EXECUTION VERSION
TENDER AND SHAREHOLDER
SUPPORT
AND ACQUISITION AGREEMENT
THIS AGREEMENT is made this 18th day of January, 2004 (the “Agreement”).
BY AND AMONG:
Press Holdings International
Limited (the “Acquiror”), a
corporation organized under the laws of Jersey;
- and -
The Ravelston Corporation Limited (the “Shareholder”), a
corporation incorporated under the laws of the Province of Ontario; and
- and -
The Lord Black of Crossharbour, PC(Can), OC, KCSG (“KS”), a citizen of the United Kingdom of
Great Britain and Northern Ireland.
WHEREAS:
A. The
Acquiror intends to commence, through a direct or indirect wholly-owned
Subsidiary (the “Offeror”) to be
incorporated under the Canada Business Corporations Act (“CBCA”), the Offer (as defined in section
2), on and subject to the terms set forth herein (including on Schedule B
attached hereto), and in compliance with applicable Laws, for all of the issued
and outstanding Retractable Common Shares, including any such shares that may
become issued and outstanding on and following the date hereof but prior to the
completion of the Offer (the “Shares”),
all of the issued and outstanding Exchangeable Non-Voting Preference Shares
Series II, including any such shares that may become issued and outstanding on
and following the date hereof but prior to the completion of the Offer (the “Series II Preference Shares”), and all of
the issued and outstanding Retractable Non-Voting Preference Shares Series III,
including any such shares that may become issued and outstanding on and
following the date hereof but prior to the completion of the Offer (the “Series III
Preference Shares”) in the capital of Hollinger Inc. (the “Corporation”), a corporation incorporated
under the CBCA.
B. The
Shareholder is the record and beneficial owner and has exclusive control or
direction over and the exclusive right to dispose of 5,766,783 Shares as of the date of this Agreement, which is
approximately 16.5%
of the issued and outstanding Shares as of the date of this Agreement, and 66,963 Series II
Preference Shares as of the date of this Agreement, which is approximately 1.7% of the issued and outstanding Series II
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Preference
Shares as of the date of this Agreement; 509645 N.B. Inc. (“NBI-5”), a corporation incorporated under
the laws of the Province of New Brunswick and an indirect controlled Subsidiary
of the Shareholder, is the record and beneficial owner and has exclusive
control or direction over and the exclusive right to dispose of 9,250,461
Shares as of the date of this Agreement, which is approximately 26.4% of the issued and outstanding Shares as of the date of this
Agreement; 509646 N.B. Inc. (“NBI-6”),
a corporation incorporated under the laws of the Province of New Brunswick and
an indirect controlled Subsidiary of the Shareholder, is the record and
beneficial owner and has exclusive control or direction over and the exclusive
right to dispose of 11,862,342 Shares as of the date of this Agreement, which
is approximately 33.9%
of the issued and outstanding Shares as of the date of this Agreement; and 509647 N.B. Inc. (“NBI-7”),
a corporation incorporated under the laws of the Province of New Brunswick and
an indirect controlled Subsidiary of the Shareholder, is the record and
beneficial owner and has exclusive control or direction over and the exclusive
right to dispose of 483,584 Shares as of the date of this Agreement, which is
approximately 1.3% of
the issued and outstanding Shares as of the date of this Agreement (collectively,
the “Subject Shares” and, together
with any other Shares, Series II Preference Shares or Series III Preference
Shares in respect of which the Shareholder acquires record or beneficial
ownership or control or direction or the power to dispose prior to the
completion of the Offer or the termination of this Agreement, whichever is
earlier, including any Shares, Series II Preference Shares or Series III
Preference Shares acquired by any means, including purchase, dividend or
distribution, or issued upon the exercise of any warrants or options, and the
conversion of any convertible securities or otherwise, the “Shareholder’s Shares”).
C. The
Shareholder is the record and beneficial owner and has exclusive control or
direction over and the exclusive right to dispose of all of the (a) common
shares of Argus Corporation Limited (“Argus”),
a corporation continued under the CBCA, that are issued and outstanding (the “Argus Common Shares”) as of the date of
this Agreement, and (b) Class C Participating Non-Voting Preference Shares in
the capital of Argus (the “Argus Class C
Shares”) that are issued and outstanding as of the date of this
Agreement.
D. KS
is the record and beneficial owner and has exclusive control or direction over
and the exclusive right to dispose of, subject to the Promissory Note and
Pledge Agreement, dated July 1, 1998, issued in favor of the Corporation by KS
and the Promissory Note and Pledge Agreement, dated November 6, 1997, issued in
favor of the Corporation by KS in respect of 735,280 Series II Preference
Shares, 1,611,039 Series II Preference Shares as of the date of this Agreement, which
is approximately 42.6%
of the issued and outstanding Series II Preference Shares as of the date of
this Agreement (collectively, the “KS
Subject Shares” and, together with
any other Shares, Series II Preference Shares or Series III Preference Shares
in respect of which KS acquires record or beneficial ownership or control or
direction or the power to dispose prior to the completion of the Offer or the termination
of this Agreement, whichever is earlier, including any Shares, Series II
Preference Shares or Series III Preference Shares acquired by any means,
including purchase, dividend or distribution, or issued upon the exercise of
any warrants
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or
options, and the conversion of any convertible securities or otherwise, the “KS Shares”).
E. The
only shareholders of Conrad Black Capital Corporation (“CBCC”), a corporation
incorporated under the laws of Ontario, are three corporations, the interests in which are owned solely by
KS or Mrs. KS, and one trust that owns only non-voting shares of CBCC, and CBCC
is the sole record and beneficial owner and has exclusive control or direction
over and the exclusive right to dispose of 35,846 of the issued and outstanding
Common Shares of the Shareholder as of the date of this Agreement, which is
approximately 65% of
the issued and outstanding Common Shares of the Shareholder as of the date of
this Agreement.
F. As
a condition to the willingness of, and as an inducement for, the Acquiror and
the Offeror to commence and complete the Offer, the Shareholder and KS have
agreed to enter into and deliver, and perform under, this Agreement.
NOW THEREFORE in consideration of the mutual covenants and agreements set forth
in this Agreement and for other good and valuable consideration, the receipt
and sufficiency of which are acknowledged by each of the parties, the parties
covenant and agree that:
1. Representations and Warranties
A. Representations and Warranties of the Shareholder and KS. The Shareholder and KS
jointly and severally represent and warrant to the Acquiror that, as of the
date of this Agreement and each date the Offeror takes up the Shareholder’s
Shares or the KS Shares under the Offer, except to the extent any such
representation and warranty expressly speaks as of a different date, in which
case, the representation and warranty shall be deemed made as of such date:
(a) the Shareholder is a corporation duly organized, validly existing
and in good standing under the Laws of its jurisdiction of incorporation;
(b) the Shareholder has the requisite corporate power and authority to
enter into this Agreement and to perform its obligations and consummate the
transactions contemplated hereby;
(c) KS has the personal capacity and power to enter into this Agreement
and to perform his obligations and consummate the transactions contemplated
hereby;
(d) the execution and delivery of this Agreement by the Shareholder, and
the performance by the Shareholder of its obligations and the consummation of
the transactions contemplated hereby, have been duly authorized and approved by
all necessary corporate action of the board of directors of the Shareholder,
and will prior to the tendering of the Shareholder’s Shares under the Offer
have been duly authorized by all necessary corporate action of the shareholders
of the Shareholder, and no additional corporate or other proceedings on the
part of the
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Shareholder or
any of its shareholders are necessary to authorize and approve this Agreement,
the performance by the Shareholder of its obligations and the consummation of
the transactions contemplated hereby;
(e) the board of directors of Argus has duly authorized and approved by
all necessary corporate action of the board of directors of Argus (i) the
tender of the Shareholder’s Shares held directly by NBI-5, NBI-6 and NBI-7 to
the Offeror in accordance with the terms hereof and (ii) the redemption of
all of the outstanding Class A Preference Shares $2.50 Series (“$2.50 Series Shares”), Class A
Preference Shares $2.60 Series (“$2.60 Series
Shares”), and Class B Preference Shares 1962 Series (“1962 Series Shares”) of Argus (collectively
the “Argus Preference Shares”) in
accordance with their respective terms on or prior to the date upon which the
Shareholder’s Shares are taken up under the Offer (such redemption being
conditional upon the taking up and payment for such shares);
(f) the holder of the Argus Class C Shares and the Argus Common
Shares has duly approved the tender of the Shareholder’s Shares held directly
by NBI-5, NBI-6 and NBI-7 to the Offeror in accordance with the terms hereof;
(g) Argus is entitled, assuming its receipt of the proceeds payable to
NBI-5, NBI-6 and NBI-7 pursuant to the Offer in respect of the Shareholder’s
Shares held directly by them, as of the date hereof to redeem all of the Argus
Preference Shares in accordance with Section 36 of the CBCA;
(h) this Agreement has been duly executed and delivered by each of the
Shareholder and KS, and assuming due authorization, execution and delivery by
the Acquiror, constitutes a valid and binding obligation of each of the
Shareholder and KS, enforceable against each of them in accordance with its
terms;
(i) the authorized share capital
of the Corporation consists solely of (i) an unlimited number of Shares, an
unlimited number of Series II Preference Shares, an unlimited number of Series
III Preference Shares (collectively, the “Corporation
Shares”), and (ii) an unlimited number of preference shares of other
series of which no shares are issued and outstanding as of the date of this
Agreement. As of the date of this
Agreement, 34,972,479 Shares, 3,775,990 Series II Preference Shares and 9,271,175 Series III Preference Shares are issued and outstanding as duly
authorized, validly issued, fully paid and non-assessable shares, and such
shares are the only shares of the Corporation that are issued and
outstanding. All of the outstanding
Corporation Shares have been issued in compliance with all applicable Laws and
not in violation of the organizational and governance documents of the
Corporation. Except as disclosed on
Schedule 1.A(i) of the Disclosure Letter and as contained in the Corporation’s
organizational documents, there are no options, warrants, conversion
privileges, puts, calls or other rights, agreements, arrangements, commitments
or obligations of the Corporation to issue, sell, transfer, redeem or acquire any
shares, securities or obligations (pre-emptive, contingent or otherwise) of any
kind convertible or exercisable into or
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exchangeable
or redeemable for any shares of the Corporation. Except as disclosed
on Schedule 1.A(i) of the Disclosure Letter, neither the Shareholder nor KS is
a party to, nor does the Shareholder or KS have Knowledge of, (i) any
shareholders’ agreements or unanimous shareholders’ agreements governing the
affairs of the Corporation or the relationship, rights and duties of its
shareholders or (ii) any voting trusts, pooling arrangements or other
similar agreements with respect to the ownership or voting of any shares of the
Corporation;
(j) the authorized share capital
of the Shareholder consists solely of an unlimited number of Common Shares (the
“RCL
Common Shares”), 900,000 Senior Preference Shares, 1,250,000 First
Preference Shares, 2,488 Second Preference Shares, 214,000 Third Preference
Shares, 200,000 Fourth Preference Shares (the “RCL Fourth Preference Shares”),
15,000 Fifth Preference Shares, an unlimited number of Class A Preference
Shares (of which 50,000,000 Class A Preference Shares, Series A have been
authorized for issuance), and an unlimited number of Junior Special Shares
issuable in series One to Nine (inclusive) (of which 112,800 Junior Special
Shares Series 8 have been authorized for issuance) (the “RCL Special Shares”)
(collectively, the “RCL Shares”). As of the date of this Agreement, 55,083 RCL Common Shares, 19,500
RCL Fourth Preference Shares and 20,000 RCL Special Shares are issued and
outstanding as duly authorized, validly issued, fully paid and non-assessable
shares and such shares are the only shares of the Shareholder that are issued
and outstanding. All of the outstanding
RCL Shares have been issued in compliance with all applicable Laws and not in
violation of the organizational and governance documents of the
Shareholder. CBCC is the sole record
and beneficial owner, free and clear of all Encumbrances, and has exclusive
control or direction over and the exclusive right to dispose of (and to
exercise voting and statutory rights in respect of), 35,846 of the issued and outstanding RCL Common Shares as of the date of
this Agreement. Except as set forth on
Schedule 1.A(j) of the Disclosure Letter and as contained in the Shareholder’s
organizational documents, there are no options, warrants, conversion
privileges, puts, calls or other rights, agreements, arrangements, commitments
or obligations of the Shareholder to issue, sell, transfer, redeem or acquire
any shares, securities or obligations (pre-emptive, contingent or otherwise) of
any kind convertible or exercisable into or exchangeable or redeemable for any
shares of the Shareholder. Except as set forth on Schedule 1.A(j) of the
Disclosure Letter, there are no shareholders’ agreements or unanimous
shareholders’ agreements governing the affairs of the Shareholder or the
relationship, rights and duties of its shareholders nor are there any voting
trusts, pooling arrangements or other similar agreements with respect to the
ownership or voting of any shares of the Shareholder;
(k) the authorized share capital
of Argus consists solely of an unlimited number of Argus Common Shares, 194,396
Class A Preference Shares issuable in series, of which 70,143 $2.50 Series
Shares and 124,253 $2.60 Series Shares have been authorized for issuance,
1,000,000 Class B Preference Shares issuable in series, of which 300,000
1962 Series Shares have been authorized for issuance, and an
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unlimited
number of Argus Class C Shares (collectively, the “Argus Shares”), of which, as of the date of
this Agreement, 1,671,661 Argus Common Shares, 24,124 $2.50 Series Shares,
60,943 $2.60 Series Shares, 298,400 1962 Series Shares and 6,677,263 Argus
Class C Shares are issued and outstanding as duly authorized, validly issued,
fully paid and non-assessable shares.
All of the outstanding Argus Shares have been issued in compliance with
all applicable Laws and not in violation of the organizational and governance
documents of Argus. The Shareholder is
the sole record and beneficial owner, free and clear of all Encumbrances, and
has exclusive control or direction over and the exclusive right to dispose of
(and to exercise voting and statutory rights in respect of), all of the issued
and outstanding Argus Common Shares and Argus Class C Shares as of the date of
this Agreement. Except as set forth on
Schedule 1.A(k) of the Disclosure Letter and as contained in Argus’
organizational documents, there are no options, warrants, conversion
privileges, puts, calls or other rights, agreements, arrangements, commitments
or obligations of the Shareholder to issue, sell, transfer, redeem or acquire
any shares, securities or obligations (pre-emptive, contingent or otherwise) of
any kind convertible or exercisable into or exchangeable or redeemable for any
Argus Shares. Except as set forth on Schedule 1.A(k) of the
Disclosure Letter, there are no shareholders’ agreements or unanimous
shareholders’ agreements governing the affairs of Argus or the relationship,
rights and duties of its shareholders nor are there any voting trusts, pooling
arrangements or other similar agreements with respect to the ownership or
voting of any Argus Shares;
(l) except as set forth on Schedule 1.A(l) of the Disclosure Letter, all
of the outstanding shares in the capital of each NBI Holdco (collectively, the
“NBI Holdco Shares”) are owned and
controlled (directly or indirectly) by Argus, free and clear of all
Encumbrances, and Argus has exclusive control or direction over and the
exclusive right to dispose or cause the disposal of (and to exercise or cause
the exercise of all voting and statutory rights in respect of) all of the NBI
Holdco Shares. All of the NBI Holdco
Shares are issued and outstanding as duly authorized, validly issued, fully
paid and non-assessable shares and have been issued in compliance with all
applicable Laws and not in violation of the organizational and governance
documents of any NBI Holdco, as applicable.
