EXECUTION COPY
CONVERSION INDUCEMENT AGREEMENT
CONVERSION INDUCEMENT AGREEMENT (the "AGREEMENT") dated as of December
28, 2001 between XXXXX CORPORATION LIMITED, a corporation incorporated under the
laws of the Province of Ontario (the "CORPORATION") and Chancery Lane/GSC
Investors L.P., a Delaware limited partnership (together with its permitted
assigns, the "PARTNERSHIP"). Capitalized terms used herein but not defined when
used shall have the meanings ascribed to such terms in Section 1.1.
WITNESSETH:
WHEREAS, the Corporation and the Partnership entered into that certain
Debenture Purchase Agreement dated as of December 12, 2000 (the "Debenture
Purchase Agreement");
WHEREAS, as contemplated under the Debenture Purchase Agreement, on
December 21, 2000, the Partnership purchased, and the Corporation sold and
issued to the Partnership, 8.70% Subordinated Convertible Debentures due 2009 in
the original aggregate principal amount of $70,500,000 (the "Debentures");
WHEREAS, the Corporation has paid to the Partnership all interest
accrued under the Debentures through the Closing Date;
WHEREAS, the Corporation desires that the Partnership effect the
conversion in full of the Debentures into Common Shares pursuant to the terms of
the Debentures;
WHEREAS, in order to induce the Partnership to effect the conversion in
full of the Debentures prior to the time at which the Partnership otherwise
would have effected such conversion, the Corporation will cause Xxxxx Holdings
U.S.A. Inc., a corporation incorporated under the laws of the State of Delaware
and a wholly-owned subsidiary of the Corporation ("SubCo"), to issue to the
Partnership an aggregate amount of 1,650,000 Preferred Shares (the "SubCo
Preferred Shares") and will deliver the Contingent Consideration, if any, upon
the terms and conditions hereof; and
WHEREAS, following the issuance and delivery of the Subco Preferred
Shares by Subco to the Partnership and the conversion in full of the Debentures
into Common Shares, the Subco Preferred Shares will be transferred to the
Corporation in exchange for 1,650,000 Common Shares (the "Initial Shares"), upon
the terms and conditions under the Transfer Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged by each party), the parties hereto
agree as follows:
1. INTERPRETATION
1.1 DEFINITIONS. Where used in this Agreement and any Schedule annexed hereto or
in any amendments hereto, the following terms shall have the following meanings,
respectively:
"2002 Additional Shares" has the meaning set out in Section 2.2(b);
"2003 Additional Shares" has the meaning set out in Section 2.2(c);
"2002 Contingent Cash Payment" has the meaning set out in Section 2.2(b);
"2003 Contingent Cash Payment" has the meaning set out in Section 2.2(c);
"2002 Price" has the meaning set out in Section 2.2(b);
"2003 Price" has the meaning set out in Section 2.2(c);
"Additional Shares" means the 2002 Additional Shares, if any, and the 2003
Additional Shares, if any;
"Affiliate" means, at any time, and with respect to any Person, any other Person
that at such time directly or indirectly through one or more intermediaries
Controls, or is Controlled by, or is under common Control with, such first
Person. As used in this definition, "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. Unless the context otherwise clearly requires, any
reference to an "Affiliate" is a reference to an Affiliate of the Corporation;
"Ancillary Agreements" means, collectively, the Registration Rights Agreement
and the Transfer Agreement and any agreements or other documents delivered
pursuant to this Agreement or thereto;
"Board" means the Board of Directors of the Corporation;
"Business Day" means a day which is not a Saturday, a Sunday or a day observed
as a banking holiday in Toronto, Ontario or New York, New York;
"Capital Lease" means, at any time, a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP;
"Claim" has the meaning set out in Section 7.2;
"Closing" has the meaning set out in Section 3.1;
"Closing Date" has the meaning set out in Section 3.1;
"Common Shares" means the common shares in the capital of the Corporation as
currently constituted, any shares resulting from the change of the designation
of such common shares, and any shares into which such common shares may be
changed, converted, exchanged or reclassified;
"Contingent Cash Payments" means the 2002 Contingent Cash Payment, if any, and
the 2003 Contingent Cash Payment, if any;
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"Contingent Consideration" means (i) the 2002 Contingent Cash Payment or, at the
option of the Corporation as provided in Section 2.2(b), the 2002 Additional
Shares and (ii) the 2003 Contingent Cash Payment or, at the option of the
Corporation as provided in Section 2.2(c), the 2003 Additional Shares, as the
case may be;
"Corporation" has the meaning set out in the Preamble;
"Debenture Purchase Agreement" has the meaning set out in the Recitals;
"Debentures" has the meaning set out in the Recitals;
"DOJ" has the meaning set out in Section 5.3;
"Exchange Act" means the Securities Exchange Act of 1934, as amended;
"Exchanges" means The Toronto Stock Exchange and the NYSE;
"FTC" has the meaning set out in Section 5.3;
"GAAP", in respect of any Person, means generally accepted accounting principles
as in effect from time to time in the country of organization of such Person (it
being understood that for the Corporation, GAAP means Canadian GAAP);
"General Partner" means MIC Investors, Inc.;
"Governmental Authority" means any national, federal, state, provincial, county,
municipal, district or local government or government body, or any public
administrative or regulatory agency, political subdivision, commission, court,
arbitral body, board or body, or representative of any of the foregoing, foreign
or domestic, of, or established by any such government or government body which
has authority in respect of a particular matter or any quasi-governmental body
having the right to exercise any regulatory authority thereunder;
"Guarantee" means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person (other than
Guarantees between members of such Person's consolidated financial reporting
group) in any manner, whether directly or indirectly, including (without
limitation) obligations incurred through an agreement, contingent or otherwise,
by such Person:
(a) to purchase such Indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of
such Indebtedness or obligation, or (ii) to maintain any
working capital or other balance sheet condition or any income
statement condition of any other Person or otherwise to
advance or make available funds for the purchase or payment of
such Indebtedness or obligation;
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(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of any other Person
to make payment of the Indebtedness or obligation; or
(d) otherwise to assure the owner of such Indebtedness or
obligation against loss in respect thereof;
"HSR Act" has the meaning set out in Section 5.3;
"Indebtedness" means, in respect of any Person at any date, without duplication,
(a) all indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of property or services (other than
trade payables incurred in the ordinary course of such Person's business), (c)
all obligations of such Person evidenced by notes, bonds, debentures (including
the Debentures) or other similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property), (e) all Capital Leases of such
Person, (f) all obligations of such Person, contingent or otherwise, as an
account party under acceptance, letter of credit or similar facilities, (g) all
obligations of such Person, contingent or otherwise, to purchase, redeem, retire
or otherwise acquire for value any capital stock (other than common shares) of
such Person, (h) all Guarantees of such Person in respect of obligations of the
kind referred to in clauses (a) through (g) above to the extent quantified as
liabilities, contingent obligations or like term in accordance with GAAP on the
balance sheet (including notes thereto) of such Person, (i) all obligations of
the kind referred to in clauses (a) through (h) above secured by (or for which
the holder of such obligation has an existing right, contingent or otherwise, to
be secured by) any Lien on property (including, without limitation, accounts and
contract rights) owned by such Person, whether or not such Person has assumed or
become liable for the payment of such obligation, (but only to the extent of the
fair market value of such Property), (j) all Swaps of such Person and (k) the
liquidation value of any preferred capital stock of such Person or its
Subsidiaries held by any Person other than such Person and its Wholly-Owned
Subsidiaries;
"Indemnified Party" has the meaning set out in Section 7.2;
"Indemnifying Party" has the meaning set out in Section 7.2;
"Initial Shares" has the meaning set out in the Recitals;
"ITA" means the Income Tax Act (Canada);
"Lien" means, with respect to any Person, any voluntary or involuntary,
mortgage, lien, pledge, charge, security interest, right of first offer, right
of first refusal or other similar right or obligation under a shareholders or
similar agreement, or other encumbrance, or any interest or title of any vendor,
lessor, lender or other secured party to or of such Person under any conditional
sale or other title retention agreement or Capital Lease, upon or with respect
to any property or asset of such Person (including in the case of shares,
shareholder agreements, voting trust agreements and all similar arrangements);
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"Losses", in respect of any matter, means all claims, demands, proceedings,
losses, damages (other than punitive, special or consequential damages and
including incidental damages), liabilities, diminution in value, deficiencies,
costs and expenses (including, without limitation, all reasonable legal and
other professional fees and disbursements and all interest, penalties and
amounts paid in settlement) arising directly or indirectly as a consequence of
such matter;
"Material" means material in relation to the business, operations, results of
operations, financial or other condition, assets, properties or liabilities of
