Exhibit 4.63
EXECUTION COPY
PENSION AND EMPLOYEE BENEFIT PLANS AGREEMENT
THIS AGREEMENT is made as of the 14th day of February, 2003.
BETWEEN:
GLOBAL COMMUNICATIONS LIMITED, a corporation governed by the
laws of Manitoba, (the "Vendor")
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CANWEST GLOBAL COMMUNICATIONS CORP., a corporation governed by
the laws of Canada, ("CanWest")
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OSPREY MEDIA HOLDINGS INC., a corporation governed by the laws
of Ontario, (the "Purchaser")
RECITALS:
A. The Parties entered into a Share Purchase Agreement dated
January 24, 2003 (the "Share Purchase Agreement") whereby the Purchaser agreed
to acquire the Purchased Shares;
B. Section 7.9 of the Share Purchase Agreement contemplates that
the Parties will enter into a Pension and Employee Benefit Plans Agreement;
THEREFORE, the Parties agree as follows:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 DEFINITIONS
Whenever used in the Agreement, unless inconsistent with the subject matter or
content thereof, the following words and terms shall have the meaning set out
below:
(a) "AGREEMENT" means this Pension and Employee Benefits Plans
Agreement including all schedules hereto and all instruments
supplementing or amending or confirming the Agreement;
(b) "CANWEST SOUTHAM PLAN" means the CanWest Southam Publications
Inc. Retirement Plan, Registration No. 1077049;
(c) "CANWEST THOMSON PLAN" means the CanWest Pension Plan for
Former Thomson Newspapers, Registration No. 1077056;
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(d) "FINAL TRANSFER AMOUNT" shall have the meaning given in
Section 2.7;
(e) "MEMBER" Means, in relation to a Vendor's Retained Pension
Plan, any Employee who was a member of that Vendor's Retained
Pension Plan as at the Closing Time;
(f) "MEMBER LIABILITIES" means, in relation to any Vendor's
Retained Pension Plan, the greater of the going concern
liabilities and solvency liabilities for the benefits accrued
by the Members under "defined benefit" provisions of that
Vendor's Retained Pension Plan (which, for greater certainty,
shall exclude any money purchase plan accruals), calculated as
of the Closing Date using the actuarial methods and
assumptions set out in Schedule "A" hereto;
(g) "PLAN ASSETS" means the market value of the assets of the
applicable Vendor's Retained Pension Plan held in the Vendor's
Pension Fund, net of all expenses and transaction costs and
fees.
(h) "PURCHASER'S BENEFIT PLANS" has the meaning set forth in
Section 3.1;
(i) "PURCHASER'S PENSION PLAN" has the meaning set forth in
Subsection 2.1(a);
(j) "REGULATORY AMOUNT" has the meaning set forth in Section 2.5;
(k) "TOTAL PLAN LIABILITIES" means, in relation to any Vendor's
Retained Pension Plan, the greater of the going concern
liabilities and solvency liabilities in respect of the
benefits of all members and former members of the Vendor's
Retained Pension Plan (including retirees, deferred vested
members and any other persons entitled to a benefits from the
plan, but excluding any money purchase accruals) calculated as
of the Closing Date using the actuarial methods and
assumptions set out in Schedule "A" hereto;
(l) "TRANSFER DATE" means the date the assets from that Vendor's
Retained Pension Plan are actually transferred from the
Vendor's Pension Fund of the applicable Vendor's Retained
Pension Plan to the funding medium of the Purchaser's Pension
Plan;
(m) "TRANSFER AMOUNT" means, in relation to each Vendor's Retained
Pension Plan, the amount of assets of the applicable Vendor's
Pension Fund to be transferred to the funding medium of the
Purchaser's Pension Plan, determined as at the Closing Date
and calculated as follows: calculate the fraction of Member
Liabilities to Total Plan Liabilities, and multiply that
fraction by the Plan Assets;
(n) "VENDOR'S BENEFIT PLANS" means the Insurance Plans listed or
described in Schedule 4.26 to the Share Purchase Agreement
(for greater certainty, excluding the Vendor's Retained
Pension Plans and any Compensation Plans maintained by the
Companies) and "VENDOR'S BENEFIT PLAN" means any one of such
plans;
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(o) "VENDOR'S PENSION FUND" means, in relation to each Vendor's
Retained Pension Plan, the fund under which the assets for the
defined benefit provisions of that Vendor's Retained Pension
Plan are held;
(p) "VENDOR'S RETAINED PENSION PLANS" means the CanWest Southam
Plan and/or the CanWest Thomson Plan and "Vendor's Retained
Pension Plan" means any one of such plans.