Except as contained in the organizational documents of the NBI Holdcos
and NBI-504468, there are no options, warrants, conversion privileges, puts,
calls or other rights, agreements, arrangements, commitments or obligations of
the Shareholder, Argus or any NBI Holdco to issue, sell, transfer, redeem or
acquire any shares, securities or obligations (pre-emptive, contingent or
otherwise) of any kind convertible or exercisable into or exchangeable or redeemable
for any NBI Holdco Shares. There are no
shareholders’ agreements or unanimous shareholders’ agreements governing the
affairs of any NBI Holdco or the relationship, rights and duties of their
shareholders nor are there any voting trusts, pooling arrangements or other
similar agreements with respect to the ownership or voting of any NBI Holdco
Shares;
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(m) all of the outstanding shares in the capital of CBCC (the “CBCC Shares”) are indirectly controlled by
KS and Mrs. KS, free and clear of all Encumbrances, and KS has exclusive
control or direction over and the exclusive right to dispose of (and to
exercise voting and statutory rights in respect of) all of the CBCC Shares. All of the CBCC Shares are issued and
outstanding as duly authorized, validly issued, fully paid and non-assessable
shares and have been issued in compliance with all applicable Laws and not in
violation of the organizational and governance documents of CBCC. Except as contained in the organizational
documents of CBCC, there are no options, warrants, conversion privileges, puts,
calls or other rights, agreements, arrangements, commitments or obligations of
CBCC to issue, sell, transfer, redeem or acquire any shares, securities or obligations
(pre-emptive, contingent or otherwise) of any kind convertible or exercisable
into or exchangeable or redeemable for any CBCC Shares;
(n) all of the outstanding shares in the capital of 504468 N.B. Inc. (“NBI-504468”),
a corporation organized under the laws of the Province of New Brunswick and an
indirect, wholly-owned Subsidiary of the Corporation, and all of the
outstanding shares in the capital of each NBI-504468 Holdco (collectively, the
“NBI-504468
Holdco Shares”) are owned and controlled (directly or indirectly) by
the Corporation, free and clear of all Encumbrances, and the Corporation
(directly or indirectly) has exclusive control or direction over and the
exclusive right to dispose or cause the disposal of (and to exercise or cause
the exercise of all voting and statutory rights in respect of) all of the NBI-504468 Holdco Shares. All of the NBI-504468 Holdco Shares are issued and outstanding as duly
authorized, validly issued, fully paid and non-assessable shares and have been
issued in compliance with all applicable Laws and not in violation of the
organizational and governance documents of NBI-504468 or any NBI-504468
Holdco, as applicable. Except as
contained in the organizational documents of the NBI-504468 Holdcos there are
no options, warrants, conversion privileges, puts, calls or other rights,
agreements, arrangements, commitments or obligations of the Corporation or any
NBI-504468 Holdco to issue, sell, transfer, redeem or acquire any shares,
securities or obligations (pre-emptive, contingent or otherwise) of any kind
convertible or exercisable into or exchangeable or redeemable for any NBI-504468 Holdco Shares. There are no shareholders’ agreements or
unanimous shareholders’ agreements governing the affairs of NBI-504468 Holdco
or the relationship, rights and duties of their shareholders nor are there any
voting trusts, pooling arrangements or other similar agreements with respect to
the ownership or voting of the NBI-504468 Holdco Shares;
(o) except as set forth on Schedule 1.A(o) of the Disclosure Letter, no
notice is required to be given by the Corporation or any of its Subsidiaries
(excluding HI and its Subsidiaries), the Shareholder, KS, Argus, any of the NBI
Holdcos or, to the Knowledge of the Shareholder and KS, HI or any of its
Subsidiaries to any person or Governmental Entity and no consent, approval,
determination, order or authorization of, or declaration, registration or
filing with, notification or notices to, or waiver from, any person or
Governmental Entity is required on the part of
8
the
Shareholder, KS, Argus, any of the NBI Holdcos, the Corporation or any of its
Subsidiaries (excluding HI and its Subsidiaries) or, to the Knowledge of the
Shareholder and KS, HI or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by the Shareholder and KS and the
performance by each of them of their respective obligations hereunder other
than (i) any filings required under the Exchange Act, (ii) filings
required under applicable securities Laws of the provinces and territories of
Canada or the rules of any stock exchange or similar organization,
(iii) the notification required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the “HSR
Act”), (iv) any notification, filing or approval required under
the Investment Canada Act
(Canada) (the “Investment Canada Act”),
(v) notification to the Irish Competition Authority under Section 18(1)(b)
of the Competition
Act 2002 (Ireland) (the “Irish Competition Act”) and Statutory
Instrument No. 622 of 2002 (Ireland) (the “Irish Statutory Instrument”),
with a view to obtaining a determination pursuant to Sections 21 and 23 or, if
applicable, a determination pursuant to Sections 22 and 23 of the Irish
Competition Act and (vi) any notification required under Part IX of the Competition
Act (Canada) (the “Canada Competition Act”);
(p) subject to making the filings and notifications, obtaining the
consents, approvals, determinations, orders and authorizations and providing
the notices described in section 1.A(o) and except as set forth on Schedule
1.A(p) of the Disclosure Letter, the execution and delivery by each of the
Shareholder and KS of this Agreement and the performance by them of their respective
obligations hereunder will not conflict with, result in any violation or breach
of, constitute a default under (with or without notice or lapse of time or
both) or give to others any right of termination, amendment, acceleration,
suspension, revocation or cancellation of, or result in the creation or
continuance of any Encumbrance on the Shareholder’s Shares or the KS Shares
pursuant to:
(i) any
provision of the Corporation’s or any of its Subsidiaries’ or the
organizational and governance documents of the Shareholder, Argus or any NBI
Holdco;
(ii) any
provision of any trust, loan or credit agreement, note, bond, mortgage,
indenture, guarantee, lease, license, permit, contract or other agreement or
instrument to which the Corporation or any of its Subsidiaries (excluding HI
and its Subsidiaries), KS, the Shareholder, Argus or any NBI Holdco or, to the
Knowledge of the Shareholder and KS, HI or any of its Subsidiaries is a party
or by which any of them is bound or to which their respective properties or
assets are subject; or
(iii) any Law or
Governmental Order applicable to the Corporation or any of its Subsidiaries
(excluding HI and its Subsidiaries), the Shareholder’s Shares, the KS Shares,
KS, the Shareholder, Argus or any NBI Holdco or any of their respective
properties or assets or, to the Knowledge of the
9
Shareholder
and KS, HI or any of its Subsidiaries or any of their respective properties or
assets,
except, in the
case of subparagraph (ii) or (iii) above, for any violation, breach, default,
termination, amendment, acceleration, suspension, revocation, cancellation or
creation or continuance of any Encumbrance that, individually or in the
aggregate, would not reasonably be expected to be Materially Adverse to the
Corporation and its Subsidiaries, taken as a whole, or prevent or materially
delay the consummation of the transactions contemplated by this Agreement;
(q) except as set forth on Schedule 1.A(q) of the Disclosure Letter, the
Shareholder is the record and beneficial owner, free and clear of all
Encumbrances, and has exclusive control or direction over and the exclusive
right to dispose of (and to exercise voting and statutory rights in respect of)
5,766,783 Shares as of the date of this Agreement and 66,963 Series II
Preference Shares as of the date of this Agreement; NBI-5 is the record and
beneficial owner, free and clear of all Encumbrances, and has exclusive control
or direction over and the exclusive right to dispose of (and to exercise voting
and statutory rights in respect of) 9,250,461 Shares as of the date of this
Agreement; NBI-6 is the record and beneficial owner, free and clear of all
Encumbrances, and has exclusive control or direction over and the exclusive
right to dispose of (and to exercise voting and statutory rights in respect of)
11,862,342 Shares as of the date of this Agreement; NBI-7 is the record and
beneficial owner, free and clear of all Encumbrances, and has exclusive control
or direction over and the exclusive right to dispose of (and to exercise voting
and statutory rights in respect of) 483,584 Shares as of the date of this
Agreement; and the Subject Shares constitute all of the Corporation Shares
owned or controlled, directly or indirectly, by the Shareholder as of the date
of this Agreement. Except as set forth
on Schedule 1.A(q) of the Disclosure
Letter, KS is the sole record and beneficial owner, free and clear of all Encumbrances,
and has exclusive control or direction over and the exclusive right to dispose
of (and to exercise voting and statutory rights in respect of) the KS Subject
Shares; and the KS Subject Shares and the Subject Shares constitute all of the
Corporation Shares owned or controlled, directly or indirectly, by KS as of the
date of this Agreement. Except as set
forth on Schedule 1.A(q) of the Disclosure Letter, neither the Shareholder nor
KS owns of record or beneficially or has direction or control over any Options. None of the Shareholder, Argus or any NBI
Holdco has requested and none of the foregoing entities has any intention of
requesting that the Corporation retract any of the Shareholder’s Shares. KS has not requested and has no intention of
requesting that the Corporation retract any of the KS Shares;
(r) (i) as of their respective dates, the materials filed or furnished since
January 1, 2001 by or on behalf of the Corporation with or to Canadian or
United States securities regulatory authorities pursuant to applicable
securities Laws did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they
10
were made, not
misleading (except as may have been subsequently remedied by the Corporation in
a later filed or furnished publicly available document prior to the date
hereof); and
(ii) there is not
any material non-public information in respect of the Corporation or its
securities, including the Corporation Shares that (A) has not been
generally disclosed or (B) if disclosed, could have reasonably been
expected to affect the market value of the Corporation Shares, or other
securities of the Corporation,
in each case
(i) and (ii), with respect to the Corporation and its Subsidiaries (other than
HI and its Subsidiaries) and, to the Knowledge of the Shareholder and KS, with
respect to HI and its Subsidiaries;
(s) the audited consolidated balance sheet and consolidated statements
of earnings (losses), deficit and cash flows of the Corporation, for and as at
the year ended December 31, 2002, and the unaudited consolidated balance sheet
and consolidated statements of earnings (losses), deficit and cash flows of the
Corporation, prepared on a consolidated basis for and as at the periods ended
March 31, 2003, June 30, 2003 and September 30, 2003 and the notes thereto
included in the SEC Filings, (i) complied as to form in all material
respects with the requirements of applicable securities Laws, (ii) were
prepared in accordance with Canadian generally accepted accounting principles
applied on a consistent basis throughout the periods covered (except as may be
indicated in the notes to such financial statements or, in the case of
unaudited financial statements, as permitted by applicable securities Laws, and
except that the unaudited financial statements may not contain footnotes and
are subject to normal year-end adjustments that will not, individually or in
the aggregate, be material in amount or require a restatement of any financial
statements for a past period), and (iii) fairly present in all material
respects the financial position of the Corporation and its Subsidiaries as at
the respective dates thereof or the results of operations and cash flows of the
Corporation and its Subsidiaries for the periods covered thereby, as the case
may be (except that the unaudited financial statements may not contain
footnotes and are subject to normal year-end adjustments that will not,
individually or in the aggregate, be material in amount or require a
restatement of any financial statements for a past period);
(t) except as set forth in the SEC Filings, neither the Corporation nor
any of its Subsidiaries (excluding HI and its Subsidiaries) nor, to the Knowledge
of the Shareholder and KS, HI or any of its Subsidiaries has any Liabilities
except for those that would not, individually or in the aggregate, reasonably
be expected to be Materially Adverse to the Corporation and its Subsidiaries,
taken as a whole;
(u) except as disclosed on Schedule 1.A(u) of the Disclosure Letter,
there are no understandings, contracts, commitments, loans, agreements,
arrangements or other transactions between or among the Corporation or any of
its Subsidiaries
11
(excluding HI
and its Subsidiaries) or, to the Knowledge of the Shareholder and KS, HI or any
of its Subsidiaries, on the one hand, and any of the Shareholder, KS, the NBI
Holdcos, the Shareholder’s directors, officers or employees or any other
persons Affiliated with the Shareholder and/or KS (except for the Corporation
or any of its Subsidiaries), on the other hand, that (i) would be required to
be disclosed by the Corporation or, to the Knowledge of the Shareholder and KS,
HI or any of its Subsidiaries under Item 404 of Regulation S-K of the
Securities Act (assuming for purposes of this section 1.A(u) that Item 404 of Regulation S-K of the
Securities Act applies to the Corporation and each of its Subsidiaries),
(ii) contain any non-competition or similar covenants or entitlements or
(iii) contain any indemnification or advancement of expenses obligations;
(v) except
as set forth in the SEC Filings, since January 1, 2001, the Corporation’s books and records reflecting
its assets and liabilities have been maintained in accordance with sound
business practices and the requirements of applicable securities Laws,
including the maintenance of proper and adequate internal controls over
financial reporting;
(w) (i) the Corporation and NBI-504468
are the record and beneficial owners of (A) 14,990,000 shares of Class B
Common Stock, par value $0.01 per share, of HI (the “Class B Shares”) in the
aggregate, and (B) 11,256,538 shares of Class A Common Stock, par value $0.01
per share, of HI in the aggregate; (ii) no other Class B Shares are issued and
outstanding other than the 14,990,000 Class B Shares owned of record and
beneficially by the Corporation and NBI-504468; (iii) pursuant to the Restated
Certificate of Incorporation of HI, holders of Class B Shares are entitled to
10 votes per Class B Share; and (iv) no amendments to or restatements of
(whether by merger, consolidation or otherwise) the Restated Certificate of
Incorporation of HI have been submitted to or filed with the Secretary of State
of the State of Delaware since June 20, 2000 and, to the Knowledge of the
Shareholder and KS, no such amendments or restatements have been proposed or
approved by the board of directors (or any committee thereof) of HI or its
shareholders that would have the effect of altering any of the rights,
privileges or preferences of any class or series of shares of HI, including,
without limitation, the Class B Shares.