the Corporation and its Subsidiaries taken as a whole;
"Material Adverse Effect" means a material adverse effect on (a) the business,
operations, results of operations, financial or other condition, assets,
properties or liabilities of the Corporation and its Subsidiaries taken as a
whole, or (b) the ability of the Corporation to perform its obligations under
this Agreement and the Ancillary Agreements, or (c) the validity or
enforceability of this Agreement or the Ancillary Agreements;
"Material Contract" means all of the Corporation's material contracts (including
any contract evidencing Indebtedness) which a corporation registered under
Section 12 of the Exchange Act would be required to file in response to Item 10
of Rule 601 of Regulation S-K promulgated under the U.S. Securities Act;
"NYSE" means The New York Stock Exchange, Inc.;
"OBCA" means the Business Corporations Act (Ontario);
"Ontario Securities Act" means the Securities Act (Ontario), as the same may be
amended, re-enacted or replaced from time to time;
"OSC" means the Ontario Securities Commission;
"Partnership" has the meaning set out in the Preamble;
"Partnership Agreement" means that certain Partnership Agreement of the
Partnership dated as of December 12, 2000, as amended, supplemented, changed or
modified from time to time;
"Person" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization or Governmental
Authority;
"Preferred Shares" means the exchangeable preferred stock, no par value per
share, of Subco;
"Property" or "Properties" means, unless otherwise specifically limited, real or
personal property of any kind, tangible or intangible, xxxxxx or inchoate;
"Public Filings" has the meaning set out in Section 4.1(l);
"Registration Rights Agreement" means the registration rights agreement to be
entered into by the Corporation, the Partnership and certain limited partners of
the Partnership on the Closing
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Date, substantially in the form annexed hereto as EXHIBIT 1, as amended,
supplemented, changed or modified from time to time;
"Responsible Officers" means, with respect to any Person, any chief financial
officer, treasurer or controller of the Person and any other officer of the
Person reasonably expected to have knowledge of the matter as to which such
officer's knowledge is required;
"SEC" means the United States Securities and Exchange Commission;
"Significant Subsidiary" means (i) any Subsidiary that, as of the relevant date
of determination, had assets that had a fair market value representing 10% or
more of the total consolidated assets of the Corporation and its Subsidiaries or
revenues representing 10% or more of the total consolidated revenues of the
Corporation and its Subsidiaries and (ii) Subco (for the purposes of this
Agreement);
"SubCo" has the meaning set out in the Preamble;
"SubCo Preferred Shares" has the meaning set out in the Recitals;
"Subsidiary" means, as to any Person, any corporation, association or other
business entity in which such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership, limited liability
company or joint venture if more than a 50% interest in the profits or capital
thereof is owned by such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries (unless such partnership, limited
liability company or joint venture can and does ordinarily take major business
actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Corporation;
"Swaps" means, with respect to any Person, payment obligations with respect to
interest rate swaps, currency swaps and similar obligations obligating such
Person to make payments, whether periodically or upon the happening of a
contingency. For the purposes of this Agreement, the amount of the obligation
under any Swap shall be the amount determined in respect thereof as of the end
of the then most recently ended fiscal quarter of such Person, based on the
assumption that such Swap had terminated at the end of such fiscal quarter, and
in making such determination, if any agreement relating to such Swap provides
for the netting of amounts payable by and to such Person thereunder or if any
such agreement provides for the simultaneous payment of amounts by and to such
Person, then in each such case, the amount of such obligation shall be the net
amount so determined;
"Transfer Agreement" means the Transfer Agreement to be entered into by and
among the Corporation and the Partnership or its permitted assignees on the
Closing Date;
"TSE Notice" means the notice required to be filed by the Corporation with, and
accepted by, The Toronto Stock Exchange pursuant to Section 619 of the Company
Manual of The Toronto Stock Exchange;
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"U.S. Securities Act" means the Securities Act of 1933, as amended from time to
time; and
"Weighted Average Trading Price Per Share" means the weighted average of the
reported per share prices at which transactions in the Common Shares are
executed on the NYSE during the twenty consecutive NYSE trading days (defined as
9:30 a.m. through 4:00 p.m., Eastern Time) ending on the trading day immediately
prior to the date of determination (weighted based on the number of shares of
Common Shares traded), as such weighted average price appears on the Bloomberg
screen "Volume at Price" page for the Common Shares.
1.2 RULES OF CONSTRUCTION. Unless the context otherwise requires, in this
Agreement:
(a) "Agreement", "this Agreement", "the Agreement", "hereto",
"hereof", "herein", "hereby", "hereunder" and similar
expressions mean or refer to this Agreement as amended from
time to time, including the Schedules and Exhibits annexed
hereto or to any amendment to this Agreement, and any
agreement or instrument supplemental hereto and the
expressions "Article", "Section", "Schedule" and "Exhibit"
followed by a number or letter mean and refer to the specified
Article, Section, Schedule or Exhibit of this Agreement;
(b) the division of this Agreement into Articles and Sections and
the insertion of headings are for convenience of reference
only and shall not affect the construction or interpretation
thereof;
(c) words importing the singular number only shall include the
plural and vice versa and words importing the use of any
gender shall include all genders;
(d) reference to any agreement, indenture or other instrument in
writing means such agreement, indenture or other instrument in
writing as amended, modified, replaced or supplemented from
time to time;
(e) reference to any statute shall be deemed to be a reference to
such statute as amended, re-enacted or replaced from time to
time;
(f) if there is any conflict or inconsistency between the
provisions contained in the body of this Agreement and those
of any Schedule or Exhibit (other than the Ancillary
Agreements) hereto, the provisions contained in the body of
this Agreement shall prevail;
(g) time periods within which a payment is to be made or any other
action is to be taken hereunder shall be calculated excluding
the day on which the period commences and including the day on
which the period ends; and
(h) whenever any payment to be made or action to be taken
hereunder is required to be made or taken on a day other than
a Business Day, such payment shall be made or action taken on
the next following Business Day.
1.3 SEVERABILITY. If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid, illegal or unenforceable in any respect,
such determination shall not
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impair or affect the validity, legality or enforceability of the remaining
provisions hereof, and each provision is hereby declared to be separate,
severable and distinct. To the extent that any such provision is found to be
invalid, illegal or unenforceable, the parties hereto shall act in good faith to
substitute for such provision, to the extent possible, a new provision with
content and purpose as close as possible to the provision so determined to be
invalid, illegal or unenforceable.
1.4 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be construed,
interpreted and enforced in accordance with, and the respective rights and
obligations of the parties shall be governed by, the laws of the State of New
York, without regard to principles governing conflicts of law. Each of the
parties hereby submits to the exclusive jurisdiction of the courts of the State
of New York and all courts competent to hear appeals therefrom, and waives any
objection as to venue in the County of New York, State of New York with respect
to any suit, claim or other dispute arising out of or related to this Agreement
or the Ancillary Agreements.
1.5 WAIVER OF IMMUNITY. To the extent that any of the parties hereto has or
hereafter may be entitled to claim or may acquire, for itself or any of its
assets, any immunity from suit, jurisdiction of any court or from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, or otherwise) with respect to itself or its
property, it hereby irrevocably waives such immunity in respect of its
obligations hereunder or under the Ancillary Agreements to which it may be a
party to the fullest extent permitted by applicable law and, without limiting
the generality of the foregoing, agrees that the waivers set forth in this
Section 1.5 shall be effective to the fullest extent now or hereafter permitted
under the Foreign Sovereign Immunities Act of 1976 of the United States of
America and are intended to be irrevocable for purposes of such Act.
1.6 WAIVER OF JURY TRIAL. Each party hereto hereby waives, to the fullest extent
permitted by applicable laws, any right it may have to a trial by jury in
respect of any litigation directly or indirectly arising out of, under or in
connection with this Agreement or the Ancillary Agreements. Each party hereto
(a) certifies that no representative, agent or counsel of the other party has
represented expressly or otherwise that the other party would not, in the event
of litigation, seek to enforce the foregoing waiver, and (b) acknowledges that
it and the other party hereto have been induced to enter into this Agreement and
the Ancillary Agreements by, among other things, the mutual waivers and
certifications contained in this Section 1.6.