Capitalized terms used in the Agreement and not defined above shall have the
meaning given to such terms in the Share Purchase Agreement.
1.2 APPLICATION OF SHARE PURCHASE AGREEMENT
Articles 1, 10 and 11 of the Share Purchase Agreement shall apply to this
Agreement mutatis mutandis.
ARTICLE 2
PENSION PLAN ARRANGEMENTS
2.1 ESTABLISHMENT OF PURCHASER'S PENSION PLANS
(a) The Purchaser shall, effective as of and from the Closing
Time, establish or designate a registered pension plan or
plans to provide pension benefits to Employees from and after
the Closing Date (the "Purchaser's Pension Plan(s)") and shall
forthwith notify the Vendor of the registration or designation
of any such plan.
(b) Effective as of the Closing Time, each Member of a Vendor's
Retained Pension Plan shall cease to actively participate in
and accrue benefits under that Vendor's Retained Pension Plan
and shall commence participation in and accrue benefits under
the applicable Purchaser's Pension Plan.
(c) Each Purchaser's Pension Plan shall provide benefits that
comply with each Company's obligations under each Collective
Agreement that apply in respect of applicable Employees and
shall for a period of at least two years after the Closing
Date, in respect of Employees' service from and after the
Closing Time, have benefit provisions which are substantially
similar in all material respects to the benefit provisions of
the applicable Vendor's Retained Pension Plan in effect as at
the Closing Date.
(d) The Purchaser shall enrol each Member in the Purchaser's
Pension Plan effective as at the Closing Time. The Purchaser's
Pension Plan shall recognize each Member's period of service
prior to the Closing Time (as recognized under the applicable
Vendor's Retained Pension Plan) for the purposes of vesting of
and eligibility for benefits under the Purchaser's Pension
Plan.
(e) All benefits accrued by a Member under a Vendor's Retained
Pension Plan up to the Closing Time shall be transferred from
that Vendor's Retained Pension Plan
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to a Purchaser's Pension Plan, subject to and upon the
completion of, the transfer of assets from the Vendor's
Pension Fund to the funding medium for the Purchaser's Pension
Plan as contemplated by Section 2.8 and Section 2.9.
(f) Upon the completion of the transfer of assets from a Vendor's
Pension Fund to the funding medium of the applicable
Purchaser's Pension Plan: (i) the Purchaser's Pension Plan
shall, for each Member, recognize such Member's period of
service (as recognized under the Vendor's Retained Pension
Plan) for all purposes relating to the determination of such
Member's benefits under the Purchaser's Pension Plan; and (ii)
in respect of benefits accrued by Members under the Vendor's
Retained Pension Plan up to the Closing Date, the Purchaser's
Pension Plan shall provide benefits that are, in each
instance, identical to or better than those provided by the
Vendor's Retained Pension Plan in respect of such service.
2.2 DETERMINATION OF MEMBER LIABILITIES
As soon as practicable after the Closing Date, the Vendor shall update
the pension records of each Member in relation to a Vendor's Retained
Pension Plan up to the Closing Date, and shall provide to the Vendor's
actuary such data, records and other information as is necessary to
enable the Vendor's actuary to determine the amount of the Member
Liabilities separately for each Vendor's Retained Pension Plan. As soon
as practicable after such information has been provided to the Vendor's
actuary, the Vendor shall instruct the Vendor's actuary to determine
the amount of the Member Liabilities and the Total Plan Liabilities for
each Vendor's Retained Pension Plan. The Vendor shall make the details
of these calculations and their results available to the Purchaser and
its actuary for their review and confirmation, and shall furnish to
them such data and other information as may be required or requested to
permit a review, recalculation and confirmation of the Member
Liabilities and Total Plan Liabilities by the Purchaser and its
actuary. The Purchaser shall within thirty (30) days of receiving such
information and data (or such later date as the Parties may agree to)
notify the Vendor as to its agreement or disagreement with the Vendor's
calculation of the Member Liabilities and Total Plan Liabilities.
2.3 DISPUTES REGARDING CALCULATIONS
If the Purchaser and the Vendor cannot reach agreement with respect to
calculations under Section 2.2 or Section 2.7 hereof, any such disputes
shall be resolved in accordance with Section 5.1, using the methods and
assumptions set out in Schedule "A".
2.4 GOVERNMENTAL APPROVALS
(a) As soon as practicable, but in any event within thirty (30)
days after final agreement is reached between the Vendor and
the Purchaser with respect to the amount of the Member
Liabilities and Total Plan Liabilities in relation to a
Vendor's Retained Pension Plan, the Vendor shall instruct the
Vendor's actuary to calculate the Transfer Amount and shall
make application to the applicable
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Governmental Authorities for approval of the transfer of
assets equal to the Transfer Amount from the applicable
Vendor's Retained Pension Plan to the applicable Purchaser's
Pension Plan.
