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EXHIBIT 10.01
XXXXXXXXX INTERNATIONAL INC.
000 XXXXX XXXXXX XXXXXX
XXXXXXX, XXXXXXXX 00000
APRIL 18, 1997
Xxxxxxxxx Inc.
UniMedia Holding Company
00 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Attention: Xx. Xxxx X. Xxxxxxxx, Vice-President,
Finance and Treasury
Re: Exchange Agreement
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Dear Xx. Xxxxxxxx:
Reference is hereby made to (i) the UniMedia Class A Stock
Purchase Agreement dated as of April 18, 1997 ("UniMedia A Agreement") among
Xxxxxxxxx Inc., a corporation continued under the laws of Canada ("Xxxxxxxxx"),
UniMedia Holding Company, a company formed under the laws of Nova Scotia
("Vendor"), and Xxxxxxxxx International Inc., a Delaware corporation
("International"), relating to the purchase of all of the outstanding Class A
Common Shares of UniMedia Newspapers Company, a Nova Scotia unlimited liability
company ("UniMedia"); and (ii) the UniMedia Class B Stock Purchase Agreement
dated as of April 18, 1997 ("UniMedia B Agreement") among Xxxxxxxxx, the
Vendor, and International relating to the purchase of all of the outstanding
Class B Common Shares of UniMedia (the UniMedia A
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UniMedia Holding Company
April 18, 1997
Page 2
Agreement and the UniMedia B Agreement being referred to collectively as the
"Purchase Agreements").
In consideration of the purchase of the outstanding Class B
Common Shares of UniMedia, International is issuing to the Vendor 23,267 newly
issued shares of Series 1 Nonvoting Preferred Stock (having the relative rights
and preferences set forth in the form of Certificate of Designations attached
hereto as Annex 1) at a stated issue price of Cdn. $1,000 per share ("Series 1
Nonvoting Preferred Stock") and cash in the amount of Cdn. $100,000. In
consideration of the purchase of the outstanding Class A Common Shares of
UniMedia, International is issuing to the Vendor 149,658 shares of Series 2
Nonvoting Preferred Stock (having the relative rights and preferences set forth
in the form of Certificate of Designations attached hereto as Annex 2) at a
stated issue price of Cdn. $1,000 per share ("Series 2 Nonvoting Preferred
Stock"), and cash in the amount of Cdn. $19,373,000.
The shares of Series 1 Nonvoting Preferred Stock and Series 2
Nonvoting Preferred Stock (collectively, "Nonvoting Preferred Stock") will not
be registered under the Securities Act of 1933, as amended (the "Securities
Act"), and will not be transferable by the Vendor without the prior written
consent of International, except as provided below. No sale, transfer, or other
disposition of any share or shares of Nonvoting Preferred Stock shall be valid
or effectual for any purpose whatsoever, and International shall not be
obligated to recognize or give any effect to any purported such sale, transfer
or other disposition, other than a sale, transfer or
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UniMedia Holding Company
April 18, 1997
Page 3
disposition to a Subsidiary or Affiliate (as such terms are defined in
International's Restated Certificate of Incorporation, as amended) of Xxxxxxxxx
unless and until International, by resolution duly adopted by its Board of
Directors, shall first have consented to the proposed sale, transfer or other
disposition and approved the proposed transferee; provided, however, that,
subject to the next sentence hereof, (a) the Vendor, Xxxxxxxxx or any
Subsidiary or Affiliate of Xxxxxxxxx may pledge such shares to a pledgee
pursuant to a bona fide pledge of such shares as collateral security for
indebtedness or other obligations due to the pledgee, and (b) the Vendor may
sell, transfer or otherwise dispose of all (but not less than all) such shares
to a third party at any time after the Stockholders Meeting (as hereinafter
defined) but only if the requisite Stockholder Approval (as hereinafter
defined) has not been obtained at the Stockholders Meeting or any postponement
or adjournment(s) thereof. Notwithstanding the provisions of clauses (a) and
(b) above, no such pledge, sale, transfer or other disposition shall be
effectual unless, as a condition prior thereto: (A) such pledge, sale, transfer
or other disposition shall be completed in accordance with all applicable laws,
including without limitation the Securities Act and the rules and regulations
of the Securities and Exchange Commission thereunder and Canadian securities
laws and regulations thereunder; (B) the shares so pledged, sold, transferred
or disposed shall remain subject to the provisions of this Exchange Agreement,
and any transferee thereof (whether by or following foreclosure, realization or
other similar action by the pledgee in the case of pledged shares, or by or
following the purchase by or transfer to a third party in the case of any other
sale, transfer or other disposition) shall have consented, in a writing
addressed to International, to be bound by the
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UniMedia Holding Company
April 18, 1997
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provisions of this Exchange Agreement, including but not limited to the
restrictions on transfer set forth in this paragraph which, for greater
certainty, will continue in effect with respect to any proposed sale, transfer
or other disposition of shares by such third party; and (C) International shall
have received a written opinion, from counsel reasonably acceptable to
International, confirming the matters referred to in clauses (A) and (B),
above.