1.7 CURRENCY. All references to currency herein are to lawful money of the
United States of America.
1.8 TAX EFFECT. The parties hereto intend, for United States federal income tax
purposes, that the transactions contemplated hereby qualify as a reorganization
within the meaning of Section 368(a)(1)(E) of the United States Internal Revenue
Code of 1986, as amended, and shall file all United States federal income tax
returns consistently with such treatment.
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2. ISSUANCE AND EXCHANGE OF SUBCO PREFERRED SHARES; CONTINGENT
CONSIDERATION
2.1 INITIAL SHARES.
(a) Upon the terms and subject to the conditions of this
Agreement, at the Closing, the Corporation shall cause Subco
to issue to the Partnership the Subco Preferred Shares, free
and clear of any Liens, other than Liens created under this
Agreement or the Transfer Agreement and shall deliver to the
Partnership the Contingent Consideration in accordance with
the terms of Section 2.2.
(b) Upon the terms and subject to the conditions of this Agreement
and the Transfer Agreement, the Subco Preferred Shares shall
be transferred to the Corporation in exchange for the Initial
Shares, free and clear of any Liens, other than Liens created
under this Agreement or the Transfer Agreement.
2.2 CONTINGENT CONSIDERATION.
(a) Upon the terms and subject to the conditions of this Agreement
and the Transfer Agreement, the Corporation shall issue or pay
the Contingent Consideration to the Partnership in accordance
with the terms of this Section 2.2.
(b) If the Weighted Average Trading Price Per Share determined as
of December 31, 2002 (as adjusted pursuant to paragraph (e) of
this Section 2.2, the "2002 PRICE") is less than $8.00 per
share (as adjusted pursuant to paragraph (e) of this Section
2.2), then the Corporation shall pay to the Partnership, on
December 31, 2002, an amount in cash (the "2002 CONTINGENT
CASH PAYMENT") equal to the lesser of : (i) (A) $14,000,000
minus (B) the value of the Initial Shares on such date,
determined by multiplying the number of Initial Shares (as
adjusted pursuant to paragraph (e) of this Section 2.2) by the
2002 Price; and (ii) the value of 3,000,000 Common Shares (as
adjusted pursuant to paragraph (e) of this Section 2.2), on
such date, determined by multiplying 3,000,000 by the 2002
Price. At the option of the Corporation, the Corporation may
satisfy the 2002 Contingent Cash Payment obligation by issuing
to the Partnership, on December 31, 2002, instead of the 2002
Contingent Cash Payment, an additional number of Common
Shares, free and clear of any Liens other than Liens created
under this Agreement or the Transfer Agreement (the "2002
ADDITIONAL SHARES") equal to the number obtained by dividing
the 2002 Contingent Cash Payment by the 2002 Price.
(c) If the Weighted Average Trading Price Per Share determined as
of December 31, 2003 (as adjusted pursuant to paragraph (e) of
this Section 2.2, the "2003 PRICE") is less than $10.83 per
share (as adjusted pursuant to paragraph (e) of this Section
2.2), then the Corporation shall pay to the Partnership, on
December 31, 2003, an amount in cash (the "2003 CONTINGENT
CASH PAYMENT") equal to the lesser of : (i) $9,000,000 and (B)
the value of 6,000,000 Common Shares (as adjusted pursuant to
paragraph (e) of this Section 2.2), on such date, determined
by multiplying 6,000,000 by the 2003 Price; provided, however,
that if, prior to
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December 31, 2003, the Partnership sells any of the Initial
Shares or the 2002 Additional Shares issued pursuant to
paragraph (b) of this Section 2.2 to any Person (other than
any permitted assignee of the Partnership or an Affiliate of a
permitted assignee), then the foregoing amount shall be
reduced on a dollar-for-dollar basis by the amount, if any,
that the aggregate cash proceeds received from any such
sale(s) prior to December 31, 2003 of Initial Shares or 2002
Additional Shares exceeds the product of (i) the number of
such Initial Shares and 2002 Additional Shares that have been
sold prior to December 31, 2003 and (ii) the Weighted Average
Trading Price Per Share determined as of the Closing Date. At
the option of the Corporation, the Corporation may satisfy the
2003 Contingent Cash Payment obligation by issuing to the
Partnership, on December 31, 2003, instead of the 2003
Contingent Cash Payment, an additional number of Common
Shares, free and clear of any Liens other than Liens created
under this Agreement or the Transfer Agreement (the "2003
ADDITIONAL SHARES") equal to the number obtained by dividing
the 2003 Contingent Cash Payment by the 2003 Price. In order
to determine whether any Initial Shares or 2002 Additional
Shares have been sold as provided in the proviso of the first
sentence of this paragraph (c), all Common Shares received by
the Partnership (or any permitted assignee of the Partnership,
as the case may be) upon conversion of the Debentures shall be
deemed to have been sold first and shall not be considered in
the application of such proviso. In addition, the Initial
Shares and any 2002 Additional Shares that were issued
pursuant to paragraph (b) of Section 2.1 and paragraph (b) of
this Section 2.2 shall be kept in a segregated account
separate and apart from any shares issued upon conversion of
the Debentures or otherwise acquired by the Partnership (or
such permitted assignee or an Affiliate of such permitted
assignee). Prior to issuing any of the 2003 Additional Shares,
the Partnership shall provide a certificate to the Corporation
certifying the number and sale price of any Initial Shares and
any 2002 Additional Shares that were issued pursuant to
paragraph (b) of Section 2.1 and paragraph (b) of this Section
2.2 that were sold by the Partnership (or such permitted
assignee or an Affiliate of such permitted assignee) prior to
December 31, 2003 (other than to any permitted assignee of the
Partnership or an Affiliate of a permitted assignee), together
with a copy of the broker's account statement for such sales
if requested by the Corporation.
(d) Any Additional Shares issued in satisfaction of the Contingent
Cash Payments may be issued to the Partnership on exchange of
exchangeable preferred shares of a wholly-owned non-Canadian
subsidiary of the Corporation using the structure contemplated
in Sections 3.2(a), 3.2(b) and 3.3(a) hereof; provided, that,
at the time of such issuance, the Corporation makes
representations, warranties, covenants and indemnities to the
Partnership with respect to such exchangeable preferred shares
that are substantially the same as those made by the
Corporation to the Partnership with respect to the Subco
Preferred Shares.
(e) The number of Common Shares used to determine the 2002
Contingent Cash Payment and the 2003 Contingent Cash Payment
pursuant to paragraphs (b) and (c) above and the 2002 Price
and the 2003 Price shall be adjusted in the event of a merger,
consolidation, recapitalization, stock split, reclassification
or other similar
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event or distribution in which the Common Shares are
converted, exchanged or otherwise changed. The Corporation
shall forthwith give notice to the Partnership in the manner
provided in Section 11 specifying the event requiring such
adjustment or readjustment and the results thereof, including
the number of Common Shares used to determine the 2002
Contingent Cash Payment and the 2003 Contingent Cash Payment
pursuant to paragraphs (b) or (c) above and the resulting 2002
Price and 2003 Price. Furthermore, the Corporation shall give
notice to the Partnership, in the manner provided in Section
11, of its intention to take any action that may give rise to
any such adjustment or readjustment at the same time as any
public announcement thereof and in any event no later than the
time at which holders of Common Shares are notified of any
such action, and, in each case, such notice shall specify the
particulars of such event and the record date and the
effective date for such event; provided, that the Corporation
shall only be required to specify in such notice such
particulars of such event as shall have been fixed and
determined on the date on which such notice is given. Such
notice shall be given not less than 7 days in each case prior
to such applicable record date or effective date, whichever is
earlier.
(f) Upon the issuance of any 2002 Additional Shares and 2003
Additional Shares as contemplated by this Section 2.2, the
Corporation shall deliver to the Partnership a duly executed
stock certificate or certificates representing such shares
registered in the name of the Partnership as requested by the
Partnership as promptly on or after the relevant December 31
delivery date as the Corporation's transfer agent can prepare
such certificate or certificates for such delivery. In
addition, the Corporation shall issue the opinions of counsel
to the Corporation, dated the issuance dates of the 2002
Additional Shares and the 2003 Additional Shares, with respect
to the issuance of such Additional Shares, each substantially
in the form of the opinions deliverable to the Partnership
pursuant to Section 3.2(d)(ii).