(b) Written confirmation of any and all approvals of applicable
Governmental Authorities shall be forwarded by the Vendor to
the Purchaser within five (5) Business Days of receipt of such
approvals.
2.5 REGULATORY OBJECTION
If any Governmental Authority refuses to permit a transfer of assets
from a Vendor's Pension Fund to the funding medium of the Purchaser's
Pension Plan in an amount equal to the Transfer Amount, the transfer
shall be made from the applicable Vendor's Pension Fund in the amount
that such Governmental Authority advises would be acceptable to it. The
asset transfer amount approved by the Governmental Authority, whether
equal to the Transfer Amount or some other amount, shall be referred to
as the "Regulatory Amount".
2.6 PAYMENTS
From the Closing Date to the Transfer Date, the Vendor shall cause the
funding agent for the Vendor's Retained Pension Plan to accept and
record, as required, all benefit payments relating to Members under
that Vendor's Retained Pension Plan and shall remain responsible for
all benefit calculations, communications and the completion of all
forms and reports under that Vendor's Retained Pension Plan relating to
the Members. All benefit payments payable between the Closing Date and
the Transfer Date to Members under the terms of that Vendor's Retained
Pension Plan shall be payable out of the applicable Vendors' Pension
Fund.
2.7 CALCULATION OF FINAL TRANSFER AMOUNT
Within thirty (30) days of receipt of all required approvals from the
Governmental Authorities in relation to a Vendor's Retained Pension
Plan, the Vendor shall calculate the Final Transfer Amount and shall
advise the Purchaser of such Final Transfer Amount For purposes of this
Agreement, the term "Final Transfer Amount" shall mean, in relation to
each Vendor's Retained Pension Plan, the Regulatory Amount adjusted for
(i) investment returns (positive or negative) on the Regulatory Amount
from the Closing Date to the Transfer Date, (ii) any data corrections
identified subsequent to the determination of the Member Liabilities,
(iii) any benefit payments paid pursuant to Section 2.6, and (iv) a
proportionate share of all fees and expenses in respect of ongoing
administration charged to the Vendor's Pension Fund between the Closing
Date and the Transfer Date.
The Vendor shall make the details of these calculations and their
results available to the Purchaser and its actuary for their review and
confirmation, and shall furnish to them such other information and data
as may reasonably be required or requested to permit a review,
recalculation and confirmation of the Final Transfer Amount by the
Purchaser and its actuary. The Purchaser shall notify the Vendors
within thirty (30) days of
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receiving such information and data as to its agreement or disagreement
with the Vendor's calculation of the Final Transfer Amount.
2.8 TRANSFER OF TRANSFER AMOUNTS
Within thirty (30) days of the Vendor and the Purchaser reaching
agreement on a Final Transfer Amount, the Vendor shall cause an amount
of cash (or cash equivalents) equal to the Final Transfer Amount, to be
transferred from the applicable Vendor's Pension Fund to the funding
medium of the Purchaser's Pension Plan.
2.9 DEFINED CONTRIBUTION ACCOUNT BALANCES
As soon as practicable after the Closing Date, the Vendor shall cause
the funding agent or recordkeeper of each Vendor's Retained Pension
Plan to report the value of any money purchase assets held under the
Vendor's Retained Pension Plan which relate to Members (the "Aggregate
DC Account Balance") under that Vendor's Retained Pension Plan as at
the Closing Date and shall provide a copy of such report to the
Purchaser.
As soon as practicable, but in any event within thirty (30) days after
the Vendor provides to the Purchaser the Aggregate DC Account Balance
for the applicable Vendor's Retained Pension Plan, the Vendor shall
seek any required approvals from the applicable Governmental
Authorities to a transfer from the applicable Vendor's Retained Pension
Plan to the applicable Purchaser's Pension Plan by a cash payment (or a
transfer of assets in kind acceptable to the Purchaser, or a
combination thereof) in an amount equal to that Aggregate DC Account
Balance adjusted to the Transfer Date in accordance with Section 2.7.
Forthwith upon receipt of all required approvals from the Governmental
Authorities, the Vendor shall cause the funding agent of each
applicable Vendor's Retained Pension Plan to transfer to the funding
agent of the applicable Purchaser's Pension Plan an amount of cash or
assets in kind acceptable to the Purchaser, or a combination thereof,
equal to the applicable Aggregate DC Account Balance as approved by the
Governmental Authorities, adjusted in accordance with Section 2.7 from
the Valuation Date to the Transfer Date.