The authorized capital stock of International currently
consists of 250,000,000 shares of Class A Common Stock, par value $.01 per
share ("Class A Common Stock"), 50,000,000 shares of Class B Common Stock, par
value $.01 per share ("Class B Common Stock"), and 20,000,000 shares of
preferred stock, par value $.01 per share ("Preferred Stock"), of which
69,565,754 shares of Class A Common Stock, 14,990,000 shares of Class B Common
Stock, 739,500 shares of Series A Redeemable Convertible Preferred Stock
("Series A Preferred Stock"), 10,350,000 shares of Series B Convertible
Preferred Stock ("Series B Preferred Stock"), 23,267 shares of Series 1
Nonvoting Preferred Stock, and 149,658 shares of Series 2 Nonvoting Preferred
Stock are issued and outstanding. In order to comply with NYSE rules relating
to issuance of shares to certain related parties, International has agreed to
call a special meeting of the holders of International's Class A Common Stock,
Class B Common Stock, and Series B Preferred Stock (the "Stockholders Meeting")
as soon as practicable after the date hereof in accordance with the Securities
Exchange Act of 1934, as amended, the applicable rules and regulations of the
Securities and Exchange Commission thereunder, and the applicable rules of the
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UniMedia Holding Company
April 18, 1997
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New York Stock Exchange. At the Stockholders Meeting, the stockholders of
International will be requested, among other matters, to consider and vote upon
the following proposals: (i) to permit the issuance by International of
authorized but unissued shares of Class A Common Stock upon exchange by the
Vendor of all shares of Series 1 Nonvoting Preferred Stock and the "Second
Tranche Shares" of the Series 2 Nonvoting Preferred Stock (as hereinafter
defined) in accordance with this Exchange Agreement; (ii) to permit the
issuance by International of authorized but unissued shares of Series C
Convertible Preferred Stock (having the relative rights and preferences set
forth in the form of Certificate of Designations attached hereto as Annex 3) of
International ("Series C Convertible Preferred Stock") upon exchange by the
Vendor of all of the "First Tranche Shares" of the Series 2 Nonvoting Preferred
Stock (as hereinafter defined) in accordance with this Exchange Agreement;
(iii) to permit the issuance by International of authorized but unissued shares
of Class A Common Stock upon conversion of the Series C Convertible Preferred
Stock as provided therein; and (iv) to increase the authorized capital of
International from 20 million shares to 120 million shares of Preferred Stock
(collectively, the "International Proposals"). The holders of outstanding
shares of Class A Common Stock, Class B Common Stock and Series B Preferred
Stock will be entitled to vote as a single class on items (i) through (iv),
above. Xxxxxxxxx, as the sole holder of the outstanding shares of Series A
Preferred Stock, hereby consents to approve an amendment to the terms of the
Series A Preferred Stock to clarify its voting rights (as provided by law) to
eliminate any right to vote as a separate class with respect to any proposed
increase in the number of shares of Preferred Stock or to authorize the
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UniMedia Holding Company
April 18, 1997
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issuance of parity or junior stock, such amendment to be effective as soon as
practicable after the date hereof and, in any event, prior to the Stockholders
Meeting. Xxxxxxxxx Inc., as the holder, directly or indirectly through its
subsidiaries, of all of the outstanding Class B Common Stock, and 33,610,754
shares of Class A Common Stock, has agreed to vote or cause to be voted all
such shares of International held by it or its subsidiaries in favour of the
International Proposals.
On the Determination Date (as hereafter defined), an amount
equal to Cdn. $149,658,000 (the "Canadian Dollar Balance") will be converted
into U.S. dollars using the "U.S. Dollar Equivalent" (as hereinafter defined)
as of that date and allocated, for computational purposes, as set forth below.