3. CLOSING; DELIVERY
3.1 CLOSING. The closing of the transactions contemplated by Section 3 (the
"CLOSING") shall take place at 10:00 a.m. (New York City time) at the offices of
Squadron Ellenoff Plesent & Xxxxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx,
xx December 28, 2001 (such closing day or such other time being hereinafter
referred to as the "CLOSING DATE") or at such other time or place as may be
agreed by the parties hereto in writing.
3.2 ACTIONS BY THE CORPORATION AT CLOSING. At the Closing, the Corporation shall
undertake the following steps in the following order and the completion of the
action set out in Section 3.3(a) is a condition precedent to the issuance of the
Subco Preferred Shares and the covenant to pay the Contingent Consideration:
(a) immediately after the action set forth in Section 3.3(a) below
is taken, cause Subco to deliver to the Partnership a duly
executed stock certificate or certificates registering the
Subco Preferred Shares in the name of the Partnership;
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(b) against delivery of the Subco Preferred Shares as contemplated
in Section 3.3(c) below, deliver to the holder(s) of the Subco
Preferred Shares a duly executed stock certificate or
certificates registering the Initial Shares as directed by the
holder(s) of the Subco Preferred Shares;
(c) deliver to the Partnership the Ancillary Agreements duly
executed by the Corporation; and
(d) deliver or cause to be delivered to the Partnership the
following:
(i) copies of resolutions of the Board and the board of
directors of Subco authorizing the transactions
contemplated by this Agreement and the Ancillary
Agreements, each certified as being true and correct
and not having been modified or rescinded since their
adoption by the Secretary or Assistant Secretary of
each of the Corporation and Subco, together with
incumbency certificates duly executed by the Secretary
or Assistant Secretary of each of the Corporation and
Subco for those officers of the Corporation and Subco
executing this Agreement and any of the Ancillary
Agreements on their behalf;
(ii) opinions of counsel addressed to the Partnership, each
dated the Closing Date, covering the matters set forth
on EXHIBIT 2; and
(iii) such other documents and certificates duly executed as
the Partnership may reasonably request in order to
effect the transactions contemplated hereby.
3.3 ACTIONS BY THE PARTNERSHIP AT CLOSING. At the Closing, the Partnership
shall:
(a) exchange an aggregate of $18 million principal amount of
Debentures for the entire Class B limited partnership interest
of two Class B limited partners of the Partnership, subject to
the agreement of such Class B limited partners immediately to
convert such Debentures in accordance with the terms of the
Debentures;
(b) effect the conversion of the remaining Debentures into Common
Shares (either by converting or causing its remaining limited
partners to convert) in accordance with the terms of the
Debentures;
(c) upon receipt from Subco of the Subco Preferred Shares, deliver
or cause its permitted assigns to deliver the Subco Preferred
Shares to the Corporation in exchange for the Initial Shares
contemplated in Section 3.2(b) above;
(d) deliver to the Corporation the Ancillary Agreements fully
executed by the parties thereto other than the Corporation;
and;
(e) deliver or cause to be delivered to the Corporation the
following:
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(i) copies of resolutions of the board of directors of the
General Partner authorizing the transactions
contemplated by this Agreement and the transactions
being entered into by the Partnership as contemplated
in the Ancillary Agreements to which it is a party,
each certified as being true and correct and not having
been modified or rescinded since their adoption by the
Secretary or Assistant Secretary of the General
Partner, together with incumbency certificates duly
executed by the Secretary or Assistant Secretary of the
General Partner for those officers of the General
Partner executing this Agreement and any of the
Ancillary Agreements on its behalf;
(ii) the opinion of counsel addressed to the Corporation,
each dated the Closing Date, covering the matters set
forth on EXHIBIT 3; and
(iii) such other documents and certificates duly executed as
the Corporation may reasonably request in order to
effect the transactions contemplated hereby.
4. REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation
represents and warrants to the Partnership as follows (in each case except as
disclosed in the applicable referenced paragraphs of the Disclosure Schedule
Letter of even date herewith delivered by the Corporation to the Partnership in
connection with the transactions contemplated hereby (the "DISCLOSURE LETTER"))
and acknowledges that the Partnership is relying upon such representations and
warranties in connection with their entering into this Agreement:
(a) ORGANIZATION; POWER AND AUTHORITY. Each of the Corporation and
Subco is duly incorporated or organized and is validly
subsisting under the laws of its jurisdiction of incorporation
or organization; each of the Corporation and Subco has all
necessary corporate or other legal power and authority to own
or lease its property and to carry on its business as
presently carried on by it and the Corporation has all
necessary corporate power and authority to execute and deliver
this Agreement and the Ancillary Agreements and to comply with
its obligations hereunder and thereunder. Each of the
Corporation and Subco is duly qualified as a corporation or
other applicable legal entity to carry on business and is in
good standing in each jurisdiction in which the nature of the
business conducted by it or the property owned or leased by it
makes such qualification necessary except where any failure to
so qualify would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect.
(b) AUTHORIZED CAPITAL. The authorized capital of the Corporation
consists of an unlimited number of preference shares issuable
in series and an unlimited number of Common Shares, of which,
on December 28, 2001, no preference shares and 88,456,940
Common Shares are issued and outstanding and all of which are
validly issued, fully paid, non-assessable and free of
pre-emptive rights.
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(c) NO OPTIONS, ETC. As of December 28, 2001, there are no
outstanding agreements, warrants, options, rights or
privileges, pre-emptive or contractual, capable of becoming an
agreement, including convertible or exchangeable securities,
to subscribe for, purchase or otherwise acquire, or otherwise
obligating the Corporation or any of its Subsidiaries to
issue, any shares of the Corporation or any of its
Subsidiaries or securities convertible into or exchangeable
for shares of the Corporation or any of its Subsidiaries,
other than: (i) options to purchase an aggregate of 5,193,000
Common Shares held by employees of the Corporation and its
Subsidiaries, of which options to purchase 3,228,000 Common
Shares are vested and exercisable, and the remaining options
to acquire 1,965,000 Common Shares are not vested or
exercisable, and which become vested and exercisable in
accordance with the terms of the relevant plans; (ii) rights
under joint venture and similar agreements governing
Subsidiaries that are not Significant Subsidiaries; and (iii)
as contemplated by this Agreement. Neither the Corporation nor
any of its Subsidiaries is a party to any voting or sale
agreements with respect to the Corporation's or any
Subsidiary's share capital. Except as provided in this
Agreement and the Transfer Agreement and except as set forth
in the Public Filings, neither the Corporation nor any of its
Subsidiaries is under any obligation to redeem or purchase any
of the Corporation's or any Subsidiary's outstanding
securities. The Compensation Committee of the Board has
proposed option grants covering approximately 1,000,000 Common
Shares under the Corporation's 2001 Long Term Incentive Plan.
The proposed grants have been approved by the Board and will
become effective upon the determination of an officer of the
Corporation to whom the authority to make the grants has been
delegated.
(d) AUTHORIZATION, ETC.
(i) The directors of the Corporation have taken all
necessary corporate action to authorize the execution,
delivery and performance of this Agreement and the
Ancillary Agreements, including the due creation,
issuance and delivery of the Initial Shares and the
payment of the Contingent Cash Payments. No action of
the shareholders of the Corporation is required to
authorize the execution, delivery and performance of
this Agreement and the Ancillary Agreements, including
the due creation, issuance and delivery of the Initial
Shares and the payment of the Contingent Cash Payments.
Each of this Agreement and the Ancillary Agreements has
been duly executed and delivered on behalf of the
Corporation and constitute and will constitute legal,
valid and binding obligations of the Corporation
enforceable by the Partnership in accordance with their
respective terms, except as the enforcement thereof may
be limited by bankruptcy, insolvency or other laws of
general application affecting the enforcement of
creditors' rights and subject to the qualification that
specific performance and injunction, being equitable
remedies, may be granted only in the discretion of a
court of competent jurisdiction.
