance of Class A Common Stock in exchange for Series 1 Preferred Stock to be
issued pursuant to this Agreement and the Exchange Agreement, as contemplated
by the International Proposals (as
17
- 10 -
defined in section 5.2 hereof). The execution and delivery of this Agreement
and the Exchange Agreement by International, the performance by International
of its obligations hereunder and thereunder and the consummation by
International of the transactions contemplated hereby and thereby have been
duly and validly authorized by all necessary corporate action on the part of
International, subject to approval of the International Proposals by the
stockholders of International. This Agreement has been duly and validly
executed and delivered by International and (assuming due and valid
authorization, execution and delivery by Xxxxxxxxx and the Vendor) constitutes
the legal, valid and binding agreement of International and is enforceable in
accordance with its terms.
4.2. CAPITALIZATION.
The authorized capital stock of International consists of 250,000,000
shares of Class A Common Stock ("CLASS A COMMON STOCK"), 50,000,000 shares of
Class B Common Stock, $.01 par value ("CLASS B COMMON Stock"), and 20,000,000
shares of preferred stock, $.01 par value ("INTERNATIONAL PREFERRED STOCK"), of
which 69,565,754 shares of Class A Common Stock, 14,990,000 shares of Class B
Common Stock, and 739,500 shares of Series A Preferred Stock, par value $.01
per share ("SERIES A PREFERRED STOCK"), and 10,350,000 shares of Series B
Convertible Preferred Stock, par value $.01 per share ("Series B Preferred
Stock") are issued and outstanding. International has also issued 20,700,000
depository shares ("PRIDES") each representing a one-half share of
International's Series B Preferred Stock. The Class A Common Stock and Class B
Common Stock (collectively, the "INTERNATIONAL COMMON STOCK") and Series B
Preferred Stock constitute the only outstanding voting securities of
International. Upon receipt of stockholder approval of the International
Proposals (as defined below), the authorized capital stock will be increased to
420,000,000, of which 120,000,000 shares of Preferred Stock will be authorized.
Options to purchase an aggregate of 1,281,500 shares of Class A Common Stock
have been granted under the International 1994 Stock Option Plan, as amended
(the "INTERNATIONAL 1994 STOCK OPTION PLAN"), an additional 189,640 shares of
Class A Common Stock have been reserved for issuance under the International
1994 Stock Option Plan, and 5,156,915 shares of Class A Common Stock have been
reserved for issuance under the International 1997 Stock Incentive Plan.
International has also reserved for issuance the requisite shares of Class A
Common Stock issuable upon conversion of shares of Class B Common Stock, Series
A Preferred Stock and Series B Preferred Stock. Except for (i) options granted
under the International 1994 Stock Option Plan and options that may be granted
under the International 1997 Stock Incentive Plan, (ii) outstanding shares of
Series A Preferred Stock, Series B Preferred Stock and Class B Common Stock,
all of which are convertible into shares of Class A Common Stock, and (iii)
shares of Series 1 Preferred Stock and Series 2 Preferred Stock to be issued to
Xxxxxxxxx or the Vendor hereunder, shares of Series C Convertible Preferred
Stock issuable to Xxxxxxxxx or the Vendor in exchange for the Series 2
Preferred Stock, and shares of Class A Common Stock issuable to Xxxxxxxxx or
the Vendor on exchange or conversion of the Series 1 Preferred Stock, Series 2
Preferred Stock and Series C Convertible Preferred Stock, all pursuant to this
Agreement and the UniMedia Class A Stock Agreement and the Exchange Agreement,
each dated the date hereof among Xxxxxxxxx, the Vendor and International, there
are no outstanding or authorized subscriptions, agreements, options, warrants,
calls or other
18
- 11 -
commitments, rights (including conversion rights) or privileges (whether
preemptive or contractual) pursuant to which International is or may become
obligated to issue, sell or transfer any shares of its capital stock or any
debt or other security of International which is convertible or exchangeable
into, or evidences the right to subscribe for, any shares of capital stock of
International.
4.3. GOVERNMENTAL FILINGS.
Except for filings under the Securities Act, the U.S. Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT"), the Securities Act (Ontario),
applicable state securities laws, the General Corporation Law of Delaware with
respect to the Class A Common Stock and the Series 1 Preferred Stock to be
issued to the Vendor hereunder, and the New York Stock Exchange, no notice,
report or other filing is required to be made by International with, nor is any
material consent, registration, approval, permit or authorization required to
be obtained by International from, any Governmental Entity in connection with
the execution and delivery of this Agreement, the issuance and delivery of the
shares of Series 1 Preferred Stock to the Vendor hereunder, or the consummation
by it of the transactions contemplated hereby.