2.10 CO-OPERATION REGARDING PENSION RECORDS
For purposes of Section 2.2 and Section 2.7, if requested to do so, the
Purchaser shall cause the Companies to provide the Vendor, or the
Vendors' actuary, as the case may be, with copies of all records, data
and documentation relating to the Vendor's Retained Pension Plans in
the possession of the Companies or their agents. The Purchaser shall
cause the Companies to direct each Employee who is employed by the
Companies who has information regarding the administration of the
Vendor's Retained Pension Plans to assist in updating the pension
records relating to service prior to the Closing Date if requested to
do so by the Vendor or the Vendors' actuary. To facilitate the proper
administration of benefit payments between the Closing Date and the
Transfer Date from the Vendor's Retained Pension Plans and the
Purchaser's Pension Plan in respect of Members, at the request of the
Purchaser, the Vendor shall provide to the Purchaser
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copies of all records, data and documentation necessary to calculate
and administer such benefit payments and at the request of the Vendor,
the Purchaser shall provide to the Vendor copies of all records, data
and documentation necessary to calculate and administer such benefit
payments.
2.11 RESPONSIBILITY FOR PENSION FUNDING DEFICITS
Notwithstanding anything to the contrary in this Agreement or in the
Share Purchase Agreement, from and after the Closing the Vendor shall
have no liabilities or obligations for any unfunded liabilities or
solvency deficiencies under any Pension Plan in respect of Employees,
which shall be the sole responsibility of the Companies and the
Purchaser.
ARTICLE 3
NON-PENSION BENEFIT PLAN ARRANGEMENTS
3.1 ESTABLISHMENT OF NEW BENEFIT PLANS
Effective as of the Closing Date, the Purchaser shall establish or otherwise
provide non-pension benefit plans (the "Purchaser's Benefit Plans") to cover the
Employees for service with the Companies on and after the Closing Date. The
Purchaser's Benefit Plans shall provide benefits which are substantially similar
to those provided to the Employees (and their eligible spouses, beneficiaries
and dependants) under the terms of the Vendor's Benefit Plans in effect as at
the Closing Date.
3.2 EMPLOYEES CEASE TO PARTICIPATE IN VENDOR'S BENEFIT PLANS
Each Employee shall cease to participate in and accrue benefits under the
Vendors' Benefit Plans and shall commence participation in the Purchaser's
Benefit Plans on and after the Closing Date and where service with the Purchaser
is a relevant criterion, the Purchaser agrees to recognize the service of each
Employee with the applicable Company and its predecessors for the purposes of
eligibility to join, vesting under and eligibility for entitlement to benefits
under the terms of the Purchaser's Benefit Plans. Each Employee who does not
participate in the Vendor's Benefit Plans immediately prior to the Closing Date
shall be eligible to participate in the Purchaser's Benefit Plans in accordance
with the terms thereof.
3.3 LIABILITY FOR BENEFIT CLAIMS INCURRED PRIOR TO THE CLOSING DATE
The Vendor's Benefit Plans shall retain responsibility for and satisfy
obligations with respect to benefit claims incurred under the Vendor's Benefit
Plans, or under the insurance policies through which the benefits under the
Vendor's Benefit Plans are provided to Employees prior to the Closing Date,
subject to and in accordance with the terms of the applicable Vendor's Benefit
Plans and related insurance policies, provided that such claims are filed within
ninety (90) days following the Closing Date. For the purposes of this Section
3.3 and Section 3.4, a claim shall be deemed to have been incurred:
(a) with respect to all death or dismemberment claims, on the
actual date of death or dismemberment;
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(b) with respect to all long-term disability claims, on the first
date of absence from work related to such claim;
(c) with respect to all short-term disability or other income
replacement claims (other than long-term disability), on each
day on which benefits are payable; and
(d) with respect to all health care, vision and dental claims, on
the date the service or supply was purchased or received by
the Employee or his or her eligible spouse or dependant.
The Purchaser shall cause each Company to notify its Employees that all claims
for expenses which qualify for coverage under the terms of the Vendor's Benefit
Plans and which were incurred prior to the Closing Date must be submitted within
ninety (90) days after the Closing Date.
3.4 LIABILITY FOR BENEFIT CLAIMS INCURRED AFTER THE CLOSING DATE
The Purchaser shall be responsible under the Purchaser's Benefit Plans for any
and all claims incurred by Employees on and after the Closing Date.