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(ii) The directors of Subco have taken all necessary
corporate action to authorize the issuance and delivery
of the Subco Preferred Shares, including the due
creation, issuance and delivery of the Subco Preferred
Shares. No action of the shareholders of Subco which
has not been taken is required to authorize the
issuance and delivery of the Subco Preferred Shares.
(e) TITLE TO SECURITIES.
(i) Upon the issuance thereof, the Initial Shares will be
validly issued, fully paid, non-assessable and free of
pre-emptive rights or any other Liens, other than any
Liens created by the Partnership, this Agreement or the
Ancillary Agreements.
(ii) Upon the issuance thereof, the Subco Preferred Shares
will be validly issued, fully paid, non-assessable and
free of pre-emptive rights or any other Liens, other
than any Liens created by the Partnership, this
Agreement or the Ancillary Agreements.
(f) COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC. None of: (i) the
authorization, execution, delivery or performance by the
Corporation of this Agreement and the Ancillary Agreements,
including, without limitation, the allotment and issuance of
the Initial Shares and the Subco Preferred Shares; or (ii) the
issuance or the acquisition of the Initial Shares and the
Subco Preferred Shares as provided herein, (A) will violate
the provision of any statute or other rule or regulation of
any Governmental Authority applicable to the Corporation or
any of its Subsidiaries, except the HSR Act, or (B) will
contravene, result in any breach of or is in conflict with and
does not and will not result in a breach of and does not and
will not create a state of facts which after notice or lapse
of time or both will result in a breach of any of the terms or
provisions of the articles or by-laws of the Corporation or
Subco, the resolutions of the directors or shareholders of the
Corporation or Subco or any Material Contract to which the
Corporation or any of its Subsidiaries is a party or by which
the Corporation or any of its Subsidiaries or the properties
or assets of the Corporation or any of its Subsidiaries are or
may become bound or results or would result in the creation or
imposition of any Lien upon any of the Material Properties or
assets of the Corporation or any of its Subsidiaries pursuant
to the terms of any such contract or result in any
acceleration or other change in rights of others or an
imposition of any penalty or other payments under any of the
foregoing. All legal, regulatory, administrative, corporate
and shareholder approvals, consents, authorizations, rulings,
orders and permits, including, without limitation, the TSE
Notice, which are necessary for completion of all of the
transactions contemplated hereby, including the issuance of
the Initial Shares by the Corporation and the Subco Preferred
Shares by Subco and any required approvals, have been obtained
and are in full force and effect. The issuance to and receipt
by the Partnership of the Subco Preferred Shares and the
Initial Shares do not (x) violate any applicable law or
regulation other than violations that do not have a material
adverse effect on the transactions
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contemplated hereby or by the Ancillary Agreements and (y)
subject the Corporation or Subco to any material Canadian tax,
penalty or liability under or pursuant to any applicable law
or regulation.
(g) NO ACTION, ORDERS, ETC. No order suspending the sale or
ceasing the trading of the Common Shares, or the issuance of
the Initial Shares, the Subco Preferred Shares or the payment
of the Contingent Cash Payments, has been issued by any court,
securities commission or regulatory authority in Canada or the
United States. There is no action or proceeding in Canada or
in the United States in front of any Governmental Authority
shall be (i) pending or, to the knowledge of the Responsible
Officers of the Corporation and Subco after reasonable
inquiry, threatened by any Governmental Authority to cease
trade, enjoin or prohibit or (ii) pending or, to the knowledge
of the Responsible Officers of the Corporation and Subco after
reasonable inquiry, threatened in writing by any other Person
where such action or proceeding would be reasonably likely to
cease trade, enjoin or prohibit, in either such case, the
issuance of the Initial Shares, the Subco Preferred Shares and
the payment of the Contingent Cash Payments contemplated
hereby, or the obligation of the Corporation to issue Common
Shares upon the valid conversion right of the Debentures.
(h) REPORTING ISSUER STATUS. The Corporation is a "reporting
issuer", as defined in the Ontario Securities Act, has been a
reporting issuer in Ontario and the other Provinces of Canada
that have a "reporting issuer" concept for at least six months
prior to the date hereof, and is not in material default of
any filings required to be made pursuant to the Ontario
Securities Act and the regulations made thereunder or pursuant
to other securities laws and regulations and rules made
thereunder or under the securities laws of the other Provinces
of Canada and applicable to the Corporation.
(i) SECURITIES LAWS. Subject to the filing by the Corporation of a
Form 45-501F1 or Form 45-501F2 pursuant to Rule 45-501 of the
OSC within 10 days following the Closing Date, compliance with
the requirements of the Exchanges and the Partnership and each
of its limited partners meeting applicable reporting
requirements and requirements as to its status (including
purchasing as principal, investment intent and status as an
accredited investor), the allotment and issuance of the
Initial Shares and the allotment and issuance of the Subco
Preferred Shares will not require registration under the U.S.
Securities Act and will be exempt from the registration and
prospectus requirements of the Ontario Securities Act and will
not result in any contravention of such securities laws of the
United States (other than blue sky laws) or Canada or the
securities laws of any other applicable jurisdiction (other
than blue sky laws), and regulations and rules made thereunder
and applicable to the Corporation. The Corporation is a
"qualifying issuer" within the meaning of Multilateral
Instrument 45-102.
(j) LITIGATION, ETC. There is not pending against the Corporation
or any of its Subsidiaries or, to the knowledge of the
Responsible Officers of the Corporation, threatened against
the Corporation or any of its Subsidiaries, any litigation,
action,
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suit or other proceeding by or before any court, tribunal,
Governmental Authority, securities commission or regulatory
body that, individually or in the aggregate, would reasonably
be expected to adversely affect the ability of the Corporation
or Subco to consummate the transactions contemplated in this
Agreement or the Ancillary Agreements.
(k) TAXES. There is no Canadian non-resident withholding tax under
Part XIII of the ITA and, provided: (i) none of the
Partnership, any of its partners and any person with whom the
Partnership or its partners does not deal at arm's length for
purposes of the ITA owns (or, at any time during the 60 month
period that ends on the Closing Date, owned), or has (or at
any time during the 60 month period that ends on the Closing
Date, had) an absolute or contingent right to acquire, any
shares of the Corporation other than as contemplated in this
Agreement or the Ancillary Agreements ,which ownership or
right, either by itself or together, or when combined with the
right of the Partnership and its partners to acquire shares of
the Corporation as contemplated by this Agreement and the
Ancillary Agreements, would result in the Debentures
constituting taxable Canadian property of the Partnership or
any of its partners for purposes of the ITA; (ii) each of DB
Capital Investors, L.P. and BTIP/Xxxxxxxx Xxxxxxx deals at
arm's length with each other, the Partnership and all the
other partners of the Partnership for purposes of the ITA;
(iii) for purposes of the ITA, the Debentures are not used or
held by the Partnership or any of its partners in carrying on
business in Canada and do not constitute designated insurance
property of any partner that is an insurer; and (iv) no
partner of the Partnership or of any partnership that is
directly or indirectly a member of the partnership, and no
beneficiary of a trust that is a member of any such
partnership, is a resident of Canada for purposes of the ITA,
there is no other Canadian tax or Canadian tax filing
requirement applicable in respect of the transactions
contemplated in this Agreement or the Ancilllary Agreements.
(l) FILED DOCUMENTS AND FINANCIAL STATEMENTS. Each of the
documents filed by the Corporation with the SEC under the U.S.
Securities Act and the Exchange Act and the OSC under the
Ontario Securities Act and other Canadian securities
regulatory authorities under Canadian securities legislation
since December 31, 2000 (the "PUBLIC FILINGS") complied as to
form in all material respects with all of the applicable
requirements of the Ontario Securities Act, the U.S.
Securities Act, the Exchange Act and other applicable Canadian
securities legislation, as applicable, and did not contain any
untrue statement of a material fact or omit to state any
material fact required to be contained therein or necessary in
order to make the statements contained therein, in the light
of the circumstances under which they were made, not
misleading, except to the extent superseded by subsequent
filings in effect as of the date of this Agreement and
included in the Public Filings.