4.4. NO VIOLATIONS.
Except for the approval of International's stockholders to permit the
issuance of Class A Common Stock and Series C Convertible Preferred Stock upon
exchange of the Series 1 and 2 Preferred Stock pursuant to the Exchange
Agreement (as defined below) and the issuance of Class A Common Stock upon
conversion of the Series C Convertible Preferred Stock, the execution and
delivery of this Agreement by International does not, and the consummation by
it of any of the transactions contemplated hereby will not, require the consent
or approval of any unrelated party or constitute or result in (i) a breach or
violation of, or a default (or an event which with notice or lapse of time or
both would become a default) under the Restated Certificate of Incorporation or
By-laws of International, (ii) a breach or violation of, a default (or an event
which with notice or lapse of time or both would become a default) under, a
right to terminate, amend, cancel or accelerate, or the creation of a lien,
pledge, security interest or other encumbrance on assets (with or without the
giving of notice or the lapse of time) pursuant to, any provision of any
material agreement, lease, contract, note, mortgage, indenture, arrangement or
other obligation of International, or any law, statute, rule, ordinance or
regulation or judgment, decree, order, award, injunction or governmental or
non-governmental permit or license to which International is subject to or by
which International or any property of International is bound or affected,
except, in the case of clause (ii) above, such breaches, violations, defaults,
terminations, amendments, cancellations, accelerations, encumbrances or changes
that, individually or in the aggregate, have not had and are not reasonably
likely to have a material adverse effect on International.
4.5. BROKERS AND FINDERS.
Neither International nor any of its officers, directors or employees has
employed any broker or finder or incurred any liability for any financial
advisory fees, brokerage fees,
19
- 12 -
commissions or finders' fees in connection with the transactions contemplated
hereby, except that the Special Committee has retained RBC Dominion Securities
Inc. ("RBC DOMINION SECURITIES") as its financial advisor.
4.6. PRIVATE OFFERING.
Assuming the accuracy of the representations of Xxxxxxxxx and the Vendor
contained in section 3.11 hereof, the offer, issuance and delivery to the
Vendor of the shares of Series 1 Preferred Stock pursuant to this Agreement
will be exempt from registration under the Securities Act.
ARTICLE 5.
COVENANTS OF THE PARTIES.
5.1. STANDSTILL.
Xxxxxxxxx and the Vendor jointly and severally agree that from the date
hereof to the Closing Date or the earlier termination of this Agreement in
accordance with Article 8 hereof, and except as otherwise consented to in
writing by the Chairman of the Special Committee or as specifically required,
permitted or contemplated by this Agreement, they will:
5.1.1. not sell, lease, assign, transfer or otherwise dispose of any of
the Shares or any interests therein, or create or permit any Encumbrances
affecting the Shares (other than those Encumbrances referred to on
Schedules 3.2.1 and 3.2.2(A) attached hereto, all of which will be
terminated on or prior to Closing);
5.1.2. not approve, consent to or take any action in furtherance of any
plan, scheme, transaction or series of transactions whereby the Company
would undertake a merger, consolidation, amalgamation, or sale, lease,
transfer, assignment or other disposition of all or any significant
portion of its properties or assets, or otherwise resulting in a change in
control of the Company or any of the Newspapers;
5.1.3. not approve, consent to or take any action in furtherance of any
plan, scheme, transaction or series of transactions whereby the Company
would incur any indebtedness for borrowed money or create any Encumbrances
affecting any of its assets, other than (A) indebtedness incurred pursuant
to the credit facilities described in Schedule 3.2.2(A), (B) Encumbrances
arising in the ordinary course of business which constitute Permitted
Encumbrances, (C) intercompany transactions among Xxxxxxxxx, the Vendor,
the Company, UniMedia Inc. and UniMedia Group consistent with past
practices, and (D) indebtedness incurred by the Company from Xxxxxxxxx in
an amount necessary to pay in full indebtedness outstanding pursuant to
the credit facilities described in Schedule 3.2.2(A), which
20
- 13 -
indebtedness will be sold by Xxxxxxxxx to Xxxxxxxxx Canadian
Publishing Holdings Inc. ("HCPH") on the Closing Date for the principal
amount thereof; or
5.1.4. not approve, consent to or take any action in furtherance of any
plan, scheme, transaction or series of transactions whereby the Company
would (A) alter, amend or repeal any provision of its Articles or By-laws
(or similar governing documents), (B) declare, set aside, make or pay any
dividends (in cash or otherwise) or other distributions on or with respect
to its share capital other than as contemplated herein or (C) increase or
reclassify the number of shares authorized or issued and outstanding of
its share capital or grant any option, warrant, call, commitment, right or
agreement of any character relating to its share capital or any securities
convertible or exchangeable into its share capital.