So long as the Corporation or any Subsidiary (as such term is defined in
the Restated Certificate of Incorporation of HI) or Affiliate (as such term is
defined in the Restated Certificate of Incorporation of HI) of the Corporation,
holds the Class B Shares and the Restated Certificate of Incorporation of HI is
not amended or restated on or after the date of this Agreement to provide
otherwise, such Class B Shares are, and upon completion of the Offer will be,
Class B Shares and such Class B Shares have, and upon completion of the Offer
will have, 10 votes per share. The Corporation is not currently in discussions,
nor has it entered into any agreement, arrangement or understanding (whether or
not subject to conditions or lapse of time or both) regarding any limitation or
restriction on its ability to vote (or act by written consent with respect to)
the Class B Shares it holds;
12
(x) except as disclosed on Schedule 1.A(x) of the Disclosure Letter,
there are no claims, actions, proceedings, complaints, suits, investigations,
inquiries or reviews pending or, to the Knowledge of the Shareholder and KS,
threatened against the Shareholder, KS or the Corporation or any of its
Subsidiaries (excluding HI and its Subsidiaries) or any of their respective
properties or assets or, to the Knowledge of the Shareholder and KS, HI or any
of its Subsidiaries or any of their respective properties or assets by or
before any Governmental Entity or third party that, either individually or in
the aggregate, if adversely determined would reasonably be expected to be
Materially Adverse to the Corporation and its Subsidiaries, taken as a whole,
or the Shareholder or to prevent or materially delay consummation of the Offer,
any Subsequent Transaction and the other transactions contemplated by this
Agreement;
(y) (i) the Corporation and its Subsidiaries (excluding HI and its
Subsidiaries) and, to the Knowledge of the Shareholder and KS, HI and its
Subsidiaries have since January 1, 2001 complied and are presently complying
with all applicable Laws and (ii) since January 1, 2001 the Corporation has not
received notification of any asserted present or past failure to comply with
any applicable Laws, except, in either case, to the extent that such
non-compliance or assertion of non-compliance, as the case may be, would not
reasonably be expected to be Materially Adverse to the Corporation and its
Subsidiaries, taken as a whole;
(z) except as disclosed in Schedule 1.A(z) of the Disclosure Letter or
contained in the SEC Filings, since December 31, 2002, the business and operations
of the Corporation and its Subsidiaries (excluding HI and its Subsidiaries)
and, to the Knowledge of the Shareholder and KS, HI and its Subsidiaries have
been conducted only in the ordinary course of business and, since such date,
there has not been any (i) event, violation, circumstance, change (including
any decision to implement such a change made by the board of directors (or any
committee thereof) of the Corporation or any of its Subsidiaries (excluding HI
and its Subsidiaries) and, to the Knowledge of the Shareholder and KS, HI or
any of its Subsidiaries or by senior management with the belief that the
decision will be confirmed by the applicable board of directors (or any
committee thereof)) or other matter that, alone or in combination with any
other event, violation, circumstance, change or matter, would reasonably be
expected to be Materially Adverse to the Corporation and its Subsidiaries,
taken as a whole, or (ii) action which, if taken on or after the date of this
Agreement, would constitute a breach of the representations and warranties or
covenants set forth in this Agreement;
(aa) the Shareholder is not now insolvent and will not be rendered
insolvent by the undertaking or consummation of any of the transactions
contemplated by this Agreement. For the
purposes of the foregoing, “insolvent” means that the realizable value of the
Shareholder’s assets does not exceed the aggregate amount of its liabilities;
13
(bb) the Corporation’s and its Subsidiaries’ (excluding HI and its
Subsidiaries) “Net Indebtedness” (as set out in Schedule 1.A(bb) of the
Disclosure Letter) as of January 15, 2004 is not in excess of US$240,400,000;
(cc) except as set forth in Schedule 1.A(cc) of the Disclosure Letter,
since January 1, 2001 through and including the date of this Agreement, none of
KS, the Shareholder, any of the directors, officers or employees of Shareholder
or any other persons Affiliated with KS and/or the Shareholder have submitted
or made to the Corporation or any of its Subsidiaries (excluding HI and its
Subsidiaries) and, to the Knowledge of the Shareholder and KS, HI or any of its
Subsidiaries any request for indemnification against or from any actual or
potential claim, loss or other Liability or for the repayment or advancement of
expenses related to any such claim, loss or other Liability;
(dd) the Corporation is a “foreign private issuer” as such term is
defined in Rule 3b-4 of the Exchange Act, and, to the Knowledge of the
Shareholder and KS after diligent inquiry and review of the books and records
of the Corporation and in consultation with the Corporation’s Share transfer
agent, less than 40% of each class of shares of the Corporation for which the
Offeror is making a tender offer hereunder are held by U.S. holders (as such
term is construed in Rule 14d-1 of the Exchange Act); and
(ee) the Corporation is not an “investment company” registered or
required to be registered under the United States Investment Company Act of
1940, as amended;.
B. Representations and Warranties of the Acquiror. The Acquiror represents
and warrants to the Shareholder and KS that, as of the date of this Agreement
and each date the Offeror takes up any of the Shareholder’s Shares or the KS
Shares under the Offer, except to the extent any such representation and
warranty expressly speaks as of a different date, in which case the
representation and warranty shall be deemed made as of such date:
(a) the Acquiror is, and the Offeror will at the time of the Offer be, a
corporation duly organized, validly existing and in good standing under the
Laws of its jurisdiction of incorporation;
(b) the Acquiror has the requisite corporate power and authority to
enter into this Agreement and to perform its obligations and consummate the
transactions contemplated hereby;
(c) the Offeror will, at the time of the Offer, have the requisite
corporate power and authority to make the Offer and perform its obligations and
consummate the transactions contemplated hereby and thereby;
(d) the execution and delivery of this Agreement by the Acquiror, and
the performance by the Acquiror of its obligations and the consummation of the
14
transactions
contemplated hereby, have been duly authorized and approved by all necessary
corporate action of the board of directors of the Acquiror and the shareholders
of the Acquiror, and no additional corporate or other proceedings on the part
of the Acquiror or the shareholders of the Acquiror are necessary to authorize
and approve this Agreement, the performance by the Acquiror of its obligations
and the consummation of the transactions contemplated hereby;
(e) this Agreement has been duly executed and delivered by the Acquiror,
and assuming due authorization, execution and delivery by the Shareholder and
KS, constitutes a valid and binding obligation of the Acquiror, enforceable
against it in accordance with its terms;
(f) no notice, filing or notification is required to be given by the
Acquiror or its Subsidiaries to any person or Governmental Entity and no
consent, approval, determination, order or authorization of, or declaration,
registration or filing with, or waiver from, any person or Governmental Entity
is required on the part of the Acquiror or its Subsidiaries in connection with
the execution and delivery of this Agreement by the Acquiror and the
performance by the Acquiror and the Offeror of their respective obligations
hereunder other than (i) any filings required under the Exchange Act, (ii)
filings required under applicable securities Laws of the provinces and
territories of Canada or the rules of any stock exchange or similar
organization, (iii) the notification required under the HSR Act, (iv) any
notification, filing or approval required under the Investment Canada Act, (v)
notification to the Irish Competition Authority under Section 18(1)(b) of the
Irish Competition Act and the Irish Statutory Instrument, with a view to
obtaining a determination pursuant to Sections 21 and 23 or, if applicable, a
determination pursuant to Sections 22 and 23 of the Irish Competition Act and
(vi) any notification required under Part IX of the Canada Competition
Act;
(g) subject to making the filings and notifications, obtaining the
consents, approvals, determinations, orders and authorizations and providing
the notices described in section 1.B(f), the execution and delivery by the
Acquiror of this Agreement and the performance by the Acquiror and the Offeror
of their respective obligations hereunder will not conflict with, result in any
violation or breach of, constitute a default under (with or without notice or
lapse of time or both) or give to others any right of termination, amendment,
acceleration, suspension, revocation or cancellation of, pursuant to:
(i) any
provision of the Acquiror’s or the Offeror’s organizational and governance
documents;
(ii) any
provision of any trust, loan or credit agreement, note, bond, mortgage,
indenture, guarantee, lease, license, permit, contract or other agreement or
instrument to which the Acquiror or any of its Subsidiaries is a party or by
which any of them is bound or to which their respective properties or assets
are subject; or
15
(iii) any Law or
Governmental Order applicable to the Acquiror or any of its Subsidiaries or any
of their respective properties or assets,
except, in the
case of subparagraph (ii) or (iii) above, for any violation, breach, default,
termination, amendment, acceleration, suspension, revocation or cancellation
that, individually or in the aggregate, would not reasonably be expected to be
Materially Adverse to the Acquiror and the Offeror, taken as a whole, or
prevent or materially delay the consummation of the transactions contemplated by
this Agreement; and
(h) the Acquiror has available, and on any taking up of the Corporation
Shares pursuant to the Offer will have made available to the Offeror, the cash
consideration payable pursuant to the Offer such that the Offeror is and will
be in a position to pay for all Corporation Shares which are or may be acquired
pursuant to the Offer.
C. Survival of Representations and Warranties. The representations and
warranties of the Shareholder and KS shall survive completion of the Offer:
(a) in the case of the representations and warranties in sections 1.A(a), (b), (c), (d), (e), (f), (h),
(i), (j), (k), (l), (m), (n), (q) and (w) until January 18,
2009; and
(b) in the case of the other representations and warranties in section
1.A, until the earlier to occur of (i) delivery to the Acquiror of the outside
auditor’s report in respect of the financial statements of the Corporation and
its consolidated Subsidiaries for the fiscal year ending December 31, 2004, and
(ii) May 20, 2005.
The
representations and warranties of the Acquiror in section 1.B of this
Agreement shall not survive the take up and payment for the Shareholder’s
Shares and the KS Shares pursuant to the Offer, other than the representation
and warranty in section 1.B(g)(iii), which shall survive until January 18,
2009.
2. The Offer
A. Agreement to Make Offer. Subject to the second sentence of section
2.B(b), on or before January
28,
2004, the Acquiror shall cause the Offeror to make offers (collectively, the “Offer”) to purchase, on the terms and
conditions hereof and contained in Schedule B, any and all of the outstanding
Corporation Shares. As used in this
Agreement, the term “Offer” shall include any amendments to, or extensions of,
the Offer made in accordance with the terms of this Agreement. The Offer shall be made by means of a
Circular in accordance with all applicable securities Laws and shall be mailed
to all holders of Corporation Shares and all holders of Options, except as
prohibited by applicable Law. The Acquiror shall cause the Offeror to file
the Circular on a timely basis with the appropriate Governmental Entities in
Canada and any other applicable jurisdictions.
16
B. Preparation of Documents.
(a) The Acquiror and Offeror shall prepare the Circular and the related
letter(s) of transmittal and notice(s) of guaranteed delivery (collectively,
the “Offer Documents”) with
respect to the Offer in compliance with the Securities Act (Ontario) (the “OSA”) and all other applicable Laws in form
and substance acceptable to the Shareholder and KS, acting reasonably.
(b) The Shareholder and KS shall have the right to review in advance,
and consent (acting reasonably) to the inclusion of, the information solely
relating to the Shareholder and any of its Subsidiaries or KS, as the case may
be, to be included in the Offer Documents or that will otherwise appear in any
filing made by Acquiror or Offeror with, or written materials submitted by
Acquiror or Offeror to, any third party and/or any Governmental Entity in
connection with the Offer. If the
Shareholder and KS do not promptly provide such consent as requested by Offeror
or Acquiror (acting reasonably), each day that such consent is not provided
shall extend the date set forth in section 2.A by which Acquiror shall cause
Offeror to make the Offer by a day. The Acquiror and Offeror shall provide each
of the Shareholder and KS with a final copy of the Offer Documents prior to the
mailing thereof. The Shareholder and KS
shall use their reasonable best efforts to ensure that the Corporation
furnishes such shareholder lists and mailing information as the Acquiror or
Offeror, acting reasonably, may request in order to communicate the Offer to
shareholders and optionholders of the Corporation.
(c) The Acquiror, the Shareholder and KS each agrees, as to itself and
its Subsidiaries, if any, and himself, that none of the information supplied or
to be supplied by or on behalf of it or its Subsidiaries or him for inclusion
or incorporation by reference in the Offer Documents will contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Acquiror agrees to cause the Offer
Documents to comply as to form in all material respects with the applicable
securities Laws.
3. Tender of Shareholder’s Shares and KS Shares
A. Agreement to Tender. Subject to the terms hereof, the Shareholder
and KS each agree irrevocably and unconditionally to deposit or cause to be
deposited, free and clear of all Encumbrances, all of the Shareholder’s Shares
and the KS Shares, respectively, under the Offer, together with a duly executed
letter of transmittal in respect of such shares, completed in accordance with
the Offer (and which shall include instructions as to the delivery and deposit
of the (a) HI Amount Escrow Fund with the HI Amount Escrow Agent (as such terms
are defined in section 5.K) consistent with and in a manner giving effect to
section 5.K and (b) Indemnification Escrow Fund with the Indemnification Escrow
Agent (as such terms are defined in section 8.F) consistent with and in a
manner giving effect to section 8.F), as soon as practicable and, in any event,
within five business
17
days after the
Shareholder, the NBI Holdcos and KS have received the Circular. Subject to the terms hereof, the
Shareholder, the NBI Holdcos and KS shall not withdraw or attempt to withdraw
the Corporation Shares so deposited (notwithstanding any statutory or other
legal or equitable right), unless this Agreement is terminated in accordance
with its terms.
B. Limitation. Subject to the second
sentence of section 2.B(b), the Shareholder’s and KS’s respective obligations
to tender or cause to be tendered the Shareholder’s Shares and the KS Shares as
provided in section 3.A shall be conditional upon the Offer being
commenced in accordance with the terms hereof by January 28, 2004. The Offeror shall have the right to amend,
modify or change the Offer without the consent of the Shareholder and KS, only
to (i) increase the Offer Price, (ii) waive one or more conditions of the Offer
or (iii) extend the Offer Period (A) if and to the extent required to
satisfy any condition of the Offer or (B) otherwise, if all of the
Shareholder’s Shares and KS Shares tendered in the Offer prior to such
extension shall have been taken up and paid for. The Offeror shall be required to extend the Offer Period if and
to the extent necessary to obtain the regulatory approval or termination of
waiting period set forth in section 1.A(o)(iii), (iv) or (vi) and 1.B(f)(iii),
(iv) or (vi), but the Offer Period may not be extended past the 180th day
following commencement of the Offer without the mutual consent of the parties
hereto.
C. Disclosure. Each of the Shareholder and KS hereby agrees to permit the
Acquiror and the Offeror to publish and disclose in the Circular and in any
other filings required in connection with the Offer and the Subsequent
Transaction under applicable Law the nature and substance of their respective
commitments under this Agreement.
4. Non-Solicitation
The
Shareholder and KS shall not, directly or indirectly, through any officer,
director, employee, Affiliate, attorney, financial advisor or other person,
agent or representative, take any action to solicit, initiate, seek, or
encourage any inquiry, proposal or offer from, furnish any information to, or
participate in any discussions or negotiations with, any third party (other
than the Acquiror or the Offeror or an Affiliate thereof designated by the
Acquiror) regarding any Third Party Acquisition. The Shareholder and KS agree that any such discussions or negotiations
(other than discussions or negotiations with the Acquiror or the Offeror or an
Affiliate thereof designated by the Acquiror) in progress as of the date of
this Agreement shall be immediately terminated and that, in no event, shall the
Shareholder or KS accept or enter into (whether or not subject to conditions)
an agreement concerning any Third Party Acquisition during the term of this
Agreement. During the term hereof, the
Shareholder and KS shall notify the Acquiror immediately after receipt by the
Shareholder (or any of its officers, directors, employees, Affiliates,
attorneys, financial advisors or other persons, agents or representatives) or
KS of any proposal for, or inquiry respecting, any Third Party Acquisition or
any request for non-public information in connection with such a proposal or
inquiry, or for access to the properties, books or records of the Corporation
by any person that informs or has informed the Shareholder or KS that it is
considering making or has made such a
18
proposal or
inquiry. Such notice to the Acquiror
shall indicate in reasonable detail the identity of the person making the
proposal or inquiry and the terms and conditions of such proposal or inquiry. The Shareholder and KS shall not take, nor
permit any person over which they exercise influence or control, directly or
indirectly (including through any officer, director, employee, Affiliate,
attorney, financial advisor or other person, agent or representative) to take,
or fail to take, any action that may in any way adversely affect, or reduce the
likelihood of, the successful completion of the Offer and any Subsequent
Transaction. The foregoing provisions
of this section 4 shall be subject to the provisions of section 12 and the
obligation, if any, of KS under Section 7 of the Restructuring Proposal to
provide notice of this Agreement or the transactions contemplated hereby; provided that KS agrees to consult with
Acquiror and its advisors as to the timing and content of any such notice prior
to delivery thereof.