3.5 LIABILITIES UNDER VENDOR'S BENEFIT PLANS
Notwithstanding anything to the contrary in this Agreement or in the Share
Purchase Agreement, from and after the Closing the Vendor shall have no
liabilities or obligations in respect of post-retirement benefits for Employees,
whether under the Vendor's Benefit Plans or otherwise, which shall be the sole
responsibility of the Companies and the Purchaser. Subject to the foregoing, the
Vendor shall be responsible for all liabilities and obligations of the Companies
under the Vendor's Benefit Plans and the Companies shall have no further
obligations or liabilities under the terms of the Vendor's Benefit Plans (other
than in respect of benefits coverage provided to Employees prior to the Closing
Date).
ARTICLE 4
UNION PLANS
4.1 COMPANY OBLIGATIONS IN RESPECT OF UNION PLANS
For greater certainty, the provisions of Article 3 shall not apply to Union
Plans, and the Companies shall continue to be responsible for complying with all
obligations to Union Plans and all liabilities in respect of Union Plans in
accordance with the terms of the applicable Collective Agreement.
ARTICLE 5
GENERAL
5.1 DISPUTES
In the event that the Vendor and the Purchaser are unable to agree on any amount
to be calculated or determined in connection with the Agreement, each of the
Parties shall, use their
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reasonable efforts to resolve any disagreement under dispute, but if the Parties
are unable to resolve their disagreement within thirty (30) days, or such other
period as may be agreed to by the Parties, then the determination of the matter
shall forthwith be referred to arbitration in accordance with the Arbitration
Procedures, except that the arbitrator shall be a recognized expert in pension
matters or a qualified actuary.
SIGNATURE PAGE FOLLOWS
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IN WITNESS OF WHICH the Parties have duly executed this Pension and
Employee Benefits Plans Agreement.
GLOBAL COMMUNICATIONS LIMITED
By: /s/ XXXXXXX XXXXXXX
_______________________________
Name: Xxxxxxx Xxxxxxx
Title: Director
CANWEST GLOBAL
COMMUNICATIONS CORP.
By: /S/ XXXXXXX XXXXXXX
_______________________________
Name: Xxxxxxx Xxxxxxx
Title: Vice-President and
General Counsel
OSPREY MEDIA HOLDINGS INC.
By: /S/ XXXXXXX X. XXXXXX
_______________________________
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief
Executive Officer
EXECUTION COPY
SCHEDULE "A"
ACTUARIAL METHODS AND ASSUMPTIONS
GOING-CONCERN BASIS:
CWSRP CWTHP
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ACTUARIAL COST METHOD: Unit Credit Unit Credit
ECONOMIC ASSUMPTIONS:
Interest Rate: 7.25% p.a. 7.25% p.a.
Expenses: Nil Nil
Salary Increase Rate: 4.25% p.a. Nil
YMPE Increase Rate: 3.75% p.a. Nil
CCRA Limit (beg. 2005): 3.75% p.a. Nil
DEMOGRAPHIC ASSUMPTIONS:
Mortality Table: UP-94 proj AA GAM-83
Retirement Age/Rates: 55-57 5% 64
58-59 10%
60-61 15%
62-64 25%
65 100%
Termination Rates: Ontario Medium Ontario Medium
to age 45 to age 45
Disability Rates: Nil Nil
CWSRP: CanWest Southam Publications Inc Retirement Plan
CWTHP: CanWest Pension Plan for Former Thomson Employees
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SOLVENCY BASIS (FOR EACH PLAN):
As required by the Pension Benefits Act and Regulations of Ontario and/or other
applicable legislation and as established by the Canadian Institute of Actuaries
in its:
(a) Valuation Technique Paper on Wind-up and Solvency Valuations
of Registered Pension Plans issued effective December 1, 1999,
and
(b) Memorandum on Guidance for Year 2000 Solvency Valuation
Assumptions dated March 22, 2000.
For greater certainty, the following actuarial assumptions are to be used:
Interest Rate:
Members under age 55 (Transfer Basis):
CIA rate* in effect at Closing Date: X% for first
15 years and 6% thereafter
Members age 55 and over (Annuity Purchase Basis):
Average single premium per certificate less than
$75,000: Level rate to the CANSIM Series
B14013 rate (or other equivalent weekly
series rate) at the date nearest to Closing
Date
Average single premium per certificate greater than
or equal to $75,000: Above rate plus
.25% p.a.
* Rate specified by CIA Transfer Value Recommendations as
applicable to month of Closing Date (without time lag).
Mortality Table: 1983 GAM
Expenses: $10,000 plus $200 per Transferring Employee