5.2. INTERNATIONAL STOCKHOLDERS' APPROVAL.
International shall take, in accordance with the requirements of
applicable law, the New York Stock Exchange and International's Restated
Certificate of Incorporation and By-Laws, all action necessary to convene a
meeting of holders of International Common Stock, and Series B Preferred Stock
represented by PRIDES, at which Xxxxxxxxx is entitled to vote, as promptly as
practicable after the Closing Date. At such meeting, International stockholders
will be asked to consider and vote upon the following proposals: (i) to permit
the issuance by International of shares of Class A Common Stock upon exchange
by the Vendor of the Series 1 Preferred Stock in accordance with the Exchange
Agreement, (ii) to permit the issuance by International of shares of Class A
Common Stock and Series C Convertible Preferred Stock upon exchange of the
Series 2 Preferred Stock, (iii) to permit the issuance by International of
shares of Class A Common Stock upon conversion of the Series C Convertible
Preferred Stock, and (iv) to increase the authorized capital of International
to permit the issuance of an additional 50 million shares of Preferred Stock
(collectively, the "INTERNATIONAL PROPOSALS"), among other matters at such
meeting. At such meeting Xxxxxxxxx agrees to vote or cause to be voted all
shares of Class A Common Stock and Class B Common Stock of International held
by it or its subsidiaries in favour of the International Proposals.
International shall take all lawful action to solicit such approval and all
lawful action necessary or helpful to secure the affirmative vote of holders of
International Common Stock and Series B Preferred Stock represented by PRIDES
required to approve the foregoing matters.
5.3. FILINGS; OTHER ACTIONS.
5.3.1. As soon as practicable after the Closing, International and
Xxxxxxxxx shall cooperate to prepare and file promptly with the SEC
preliminary proxy solicitation materials (the "PRELIMINARY PROXY
STATEMENT") for the International stockholders meeting, including
obtaining all such information (financial or other) as may be required
under applicable law and rules and regulations of the SEC with respect to
the International stockholders meeting and the International Proposals.
After review by the SEC, International shall mail a definitive version of
such proxy
21
- 14 -
solicitation materials (the "PROXY STATEMENT") to all stockholders of
record of International. The Proxy Statement shall contain the
recommendation of the Board of Directors of International and the Special
Committee that holders of International Common Stock and of Series B
Preferred Stock represented by PRIDES vote in favour of approval of the
International Proposals. Prior to submitting the Preliminary Proxy
Statement and the Proxy Statement and any such amendment, supplement or
revision to the SEC or to International's stockholders, such Preliminary
Proxy Statement, Proxy Statement and amendment, supplement or revision
will be submitted to Xxxxxxxxx for its review and comment.
5.3.2. Each party hereto shall cooperate with the other party hereto and
use all reasonable efforts to prepare and file promptly all necessary
documentation, to effect all necessary applications, notices, petitions,
filings and other documents, and to obtain as promptly as practicable all
necessary permits, consents, orders, approvals and authorizations of, or
any exemption from, all third parties and Governmental Entities necessary
or advisable to consummate the transactions contemplated by this
Agreement. Each party agrees, to the extent either deems necessary or
appropriate, to request "cold comfort letters" or similar assurances from
KPMG Peat Marwick or other accounting firms with audit responsibility for
financial statements included in the Proxy Statement regarding the pro
forma financial statements and unaudited financial statements to be
included in the Proxy Statement and such other matters (including without
limitation other securities law matters affecting Xxxxxxxxx or
International, as the case may be) as may be identified. Each party shall
have the right to review in advance, and to the extent practicable each
will consult with the other on, all the information relating to the other
party and any of their respective subsidiaries and associated companies
which are to appear in any filing to be made with, or written materials to
be submitted to, any third party or any Governmental Entity in connection
with the transactions contemplated by this Agreement. In exercising the
foregoing right, each of the parties hereto shall act reasonably and as
promptly as practicable. Each party hereto agrees that it will consult
with the other party hereto with respect to the obtaining of all permits,
consents, orders, approvals and authorizations of all third parties and
any Governmental Entity necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the
other party hereto apprised of the status of matters relating to the
transactions contemplated hereby and thereby.
5.3.3. Each party shall promptly furnish each other party with copies of
written communications received by such party, or any of its subsidiaries,
affiliates or associates from, or delivered by any of the foregoing to,
any unrelated party or Governmental Entity in respect of the transactions
contemplated, in each case subject to applicable laws relating to the
exchange of information as advised by independent counsel in writing.
22
- 15 -
5.4. REGISTRATION OF CERTAIN SECURITIES.
Upon request by Xxxxxxxxx following the Closing, International will use
commercially reasonable efforts to cause the registration under the Securities
Act of the shares of Class A Common Stock issuable to Xxxxxxxxx or the Vendor
on exchange of the Series 1 Preferred Stock issued hereunder, such registration
to be effected by means of filing one or more Registration Statements with the
SEC (the "REGISTRATION STATEMENTS"). All costs and expenses of such
registration incurred on or after the date hereof, including any additional SEC
filing fees, will be borne by International. Such Registration Statements may,
if so requested by Xxxxxxxxx, reflect one or more pledges of shares of Class A
Common Stock issuable on exchange of the Series 1 Preferred Stock in favour of
lenders to Xxxxxxxxx or the Vendor, subject to receipt by International of
customary assurances to permit sales or distributions of such securities in
accordance with applicable law.