5. Covenants of the Shareholder and KS
The
Shareholder and KS agree as follows, subject in the case of KS to section 12:
A. No Transfers.
(a) Other than pursuant to this Agreement, each of the Shareholder and
KS agrees that the Shareholder shall not, and shall cause each of NBI-5, NBI-6
and NBI-7 not to, directly or indirectly, (i) sell, transfer, pledge, encumber,
assign, gift or otherwise dispose of (collectively, a “Transfer”), or enter into any contract,
option or other arrangement or understanding (whether or not subject to
conditions) with respect to a Transfer by the Shareholder, NBI-5, NBI-6 or
NBI-7 of any of the Shareholder’s Shares or offer any interest in any thereof
to any person or permit the same, (ii) enter into any voting arrangement or
understanding, whether by proxy, power of attorney, voting agreement, voting
trust or otherwise with respect to Shareholder’s Shares or (iii) take or fail
to take any action that would make any representation or warranty of the
Shareholder or KS contained herein untrue or incorrect in any material respect
or have the effect of preventing or disabling the Shareholder or KS from
performing its or his obligations hereunder.
(b) Other than pursuant to this Agreement, each of the Shareholder and
KS agrees that, prior to the earlier of the acquisition of all of the
Shareholder’s Shares by the Offeror and the termination of this Agreement,
Shareholder shall not, and shall use its reasonable best efforts to cause Argus
and each NBI Holdco not to, directly or indirectly, (i) Transfer, or enter into
any contract, option or other arrangement or understanding (whether or not
subject to conditions) with respect to a Transfer by Shareholder, Argus or any
NBI Holdco of any of the Argus Shares or NBI Holdco Shares, any options to
acquire any Argus Shares or NBI Holdco Shares or offer any interest in any
thereof to any person or permit the same or (ii) enter into any voting
arrangement or understanding, whether by proxy, power of attorney, voting
agreement, voting trust or otherwise with respect to any of the Argus Shares or
NBI Holdco Shares.
19
(c) Other than pursuant to this Agreement, KS agrees that he shall not,
directly or indirectly, (i) Transfer, or enter into any contract, option or
other arrangement or understanding (whether or not subject to conditions) with
respect to the Transfer by KS of any of his KS Shares, any Options to acquire
Shares, or shares of the Shareholder or offer any interest in any thereof to
any person or permit the same other than pursuant to this Agreement, (ii) enter
into any voting arrangement or understanding, whether by proxy, power of
attorney, voting agreement, voting trust or otherwise with respect to his KS
Shares or shares of the Shareholder or (iii) take or fail to take any
action that would make any representation or warranty of KS contained herein
untrue or incorrect in any material respect or have the effect of preventing or
disabling KS from performing his obligations hereunder.
B. Voting.
(a) Each of the Shareholder and KS agree, and Shareholder agrees to
cause each of NBI-5, NBI-6 and NBI-7 to agree, that, prior to the earlier of
the acquisition of all of the Shareholder’s Shares by the Offeror and the
termination of this Agreement, at any meeting of the shareholders of the
Corporation, however called, or by action by written consent, in circumstances
where a vote, consent or other approval of the shareholders of the Corporation
is sought, the Shareholder shall, and shall cause each of NBI-5, NBI-6 and
NBI-7 to, vote or consent (or cause to be voted or consented) all of the
Shareholder’s Shares then held or controlled (i) in favour of the Offer
and the other transactions contemplated by this Agreement and (ii) against
any action or transaction that would impede, interfere with, delay, postpone or
attempt to discourage the Offer or the other transactions contemplated by this
Agreement.
(b) Each of the Shareholder and KS agrees to cause Argus and each NBI
Holdco to agree that, prior to the earlier of the acquisition of all of the
Shareholder’s Shares by the Offeror and the termination of this Agreement, at
any meeting of the shareholders of Argus or any of the NBI Holdcos, however
called, or by action by written consent, in circumstances where a vote, consent
or other approval of the shareholders of Argus or any NBI Holdco is sought, the
Shareholder, Argus or the NBI Holdco in question (as applicable) shall vote or
consent (or cause to be voted or consented) all of its shares of Argus or such
NBI Holdco then held or controlled (i) in favour of the Offer and the other
transactions contemplated by this Agreement and (ii) against any action or
transaction that would impede, interfere with, delay, postpone or attempt to
discourage the Offer or the other transactions contemplated by this Agreement.
(c) KS agrees that, prior to the earlier of the acquisition of all of
the Shareholder’s Shares and the KS Shares by the Offeror and the termination
of this Agreement, at any meeting of the shareholders of the Shareholder,
however called, or by action by written consent, in circumstances where a vote,
consent or other approval of the shareholders of the Shareholder is sought, KS
shall vote or consent (or cause to be voted or consented) all of KS’ shares of
the Shareholder then held or
20
controlled
(i) in favour of the Offer and the other transactions contemplated by this
Agreement and (ii) against any action or transaction that would impede,
interfere with, delay, postpone or attempt to discourage the Offer or the other
transactions contemplated by this Agreement.
C. Access. Upon reasonable request, and
except as may otherwise be required by applicable Law, each of the Shareholder
and KS shall use their respective reasonable efforts to cause the Corporation
and its officers, directors, employees, agents, accountants, financial
advisors, counsel and representatives to, subject to the Confidentiality Agreement,
(i) afford the officers, directors, employees, agents, accountants,
counsel, financial advisors, counsel and representatives of the Acquiror (and
the Offeror) reasonable access, during normal business hours throughout the
period prior to the completion of the Offer or the termination of this
Agreement, whichever is earlier, to the offices, properties, other facilities,
books and records of the Corporation and to the officers, directors, employees,
agents, accountants, counsel and representatives of the Corporation and
(ii) furnish to the officers, directors, employees, agents, accountants,
financial advisors, counsel and representatives of the Acquiror (and the
Offeror) such additional financial and operating data and other information
regarding the business, operations, assets, liabilities, capital and condition
(financial or otherwise) of the Corporation as the Acquiror or any of such
persons may from time to time reasonably request.
D. Conduct of Business. The Shareholder and KS shall use their reasonable
best efforts to cause the business and affairs of the Corporation and its
Subsidiaries to be operating in the ordinary course as currently conducted and
with a view to the best interests of the Corporation and its public
shareholders and, in furtherance of the foregoing, not to take any action that
would or would reasonably be expected to result in non-satisfaction of a
condition of the Offer (unless waived by the Offeror) without the prior written
consent of the Offeror. Without
limiting the generality of the foregoing, unless the Offeror otherwise agrees
in writing or as expressly set forth in this Agreement, the Shareholder and KS
shall use their reasonable best efforts to ensure that the Corporation shall
not, directly or indirectly, do, permit any of its Subsidiaries to do or permit
to occur (or enter into any agreement or arrangement whether or not subject to
conditions with respect to) any of the following:
(a) issue, grant, sell, transfer, pledge, lease, dispose of, encumber,
acquire or redeem:
(i) any
Corporation Shares or other securities of the Corporation or its Subsidiaries;
or
(ii) any material
property or assets of the Corporation or any of its Subsidiaries,
except for (A)
shares issued upon exercise of options outstanding on the date of this
Agreement and (B) shares that may be issued in respect of (x) the Directors
Share Unit Plan of the Corporation and the Executives Share Option Plan of the
Corporation, (y) any plan in existence on the date hereof providing for the
21
issuance of
shares or share equivalents to directors or employees of HI or (z) any
securities of the Corporation or HI outstanding as of the date of this
Agreement under which the Corporation or HI is obligated to deliver shares, as
expressly required by the Articles of Incorporation of the Corporation or the
Restated Certificate of Incorporation of HI, as the case may be, and the terms
of such securities;
(b) amend or propose to amend the constitutional documents (including
articles or other organizational documents or by-laws) of it or any of its
Subsidiaries;
(c) declare, make or set aside any amounts for any dividend or other
distribution (in cash, securities or other property) in respect of any
securities of it or any of its Subsidiaries except for scheduled interest
payments on indebtedness of it or any of its Subsidiaries that is outstanding
on the date of this Agreement (without giving effect to any amendment to or
waiver of the terms thereof), or incurred in compliance with the express
provisions of this section 5.D;
(d) incur, create, assume, guarantee or otherwise become liable or
responsible for, or amend or restate the material terms of, any Indebtedness
that individually or in the aggregate exceeds $1,000,000;
(e) enter into any statutory arrangement, merger, amalgamation,
consolidation, liquidation, dissolution, or business combination;
(f) settle or compromise any material legal or regulatory proceeding or
voluntarily become subject to or amend the material terms of any Governmental
Order; and
(g) make any changes to existing accounting practices, except as the
regular, independent auditors of the Corporation advise the audit committee of
the board of directors of the Corporation are required by applicable Law or
Canadian generally accepted accounting principles, or write down, write up or
write off the book value of any assets in amounts that, in aggregate, exceed $1,000,000 except for
depreciation and amortization in accordance with Canadian generally accepted
accounting principles.
E. Resignations and Appointments. Effective upon the taking up of and payment
for the Shareholder’s Shares and the KS Shares under the Offer, KS and Mrs. KS
shall each resign as an officer and director (as applicable) of the Corporation
and each of its Subsidiaries and KS shall use his reasonable best efforts to
assist the Acquiror in securing the resignation of such other officers and
directors of the Corporation and its Subsidiaries as the Acquiror may request
in writing.
F. Approvals and Consents. The Shareholder and KS shall, and shall use
their respective reasonable best efforts to cause the Corporation and its
Subsidiaries and the NBI Holdcos to, provide notice to, and use their
respective reasonable best efforts to obtain all waivers, consents, permits,
licenses, authorizations, orders and approvals or releases necessary or
22
desirable to
complete the Offer from Governmental Entities and other persons, including parties
to agreements, understandings or other documents to which the Shareholder, KS,
the Corporation or any of its Subsidiaries or the NBI Holdcos is a party or
bound, the failure of which to provide or obtain would reasonably be expected
to, individually or in the aggregate, (a) prevent or materially delay the
completion of the Offer or (b) be Materially Adverse to the Corporation
and its Subsidiaries, taken as a whole.
G. Affiliate Arrangements. The Shareholder and KS shall not, and shall
use their respective commercially reasonable efforts, to ensure that the
Shareholder’s directors, officers and employees and any other persons
Affiliated with KS and/or the Shareholder do not, enter into, modify or waive
(except as expressly set forth in this Agreement, including in the next
succeeding sentence) any provision of any understanding, contract, commitment,
loan, agreement, arrangement or other transaction to which (x) any of them, on
the one hand, and (y) the Corporation or any of its Subsidiaries, on the other
hand, is a party or by which any of its respective properties or assets are
bound (collectively, the “Affiliate
Arrangements”). The
Shareholder and KS acknowledge and agree that the Affiliate Arrangements set
forth on Schedule 5.G(i) are a true and complete list of all Affiliate
Arrangements. Except as otherwise
provided in Schedule 5.G(ii) and section 7.G, as soon as reasonably practicable
after the take up and payment of the Shareholder’s Shares and the KS Shares
pursuant to the Offer, the Shareholder and KS shall terminate, or use their
respective commercially reasonable efforts to cause to be terminated, as
applicable, any existing Affiliate Arrangements, except to the extent that any
Affiliate Arrangement relates to a non-competition or similar arrangement that
is to or for the benefit of the Corporation or any of its Subsidiaries (other
than HI and its Subsidiaries), on terms satisfactory to the Acquiror (acting
reasonably) (which, for greater certainty shall include reasonably satisfactory
provisions for a full and final release of the Corporation and/or the
Subsidiary of the Corporation, as applicable, of all Liabilities pursuant to
such Affiliate Arrangements and reasonably satisfactory provisions for an
indemnity of the Corporation, the Acquiror, the Offeror and the Subsidiaries of
the Corporation, the Acquiror and the Offeror and their respective directors,
officers, employees, shareholders, agents, partners, attorneys, financial
advisors and representatives, including the heirs, executors, personal
representatives and administrators of any of the foregoing natural persons,
with respect to any and all Liabilities arising in connection with or pursuant
to such Affiliate Arrangements, other than any Liabilities to the Acquiror, the
Offeror, the Corporation or the Subsidiaries of the Acquiror, the Offeror or
the Corporation for which the Shareholder or KS and KS on behalf of Mrs. KS has
or may have indemnification, reimbursement or repayment obligations under
section 5.H(a), 5.H(b), 5.I or 8.A).
H. Reimbursement.
(a) In the event that (i) KS or Mrs. KS is or has been paid by the
Corporation or one of its Subsidiaries in respect of a claim for
indemnification or advancement of expenses submitted or made to the Corporation
or one of its Subsidiaries and (ii) the Corporation or its applicable
Subsidiary submits or has submitted a notice to its insurer in respect of such
a claim and the insurer denies or has denied (after the Corporation or its
applicable Subsidiary has taken all reasonable steps to enforce
23
its rights
under the applicable insurance policy), in whole or in part, coverage to the
Corporation or its applicable Subsidiary in respect of such a claim, KS agrees
to promptly pay to the Offeror (A) the entire amount by which the claim paid by
the Corporation or its applicable Subsidiary (other than HI and its
Subsidiaries) exceeds the amount that the Corporation or its applicable
Subsidiary (other than HI and its Subsidiaries) actually receives from the
insurer in respect of such claim and (B) 30.3% of the amount by which the claim
paid by HI or its applicable Subsidiary exceeds the amount that HI or its
applicable Subsidiary actually receives from the insurer in respect of such
claim. For purposes of this section
5.H(a), “claim” shall mean each request for indemnification and/or advancement
of expenses regardless of the nature of such claim.
The provisions of this section 5.H(a) shall provide the
exclusive remedy of the Acquiror and its Subsidiaries solely with respect to
reimbursement or recovery of any claim against KS or Mrs. KS for any
indemnification of or advancement of expenses to KS or Mrs. KS by the
Corporation or any of its Subsidiaries, but for the avoidance of doubt, not in
respect of any controversy not arising from indemnification payments or
reimbursement of expenses to KS or Mrs. KS.
In the event that a final and non-appealable Governmental Order has been
issued by a Governmental Entity directing KS or Mrs. KS, as the case may be, to
reimburse or return to the Corporation or any of its Subsidiaries any amounts
actually paid to the Offeror in respect of subsection (A) or (B) above, then
Offeror shall be required to assume all responsibility and liability for making
such payment and shall promptly pay directly to the Corporation or any of its
Subsidiaries (as applicable) any such reimbursed or returned amounts, up to any
amounts that Offeror actually received under subsection (A) or (B) above.
(b) In the event that with respect to any civil, criminal or
administrative action or proceeding to which KS or Mrs. KS is made a party by
reason of having been a director or officer of the Corporation or any of its
Subsidiaries or Shareholder pursuant to which a finding or determination is made
as part of a settlement or in a final and non-appealable Governmental Order
that (i) he or she did not act honestly and in good faith with a view to the
best interests of the Corporation or its applicable Subsidiary and (ii) in the
case of a criminal or administrative action or proceeding that is enforced by a
monetary penalty, he or she had no reasonable grounds for believing that his or
her conduct was lawful, and as the proximate and primary cause thereof the
Corporation or any of its Subsidiaries suffers any monetary loss or other
Liability (including for amounts previously advanced to KS or Mrs. KS, as
applicable, by the Corporation or any of its Subsidiaries), KS agrees to
promptly pay to the Corporation or its applicable Subsidiary its direct, out-of-pocket
costs and expenses incurred in connection with such action or proceeding after
deducting any insurance proceeds actually received by the Corporation or its
applicable Subsidiary in respect of such action or proceeding. Any claim by the Corporation or any of its
Subsidiaries for payment under the provisions of this section 5.H(b) shall be
subject to the provisions of section 8.C with respect to claims for
indemnification.