The Canadian dollar equivalent of U.S. $90,000,000 using the "Noon Buying
Rate," as hereinafter defined on the Determination Date (the "First Tranche
Amount"), will first be allocated to a portion of the Series 2 Nonvoting
Preferred Stock (the "First Tranche Shares") to determine the portion of the
Series 2 Nonvoting Preferred Stock to be mandatorily exchanged into Series C
Convertible Preferred Stock. Such portion (rounded to the nearest share) will
be determined by (A) dividing the First Tranche Amount by the Canadian Dollar
Balance, and then (B) multiplying the resulting fractional amount (rounded to
the fourth decimal place) by 149,658. Then, any remaining amount of the Canadian
Dollar Balance (the "Second Tranche Amount"), expressed in Canadian dollars,
will be allocated to the remaining shares of Series 2 Nonvoting Preferred Stock
(the "Second Tranche Shares"), determined by subtracting the number of First
Tranche Shares from 149,658. On the Determination Date,
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UniMedia Holding Company
April 18, 1997
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International will deliver two new stock certificates to the Vendor in respect
of the Series 2 Nonvoting Preferred Stock in replacement of the original
certificate issued on the date hereof, with one new certificate representing
the First Tranche Shares and the other representing the Second Tranche Shares.
Within five (5) business days after obtaining the affirmative
vote of the holders of a majority of the total votes cast with regard to items
(i) through (iv) of the International Proposals ("Stockholder Approval"),
International shall issue to Xxxxxxxxx or the Vendor the following securities
in exchange for all (but not less than all) issued and outstanding shares of
Nonvoting Preferred Stock of all series (the "Exchange"):
(i) in exchange for all 23,267 shares of Series 1
Nonvoting Preferred Stock, that number of newly issued shares of Class
A Common Stock as is determined by dividing (x) the "U.S. Dollar
Equivalent" of Cdn. $23,267,000 on the Determination Date by (y) the
"Adjusted Market Price" of Class A Common Stock on the "Determination
Date" (as such terms are hereinafter defined);
(ii) in exchange for all the First Tranche Shares,
that number of newly issued shares of Series C Convertible Preferred
Stock as is determined by dividing (x) the "U.S. Dollar Equivalent" of
the First Tranche Amount by (y) the "Adjusted Market Price"
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UniMedia Holding Company
April 18, 1997
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of Class A Common Stock on the "Determination Date" (as such terms are
defined below);
(iii) in exchange for all of the Second Tranche
Shares, that number of newly issued shares of Class A Common Stock as
is determined by dividing (x) the "U.S. Dollar Equivalent" of the
"Second Tranche Amount" (if any) by (y) the "Adjusted Market Price" of
Class A Common Stock on the "Determination Date" (as such terms are
defined below).
If the "U.S. Dollar Equivalent" of the Canadian Dollar Balance is less
than U.S. $90,000,000, then the number of shares of Series C
Convertible Preferred Stock will be proportionally reduced. If the
Second Tranche Amount is zero, there will be no exchange in respect
thereof.
For purposes hereof: (A) the "U.S. Dollar Equivalent" means the inverse of the
"Noon Buying Rate"; (B) the "Noon Buying Rate" means the noon buying rate in
the City of New York for cable transfers in United States dollars as certified
for customs purposes by the Federal Reserve Bank of New York; (C) the "Adjusted
Market Price" means the greater of (I) the amount per share determined by
multiplying 1.05 by the "Market Price" and (II) U.S. $9.00 per share; (D) the
"Market Price" means the weighted average market price per share of Class A
Common Stock on the New York Stock Exchange (taking into account the actual
sale prices and the respective
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UniMedia Holding Company
April 18, 1997
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number of shares of Class A Common Stock so sold in each sale transaction on
the New York Stock Exchange) for the ten (10) trading day period ending on the
"Determination Date" as reported by Bloomberg or other authority satisfactory
to International; and (E) the "Determination Date" means the date that is five
(5) business days prior to the mailing by International of the definitive
version of the proxy solicitation materials (the "Proxy Statement") to all
stockholders of record of International with respect to the Stockholders
Meeting.
As soon as practicable after the Determination Date, but in
any event no later than the date (the "Mailing Date") on which International
first mails the definitive Proxy Statement to its stockholders with respect to
the Stockholders Meeting, International will furnish to Xxxxxxxxx and the
Vendor a certificate (the "Officers' Certificate"), executed by a duly
authorized officer of International and substantially in the form of Annex 4
attached hereto with all blanks completed.
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UniMedia Holding Company
April 18, 1997
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Absent manifest error, all such information as set forth in the definitive
Officers' Certificate delivered to Xxxxxxxxx and the Vendor hereunder shall be
binding and conclusive on all of the parties hereto.