5.5. ASSUMPTIONS OF OBLIGATIONS UNDER SOGIC AGREEMENT.
International, as an entity which is directly or indirectly controlled by
Xxxxxxxxx, undertakes to assume all of the obligations of Xxxxxxxxx under the
agreement executed among Xxxxxxxxx, UniMedia Group and la Societe Generale des
Industries Culturelles on August 8, 1988 (the "SOGIC AGREEMENT") as if it were
a party to the SOGIC Agreement.
5.6. NON-COMPETITION
5.6.1. Xxxxxxxxx agrees that neither it nor any of its subsidiaries will,
for a period of five (5) years after the Closing Date, without the prior
written consent of International, either directly or indirectly, undertake
or carry on or be engaged or have any financial interest in any newspaper,
shopper or other similar publication carrying advertising, for which the
circulation or distribution is primarily in the communities where the
Newspapers are currently published or within a radius of ten (10) miles of
the centre point of any such community (such geographic area being
hereinafter referred to as the "Restricted Area"); provided, however, that
the foregoing provisions shall not apply to (A) the publication or the
future acquisition of any publication that is circulated to a national
market so long as such newspaper does not publish or distribute any
regional, community, zoned or similar edition in the Restricted Area; (B)
the ownership, directly or indirectly, of less than five percent (5%) of
any class of securities of any publicly-traded company; or (C) for greater
certainty, prohibit the interest that Xxxxxxxxx has in HCPH, Southam Inc.,
The Financial Post Company, Saturday Night Magazine Limited, and their
respective subsidiaries and operations.
5.6.2. Xxxxxxxxx acknowledges that in the event of any violation of the
covenants contained in this section 5.6.1 hereof, International's damages
will be difficult to ascertain and International's remedy at law will be
inadequate. Accordingly, Xxxxxxxxx agrees that, in addition to such
remedies as International
23
- 16 -
may have at law, International shall be entitled to specific performance
of such covenants hereunder and to an injunction to prevent any continuing
violation thereof.
5.6.3. If any of the provisions of or covenants contained in this section
hereof is hereafter construed to be invalid or unenforceable in any
jurisdiction, the same shall not affect the remainder of the provisions or
the enforceability thereof in any other jurisdiction, which shall be given
full effect, without regard to the invalidity or unenforceability in such
other jurisdiction. If any of the provisions of or covenants contained
herein is held to be unenforceable in any jurisdiction because of the
duration or geographical scope thereof, the parties agree that the court
making such determination shall have the power to reduce the duration or
geographical scope of such provision or covenant and, in its reduced form,
said provision or covenant shall be enforceable; provided, however, that
the determination of such court shall not affect the enforceability of
section 5.6.1 in any other jurisdiction.
5.7. OWNERSHIP CHANGES
Xxxxxxxxx owns, through wholly-owned subsidiaries, 50 Series A Preferred
Shares in the capital of HCPH (the "HCPH SHARES"), representing 50% of the
outstanding voting stock of HCPH. Xxxxxxxxx will not, either directly or
indirectly through its subsidiaries or affiliates, issue, sell, exchange,
assign, transfer, dispose, mortgage, charge, pledge, encumber, grant a security
interest in or otherwise deal with any security of Xxxxxxxxx or any of its
subsidiaries or affiliates, in any manner which is materially prejudicial to
the direct or indirect interests of International in the Canadian Newspaper
Group by reason of changes in ownership that would cause a material adverse
impact on the profitability, ownership or operation of the Canadian Newspaper
Group by reason of section 19 of the Income Tax Act (Canada).
ARTICLE 6.
CONDITIONS TO THE OBLIGATIONS OF INTERNATIONAL.
The obligations of International to consummate the transactions
contemplated hereby are subject to the fulfilment of the following conditions,
any one or more of which may be waived by International:
6.1. REPRESENTATIONS AND WARRANTIES TRUE.
At the Closing Date, the representations and warranties of Xxxxxxxxx and
the Vendor contained in this Agreement shall be true and correct in all
material respects at and as of such date and time as if made on and as of such
date and time, other than any such representations and warranties which are
made as of a specified earlier date, which shall be true and correct in all
material respects at and as of such date; and at and as of the Closing Date
Xxxxxxxxx and the Vendor shall have delivered to International certificates to
such effect signed by an officer of the relevant company acceptable to
International.
24
- 17 -
6.2. PERFORMANCE BY XXXXXXXXX AND THE VENDOR.
From the date of this Agreement, each of the obligations of Xxxxxxxxx and
the Vendor to be performed by it on or before the Closing Date pursuant to the
terms of this Agreement shall have been duly performed in all material respects
at and as of the Closing Date; and at the Closing Date, Xxxxxxxxx and the
Vendor shall have delivered to International certificates to such effect signed
by an officer of the relevant company acceptable to International.