(m) LISTING AND STOCK EXCHANGE APPROVALS. The Common Shares are
listed and posted for trading on the Exchanges. The
Corporation is in good standing with the Exchanges and in full
compliance with the rules and regulations thereof. To
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the extent required under the rules thereof, the Exchanges
have approved the issuance of the Subco Preferred Shares and
the Initial Shares in accordance with the terms of this
Agreement and the Transfer Agreement pursuant to all
applicable by-laws, rules, policies and regulations of the
Exchanges, and each of the Exchanges have accepted as at such
time the listing or posting for trading of that number of
Initial Shares which shall be issued under Section 2.1(b)
hereof, subject to the filing of required documents and
payment of the necessary listing fees by the Corporation.
(n) STATUS UNDER CERTAIN STATUTES. Neither the Corporation nor any
of its Subsidiaries is subject to regulation under the
Investment Company Act of 1940, as amended, the Public Utility
Holding Company Act of 1935, as amended, the Interstate
Commerce Act, as amended, or the Federal Power Act, as
amended.
(o) FOREIGN CORRUPT PRACTICES ACT. The Corporation and its
Subsidiaries and each of their respective officers, directors
and employees are not in violation of section 30A of the
Exchange Act or any similar non-U.S. statute or law.
(p) NO BROKERS OR FINDERS. Except for the financial advisor
retained by the Independent Committee of the Board, no agent,
broker, finder, or investment or commercial banker or other
Person or firm engaged by or acting on behalf of the
Corporation or any Subsidiary in connection with the
negotiation, execution or performance of this Agreement or the
transactions contemplated by this Agreement, is or will be
entitled to any brokerage or finder's or similar fee or other
commission as a result of this Agreement or such transactions.
(q) STATE TAKEOVER STATUS. No takeover statute or regulation
having consequences similar to Section 203 of the Delaware
General Corporation Law applies to this Agreement, the
Ancillary Agreements or the Initial Shares or any of the
transactions contemplated hereby and thereby. Neither the
Corporation nor any of its Subsidiaries has any rights plan,
preference shares or similar arrangement which have any of the
aforementioned consequences in respect of the transactions
contemplated hereby.
4.2 REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP. The Partnership
represents and warrants to the Corporation as follows and acknowledges that the
Corporation is relying upon such representations and warranties in connection
with its entering into this Agreement:
(a) ORGANIZATION; POWER AND AUTHORITY. The Partnership is a
limited partnership duly organized and is validly existing
under the laws of Delaware; the General Partner is the sole
general partner of the Partnership; the General Partner has
all necessary corporate power to execute and deliver this
Agreement and the Ancillary Agreements to which the
Partnership is a party on behalf of the Partnership and the
Partnership has all necessary partnership power to enter into
this Agreement and the Ancillary Agreements to which the
Partnership is a party and to comply with its obligations
hereunder and thereunder.
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(b) AUTHORIZATION, ETC. The General Partner has taken all
necessary corporate action to authorize the execution,
delivery and performance of this Agreement and the Ancillary
Agreements to which the Partnership is a party; this Agreement
and the Ancillary Agreements to which the Partnership is a
party has been duly executed and delivered by the General
Partner on behalf of the Partnership and constitutes the
legal, valid and binding obligations of the Partnership
enforceable by the Corporation in accordance with their
respective terms, except as enforcement thereof may be limited
by bankruptcy, insolvency or other laws of general application
affecting the enforcement of creditors' rights and subject to
the qualification that specific performance and injunction,
being equitable remedies, may be granted only in the
discretion of a court of competent jurisdiction.
(c) COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Neither: (i) the
authorization, execution, delivery or performance by the
Partnership of this Agreement and the Ancillary Agreements to
which it is a party; (ii) the conversion of the Debentures or
(iii) the acquisition of the Subco Preferred Shares as
provided herein, is in conflict with and does not and will not
result in any breach of and does not and will not create a
state of facts which after notice or lapse of time or both
will result in a breach of any of the terms or provisions of
the Partnership Agreement, the resolutions of the board of
directors of the General Partner, or results or would result
in the creation or imposition of any security interest,
mortgage, Lien, charge or encumbrance of any nature whatsoever
upon any of the Material Properties or assets of the
Partnership pursuant to the terms of any indenture,
instrument, agreement or undertaking.
(d) NO ORDERS. To the knowledge of the General Partner, after
reasonable inquiry, no order suspending the acquisition of the
the Subco Preferred Shares by the Partnership or the
conversion of the Debentures has been issued by any court,
securities commission or regulatory authority in Canada or the
United States, and no proceedings for such purpose are pending
or threatened.
(e) INVESTMENT REPRESENTATIONS. Except as contemplated herein
(including the distribution of the Subco Preferred Shares or
the Debentures to certain of the Partnership's limited
partners), the Partnership is acquiring the Subco Preferred
Shares for investment purposes only, and not with a view to,
or for, resale, distribution or any present intention of
distributing or selling the Initial Shares or the Subco
Preferred Shares or any part thereof. The Partnership and each
partner of the Partnership is an "accredited investor" as the
term is defined in Regulation D under the U.S. Securities Act
and OSC Rule 45-501. The Partnership and its partners are not
residents of Canada.
(f) ACKNOWLEDGEMENT RE: SECURITIES LAWS. The Partnership
understands, recognizes and acknowledges that the Subco
Preferred Shares have not been qualified for distribution or
registered under any applicable securities legislation,
including the Ontario Securities Act, the U.S. Securities Act
or any other applicable federal, provincial or state
securities laws by reason of exemptions from such requirements
being available, and that the Subco Preferred Shares and
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the Initial Shares may not be sold, pledged, assigned or
otherwise disposed of in the absence of compliance with such
law or unless an exemption from the application of such law is
applicable, and certificates issued in respect of the Subco
Preferred Shares and the Initial Shares will be legended to
reflect such restrictions.
4.3 SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES. All covenants,
representations and warranties of each party made herein and in any certificate
or other document delivered by it or on its behalf pursuant to the provisions
hereof or otherwise with respect to this Agreement and the transactions
contemplated hereby, shall survive the Closing and, notwithstanding such
closing, nor any investigation made by or on behalf of such party, shall
continue in full force and effect, subject as hereinafter provided, for a period
of eighteen months from the Closing Date for the benefit of the party to whom
the covenants, representations and warranties are made; provided, however, that
notwithstanding anything herein contained, the representations and warranties
contained in Sections 4.1(b), (c), (d) and (e) hereof shall survive the Closing
and shall continue in full force and effect for the benefit the Partnership
without any limitation period and the representation and warranty contained in
Section 4.1(k) hereof shall survive the Closing and shall continue in full force
and effect for the benefit of the Partnership until the 60th day after the
expiration of the relevant statute of limitations period.
5. COVENANTS OF THE PARTIES
5.1 AFFIRMATIVE COVENANTS OF THE CORPORATION. The Corporation covenants and
agrees with the Partnership that it will do or cause to be done, and, as
applicable, will cause Subco to do or cause to be done, the following:
(a) use its reasonable best efforts to comply with, satisfy and
fulfill promptly all prerequisites, conditions and
requirements imposed by or arising out of legal, regulatory
and administrative requirements applicable to the Corporation
with respect to the consummation of the transactions
contemplated hereby, including, without limiting the
generality of the foregoing, (i) filing or causing to be filed
all documents, certificates, opinions, forms or undertakings
required to be filed by the Corporation in connection with the
acquisition by the Partnership of the Initial Shares, the
issuance of the Initial Shares and the listing and posting for
trading of the Initial Shares on the Exchanges, and (ii)
subject to Section 5.3, obtaining all necessary legal,
regulatory and administrative approvals, consents,
authorizations, rulings, orders and permits;
(b) maintain its status as a "reporting issuer" in good standing
under the Ontario Securities Act and other applicable Canadian
securities legislation and as a "registrant" in good standing
under the Exchange Act;
(c) maintain the listing or posting for trading of the Common
Shares (including the Initial Shares) on the NYSE; and
(d) pay all stamp or duty or similar taxes, if any, associated
with the issuance and/or delivery of the Initial Shares and
the Subco Preferred Shares.