24
I. Payments by KS and Shareholder. KS and the Shareholder shall repay to the
Corporation and any of its Subsidiaries, concurrently with the Offeror’s
payment for the Shareholder’s Shares and the KS Shares pursuant to the Offer,
any amounts then due and owing from KS or the Shareholder to the Corporation or
any of its Subsidiaries pursuant to any Affiliate Arrangement, and KS or the
Shareholder shall repay to the Corporation and any of its Subsidiaries any
other amounts that are otherwise finally determined to be due and owing from KS
or the Shareholder under any Affiliate Arrangement promptly after such final
determination. Other than as set forth
on Schedule 5.I or on Schedule 7.G, there are no Affiliate Arrangements
pursuant to which KS or the Shareholder has any payment obligation to the
Corporation or any of its Subsidiaries (other than HI and its Subsidiaries),
and to the Knowledge of KS or the Shareholder, HI and its Subsidiaries.
J. Options. The Shareholder and KS shall not exercise and, at the take up and
payment for the Shareholder’s Shares and the KS Shares pursuant to the Offer,
shall surrender to the Corporation for termination, and shall use their
respective reasonable best efforts to ensure that the Shareholder’s directors,
officers and employees or any other persons Affiliated with KS and/or the
Shareholder do not exercise, and at the completion of the Offer shall surrender
to the Corporation for termination, all Options that are “out-of-the-money” (as
compared to the Offer Price) as of the date of this Agreement.
K. HI Amount. The Offeror, on behalf of the Shareholder and KS, shall deposit
or cause to be deposited US$16,550,000 of the funds to be delivered to them as
payment for the Shareholder’s Shares and the KS Shares pursuant to the Offer
(the “HI Amount Escrow Fund”),
ratably between them in proportion to the proceeds received by each of the
Shareholder and KS, with a person to be named (the “HI Amount Escrow Agent”)
concurrently with the Offeror’s payment for the Shareholder’s Shares and the KS
Shares pursuant to the Offer. If on or
prior to December 31, 2005, a Governmental Entity shall have issued a final and
non-appealable Governmental Order providing (a) for the repayment or
reimbursement by the Corporation (or any successor entity or entities thereto)
of all or a portion of the HI Amount to HI or
any of its Subsidiaries (or any successor
entity or entities thereto), (i) in such event, the Corporation shall be permitted to direct the HI Amount Escrow Agent to promptly
pay (without consent or approval of the Shareholder and KS) the applicable
amount to HI or any of its Subsidiaries (or any successor entity or entities
thereto) determined in accordance with such Governmental Order from the HI
Amount Escrow Fund and (ii) in the event amounts remain in the HI Amount Escrow
Fund after the repayment or reimbursement of the amount referenced in
subsection (i) above (after the payment of all fees and expenses of the HI
Amount Escrow Agent), the HI Amount Escrow Agent shall promptly pay such amount
to the Shareholder and KS or (b) that the Corporation (or any successor entity
or entities thereto) is entitled to retain all of the HI
Amount, then in such case, the HI Amount
Escrow Agent shall promptly pay the amount in the HI Amount Escrow Fund (after
the payment of all fees and expenses of the HI Amount Escrow Agent) to the
Shareholder and KS based on their proportional interests in the HI Amount
Escrow Fund. In the event that no final
and non-appealable Governmental Order has been issued by a Governmental Entity
as of December 31, 2005 with respect to the matters covered in subsection (i)
or (ii) above, thereafter the HI Amount Escrow Agent shall promptly pay the
amount in the
25
HI Amount
Escrow Fund (after the payment of all fees and expenses of the HI Amount Escrow
Agent) to the Shareholder and KS based on their proportional interests in the
HI Amount Escrow Fund. In the event
that, at or prior to the time that the Offeror pays for the Shareholder’s
Shares and the KS Shares pursuant to the Offer, (x) HI has irrevocably and
unconditionally agreed on behalf of itself and its successors and assigns in
writing that it will no longer seek or assist any other person in seeking
repayment or reimbursement by the Corporation (or any successor entity or
entities thereto) of all or a portion of the HI Amount to HI or any of its
Subsidiaries (or any successor entity or entities thereto) or (y) any
obligation of the Corporation for such repayment or reimbursement shall
otherwise have been fully satisfied (without any continuing or contingent
obligation of the Corporation (or any successor entity or entities thereto)),
then the Offeror shall not deposit the HI Amount Escrow Fund (or the applicable
portion thereof) with the HI Amount Escrow Agent and the HI Amount Escrow Fund
(or the applicable portion thereof) will be delivered to the depositary for
delivery to the Shareholder and KS based on their proportional interests in the
HI Amount Escrow Fund at the same time as the remainder of the aggregate
consideration for the Shares is delivered to the depositary. Subject to the foregoing, as soon as
practicable after the date hereof, but in any event on or prior to the
completion of the Offer, the Shareholder, KS, the Acquiror, the Offeror and the
HI Amount Escrow Agent shall enter into an escrow agreement governing the
administration and distribution of the HI Amount Escrow Fund in a form
reasonably acceptable to the foregoing persons.
L. Argus Approvals.
(a) The Shareholder and KS will cause Argus to redeem all of the Argus
Preference Shares in accordance with their respective terms on the date the
Offeror takes up and pays for the Shareholder’s Shares held directly by NBI-5,
NBI-6 and NBI-7, provided, however, that neither the Shareholder nor KS shall
be required to do so if Argus is prevented by Government Order or by applicable
Law from redeeming any of the Argus Preference Shares.
(b) If Argus is prevented by Government Order or by applicable Law from
redeeming any of the Argus Preference Shares in the manner contemplated by
section 5.L(a):
(i) the
Shareholder and KS shall, and shall cause Argus to, (A) cooperate and consult
with Acquiror in promptly determining a course of action or mechanism that is
acceptable to Acquiror (acting reasonably) that will permit NBI-5, NBI-6 and
NBI-7 to tender, in compliance with applicable Law and the provisions of the
organizational and governance documents of Argus, NBI-5, NBI-6 and NBI-7, all
of the Shareholder’s Shares directly owned by them to the Offer in the manner
contemplated by this Agreement and (B) take or implement such course of action
or mechanism (which for greater certainty may include an offer by Shareholder
to purchase all of the Argus Preference Shares at their respective redemption
26
prices (as set
out in the Articles of Continuance of Argus); provided
that sufficient funds from the proceeds of the Offer are available to the
Shareholder and KS to effect such purchase on the date the Offeror takes up and
pays for the Shareholder’s Shares held directly by NBI-5, NBI-6 and NBI-7) as
promptly as reasonably practicable and in a manner acceptable to Acquiror;
(ii) the Offeror
shall be required to extend the Offer Period if and to the extent necessary to
ensure that NBI-5, NBI-6 and NBI-7 are able, in compliance with applicable Law
and the provisions of the organizational and governance documents of Argus,
NBI-5, NBI-6 and NBI-7, to tender all of the Shareholder’s Shares directly owned
by them to the Offer in the manner contemplated by this Agreement (but in no
event shall the Offer Period be extended past the 180th day following
commencement of the Offer without the mutual consent of the parties); and
(iii) the Offeror
shall not take up and pay for any of the Shareholder’s Shares directly owned by
NBI-5, NBI-6 and NBI-7 until NBI-5, NBI-6 and NBI-7 are able, in compliance
with applicable Law and the provisions of the organizational and governance
documents of Argus, NBI-5, NBI-6 and NBI-7, to tender all of the Shareholder’s
Shares directly owned by them to the Offer in the manner contemplated by this
Agreement.
6. Guarantee
KS hereby
guarantees the due and punctual performance by the Shareholder of the
obligations of the Shareholder hereunder; provided, that at and after the time that
the Offeror takes up and pays for the Shareholder’s Shares and the KS Shares
pursuant to the Offer, KS’s indemnification obligations shall be subject to
section 8.G.
7. Covenants of the Acquiror
A. The
Acquiror covenants and agrees that after taking up and paying for the
Shareholder’s Shares pursuant to the Offer it shall, if so requested in writing
by the Corporation, provide or cause to be provided up to $26,400,000 in debt
or other financing to the Corporation on terms and conditions reasonably
satisfactory to the Acquiror, which may include a pledge of collateral or
guaranty, for the purposes of allowing NBI-504468 to satisfy its obligations to
HI under that certain Amended Promissory Note dated March 10, 2003, if still
outstanding on such date.
B. The
Acquiror covenants and agrees that it will not take any action that negatively
affects the ability of HI to consummate a transaction resulting from the
Strategic Process (as such term is defined in the Restructuring Proposal
without giving effect to any amendment thereof). In agreeing to the foregoing covenant, the Acquiror is relying on
the assurance of KS that the Acquiror is not required to vote (or act by written
consent
27
with respect
to) the shares of Class A Common Stock of HI or the Class B Shares held,
directly or indirectly, by the Corporation in favour or not against any such
transaction.
C. Directors’ and
Officers’ Insurance. ,
(a) Prior to the taking up and payment for the Shareholder’s Shares and
the KS Shares pursuant to the Offer, the Shareholder shall use its reasonable
best efforts to assist the Corporation in obtaining effective as of the taking
up and payment for the Shareholder’s Shares and the KS Shares pursuant to the
Offer directors’ and officers’ liability insurance (“D&O
Insurance”) for a period not exceeding six years after the take up
and payment for the Shareholder’s Shares and the KS Shares in respect of acts
or omissions prior to the taking up and payment for the Shareholder’s Shares
and the KS Shares by directors and officers of the Corporation and its
Subsidiaries (other than HI and its Subsidiaries). Concurrently with the taking up and payment for the Shareholder’s
Shares and the KS Shares pursuant to the Offer or thereafter if such D&O
Insurance may only be obtained thereafter, the Acquiror shall cause the
Corporation to enter into an agreement and pay for any such D&O Insurance; provided that
the Corporation’s payment obligation for such D&O Insurance shall not
exceed US$1,000,000 in the aggregate.
(b) If the Corporation or any of its successors or assigns
(i) shall consolidate with, amalgamate with or merge into any other
corporation or entity and shall not be the continuing or surviving corporation
or entity of such consolidation, amalgamation or merger or (ii) shall
transfer all or substantially all of its properties and assets to any
individual, corporation or other entity, then, and in each such case, the Acquiror
shall make proper provision for the successors and assigns of the Corporation
to assume all of the obligations set forth in this section 7.C.
(c) The provisions of this section 7.C are intended to be for the
benefit of, and to the maximum extent permitted by applicable Laws shall be
enforceable by, each present and former director, officer and employee of the
Corporation, their heirs and their representatives.
D. Approvals and Consents. The Acquiror shall, and shall cause the
Offeror to, use its reasonable best efforts to provide notice to, and use their
respective reasonable best efforts to obtain all waivers, consents, permits,
licenses, authorizations, orders and approvals or releases necessary or
desirable to complete the Offer from Governmental Entities and other persons,
including parties to agreements, understandings or other documents to which the
Acquiror, the Offeror or any of their respective Subsidiaries is a party or
bound, the failure of which to provide or obtain would reasonably be expected
to, individually or in the aggregate, prevent or materially delay the
completion of the Offer.
E. Notification and Undertakings Under the Enterprise Act 2002.
28
(a) Submission of Information to OFT and OFCOM.
As soon as reasonably practicable after the Acquiror and the Shareholder
have issued the joint press release pursuant to section 10, the Acquiror shall:
(i) furnish to the Office of Fair
Trading (the “OFT”) such information regarding the acquisition of the
Corporation Shares by the Offeror pursuant to the terms of the Offer (the “Transaction”)
as shall be necessary or appropriate in order for the OFT to decide whether the
OFT is under a duty pursuant to Section 22 or 33 of the Enterprise Act 2002 (United
Kingdom), as amended, (the “Enterprise Act”), to refer the Transaction
to the Competition Commission; and
(ii) furnish to the Office of Communications (“OFCOM”)
such information regarding the Transaction as shall be necessary or appropriate
in order for OFCOM to decide whether, in the event that the Secretary of State
for Trade and Industry (the “Secretary of State”) issues an intervention
notice pursuant to Section 42 of the Enterprise Act (an “Intervention Notice”) in
relation to the Transaction, OFCOM would, in its report to the Secretary of
State pursuant to Section 44A of the Enterprise Act in relation to the
Transaction, be minded to advise or recommend to the Secretary of State that
the Secretary of State should refer the Transaction to the Competition
Commission pursuant to Section 45 of the Enterprise Act.
(b) Undertakings
to Allow the Offer to Proceed. If, prior to the time that the Offeror has taken up and paid for the
Corporation Shares pursuant to the terms of the Offer, the OFT or, in the event
that the Secretary of State issues an Intervention Notice, the Secretary of
State, refers the Transaction to the Competition Commission, or indicates to
the Acquiror or any of its Affiliates that the OFT or the Secretary of State,
as the case may be, is minded to refer the Transaction to the Competition
Commission, the Acquiror shall, if necessary, give, or shall cause the giving
by any of its Affiliates or by any other person, and shall comply with, or
cause the compliance with, undertakings that pending the outcome of the
reference, HI UK Holdings Limited and its Subsidiaries will be maintained as a
viable going concern, held separate from all other businesses of the Acquiror
or its Affiliates and not transferred to any other person, together with such
other undertakings as can reasonably be given by the Acquiror or its Affiliates
to allow the Offeror to take up and pay for the Corporation Shares pursuant to
the terms of the Offer in full compliance with the Enterprise Act, in
particular, Sections 78 and 80 thereof and Schedule 7 thereto, and without the
need for the Acquiror or any of its Affiliates to seek the consent of the
Secretary of State under Schedule 7 or the Competition Commission under Section
78 in relation to such taking up of, and payment for, the Corporation Shares.
(c) Information Rights
for the Shareholder and KS. The Acquiror shall: (i) keep the Shareholder and KS or their
legal representatives informed of progress in the review of the Transaction by
the Governmental Entities specified in subparagraph
29
(a) of this section 7E; and (ii) promptly send to the Shareholder and KS
or their legal representatives copies of all documents furnished by the
Acquiror or any of its Affiliates to such Governmental Entities (having, if the
Acquiror so wishes, excised any confidential information relating to the
Acquiror or its Affiliates that would not be reasonably necessary for the legal
representatives of the Shareholder and KS to assess the progress being made in
such review).
F. Guarantee.
The Acquiror shall cause the Offeror to perform all of the Offeror’s
obligations under the Offer and this Agreement including, without limitation,
to pay for all Corporation Shares taken up by it under the Offer pursuant to
the terms of the Offer and shall cause the depositary appointed pursuant to the
Offer to deliver promptly as Argus may direct the proceeds payable in respect
of Shareholder’s Shares tendered by NBI–5, NBI–6 and NBI–7.