6.3. LEGAL OPINIONS.
International shall have been furnished with opinions of Tory Xxxx
XxxXxxxxxxx & Xxxxxxxxxx, Xxxxxxxx Xxxxxxxxxx, and Xxxxxxx XxXxxxxx Stirling
Scales, each dated as of the Closing Date and substantially in the forms
attached hereto as Schedules 6.3(a), 6.3(b) and 6.3(c) respectively, to this
Agreement.
6.4. NO SUITS OR PROCEEDINGS CHALLENGING TRANSACTION.
There shall be no pending or threatened suits, actions, proceedings,
governmental inquiries or investigations of any kind which seek to enjoin,
prevent or otherwise interfere with the transactions contemplated hereby or
otherwise question the validity or legality of such transactions.
6.5. CERTAIN CONSENTS.
Xxxxxxxxx, the Vendor, the Company and International shall have obtained
all consents from unrelated parties and Governmental Entities required to
consummate the transactions contemplated by this Agreement.
6.6. INCOME TAX ACT.
Prior to the Closing Date there shall have been no amendment to the Income
Tax Act (Canada) including Section 19 thereof that would have a material
adverse impact on the profitability, ownership or operation by the Company of
the Newspapers after giving effect to the transactions contemplated hereby and
there shall have been no xxxx read in Parliament that would have such material
adverse impact if enacted into law.
6.7. RBC DOMINION FAIRNESS OPINION.
International shall have obtained from RBC Dominion Securities an opinion
in form satisfactory to the Special Committee to the effect that the aggregate
consideration to be paid for the Canadian Newspaper Group by International
(either directly, or indirectly through HCPH) pursuant to (i) this Agreement,
(ii) the UniMedia A Agreement, (iii) the Sterling Purchase Agreement and (iv)
the Exchange Agreement (including the term sheets attached thereto) is fair,
from a financial point of view, to International and the holders of
International's common stock and Series B Preferred Stock other than Xxxxxxxxx.
25
- 18 -
6.8. EXCHANGE AGREEMENT.
Xxxxxxxxx, the Vendor and International shall have entered into an
Exchange Agreement (the "Exchange Agreement") as of the Closing Date
substantially in the form attached hereto as Schedule 6.8.
6.9. OTHER TRANSACTION DOCUMENTS.
International shall have received on or prior to the Closing Date:
6.9.1. certificates evidencing the incumbency of the officers of Xxxxxxxxx
and the Vendor executing this Agreement on its behalf and of their
authority to do so;
6.9.2. certified copies of the Articles and By-laws (or similar governing
documents) of the Company;
6.9.3. certificates of status (or the equivalent under the laws of their
respective jurisdictions of incorporation) of recent date for Xxxxxxxxx,
the Vendor and the Company;
6.9.4. certified copies of the resolutions of the Board of Directors of
the Vendor authorizing the transactions contemplated hereunder to take
place on the Closing Date;
6.9.5. stock certificates representing all of the Shares registered in the
name of the Vendor together with customary searches of public records in
Nova Scotia reasonably satisfactory to counsel to International and to its
lenders confirming that such interests are free and clear of any
Encumbrances; and
6.9.6. customary documentation reasonably satisfactory to counsel to
International and to its lenders confirming (A) an undertaking from
Xxxxxxxxx'x lenders upon receipt of the Cash Purchase Price to release of
all obligations of the Company and its subsidiaries with respect to
indebtedness of Xxxxxxxxx, the Vendor or of any other person and the
Encumbrances arising under the credit facilities described on Schedule
3.2.2(A) and (B) that the shares of the Company and the assets of UniMedia
Inc. and its subsidiaries are free and clear of any other Encumbrances
other than Permitted Encumbrances.
ARTICLE 7.
CONDITIONS TO THE OBLIGATIONS OF XXXXXXXXX AND THE VENDOR.
The obligations of Xxxxxxxxx and the Vendor to consummate the transactions
contemplated hereby are subject to the fulfilment of the following conditions,
any one or more of which may be waived by Xxxxxxxxx:
26
- 19 -
7.1. REPRESENTATIONS AND WARRANTIES TRUE.
As of the Closing Date, the representations and warranties of
International contained in this Agreement shall be true and correct in all
material respects at and as of such date and time as if made on and as of such
date and time, other than any such representations and warranties which are
made as of a specified earlier date, which shall be true and correct in all
material respects at and as of such specified date; and at the Closing Date
International shall have delivered to Xxxxxxxxx and the Vendor a certificate to
such effect signed by an officer of International acceptable to Xxxxxxxxx and
the Vendor.
7.2. PERFORMANCE BY INTERNATIONAL.
From the date of this Agreement, each of the obligations of International
to be performed on or before the Closing Date pursuant to the terms of this
Agreement shall have been duly performed in all material respects at the
Closing Date and at the Closing Date International shall have delivered to
Xxxxxxxxx and the Vendor a certificate to such effect signed on behalf of
International by an officer of International acceptable to Xxxxxxxxx and the
Vendor.