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5.2 AFFIRMATIVE COVENANTS OF THE PARTNERSHIP. Subject to Section 5.3, the
Partnership covenants and agrees with the Corporation that it will use its
reasonable best efforts to comply with, satisfy and fulfill promptly all
prerequisites, conditions and requirements imposed by or arising out of legal,
regulatory and administrative requirements applicable to the Partnership with
respect to the consummation of the transactions contemplated hereby, including,
without limiting the generality of the foregoing, (i) filing or causing to be
filed all documents, certificates, opinions, forms or undertakings required to
be filed by the Partnership in connection with the acquisition by the
Partnership of the Initial Shares and the Subco Preferred Shares and the
issuance of the Initial Shares and the Subco Preferred Shares, and (ii)
obtaining all necessary legal, regulatory and administrative approvals,
consents, authorizations, rulings, orders and permits.
5.3 HSR ACT. The Corporation has filed or will file concurrently with the
execution of this Agreement (a) all Notification and Report Forms and related
material required to be filed by it with the Federal Trade Commission ("FTC")
and the Antitrust Division of the United States Department of Justice ("DOJ")
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and
the rules and regulations promulgated thereunder (the "HSR ACT") with respect to
the transactions contemplated hereby and by the Ancillary Agreements and (b) the
necessary filings and notifications with any other jurisdictions with respect to
the transactions contemplated hereby and the Ancillary Agreements to the extent
required to effect the conversion of the Debentures and, in each case, shall
promptly make any further filings pursuant thereto that may be required by law.
The Corporation shall use its commercially reasonable efforts to furnish to the
Partnership such information, cooperation and assistance as the Partnership
reasonably may request in connection with the submissions to, or agency
proceedings by, any Governmental Authority under the HSR Act, or any comparable
laws of foreign jurisdictions, and each of the parties hereto shall keep the
other promptly apprised of any communications with, and inquiries or requests
for information from, such Governmental Authorities.
6. [INTENTIONALLY DELETED]
7. INDEMNIFICATION
7.1 INDEMNIFICATION BY THE CORPORATION. From and after the Closing, the
Corporation agrees to indemnify and save harmless the Partnership and its
Affiliates and the directors, officers, general partners, employees,
shareholders, representatives and agents of the Partnership and its Affiliates
(collectively, the "INDEMNITEES") from all Losses suffered or incurred by any of
them as a result of or arising directly or indirectly out of or in connection
with: (a) any breach by the Corporation of or any inaccuracy of any
representation or warranty of the Corporation contained in this Agreement, the
Ancillary Agreements or in any agreement, certificate or other document
delivered pursuant hereto and (b) any breach or non-performance by the
Corporation of any covenant to be performed by any of them which is contained in
this Agreement, the Ancillary Agreements or in any agreement, certificate or
other document delivered pursuant hereto. Notwithstanding anything contained
herein to the contrary, the indemnification provided above (except with respect
to any breach of Sections 4.1(b), (c), (d), (e) and (k) hereof) shall (i) only
apply to the extent that, and not until, the aggregate of all amounts subject to
indemnification under clause (a) of this Section 7.1 exceeds $1,000,000 (in
which event, the
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Indemnitees shall be entitled to indemnification as provided herein for all such
Losses and not just the excess over $1,000,000) and (ii) not exceed $23,000,000
in the aggregate. The indemnification with respect to any breach of Section
4.1(k) hereof shall be increased by an amount such that the Indemnitees will
receive cash, after taking into account any Canadian non-resident withholding
tax imposed under Part XIII of the ITA, equal to the amount owing pursuant to
this Section 7.1 (without regard to this sentence) as a result of the breach of
Section 4.1(k).
7.2 NOTICE OF CLAIM; INVESTIGATIONS; DETERMINATION. Subject to Section 7.3, in
the event that a party (the "INDEMNIFIED PARTY") shall become aware of any
claim, proceeding or other matter (a "CLAIM") in respect of which another party
(the "INDEMNIFYING PARTY") agreed to indemnify the Indemnified Party pursuant to
this Agreement and, if a claim for breach of representation and warranty of the
Indemnifying Party, in respect of which the applicable survival period shall not
have lapsed, the Indemnified Party shall promptly give written notice thereof to
the Indemnifying Party. Such notice shall specify the factual basis for the
Claim and the amount of the Claim, if known. Following receipt of notice from
the Indemnified Party of the Claim, the Indemnifying Party shall have 60 days to
make such investigation of the Claim as is considered necessary or desirable.
For the purpose of such investigation, the Indemnified Party shall make
available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the Claim, together with all such other
information as the Indemnifying Party may reasonably request. If both parties
agree at or prior to the expiration of such 60-day period (or any mutually
agreed upon extension thereof) to the validity and amount of such Claim, the
Indemnifying Party shall immediately pay to the Indemnified Party the full
agreed upon amount of the Claim.
7.3 CERTAIN CLAIMS. If any Claim arises directly or indirectly out of or in
connection with the Corporation's execution, delivery and performance of this
Agreement or the Ancillary Agreements and is asserted against any Indemnitee,
such Indemnitee shall promptly give the Corporation notice thereof in accordance
with Section 7.2. The Corporation shall have the right to control negotiations
toward resolution of such Claim without the necessity of litigation, and, if
litigation ensues, to defend the same with counsel chosen by the Corporation and
reasonably acceptable to the such Indemnitee, at the Corporation's expense with
respect to the conduct of such defense, and such Indemnitee shall in such case
extend reasonable cooperation in connection with such negotiation and defense
and the Corporation shall keep such Indemnitee reasonably informed as to such
case. If the Corporation fails to assume control of the negotiations prior to
litigation or to defend such action within a reasonable time, such Indemnitee
shall be entitled, but not obligated, to assume control of such negotiations or
defense of such action, and the Corporation shall be liable to such Indemnitee
for its expenses reasonably incurred in connection therewith which the
Corporation shall promptly pay. Neither party shall settle, compromise, or make
any other disposition of any Claims, which would or might result in any
liability to the Indemnitee or the Corporation, respectively, under this Section
7 without the written consent of the Indemnitee or the Corporation,
respectively, which consent shall not be unreasonably withheld.
7.4 THIRD PARTY CLAIMS. If any Claim covered by the foregoing indemnities is
asserted against any Indemnified Party, it shall be a condition to the
obligations under this Section 7 that the Indemnified Party shall promptly give
the Indemnifying Party notice thereof in accordance
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with Section 7.2. The Indemnifying Party shall be entitled to control
negotiations toward resolution of such claim without the necessity of
litigation, and, if litigation ensues, to defend the same with counsel
reasonably acceptable to the Indemnified Party, at the Indemnifying Party's
expense, and the Indemnified Party shall in such case extend reasonable
cooperation in connection with such negotiation and defense. If the Indemnifying
Party fails to assume control of the negotiations prior to litigation or to
defend such action within a reasonable time, the Indemnified Party shall be
entitled, but not obligated, to assume control of such negotiations or defense
of such action, and the Indemnifying Party shall be liable to the Indemnified
Party for its expenses reasonably incurred in connection therewith which the
Indemnifying Party shall promptly pay. Neither the Indemnifying Party nor the
Indemnified Party shall settle, compromise, or make any other disposition of any
Claims, which would or might result in any liability to the Indemnified Party or
the Indemnifying Party, respectively, under this Section 7 without the written
consent of the Indemnified Party or the Indemnifying Party, respectively, which
consent shall not be unreasonably withheld.
7.5 EXCLUSIVITY. The provisions of this Section 7 shall be the exclusive remedy
with respect to any Claim for breach by the Corporation of any of its covenants,
representations, warranties or agreements under this Agreement or the Ancillary
Agreements, or any agreement, certificate or other document delivered pursuant
thereto (other than a Claim for specific performance or injunctive relief) and
all such Claims against the Corporation shall be subject to the limitations and
other provisions contained in this Section 7, other than claims against the
Corporation for fraud or fraudulent misrepresentation.
8. [INTENTIONALLY DELETED]
9. EXPENSES, ETC.
9.1 The Corporation shall pay the reasonable costs and expenses (including legal
fees, disbursements and related charges) incurred by the Partnership in
connection with the transactions contemplated by this Agreement and the
Ancillary Agreements. Such expenses shall be paid in cash at the Closing by way
of wire transfer of immediately available funds in accordance with the
Partnership's instructions.
10. CONFIDENTIALITY
10.1 Neither the Partnership nor the Corporation shall make any public
disclosure, except to the extent required by law or the rules and procedures of
the Exchanges, of the terms of this Agreement or regarding the transaction
contemplated hereby without the prior consent of the other, such consent not to
be unreasonably withheld. The wording of any public disclosure to be made in
respect of the transactions contemplated by this Agreement must be approved by
each of the Corporation and the Partnership. This Section 10 shall survive any
termination of this Agreement.