As soon as practicable, but in any event no later than five(5)
business days after the Determination Date, International, Xxxxxxxxx, Vendor,
1159670 Ontario Limited, Xxxxxxxxx'x indirect wholly owned subsidiary
("1159670"), and/or any other direct or indirect wholly owned subsidiary of
Xxxxxxxxx (as Xxxxxxxxx may designate) will enter into the Second Exchange
Agreement, substantially in the form of Annex 5 attached hereto with all blanks
completed (the "Second Exchange Agreement"). Xxxxxxxxx will cause Vendor,
1159670 and/or any other direct or indirect wholly owned subsidiary of
Xxxxxxxxx (as Xxxxxxxxx may designate) to execute and deliver the Second
Exchange Agreement and perform their respective obligations thereunder.
During the preparation of the definitive Proxy Statement, the
parties hereto shall consult and cooperate with each other in order to complete
any and all matters relating to the definitive Certificate of Designations to
be filed with the Delaware Secretary of State to create the Series C
Convertible Preferred Stock, including without limitation the expected date of
the Exchange, the expected Dividend Payment Dates, the Mandatory Conversion
Date and the Initial Redemption Date, the calculation of the Call Price, and
all other pertinent matters, taking into
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UniMedia Holding Company
April 18, 1997
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account the parties' mutual intention that the Series C Convertible Preferred
Stock (as reflected in the definitive Certificate of Designations creating such
Preferred Stock, and when issued upon the Exchange) be similar in all material
respects to the Series B Preferred Stock (except for the agreed dividend rate
of 9.5% per annum and the other financial terms referred to above).
The Special Committee of independent members of the Board of
Directors of International (the "Special Committee"), acting on behalf of
International pursuant to authority duly delegated to it by the Board of
Directors of International, shall approve (a) the definitive Officers'
Certificate prior to its delivery to Xxxxxxxxx and the Vendor and (b) the other
provisions requiring completion with respect to the definitive Certificate of
Designations for the Series C Convertible Preferred Stock.
The Exchange shall be mandatory and shall not require any
request or other action by, or notice to, Xxxxxxxxx, the Vendor or
International. Immediately upon the Exchange dividends will cease to accrue in
respect of shares of Nonvoting Preferred Stock. Xxxxxxxxx and the Vendor will
promptly tender all stock certificates evidencing shares of Nonvoting Preferred
Stock in order to permit International to complete the Exchange.
Upon the completion of the Exchange after Stockholder
Approval is obtained, the outstanding shares of Nonvoting Preferred Stock will
be cancelled. The shares of Class A Common Stock and Series C Convertible
Preferred Stock issued upon the Exchange will not be
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UniMedia Holding Company
April 18, 1997
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registered under the Securities Act at the time of issuance. At the request of
Xxxxxxxxx, International agrees to take commercially reasonable efforts to
cause the registration under the Securities Act of the shares of Class A Common
Stock and Series C Convertible Preferred Stock issued to the Vendor upon the
Exchange (and the shares of Class A Common Stock issuable upon conversion of
the Series C Convertible Preferred Stock) and to list such newly issued shares
of Class A Common Stock and Series C Convertible Preferred Stock on the New
York Stock Exchange, in each case as soon as practicable after the issuance
thereof.
In the event Stockholder Approval is not obtained at the
Stockholders Meeting or any adjournment or postponement thereof, the shares of
Nonvoting Preferred Stock will remain outstanding, subject to redemption at the
option of the holder in accordance with their terms or transfer in accordance
with the provisions of this Exchange Agreement.
This Agreement may be amended or modified, but only by a
written agreement that identifies this Exchange Agreement and is signed by all
of the parties hereto. Any such amendment or modification shall be effective as
to International only if in writing signed by the Chairman of the Special
Committee on behalf of International. In addition, International shall not
waive any obligations of Xxxxxxxxx or the Vendor hereunder or any other
benefits to International arising under this Exchange Agreement unless approved
by the Board of Directors of International following receipt of a favourable
recommendation thereof by the Special Committee.
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UniMedia Holding Company
April 18, 1997
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This Exchange Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware
Very truly yours,
XXXXXXXXX INTERNATIONAL INC.
By: /s/ XXXXXXX X. XXXXXX
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Name: Xxxxxxx X. Xxxxxx
Title: Vice President-Law & Finance
and Secretary
Agreed and Accepted
this 18th day of April, 1997:
XXXXXXXXX INC.
By: /s/ X. X. XXXXXXXX
----------------------
Name: X. X. Xxxxxxxx
Title: Vice President, Finance
and Treasury
UNIMEDIA HOLDING COMPANY
By: /s/ X. X. XXXXXXXX
----------------------
Name: X. X. Xxxxxxxx
Title: Vice President, Finance
and Treasury