7.3. LEGAL OPINIONS.
Xxxxxxxxx and the Vendor shall have been furnished with the opinion of
Xxxxxxxxxxx & Xxxxxxxx LLP dated as of the Closing Date and substantially in
the form attached hereto as Schedule 7.3 to this Agreement.
7.4. NO SUITS OR PROCEEDINGS CHALLENGING TRANSACTION.
There shall be no pending or threatened suits, actions, proceedings,
governmental inquiries or investigations of any kind which seek to enjoin,
prevent or otherwise interfere with the transactions contemplated hereby or
otherwise question the validity or legality of such transactions.
7.5. CERTAIN CONSENTS.
Xxxxxxxxx, the Vendor, the Company and International shall have obtained
all consents from unrelated parties and Governmental Entities required to
consummate the transactions contemplated by this Agreement.
7.6. INCOME TAX ACT.
Prior to the Closing Date there shall have been no amendment to the Income
Tax Act (Canada), including Section 19 thereof that would have a material
adverse impact on the profitability, ownership or operation by the Company of
the Newspapers after giving effect to the transactions contemplated hereby and
there shall have been no xxxx read in Parliament that would have such material
adverse impact if enacted into law.
27
- 20 -
7.7. EXCHANGE AGREEMENT.
Xxxxxxxxx, the Vendor and International shall have entered into the
Exchange Agreement as of the Closing Date.
7.8. RBC DOMINION FAIRNESS OPINION.
International shall have obtained from RBC Dominion Securities an opinion
in form satisfactory to the Special Committee to the effect that the aggregate
consideration to be paid for the Canadian Newspaper Group by International
(either directly, or indirectly through HCPH) pursuant to (i) this Agreement,
(ii) the UniMedia A Agreement, (iii) the Sterling Purchase Agreement and (iv)
the Exchange Agreement (including the term sheets attached thereto) is fair,
from a financial point of view, to International and the holders of
International's common stock and Series B Preferred Stock other than Xxxxxxxxx.
7.9. OTHER TRANSACTION DOCUMENTS.
Xxxxxxxxx and the Vendor shall have received on or prior to the Closing
Date:
7.9.1. certificate evidencing the incumbency of the officers of
International executing this Agreement on its behalf and their authority
to do so;
7.9.2. certified copy of the Restated Certificate of Incorporation or
similar charter documents and By-laws of International including without
limitation the Certificate of Designations creating the Series 1 Preferred
Stock;
7.9.3. certificate of good standing of recent date for International; and
7.9.4. certified copies of the resolutions of the Board of Directors of
International and of the Special Committee authorizing or recommending the
transactions contemplated hereunder to take place on the Closing Date.
ARTICLE 8.
TERMINATION.
8.1. TERMINATION BY MUTUAL CONSENT.
This Agreement may be terminated and the transactions contemplated hereby
may be abandoned at any time prior to the Closing Date by the mutual consent of
Xxxxxxxxx (on behalf of itself and the Vendor) and International by action of
their respective Boards of Directors.
8.2. TERMINATION BY EITHER XXXXXXXXX OR INTERNATIONAL.
This Agreement may be terminated and the transactions contemplated hereby
may be abandoned by action of the Board of Directors of either Xxxxxxxxx
(acting on behalf of itself and the Vendor) or International if: (i) the
Closing shall not have occurred on or before
28
- 21 -
December 31, 1997; or (ii) a Governmental Entity of competent jurisdiction
shall have issued an order, or taken any other action, permanently restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby, and such order or other action shall have become final and
not appealable; provided, however, that in the case of a termination pursuant
to clause (i) above, the terminating party shall not have breached or failed to
perform in any material respect its obligations under this Agreement.
8.3. TERMINATION BY XXXXXXXXX.
This Agreement may be terminated and the transactions contemplated hereby
may be abandoned at any time prior to the Closing Date by action of the Board
of Directors of Xxxxxxxxx (acting on behalf of itself and the Vendor) if there
has been a material breach or failure to perform by International of any
covenant or agreement contained in this Agreement which is not curable or, if
curable, is not cured within five (5) days after written notice of such breach
is given by Xxxxxxxxx to International.
8.4. TERMINATION BY INTERNATIONAL.
This Agreement may be terminated and the transactions contemplated hereby
may be abandoned prior to the Closing Date by action of the Board of Directors
of International if there has been a material breach or failure to perform by
Xxxxxxxxx or the Vendor of any covenant or agreement contained in this
Agreement which is not curable or, if curable, is not cured within five (5)
days after written notice of such breach is given by International to Xxxxxxxxx
or the Vendor as the case may be.
8.5. SPECIAL COMMITTEE.
In any event in which International intends to consent to or seek
termination of this Agreement pursuant to this Article 8, such action must be
taken by the Board of Directors of International following receipt of a
favourable recommendation thereof by the Special Committee.