G. Assumption of Support Obligations.
As soon as reasonably practicable after the take up and payment for the
Shareholder’s Shares and the KS Shares, the Acquiror agrees that it will make
commercially reasonable efforts to promptly assume the obligations of the Shareholder
and RMI, and obtain a release of all of their obligations, under the agreements
set forth on Schedule 7.G (without giving effect to any amendment, restatement
or waiver thereof on or after the date hereof, each, a “Support Agreement”), and the Shareholder
agrees on behalf of RMI that it will cooperate with the Acquiror and its
Affiliates in good faith to effect such assumptions. The Acquiror agrees and the Shareholder agrees on behalf of
itself and on behalf of RMI that, in the absence of a full and effective
assumption of such obligations under the Support Agreements that is reasonably
satisfactory to the Shareholder, the Acquiror shall, from and after the time of
the taking up of and payment for the Shareholder’s Shares and the KS Shares,
(i) make or cause to be made any payment on behalf of the Shareholder or
RMI then due and owing to the Corporation or any of its Subsidiaries under any
of the Support Agreements after giving effect to any applicable grace periods
and in the form and manner required under the applicable Support Agreement (any
such amount shall be referred to as a “Support
Payment”), and (ii) if applicable, discharge any other
performance obligations of the Shareholder or RMI thereunder; provided
that neither the Acquiror nor any
of its Affiliates shall be required to comply with any restrictions or
limitations thereunder governing the business, operations, capital, financial
condition or other affairs of the Acquiror and its Affiliates to which
Ravelston or RMI may be subject under any Support Agreement. In the event that under the terms of the
applicable Support Agreement such Support Payment is required to be made
directly by the Shareholder or RMI, then Acquiror shall be required to assume all
responsibility and liability for making such payment and the Acquiror shall
make directly to the party then due or owed, such Support Payment at the time
such Support Payment is due and owing by the Shareholder or RMI under the
applicable Support Agreement after giving effect to any applicable grace
periods. Subject to the limitations set
forth in this section 7.G, the Acquiror agrees that, in the absence of a full
and effective assumption of such obligations under the Support Agreements that
is reasonably satisfactory to the Shareholder, the Acquiror shall, from and
after the time of the taking up of and payment for the Shareholder’s Shares,
indemnify the Shareholder and RMI, as applicable, and hold them harmless
against, any
30
bona fide claim against the Shareholder or RMI, as
applicable, for the payment or performance of their obligations under each such
Support Agreement arising from and after the take up and payment for the
Shareholder’s Shares and the KS Shares.
8. Indemnification
A. Indemnity. Subject to section 8.G, the Shareholder and KS shall jointly and
severally defend and indemnify the Indemnified Parties in respect of, and hold
each of them harmless from and against, any and all Losses suffered, incurred
or sustained by any of them or to which any of them becomes subject, resulting
from, arising out of, or relating to (i) any breach of or inaccuracy in
any representation or warranty on the part of the Shareholder and/or KS
contained in this Agreement and (ii) any breach, non-fulfillment of or failure
to perform any covenant, obligation or agreement on the part of the Shareholder
and/or KS contained in this Agreement; provided, however, that none of (x) any
indemnification payment or advancement of expenses, or reimbursements therefor,
referred to in section 5.H(a), (y) any payment by or on behalf of the
Corporation of the HI Amount referred to in section 5.K or (z) any payment
obligation that KS or the Shareholder satisfies pursuant to section 5.I
shall give rise to any claim for indemnification under this section 8.
B. Indemnification Limits. Notwithstanding anything to the contrary
contained in this Agreement:
(a) no amounts shall be payable to any Indemnified Party as a result of
any claim in respect of a Loss arising under clause (i) of section 8.A or under
any unintentional breach, unintentional non-fulfillment or unintentional
failure to perform under clause (ii) of section 8.A unless and until the
aggregate amount of such Losses incurred by the Indemnified Parties is in excess
of US$5,000,000, and then
only to the extent of any such excess; and
(b) the maximum aggregate liability of the Shareholder and KS for Losses
arising under clause (i) of section 8.A and under any unintentional breach,
unintentional non-fulfillment or unintentional failure to perform under clause
(ii) of section 8.A shall be equal to US$70,000,000.
(c) The foregoing limitations shall not apply to any Losses relating to
or arising from (i) any intentional breach of this Agreement or fraudulent
misrepresentation or action by the Shareholder or KS or (ii) any Affiliate
Arrangement. For purposes of
determining whether the amounts referred to in subsections (a) and (b) have
been met or exceeded, any amounts paid by KS pursuant to section 5.H(a) in
respect of any indemnification payments or advancement of expenses made to KS
or Mrs. KS by the Corporation or one of its Subsidiaries shall be included
in the calculation as if they constituted Losses indemnified under this
section 8; provided that to
the extent that the Acquiror is required to repay such amounts pursuant to the
last sentence of section 5.H(a), any such amounts repaid shall no longer
constitute a Loss under this section 8.
31
C. Indemnification Procedures – Third Party Claims.
(a) If any claim or demand in respect of which an Indemnified Party
might seek indemnity under section 8.A is asserted against or sought to be
collected from such Indemnified Party by any third party (a “Third Party Claim”), the Indemnified Party
shall reasonably promptly deliver written notice to the Shareholder and KS of
such claim. The failure to notify the
Shareholder and/or KS shall not relieve the Shareholder and/or KS of any Liability
that it, he or they may have to the Indemnified Party, except to the extent
that it, he or they demonstrate that it, he or they have suffered actual
material prejudice by the Indemnified Party’s failure to give such notice
reasonably promptly and then the relief shall be limited to addressing the
actual material prejudice (if any).
(b) The Shareholder and/or KS shall be entitled to assume the defence of
any Third Party Claim at their sole cost and expense using counsel satisfactory
to the Indemnified Party (acting reasonably) if they deliver written notice to
the Indemnified Party of their intention to do so within five business days of
their receipt of notice of the Third Party Claim. If the Shareholder and/or KS elect to assume the defence of any
Third Party Claim, they shall reimburse the Indemnified Party for all of its
reasonable out-of-pocket expenses arising prior to or in connection with such
assumption. The Shareholder and/or KS
may not assume the defence of a Third Party Claim if (i) the Shareholder and/or
KS is or are also a party to the Third Party Claim and the Indemnified Party
determines in good faith that joint representation would be inappropriate or
(ii) the Shareholder and/or KS fails to promptly provide reasonable written
assurance to the Indemnified Party of its or their financial capacity to defend
the Third Party Claim and provide indemnification with respect to the Third
Party Claim.
(c) If the Shareholder and/or KS assumes the defence of a Third Party
Claim (i) no compromise or settlement of such Third Party Claim may be made by
the Shareholder and/or KS without the Indemnified Party’s consent (which may
not be unreasonably withheld or delayed) unless (A) such compromise or
settlement provides for a complete and unconditional release by such third
party of the Indemnified Party, (B) there is no finding or admission of any
violation of Laws or any violation of the rights of any person and no effect on
any other claims that may be made against the Indemnified Party and (C) the
sole relief provided is monetary damages that are paid in full by KS and/or the
Shareholder, and (ii) the Indemnified Party shall have no Liability with
respect to any compromise or settlement of such claims effected without
compliance with section 8.C(c)(i).
(d) If notice is given to the Shareholder and/or KS of a Third Party
Claim and the Shareholder and/or KS do not, within ten days after receipt of
such notice, give notice to the Indemnified Party of its or their election to
assume the defence of the Third Party Claim, the Shareholder and/or KS shall be
bound by any determination made in the Third Party Claim or any compromise or
settlement effected by the Indemnified Party.
32
(e) Where the defence of a Third Party Claim is being undertaken and
controlled by the Shareholder and/or KS, the Indemnified Party shall use all
commercially reasonable efforts to reasonably cooperate with and provide
reasonable assistance to the Shareholder and/or KS in connection with such
defence at the sole cost and expense of the Shareholder and/or KS.
D. Indemnification Procedures – Other Claims. Any claim or demand in
respect of which an Indemnified Party might seek indemnity under section 8.A
other than a Third Party Claim shall be asserted by an Indemnified Party
against the Shareholder by delivery of written notice of such claim or demand
to the Shareholder and/or KS. If the
Shareholder and/or KS do not deliver written notice of their objection to all
or any part of such claim or demand to the Indemnified Party within 20 days of
its or their receipt of notice of such claim or demand from the Indemnified
Party (the “Objection Period”),
then the Shareholder and/or KS shall be deemed to have accepted such claim or
demand and shall subject to section 8.G, promptly pay or cause to be paid the
amount claimed or demanded by the Indemnified Party. If the Shareholder and/or KS deliver such written notice of
objection to the Indemnified Party within the Objection Period, the Shareholder
and/or KS and the Indemnified Party shall attempt in good faith to resolve any
such dispute within 30 days of the date of such objection and if not resolved
within such 30-day period, such dispute shall be resolved by arbitration in
accordance with the procedures set forth in Schedule 8.D.
E. Survival of Indemnification Claims. Claims for indemnification pursuant to
section 8.A with respect to breaches of representations and warranties shall
not be made after the expiration of the representations and warranties as
provided for in section 1.C; provided,
however, that in the event that a
notice of claim shall have been given on or before 11:59 p.m., Eastern Time, on
the last day of the applicable survival period, the representation or warranty
that is the subject of such indemnification claim shall survive for the
purposes of such claim until such time as such claim is finally resolved.
F. Indemnification Escrow. As security for the payment of any
obligation of the Shareholder and KS under sections 5.H(a), 5.I and 8.A, the
Shareholder and KS jointly and severally agree that Offeror, on behalf of
Shareholder and KS, shall deposit or cause to be deposited on their behalf
US$44,000,000 of the funds to be delivered to them as
payment for the Shareholder’s Shares and the KS Shares pursuant to the Offer (the “Indemnification Escrow Fund”),
ratably between them in proportion to the proceeds of the Offer otherwise
payable to each of the Shareholder and KS, with a party to be
named (the “Indemnification Escrow
Agent”) concurrently with the Offeror’s payment for the
Shareholder’s Shares and the KS Shares pursuant to the Offer. On or prior to the completion of the Offer,
the Shareholder, KS, the Acquiror, the Offeror and the Indemnification Escrow
Agent shall enter into an escrow agreement governing the administration and
distribution of the Indemnification Escrow Fund in a form reasonably acceptable
to the foregoing persons and which, for the avoidance of doubt shall provide
that the Indemnification Escrow Fund will terminate at the end of the survival
period as determined in accordance with section 1.C(b) except to the extent
necessary to provide
33
for the payment of any pending unresolved claims against the
Indemnification Escrow Fund.
G. Payment of Indemnification Claims. During the term of the Indemnification
Escrow Agreement, if an Indemnified Party is entitled to payment or
indemnification from the Shareholder or KS under sections 5.H(a), 5.I and 8.A,
the Indemnified Party shall seek payment of such amount, by and in accordance
with the Indemnification Escrow Agreement, from the Indemnification Escrow
Fund. Following the termination of the
Indemnification Escrow Agreement, if an Indemnified Party is entitled to
indemnification from the Shareholder or KS under section 8.A, the Indemnified
Party shall seek payment of such amount from the Shareholder; provided,
that if the Indemnified Party seeks payment of such amount from the Shareholder
and the Shareholder does not satisfy such indemnification obligation in
accordance with the terms of this section 8, then the Indemnified Party may
seek payment from KS of any portion of such amount not paid by the Shareholder
and KS agrees to be liable for and promptly pay any such amounts. For greater certainty and without
limitation, the foregoing provisions of this section 8.G are subject to the
limitations set forth in sections 8.B and 8.E.
Any amounts paid by the Shareholder or KS, as the case may be, to the
Offeror pursuant to this section 8, to the Offeror whether from the
Indemnification Escrow Fund or otherwise, shall be deemed to represent a
corresponding reduction of the purchase price paid by the Offeror for the
Shareholder’s Shares or the KS Shares, as the case may be.
H. Continuing Obligations. If (a) the Shareholder or any of its
successors or assigns shall consolidate with, amalgamate with or merge with or
into any other corporation or entity and shall not be the continuing or
surviving corporation or entity of such consolidation, amalgamation or merger
or (b) the Shareholder or KS shall Transfer (in one or a series of related
transactions) all or substantially all of its or his properties and assets to
any person, then, and in each case, the Shareholder or KS, as the case may be,
shall make proper provision for the successors and assigns of the Shareholder
or KS, as the case may be, to assume all of the obligations set forth in this
section 8 prior to the consummation of any transaction or series of related
transactions contemplated by subsections (a) or (b) above. So long as the Shareholder and KS (or any
successor or assign thereof) have liability under this section 8, neither will
take or cause to be taken or fail to take or cause to be taken any action that
is primarily intended or structured so as to materially impede or frustrate the
ability of an Indemnified Person to collect amounts that may come due under
this section 8.
9. Fees
and Expenses
Except as
otherwise set forth in this Agreement, each of the parties shall be responsible
for payment of all fees and expenses incurred by it or on its behalf in
connection with the matters contemplated by this Agreement. The Acquiror and the Offeror shall be
responsible for payment of all printing and mailing fees of the Circular and
ancillary documents and depositary fees.
34
10. Public
Disclosure
The Acquiror
and the Shareholder agree that, promptly after the entering into of this
Agreement, they shall issue a joint press release announcing the entering into
of this Agreement and the Acquiror’s intention to make the Offer, which press
release shall be satisfactory in form and substance to both parties (acting
reasonably). Thereafter, the Acquiror,
the Offeror, the Shareholder and KS, subject to applicable Law, will consult
with each other prior to making any other public announcement concerning this
Agreement and the transactions contemplated hereby; provided, however,
that a party hereto may at any time make a public disclosure if it is advised
by outside legal counsel to such party that such disclosure is required under
applicable Law, regulatory authority or stock exchange listing agreement or by
a court of competent jurisdiction.
11. Termination
A. The Shareholder and KS acting jointly, when neither is in default in
performance of their respective obligations under this Agreement may, without
prejudice to any other rights, terminate this Agreement by written notice to
the Acquiror and Offeror if:
(a) subject to section 2.B(b) the Offer has not been commenced on or
before January 28, 2004;
(b) the Acquiror breaches any of its representations, warranties or
covenants in this Agreement in any material respect (or in any respect to the
extent any such representation, warranty or covenant is already subject to a
materiality or Materially Adverse qualifier) and such breach has not been
remedied within three business days after written notice of such breach to the
Acquiror and the Offeror;
(c) the Offer (or any amendment or modification thereof or change
thereto, except for an increase to the Offer Price or the waiver of one or more
conditions of the Offer) does not conform in all material respects with
Schedule B;
(d) the Offer expires in accordance with its terms without the Offeror
taking up, or if after having taken up, the Offeror has not paid for, all of
the Shareholder’s Shares or KS Shares tendered in accordance with Schedule B;
(e) a Governmental Entity shall issue a Governmental Order that
permanently enjoins or otherwise prohibits the consummation of the Offer; or
(f) the Offeror has not taken up and paid for the Shareholder’s Shares
or KS Shares within 180 days following the commencement date of the Offer.
B. The Acquiror, when not in default of the performance of its
obligations under this Agreement, may, without prejudice to any other rights,
terminate this Agreement by written notice to the Shareholder and KS if:
35
(a) the Shareholder or KS breach any of their representations, warranties
or covenants in this Agreement in any material respect (or in any respect to
the extent any such representation, warranty or covenant is already subject to
a materiality or Materially Adverse qualifier) and such breach has not been
remedied within three business days after written notice of such breach to the
Shareholder and KS; or
(b) any of the conditions to the Offer set out in Schedule B have not
been satisfied and have not been waived in writing by the Offeror, or the
Offeror has determined (acting reasonably) that one or more conditions to the
Offer are not capable of satisfaction, within 180 days following the
commencement date of the Offer.
C. Unless earlier terminated pursuant to either section 11.A or 11.B,
this Agreement shall terminate following the expiry of the Offer and the take
up of and the payment for all the Corporation Shares tendered pursuant to the
Offer.