11. GENERAL PROVISIONS
11.1 NOTICES. Any notice, direction or other instrument required or permitted to
be given or made hereunder shall be in writing and shall be sufficiently given
or made if delivered in person
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to the address set forth below or if facsimiled
or sent by other means of recorded electronic communication and confirmed by
delivery as soon as practicable thereafter.
Notices to the Corporation shall be addressed as follows:
Xxxxx Corporation Limited
c/x Xxxxx Executive Xxxxxx
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Chief Financial Officer
Fax: 000-000-0000
with copies to:
Xxxxx Corporation Limited
c/x Xxxxx Executive Xxxxxx
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
Fax: 000-000-0000
Notices to the Partnership shall be addressed as follows:
Chancery Lane/GSC Investors, L.P.
c/o MIC Investors, Inc.
c/o Xxxx Xxxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
with copies to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Fax: 000-000-0000
and to:
Squadron Ellenoff Plesent & Xxxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
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Attention: Xxxxxxxx X. Xxxx
Fax: 000-000-0000
Any notice, direction or other communication so given or made shall be deemed to
have been given or made and to have been received on the day of delivery, if
delivered, or on the day of sending if sent by facsimile or other means of
recorded electronic communication (provided such day of delivery or sending is a
Business Day and, if not, then on the first Business Day thereafter). Any party
hereto may change its address for notice to the other parties by notice given in
the manner aforesaid.
11.2 ASSIGNMENT. No party hereto may assign this Agreement or its rights or
obligations hereunder without the prior written consent of the other parties,
except that the Partnership may assign its rights and obligations hereunder to
any limited partner of the Partnership; provided, that (i) any such assignee
agrees to be bound by the terms and conditions of this Agreement relating to the
assigned portion of the Agreement and (ii) Xxxxx is released from its
obligations to the Partnership under Sections 2.1(b), 2.2 and 3.2(b) if and to
the extent that the Partnership assigns such obligations pursuant to this
Section 11.2.
11.3 ENUREMENT. This Agreement shall enure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns.
11.4 FURTHER ASSURANCES. Each of the parties agrees to take all such reasonable
actions as may be requested by any other party hereto to implement and give full
effect to the provisions of this Agreement.
11.5 TIME OF THE ESSENCE. Time shall be of the essence of this Agreement.
11.6 ENTIRE AGREEMENT. This Agreement and the Ancillary Agreements constitute
the entire agreement between the parties hereto pertaining to the effectuation
of the conversion of the Debentures by the Partnership as described herein and
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties and there are no other agreements
between the parties in connection with such subject matter. No supplement,
modification or termination of this Agreement and the Ancillary Agreements shall
be binding unless executed in writing by both of the parties hereto.
11.7 COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which when taken together shall constitute this Agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above stated.
XXXXX CORPORATION LIMITED
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer
CHANCERY LANE/GSC INVESTORS, L.P.
By: MIC Investors, Inc., its General Partner
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President
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EXHIBIT 1
---------
FORM OF REGISTRATION RIGHTS AGREEMENT
-------------------------------------
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EXHIBIT 2
---------
OPINIONS TO BE DELIVERED BY THE CORPORATION
-------------------------------------------
(a) Favorable written opinions from nationally-recognized counsel
(in the appropriate jurisdiction) (reasonably satisfactory to
the Partnership) to the Corporation (who may rely on
certificates from the Corporation with respect to factual
matters), dated the Closing Date and satisfactory in scope and
substance to the Partnership and its counsel, acting
reasonably, with respect to the following substantive matters:
(i) the Corporation is a corporation incorporated under the
laws of the Province of Ontario and has all necessary
corporate power and authority to own its property and
to execute and deliver this Agreement and the Ancillary
Agreements and to perform all its respective
obligations hereunder and thereunder;
(ii) all necessary corporate action has been taken by the
Corporation to authorize the issuance of the Initial
Shares and the execution and delivery of this Agreement
and the Ancillary Agreements and, upon issuance the
Initial Shares will have been validly issued, as fully
paid and non-assessable Common Shares;
(iii) no action of the shareholders of the Corporation is
required to authorize the issuance of the Initial
Shares and the execution and delivery of this Agreement
and the Ancillary Agreements;
(iv) each of this Agreement and the Ancillary Agreements has
been duly executed and delivered by the Corporation;
and
(v) the authorization, execution, delivery and performance
by the Corporation of this Agreement and the Ancillary
Agreements and the issuance of the Initial Shares do
not conflict with, and do not result in a breach of,
the articles or by-laws of the Corporation.
(b) Favorable written opinion from in-house counsel or any
reputable outside counsel to the Corporation (at the
Corporation's election), dated the Closing Date and
satisfactory in scope and substance to the Partnership and its
counsel, acting reasonably, with respect to the following
substantive matters:
(i) the Corporation is duly qualified to carry on business
in all jurisdictions in which it currently carries on
business, and has all necessary corporate power and
authority to carry on its business as aforesaid; and
(ii) none of: (A) the authorization, execution, delivery or
performance by the Corporation of this Agreement or the
Ancillary Agreements,
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including, without limitation, or (B) the allotment and
issuance of the Initial Shares as provided herein, will
contravene, result in any breach of or is in conflict
with and does not and will not result in a breach of
and does not and will not create a state of facts which
after notice or lapse of time or both will result in a
breach of any of the terms or provisions of the
articles or by-laws of the Corporation, the resolutions
of the directors or shareholders of the Corporation or
any Material Contract to which the Corporation is a
party or by which the Corporation or the Properties or
assets of the Corporation are bound or results in the
creation or imposition of any Lien upon any of the
Material Properties or assets of the Corporation
pursuant to the terms of any Material Contract.
(c) Favorable written opinions from nationally-recognized counsel
(in the appropriate jurisdiction) (reasonably satisfactory to
the Partnership) to Subco (who may rely on certificates from
Subco with respect to factual matters), dated the Closing Date
and satisfactory in scope and substance to the Partnership and
its counsel, acting reasonably, with respect to the following
substantive matters:
(i) Subco is a corporation incorporated under the laws of
the State of Delaware and has all necessary corporate
power and authority to own its property and to execute
and deliver this Agreement and to perform all its
obligations hereunder;
(ii) all necessary corporate action has been taken by Subco
to authorize the issuance of the Subco Preferred Shares
and the execution and delivery of this Agreement and,
upon issuance the Subco Preferred Shares will have been
validly issued, as fully paid and non-assessable
shares;
(iii) all necessary action of the shareholders of Subco has
been taken to authorize the creation of the Subco
Preferred Shares and the execution and delivery of this
Agreement;
(iv) the authorization, execution, delivery and performance
by Subco of this Agreement and the issuance of the
Subco Preferred Shares do not conflict with, and do not
result in a breach of, the articles or by-laws of
Subco;
(v) the issuance of the Subco Preferred Shares to the
Partnership pursuant to this Agreement are exempt from
the registration and prospectus requirements of the
Ontario Securities Act; and
(vi) the issuance of the Subco Preferred Shares to the
Partnership pursuant to this Agreement are not in
violation of United States federal securities laws.
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(d) A favorable written opinion from in-house counsel or any
reputable outside counsel to Subco (at Subco's election),
dated the Closing Date and satisfactory in scope and substance
to the Partnership and its counsel, acting reasonably, with
respect to the following substantive matters:
(i) Subco is duly qualified to carry on business in all
jurisdictions in which it currently carries on
business, and has all necessary corporate power and
authority to carry on its business as aforesaid; and
(ii) none of: (A) the authorization, execution, delivery or
performance by Subco of this Agreement, including,
without limitation, the allotment and issuance of the
Subco Preferred Shares; or (B) the issuance of the
Subco Preferred Shares as provided herein, (x) will
violate the provision of any statute or other rule or
regulation of any Governmental Authority applicable to
Subco or (y) will contravene, result in any breach of
or is in conflict with and does not and will not result
in a breach of and does not and will not create a state
of facts which after notice or lapse of time or both
will result in a breach of any of the terms or
provisions of the articles or by-laws of Subco.
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EXHIBIT 3
---------
OPINION TO BE DELIVERED BY THE PARTNERSHIP
------------------------------------------
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