8.6. EFFECT OF TERMINATION AND ABANDONMENT.
In the event of the termination and abandonment of this Agreement,
Xxxxxxxxx, the Vendor and International shall have no obligation or liability
to the others.
ARTICLE 9.
INDEMNIFICATION.
9.1. INDEMNITY.
Xxxxxxxxx and the Vendor shall, jointly and severally, indemnify and save
International harmless for and from any loss, damages or deficiencies suffered
by International or by the Company or any subsidiary thereof as a result of any
breach of representation, warranty or
29
- 22 -
covenant on the part of Xxxxxxxxx or the Vendor contained in this Agreement and
all claims, demands, costs and expenses, including legal fees, in respect of
the foregoing.
9.2. LIMITATIONS.
The obligations of Xxxxxxxxx and the Vendor to indemnify International in
accordance with the foregoing shall be subject to the following:
9.2.1. any claim arising as a result of a breach of (i) a representation
or warranty contained in Article 3 or (ii) a covenant contained in Article
5 shall be made not later than the date on which pursuant to section 10.1
such representation, warranty or covenant terminated;
9.2.2. their obligation to indemnify International (except in respect of
any obligations to indemnify arising from section 3.10) shall only apply
if indemnification claims, in the aggregate, exceed Cdn. $1,000,000 in
which case they shall be liable therefor only to the extent that such
claims exceed Cdn. $500,000 to a maximum aggregate amount equal to the
Total Purchase Price.
ARTICLE 10.
MISCELLANEOUS.
10.1. SURVIVAL.
Only the agreements and covenants of the parties contained in Articles 5
and 10, and Section 8.6 hereof shall survive the Closing Date without time
limit, except as otherwise specified therein. All representations, warranties
and other agreements and covenants shall be deemed to be conditions of the
transactions contemplated hereby and shall not survive the Closing Date;
provided, however, that the representations and warranties of Xxxxxxxxx and the
Vendor contained in Sections 3.1 and 3.2 hereof and International's
representations and warranties contained in Sections 4.1 and 4.2 hereof shall
survive the Closing Date without time limit; and the representations and
warranties of Xxxxxxxxx and the Vendor contained in Sections 3.3, 3.4, 3.5,
3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12.2, 3.13 and 3.14 and International's
representations and warranties contained in Sections 4.3, 4.4, 4.5 and 4.6
shall survive until the second anniversary of the Closing Date and the
representations and warranties by Xxxxxxxxx and the Vendor made in Section
3.12.1 shall survive for the applicable statute of limitations. If the
transactions contemplated hereby shall be abandoned and this Agreement
terminated, only the agreements and covenants of the parties contained in
Sections 10.1, 10.2, 10.5, 10.10, 10.12 and 10.14 hereof shall survive such
abandonment and termination.
10.2. CERTAIN EXPENSES.
Whether or not the transactions contemplated hereby are consummated,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby will be paid by the party incurring such costs
and expenses.
30
- 23 -
10.3. DOLLAR AMOUNTS.
Except as expressly indicated, all dollar amounts in this Agreement are
stated in and shall be interpreted to be in United States dollars.
10.4. FURTHER ASSURANCES.
International, Xxxxxxxxx and the Vendor shall use its reasonable
commercial efforts to perform and fulfil all conditions and obligations on its
part to be performed and fulfilled under this Agreement, to the end that the
transactions contemplated by this Agreement shall be fully carried out. From
time to time as and when requested by International or its successors or
assigns, the Vendor shall execute and deliver such deeds and other instruments
of transfer and shall take or cause to be taken such further or other actions
as shall be necessary or advisable in order to carry out the purpose and
intention of this Agreement or to vest or perfect in International, or to
confirm of record or otherwise to International, title to and possession of all
of the Shares. From time to time as and when requested by Xxxxxxxxx, the Vendor
or their successors and assigns, International shall execute and deliver such
further deeds and other instruments and shall take or cause to be taken such
further or other actions as shall be necessary or advisable in order to carry
out the purpose and intention of this Agreement.
10.5. PRESS RELEASES, ANNOUNCEMENTS AND COMMUNICATIONS.
No press release or other public announcements related to this Agreement
or the transactions contemplated hereby will be issued after the date hereof
without the prior approval of Xxxxxxxxx and International, such approval not to
be unreasonably withheld or delayed, except for any public disclosure that
Xxxxxxxxx or International in good faith believes is required by law or by
obligations relating to any securities exchange or market. The parties agree to
use reasonable efforts to consult with each other before taking any action that
would require the issuance of any press release or other public announcement
with respect to this Agreement or the transactions contemplated hereby.
10.6. AMENDMENT AND MODIFICATION.
This Agreement may be amended, modified or supplemented at any time prior
to or after the Closing Date, but only by written agreement that identifies
this Agreement and is signed by all of the parties hereto. Any amendment,
modification or supplement hereto shall be effective as to International only
if in writing signed by the Chairman of the Special Committee on behalf of
International.