D. In the case of any termination of this Agreement pursuant to this
section 11, except as otherwise contemplated hereby, this Agreement shall be of
no further force and effect, except for (a) in the case of any termination of
this Agreement pursuant to section 11.A or 11.B, the provisions of sections 9,
11.D, 12, 16–19, 21–23 and 28 and (b) in the case of termination of this Agreement
pursuant to section 11.C, the provisions of sections 1.C, 5.E, 5.G–I, 5.K,
7.A-C, 7.G, 8, 9, 11.D, 12–14 and 16–28 shall also remain in force and
effect. Such termination shall not
relieve any party from any liability for any intentional breach of this
Agreement or for fraudulent misrepresentation or action prior to such
termination.
12. Capacity
Notwithstanding
any other provision of this Agreement, KS is executing and delivering this
Agreement as the controlling shareholder of the Shareholder and not in his
capacity as a director or officer of the Corporation, and nothing herein shall
require KS to act in his capacity as a director or officer of the Corporation
or any of its Subsidiaries in a manner contrary to the proper discharge of his
fiduciary duties to the Corporation or any of its Subsidiaries.
13. Assignment
The Acquiror
may assign this Agreement or all or any part of its rights under this Agreement
to an Affiliate or as collateral in connection with one or more bona fide financing transactions; provided
that if such an assignment takes place, the Acquiror shall, unless otherwise
agreed by the Shareholder and KS, continue to be liable for any default in the
performance by the assignee. Subject to
the foregoing, neither this Agreement nor any of the rights hereunder shall be
assignable by either the Shareholder or KS without the prior written consent of
the Acquiror or by the Acquiror without the prior written consent of the
Shareholder and KS.
36
14. Further
Assurances
Upon and
subject to the terms and conditions of this Agreement and the Offer, each of
the parties hereto shall use its reasonable best efforts to take, or cause to
be taken, all appropriate action, and to do or cause to be done, all things
necessary, proper or advisable under applicable Laws and regulations to
consummate and make effective the transactions contemplated by this
Agreement. Without limiting the
generality of the foregoing, each party hereto shall, from time to time and
without further consideration, execute and deliver, or cause to be executed and
delivered, such additional or further consents, documents and other instruments
and shall take all such other action as any other party may reasonably request
for the purpose of effectively carrying out the transactions contemplated by
this Agreement and the Offer, including using reasonable best efforts to obtain
all consents and approvals of Agencies and parties to contracts as are
necessary for the consummation of the said transactions.
15. Adjustments
In the event
of a stock distribution, or any change in the Corporation Shares by reason of
any stock dividend, consolidation, split, reclassification, recapitalization,
exchange or the like, the terms “Subject Shares”, “Shareholder’s Shares”, “KS
Subject Shares” and “KS Shares” shall be deemed to refer to and include all
shares into which such Shares, Series II Preference Shares or Series III
Preference Shares, as applicable, are changed or exchanged; in such event the
Offer Price for such Shares, Series II Preference Shares or Series III
Preference Shares, as applicable, shall be proportionately adjusted.
16. Notices
A. Each party shall give prompt written notice to the others of:
(a) the occurrence or failure to occur of any event that causes, or
would reasonably be expected to cause, any representation or warranty on its
part contained in this Agreement to be untrue or inaccurate; and
(b) any breach of its covenants, obligations and agreements under this
Agreement;
provided that
no such written notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement or the Offer.
B. Any notice or other communication required or permitted to be given
under this Agreement shall be sufficiently given if delivered in person or if
sent by facsimile transmission (provided that transmission is confirmed):
37
(a) in the case of the Shareholder, to:
The Ravelston
Corporation Limited
10 Toronto Street
Toronto, Ontario
M5C 2B7
Attention: The Lord
Black of Crossharbour
Telecopier Number: (416)
363-4187
with copies
(which shall not constitute notice) to:
Sullivan &
Cromwell LLP
125 Broad Street
New York, New York 10004-1498
Attention: Benjamin F. Stapleton III, Esq.
John J. O’Brien, Esq.
Telecopier
Number: (212) 558-3588
- and -
Ogilvy
Renault
77 King Street West
Suite 2100, P.O. Box 141
Royal Trust Tower, TD Centre
Toronto, Ontario M5K 1H1
Attention: Terence S. Dobbin
Telecopier
Number: (416) 216-3930
(b) in the case of KS, c/o the Shareholder at the address specified
above
(c) in the case of the Acquiror, to:
Press Holdings
International Limited
Le
Montaigne
7
Avenue de Grande Bretagne
Monte
Carlo, Monaco 98000
Attention:
Sir David Barclay
Facsimile
Number: (011) 377-93-30-20-13
38
with copies
(which shall not constitute notice) to:
Skadden, Arps,
Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036-6532
Attention: Morris J. Kramer,
Esq.
Alan C. Myers, Esq.
Thomas W. Greenberg, Esq.
Telecopier
Number: (212) 735-2000
- and -
Goodmans
LLP
250 Yonge Street, Suite 2400
Toronto, Ontario M5B 2M6
Attention: Stephen H. Halperin
Telecopier
Number: (416) 979-1234
(d) in the case of Offeror, c/o the Acquiror at the address specified
above
or at such other address or telecopier number as the
party to which that notice or other communication is to be given has last
notified the party giving the notice in the same manner provided in this
section 16.B. Any notice given in
accordance with this section 16.B shall be deemed to have been received on the
date of delivery or sending.
17. Governing
Law
This Agreement
shall be governed by, and construed in accordance with, the laws of the
Province of Ontario and the federal laws of Canada applicable therein
(excluding any conflict of laws rule or principle that might refer to the laws
of another jurisdiction). Each party
irrevocably submits to the non-exclusive jurisdiction of the courts of the
Province of Ontario with respect to any matter arising under this Agreement or
related to this Agreement.
18. Definitions
For the
purposes of this Agreement, those terms defined in Schedule A shall have the
meanings attributed to them in that schedule.
19. Currency
Unless
indicated otherwise, all references to “dollars” and “$” in this Agreement
refer to Canadian dollars.
39
20. Time of
the Essence
Time shall be
of the essence for the purposes of this Agreement.
21. Severability
Whenever
possible, each provision or portion of any provisions of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable Law
but if any provision or portion of any provision of this Agreement is held to
be invalid, illegal or unenforceable in any respect under any applicable Law or
rule such invalidity, illegality or unenforceability shall not affect any other
provision or portion of any provision and this Agreement shall be reformed,
construed and enforced as if such invalid, illegal or unenforceable provision
or portion of any provision had never been contained herein.
22. Entire
Agreement; Amendment
This Agreement
constitutes the entire obligations of the parties with respect to the subject
matter of this Agreement and supersedes any prior expression of intent or
understanding with respect to the subject matter of this Agreement or understanding
with respect to the transactions contemplated by this Agreement. For greater certainty, none of the parties
makes any representation or warranty, express or implied, except as set forth
in this Agreement or as may be set forth in a subsequent definitive
agreement. This Agreement may be
amended only in writing signed by the parties.
23. Specific
Performance and Other Equitable Rights
Each of the
parties acknowledges and agrees that a breach by it of any covenant or other
commitment contained in this Agreement shall cause the others to sustain injury
for which they would not have an adequate remedy at Law for money damages. In the event of any such breach, the
aggrieved party shall be entitled to the remedy of specific performance of the
covenants or commitments and preliminary and permanent injunctive and other
equitable relief in addition to any other remedy to which it might be entitled,
at Law or in equity. The parties agree
to waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such injunctive or other equitable relief.
24. Schedules
The following
are the Schedules to this Agreement, which form an integral part hereof:
Schedule
A
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-
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Definitions
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Schedule
B
|
-
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The Offer
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Schedule
5.G(i)
|
-
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Affiliate
Arrangements
|
Schedule
5.G(ii)
|
-
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Exceptions
|
Schedule
5.I
|
-
|
Payments by
KS and Shareholder
|
Schedule
7.G
|
-
|
Support
Agreements
|
40
Schedule
8.D
|
-
|
Arbitration
Procedures
|
The Schedules
contained in the Disclosure Letter
Nothing
in the Schedules to this Agreement constitutes an admission of any liability or
obligation of the Shareholder, KS, the Corporation or any of their respective
Subsidiaries and Affiliates to any person not a party to this Agreement, nor an
admission to any person not a party to this Agreement against any of the
interests of the Shareholder, KS, the Corporation or any of their respective
Subsidiaries and Affiliates.
25. Counterparts
This Agreement
may be signed in any number of counterparts (by facsimile or otherwise), each
of which shall be deemed to be original and all of which, when taken together,
shall be deemed to constitute one and the same instrument. It shall not be necessary in making proof of
this Agreement to produce more than one counterpart.
26. Treatment
of Claims
Neither the
Shareholder nor KS shall settle or compromise any claim brought by any present,
former or purported holder of any securities of the Corporation in connection
with the transactions contemplated by this Agreement without the prior written
consent of the Acquiror, except to the extent any such settlement (i) provides
a full and unconditional release to the Acquiror and the Offeror, as well as
the Corporation and its Subsidiaries, (ii) imposes no limitations or
restrictions on the business or affairs of the Corporation and its Subsidiaries
and (iii) does not include any finding or admission of any violation of Laws or
any violation of the rights of any person by the Corporation or any of its
Subsidiaries, the Acquiror or the Offeror.
27. Waiver
At any time
during the term of this Agreement, any of the parties may: (a) extend the
time for the performance of any of the obligations or other acts of any of the
other parties; or (b) waive compliance with any of the agreements of any
of the other parties or with any conditions to its own obligations, in each
case only to the extent such agreements and conditions are intended for its
benefit.
28. Interpretation
The headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. References to sections, subsections and
Schedules refer to sections, subsections and schedules of this Agreement unless
otherwise stated. Unless the context
otherwise requires, words used herein importing the singular include the plural
and vice versa. Except for the provisions of sections
5.H(b), 7.C and 8, this Agreement and the provisions hereof are not intended to
confer benefits, rights or remedies to any person not a party hereto. Each of the parties has had the opportunity
to review and comment on this Agreement and consult with counsel, and
therefore, no adverse presumption shall be made against the drafting party.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the date first
set out above.
|
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PRESS
HOLDINGS INTERNATIONAL LIMITED
|
|
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By:
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/s/ Morris
J. Kramer
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|
Name:
Morris J. Kramer, as Attorney-in-fact
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/s/ Barbara Amiel Black
|
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/s/ Conrad Black
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Witness
|
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THE LORD BLACK OF CROSSHARBOUR,
PC(CAN), OC, KCSG
|
|
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THE
RAVELSTON CORPORATION LIMITED
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By:
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/s/ Peter G.
White
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Name:
Peter G. White
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Title: Executive Vice President
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1
SCHEDULE “A”
DEFINITIONS
“Acquiror”
has the meaning set forth in the preamble.
“Affiliate”
means a company shall be deemed to be an “Affiliate” of another company if one
of them is the Subsidiary of the other or if both are Subsidiaries of the same
company or if each of them is controlled by the same person or company.
“Affiliate
Arrangements” has the meaning set forth in section 5.G.
“Agreement”
has the meaning set forth in the preamble.
“Arbitration Act” has the meaning set forth
in Schedule 8.D.
“Arbitrators” has the meaning set forth in
Schedule 8.D.
“Argus”
has the meaning set forth in Recital C.
“Argus
Circular” has the meaning set forth in section 5.L(a)(ii).
“Argus Class
C Shares” has the meaning set forth in Recital C.
“Argus Common
Shares” has the meaning set forth in Recital C.
“Argus
Preference Shares” has the meaning set forth in section 1.A(e).
“Argus Shares”
has the meaning set forth in section 1.A(k).
“Argus
Special Meeting” has the meaning set forth in section 5.L(a)(i).
“business day” means
any day other than a Saturday, Sunday or Canadian federal holiday or a day on
which banks are not open for business in Toronto, Ontario.
“CBCA”
has the meaning set forth in Recital A.
“CBCC”
has the meaning set forth in Recital E.
“CBCC Shares” has
the meaning set forth in section 1.A(m).
“CCRA” has
the meaning set forth in Schedule 1.A(x) of the Disclosure Letter.
2
“Circular” means
the take-over bid circular relating to the Offer as amended or supplemented
from time to time.
“Claim Dispute” has the meaning set forth in
Schedule 8.D.
“Class B
Shares” has the meaning set forth in section 1.A(w).
“Canada
Competition Act” has the meaning set forth in section 1.A(o).
“Compulsory
Acquisition Rights” means the rights afforded to an offeror pursuant
to Section 206 of the Canada Business
Corporations Act.
“Confidentiality
Agreement” means the Confidentiality Agreement, dated January 14, 2004, between the Acquiror, the Shareholder and the Corporation.
“Corporation”
has the meaning set forth in Recital A.
“Corporation
Shares” has the meaning set forth in section 1.A(i).
“Current
Premium” has the meaning set forth in section 7.C(a).
“Disclosure
Letter” means the disclosure letter delivered to the Acquiror by the
Shareholder and KS prior to entering into this Agreement, without giving effect
to any amendments or supplements thereto.
“D&O
Insurance” has the meaning set forth in section 7.C(a).
“Encumbrance” means any
security interest, pledge, mortgage, option, lien (including environmental and
tax liens), assessment, lease, charge, community property interest,
encumbrance, adverse claim, preferential arrangement, condition, equitable
interest, right of first refusal or restriction of any kind, including any
restriction on the use, voting, transfer, receipt of income or other exercise
of any attributes of ownership.
“Enterprise Act” has the
meaning set forth in section 7.E(a)(i).
“Exchange Act” means the
United States Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“Governmental Entity” means
any (a) nation, principality, state, commonwealth, province, territory, county,
municipality, district or other jurisdiction of any nature, (b) governmental
or quasi-governmental entity of any nature, including any governmental
division, subdivision, department, agency, bureau, branch, office, commission,
council, board, instrumentality, officer, official, representative,
organization, taxing authority or unit and any court or other tribunal
(foreign, federal, state or local), or (c) person, or body exercising, or
entitled to exercise, any executive, legislative, judicial, administrative,
regulatory, police, military or taxing authority or power of any nature.
3
“Governmental Order” means any
order, writ, judgment, injunction, decision, decree, stipulation, determination
or award entered by or with any Governmental Entity.
“HI”
means Hollinger International Inc., a Delaware corporation.
“HI Amount” means the amount of
US$16,550,000 characterized as a “non-compete” payment made by HI or one of its
Subsidiaries to the Corporation.
“HI Amount Escrow Agent” has
the meaning set forth in section 5.K.
“HI Amount Escrow Fund” has
the meaning set forth in section 5.K.
“HIP” has the meaning set
forth in section 1.A(l).
“HSR Act” has the meaning set
forth in section 1.A(o).
“Income Tax
Act” means the Income Tax
Act (Canada).
“Indebtedness” of any person shall
mean (a) all obligations of such person for borrowed money, including with
respect to deposits or advances of any kind, (b) all obligations of such person
evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such person upon which interest charges are customarily accrued
and/or paid, (d) all obligations of such person under conditional sale or other
title retention agreements relating to property or assets purchased by such
person, (e) all obligations of such person issued or assumed as the deferred
purchase price of property or services, (f) all obligations of such person
under letters of credit or similar instruments, (g) all capital lease
obligations of such person, (h) all indebtedness of others referred to in clauses
(a) through (g) above guaranteed directly or indirectly by a person, or in
effect guaranteed directly or indirectly by a person through a contract,
agreement or arrangement or (h) all securities or other similar instruments
convertible, exercisable, redeemable or exchangeable into any of the foregoing.
“Indemnification Escrow Agent”
has the meaning set forth in section 8.F.
“Indemnification Escrow Fund”
has the meaning set forth in section 8.F.