10.7. WAIVER OF COMPLIANCE; CONSENTS.
Except as otherwise provided in this Agreement, any failure of any of the
parties to comply with any obligation, representation, warranty, covenant,
agreement or condition herein may be waived by the party entitled to the
benefits thereof only by a written instrument signed by the party granting such
waiver, but such waiver or failure to insist upon strict compliance with
31
- 24 -
such obligation, representation, warranty, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent
or other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing.
International shall not waive, nor shall International be deemed to have
waived, any obligations of Xxxxxxxxx or the Vendor hereunder or any other
benefits to International arising under this Agreement unless approved by the
Board of Directors of International following receipt of a favourable
recommendation thereof by the Special Committee.
10.8. NOTICES.
All notices, demands and other communications hereunder shall be in
writing and shall be deemed to have been given when received if delivered by
hand, courier or by facsimile transmission to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) If to Xxxxxxxxx or the Vendor:
Xxxxxxxxx Inc.
00 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Attention: Xxxxx X. Xxxxxxxx
Vice-President and General Counsel
Facsimile No.: (000) 000-0000
Copies to:
Tory Xxxx XxxXxxxxxxx & Binnington
Suite 3000, Aetna Tower
P.O. Box 270
Toronto-Dominion Centre
Toronto, Ontario
Canada M5K 1N2
Attention: Xxxx XxXxxxxxxx
Facsimile No.: (000) 000-0000
32
- 25 -
Xxxxxxxx Xxxxxxxxxx
0000 Xxxx Xxxxxxxx Xxxx. Xxxx
Xxxxx 0000
Montreal, P.Q.
Canada H3B 5E9
Attention: Xxxx Xxxxxxxxxx
Facsimile No.: (000) 000-0000
(b) If to International:
Xxxxxxxxx International Inc.
000 X. Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
X.X.X.
Attention: Xxxxxxx X. Xxxxxx,
Vice President - Law and Finance and Secretary
Facsimile No.: (000) 000-0000
Copies to:
Xxxxxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx Xxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
X.X.X.
Attention: Xxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
(c) If to the Special Committee:
Xxxxxxxxx International Inc.
Special Committee
c/o Xxxxxxx X. Xxxxx, Chairman
0 Xxxxxxx Xxxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
X.X.X.
Facsimile No.: (000) 000-0000
33
- 26 -
Copies to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
X.X.X.
Attention: Xxxxxx X. Block
Facsimile No.: (000) 000-0000
10.9. ASSIGNMENT.
Neither this Agreement nor any of the rights, interests or obligations
under this Agreement shall be assigned by any party hereto without the prior
written consent of the other parties hereto. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, successors and assigns; provided, however,
that International may assign its rights and interests (but not its
obligations) hereunder to HCPH or another subsidiary of International.
10.10. GOVERNING LAW AND JURISDICTION.
This Agreement shall be governed by and construed in accordance with the
laws of Ontario. Each party hereto submits to the non-exclusive jurisdiction of
the courts of competent jurisdiction of Ontario in connection with any dispute
arising out of or related to this Agreement.
10.11. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, none of which
need contain the signatures of all parties, each of which shall be deemed an
original, and all of which together shall constitute one and the same
instrument.
10.12. NO THIRD PARTY BENEFICIARIES.
No person who is not a party to this Agreement shall be deemed to be a
beneficiary of any provision of this Agreement, and no such person shall have
any claim, cause of action, right or remedy pursuant to this Agreement.
10.13. INTERPRETATION.
The descriptive headings contained in this Agreement are for convenience
of reference only and shall have no effect on the interpretation or meaning
hereof. The word "Agreement" refers to the body of this Agreement and all
Schedules attached hereto or referred to herein. "Herein," "hereof" and the
like refer to this Agreement as a whole. As used in this
34
- 27 -
Agreement, the singular shall include the plural, the plural shall include the
singular and each gender shall include all genders.
10.14. ENTIRE AGREEMENT.
This Agreement, including the Schedules attached hereto (and any other
instruments executed and delivered at the Closing), embodies the entire
agreement and understanding of the parties hereto with respect to the transfer
of the Shares to International. The Schedules hereto are an integral part of
this Agreement and are incorporated by reference herein. This Agreement
supersedes all prior discussions, negotiations, agreements and understandings
(both written and oral) between the parties with respect to the transfer of the
Shares to International hereunder.
35
- 28 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
XXXXXXXXX INC.
By: /s/ XXXXX X. XXXXXXXX
------------------------------------
Xxxxx X. Xxxxxxxx
Vice-President and General Counsel
UNIMEDIA HOLDING COMPANY
By: /s/ XXXXX X. XXXXXXXX
------------------------------------
Xxxxx X. Xxxxxxxx
Vice-President and General Counsel
XXXXXXXXX INTERNATIONAL INC.
By: /s/ XXXXXXX X. XXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxx
Vice President-Law and Finance
and Secretary