“Indemnified Parties” means the Acquiror and
the Offeror and their respective officers, directors, employees, shareholders,
partners, attorneys, financial advisors, agents and representatives, including
the heirs, executors, personal representatives and administrators of any of the
foregoing natural persons.
“Intervention Notice” has the
meaning set forth in section 7.E(a)(ii).
“Investment Canada Act”
has the meaning set forth in section 1.A(o).
“Irish Competition Act” has
the meaning set forth in section 1.A(o).
“Irish Statutory Instrument”
has the meaning set forth in section 1.A(o).
4
“Knowledge” means an
individual will be deemed to have “Knowledge” of a particular fact,
circumstance, event or other matter if such individual is actually aware or,
but for gross negligence or bad faith, would be aware, of such fact,
circumstance, event or other matter. A
person (other than an individual) will be deemed to have “Knowledge” of a
particular fact, circumstance, event or other matter if any individual who is or
was serving at the relevant time as a director or officer of such person (or by
a person performing functions ordinarily performed by a director or officer of
such person) has or had Knowledge of such fact, circumstance, event or other
matter.
“KS” has the meaning set forth
in the preamble.
“KS Shares” has the meaning
set forth in Recital D.
“KS Subject Shares” has the
meaning set forth in Recital D.
“Laws” means all laws, statutes,
rules, regulations, ordinances and other pronouncements having the effect of
law of the Province of Ontario and the federal laws of Canada, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental Entity.
“Lease” has the meaning set forth in
Schedule 1.A(r) of the Disclosure Letter.
“Liabilities” means all debts, obligations
and other liabilities of a person (whether absolute, accrued, contingent, fixed
or otherwise, or whether due or to become due), including those arising under
any Law, action, investigation, inquiry or order and those arising under any
contract.
“Loss” means any action, cost, damage,
Liability, loss, injury, penalty, or obligation of any kind or nature,
including interest, penalties, fines, legal, accounting, and other professional
fees and expenses incurred in the investigation, collection, prosecution,
determination and defense thereof, amounts paid in settlement, any incidental
or consequential damages and any punitive damages payable to third parties that
may be imposed on or otherwise incurred or suffered and which give rise to a
valid claim for indemnification under section 8.
“Materially Adverse” means,
with respect to a person, a fact, circumstance, event or term, or change in a
fact, circumstance, event or term that is or would reasonably be expected to
materially and adversely affect the condition (financial or otherwise),
operations, results of operations, business, assets, Liabilities or capital of
that person.
“Misrepresentation” has the
meaning ascribed thereto in the Securities
Act (Ontario).
“Mrs. KS” means Barbara Amiel
Black.
“NBI Holdco” means
each of 509643 N.B. Inc., a corporation organized under the laws of
New Brunswick, 509644 N.B. Inc., a corporation organized under the
laws of New Brunswick, NBI–5, NBI–6 and NBI–7.
5
“NBI Holdco Shares” has the
meaning set forth in section 1.A(l).
“NBI-5” has the meaning set
forth in Recital B.
“NBI-6” has the meaning set
forth in Recital B.
“NBI-7” has the meaning set
forth in Recital B.
“NBI-504468” has the meaning
set forth in section 1.A(n).
“NBI-504468 Holdco” means each
of the Subsidiaries of the Corporation that owns (directly or indirectly)
shares in the capital of NBI-504468.
“NBI-504468 Holdco Shares” has
the meaning set forth in section 1.A(n).
“Net Indebtedness” has the
meaning set forth in Schedule 1.A(bb).
“1962 Series Shares” has the
meaning set forth in section 1.A(e).
“Objection Period” has the
meaning set forth in section 8.D.
“OFCOM” has the meaning set forth
in section 7.E(a)(ii).
“Offer” has the meaning set
forth in section 2.A.
“Offer Documents” has the
meaning set forth in section 2.B(a).
“Offer Period” has the meaning
specified in Schedule B to this Agreement.
“Offer Price” has the meaning
specified in Schedule B to this Agreement.
“Offeror” has the meaning set
forth in Recital A.
“OFT” has the meaning set
forth in section 7.E(a)(i).
“Options” means options,
rights, warrants or entitlements to purchase or otherwise acquire authorized
and unissued Shares.
“OSA” has the meaning set
forth in section 2.B(a).
“OSC” means Ontario Securities Commission.
“person” means an individual,
corporation, incorporated or unincorporated association, syndicate or
organization, partnership, trust, trustee, executor, administrator or other
legal representative.
“Restructuring Proposal” means
the Restructuring Proposal, dated November 15, 2003, included as Exhibit 99.1
to HI’s Form 8-K, filed on January 6, 2004.
6
“RCL Common Shares” has the
meaning set forth in section 1.A(j).
“RCL Fourth Preference Shares”
has the meaning set forth in section 1.A(j).
“RCL Shares” has the meaning
set forth in section 1.A(j).
“RCL Special Shares” has the
meaning set forth in section 1.A(j).
“RMI” means Ravelston
Management Inc., a corporation incorporated under the laws of the Province of
Ontario.
“Rules” has the meaning set forth in
Schedule 8.D.
“SEC Filings” means the
Corporation’s Annual Report on Form 20-F for the year ended December 31, 2002,
and all other reports publicly filed or furnished by the Corporation subsequent
to December 31, 2002 and prior to the date hereof under Section 13 or 15(d) of
the Exchange Act or pursuant to the Corporation’s continuous disclosure obligations
under the OSA, in the form filed with the SEC or the Ontario Securities
Commission, as the case may be, and HI’s Annual Report on Form 10-K for the
year ended December 31, 2002, and all other reports publicly filed by HI
subsequent to December 31, 2002 and prior to the date hereof under Section 13
or 15(d) of the Exchange Act, in the form filed with the SEC.
“Secretary of State” has the
meaning set forth in section 7.E(a)(ii).
“Securities Act” means the United
States Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
“Securityholders” means the
holders of Shares and the holders of Options, rights, warrants or other
securities or entitlements to purchase or otherwise acquire Shares.
“Series II Preference Shares”
has the meaning set forth in Recital A.
“Series III Preference Shares”
has the meaning set forth in Recital A.
“Shareholder” has the meaning
set forth in the preamble.
“Shareholder’s Shares” has the meaning set forth in Recital
B.
“Shares” has the meaning set
forth in Recital A.
“Subject Shares” has the meaning set forth
in Recital B.
“Subsequent Transaction” means
an amalgamation, statutory arrangement or other transaction involving the
Corporation and one or more of the Offeror and an Affiliate of the Offeror for
the purpose of enabling them to acquire all of the Shares, Series II Preference
Shares and Series III Preference Shares not acquired by the Offeror pursuant to
the Offer and, for greater certainty, includes the exercise by the Offeror of
its Compulsory Acquisition Rights.
7
“Subsidiary” A company shall
be deemed to be a “Subsidiary” of another company (the “Parent Company”) if:
(a) it is controlled by:
(i) the Parent Company;
(ii) the Parent Company and one or more companies each of which is
controlled by the Parent Company; or
(iii) two or more companies each of which is controlled by the Parent
Company; or
(b) it is a subsidiary of a company that is the Parent Company’s
subsidiary.
“Sugra”
has the meaning set forth in Schedule 1.A(r) of the Disclosure Letter.
“Support Agreement” has the meaning set
forth in section 7.G.
“Support Payment” has the meaning set forth
in section 7.G.
“Third Party Acquisition”
means any take-over bid, tender, offer or exchange offer for Shares other than
the Offer, merger, amalgamation, plan of arrangement, reorganization,
consolidation, business combination, reverse take-over, sale of assets or any
lease, long-term supply agreement or other arrangement having the same economic
effect as a sale (other than in the ordinary course of business), sale of
securities (other than pursuant to the exercise of currently outstanding
Options and share purchase plans), recapitalization, liquidation, dissolution,
winding-up or similar transaction involving the Corporation.
“Third Party Claim” has the
meaning set forth in section 8.C(a).
“Transaction” has the meaning
set forth in section 7.E(a)(i).
“Transfer” has the meaning set forth in section 5.A(a).
“$2.50 Series Shares” has the
meaning set forth in section 1.A(e).
“$2.60 Series Shares” has the
meaning set forth in section 1.A(e).
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1
SCHEDULE “B”
THE OFFER
General:
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The Offer
shall consist of three separate offers to purchase all of the Shares, Series
II Preference Shares and Series III Preference Shares by way of a Circular
mailed simultaneously to all Securityholders, except as prohibited by
applicable Law, and prepared in compliance with the OSA and other applicable
securities Laws. The Offer shall be
made on the terms set forth in this Schedule “B” and upon such other terms
and conditions as are required by applicable Law.
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Offer
Period:
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The Offer
shall initially be open for acceptance for a period of 35 clear days and may
be extended from time to time by the Offeror (A) if and to the extent
required to satisfy any condition of the Offer or (B) otherwise, if all
of the Corporation Shares tendered in the Offer prior to such extension shall
have been taken up and paid for.
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Take Up and
Payment:
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Subject to
satisfaction or waiver of the conditions of the Offer, the Offeror shall take
up all the Shares, Series II Preference Shares and Series III Preference
Shares deposited under the Offer on the first business day it is entitled to
do so under applicable securities Laws (including any relief from such Laws
granted by a Governmental Entity) and shall pay for such Shares, Series II
Preference Shares and Series III Preference Shares by delivery to the
depositary of the aggregate consideration therefor on the same business day
upon which it has taken up such Shares, Series II Preference Shares and
Series III Preference Shares.
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Offer Price:
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$8.44 cash per
Share.
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$9.53 cash per
Series II Preference Share.
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$10.00 cash per
Series III Preference Share.
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Conditions
of the Offer
for the
Shares:
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The Offer
shall be subject to the following conditions only, each of which shall be for
the exclusive benefit of the Offeror and may be waived only in writing by the
Offeror in its sole discretion. The
failure by the Offeror at any time to exercise any of the following
conditions shall not be deemed a waiver of any such condition, the waiver of
any such condition with respect to particular facts and other circumstances
shall not be deemed a waiver with respect to any other facts and
circumstances, and each such condition shall be deemed an ongoing condition
that may be asserted at any time and from time to time by the Offeror. Any determination by the Offeror
concerning any event or other matter described in the following conditions
shall be
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final and
binding upon all Securityholders and the depositary.
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(a)
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the
Shareholder, KS and NBI-5, NBI-6 and NBI-7 having validly deposited all, free
and clear of all Encumbrances, under the Offer and not withdrawn any of the
Shareholder’s Shares and the KS Shares;
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(b)
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the
Governmental Entity approval and the termination of waiting periods set forth
in sections 1.A(o)(iii), (iv) and
(vi) and 1.B(f)(iii), (iv) and (vi) shall have been obtained on terms and
conditions reasonably satisfactory to the Offeror; provided, however,
that any undertaking, agreement or arrangement requested by the Minister of
Heritage Canada regarding any “cultural business” (as such term is defined in
the Investment Canada Act) carried on by the Corporation or any of its
Subsidiaries that does not require the expenditure of monies, including an
undertaking, agreement or arrangement to divest any or all of such cultural
business, shall be deemed to be reasonably satisfactory to the Offeror;
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(c)
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(i)
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no
Governmental Order shall be in effect;
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(ii)
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no
Governmental Entity shall have commenced or made any bona fide threat to commence any action,
suit or proceeding seeking a Governmental Order; and
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(iii)
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no Law,
regulation or policy shall have been proposed (and shall be reasonably likely
to be enacted), enacted, promulgated or applied;
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in the case
of any of (i), (ii) or (iii),
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(A)
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to prohibit
the making of the Offer or, subject to compliance with applicable securities
Laws, the purchase or sale of the Shares, the Series II Preference Shares or
the Series III Preference Shares pursuant to the Offer;
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(B)
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to impose
material limitations or conditions on the right of the Offeror (or any of its
Affiliates) to own the Shares, the Series II Preference Shares or the Series
III Preference Shares or exercise full rights or benefits of ownership of the
Shares, the Series II Preference Shares or the Series III Preference Shares;
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(C)
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which, if
the Offer were consummated, would reasonably be expected to be Materially
Adverse to the
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3
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Corporation
and its Subsidiaries, taken as a whole; or
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(D)
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that would
prevent the completion of the acquisition of the Shares, the Series II
Preference Shares or the Series III Preference Shares pursuant to the
Compulsory Acquisition Rights or any Subsequent Transaction;
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(d)
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no action
shall have been taken by or at the direction of the Corporation or any of its
Subsidiaries, and not subsequently rescinded or otherwise cured, that would
(i) prevent the Offeror from taking up the Corporation Shares pursuant to the
Offer, (ii) reasonably be expected, in the event that the Offeror did take up
and pay for the Corporation Shares tendered in the Offer, to deny the Offeror
the record or beneficial ownership, or to limit or restrict such ownership,
of such Corporation Shares, (iii) affect materially and adversely any of the
rights and privileges (including economic benefits and voting rights) that
would attach to such Corporation Shares in the absence of such action or
(iv) constitute
a Transfer of, or an understanding, arrangement or agreement to Transfer, any
assets, properties or businesses for gross consideration to or for or on
behalf of HI and its Subsidiaries, including any Liabilities to be assumed by
a third party in connection therewith, in excess of 20% of the aggregate
equity capitalization of HI (valuing the common shares of HI by reference to
the per share value of the publicly traded common shares of HI for the ten
trading days immediately preceding the earlier of (1) the date of public
announcement or (2) the consummation, of any such Transfer transaction or
series of transactions announced on or after the date of the Agreement);
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(e)
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the accuracy
in all material respects of the representations and warranties in the
Agreement as of the date of the Agreement and as of the date the Offeror
takes up the Shareholder’s Shares and the KS Shares under the Offer except
(i) to the extent any such representation and warranty speaks as of a different
date, then such accuracy shall be measured as of such date, (ii) in the case
of the representations and warranties contained in section 1A(x) of the
Agreement, such accuracy shall be measured as of the date of the Agreement
and (iii) to the extent that any such representation and warranty is subject
to a materiality or Material Adverse qualification, in which case any such
representation and warranty shall be accurate in all respects after giving
effect to such qualification;
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(f)
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the
compliance in all material respects by the Shareholder and KS with their
respective obligations in the Agreement;
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(g)
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subject to
section 5.L(b), the Argus Preference Shares shall have been redeemed on the date
the Offeror first takes up any Corporation Shares; and
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(h)
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(i) the
absence of any suspension of, or limitation on prices for, trading in the
Shares, the Series II Preference Shares or the Series III Preference Shares
on the Toronto Stock Exchange (or on any other exchange or quotation system
on which such shares may then be listed or quoted), (ii) a declaration
of a banking moratorium or any suspension of payments in respect of banks in
the Canada, the United Kingdom or the United States by any Governmental
Entity or (iii) a commencement of a war, armed hostilities or other national
or international calamity directly or indirectly involving Canada, the United
Kingdom or the United States which could reasonably be expected to be
Materially Adverse to the Corporation and its Subsidiaries, taken as a whole,
or to delay the consummation of the Offer.
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Conditions
of the offer for the Series II Preference Shares and the Series III
Preference Shares:
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The offer
for the Series II Preference Shares and the Series III Preference Shares
shall be subject to the condition that the Shares held by KS and the
Shareholder have been taken up under the Offer in accordance with the terms
of the Agreement. This condition
shall be for the exclusive benefit of the Offeror and may be waived only in
writing by the Offeror in its sole discretion.
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No other
Conditions:
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For greater
certainty, the Offer shall not be subject to any conditions other than those
specified above.
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* *
*