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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For Quarter Ended March 31, 1997 Commission File Number 1-6249
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First Union Real Estate Equity and Mortgage Investments
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(Exact name of registrant as
specified in its charter)
Ohio 34-6513657
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification) No.)
Suite 1900, 55 Public Square
Cleveland, Ohio 44113-1937
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 781-4030
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Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---- ---
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
21,625,503 Shares of Beneficial Interest outstanding as of March 31, 1997
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Total number of pages contained in this report: 10
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PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements.
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The combined financial statements included herein have been prepared by
the registrant, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations, although the registrant believes that the disclosures
contained herein are adequate to make the information presented not misleading.
It is suggested that these combined financial statements be read in conjunction
with the combined financial statements and the notes thereto included in the
registrant's latest annual report on Form 10-K.
The unaudited "Combined Balance Sheets" as of March 31, 1997 and
"Combined Statements of Income and Combined Statements of Changes in Cash" for
the periods ended March 31, 1997 and 1996, of the registrant, and "Notes to
Combined Financial Statements," are included herein. These financial statements
reflect, in the opinion of the registrant, all adjustments (consisting of normal
recurring accruals) necessary to present fairly the combined financial position
and results of operations for the respective periods in conformity with
generally accepted accounting principles consistently applied.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
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of Operations.
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Financial Condition
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In January 1997, the registrant sold a shopping center in Wilkesboro,
NC for $9 million in cash. This sale resulted in a capital loss of $4.9 million,
which was previously provided for by the registrant as part of a $14 million
noncash unrealized loss on the carrying value of certain assets identified for
disposition recorded in December 1995. The net proceeds were used to repay
short-term bank loans.
In January 1997, the registrant issued 3,910,000 shares of beneficial
interest, resulting in net proceeds of $46.1 million. The net proceeds were used
to repay short-term bank loans of $17 million, repay $5 million in mortgage
loans and invest $24 million in short-term investments.
In February 1997, the registrant received repayment of its wraparound
mortgage loan investment secured by an apartment complex in Atlanta, GA. The
registrant received $16.2 million in cash and a 10%, $1.8 million second
mortgage secured by the management agreement on the apartment complex. The
proceeds were used to repay $3.4 million in underlying mortgage debt and invest
$12.8 million in short-term investments.
Except as noted above, there has been no material change in the
registrant's financial condition from December 31, 1996.
Liquidity and Capital Resources
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Net cash provided by operations for the first quarter of 1997 of $7
million was $2 million greater than the same period of 1996. This increase is
primarily attributed to an increase in net income before preferred dividend
when comparing the first quarter of 1997 to that of 1996. Dividends paid in 1997
of $2.0 million represented 28% of net cash from operating activities.
As described above in the first quarter of 1997, the registrant
received $16.2 million from the repayment of a mortgage investment and $9
million from the sale of a mall. The proceeds were used to repay mortgage debt
related to the mortgage investment and repay amounts outstanding under the bank
credit agreement with the balance of the proceeds being invested temporarily in
short-term investments. The registrant also invested $4.1 million in its
existing portfolio, primarily to complete a tenant alteration at its office
technology center in Denver, CO, which is continuing with a re-tenanting and
conversion from a retail center to a modern commerce center.
The net proceeds of $46.1 million from the January 1997 share offering
were used to repay mortgage and bank loans with the balance of the proceeds
being invested temporarily in short-term investments.
In April 1997, the registrant's affiliated management company purchased
voting control of Imperial Parking Ltd. for $75 million including the assumption
of $26 million in debt. The purchase was funded through cash held in short-term
investments at March 31, 1997 and through short-term borrowings.
During the remaining nine months of 1997, the registrant has
approximately $1.5 million of mortgage principle payments and $15 million of
tenant and building improvements
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to fund. These commitments will be funded through existing operations and bank
credit facilities.
Results From Operations
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Net income applicable to shares of beneficial interest for the first
quarter of 1997 was $1 million as compared to a net loss of $.9 million for the
first quarter of 1996.
Net income applicable to shares of beneficial interest in 1997 included
a non-cash recognition of $.7 million of income from the repayment of a
wraparound mortgage investment, as the proceeds of $18 million exceeded the
registrant's basis in the wraparound mortgage investment. Additionally, in 1997,
net income applicable to shares of beneficial interest was reduced by the
accrual of a preferred dividend of $1.2 million. The preferred shares were
issued in October 1996.
Net income applicable to shares of beneficial interest for the first
quarter of 1996 included two non-cash charges totaling $1.3 million for the
write-off of a tenant allowance and the termination of an employment contract.
Property net operating income, which is rents less property operating
expenses and real estate taxes, was $.6 million and $.5 million greater than
when comparing the first quarter of 1997 to that of 1996 on a comparable and
non-comparable property basis, respectively. The office property portfolio
benefited from increased occupancy at a former retail center in Denver, CO.
which is in the process of being converted into a commerce center and produced
$.5 million of increased income from property net operating income when
comparing 1997 to 1996. The comparable retail portfolio produced an additional
$.3 million in property net operating income primarily due to the addition of
anchor tenants at shopping malls in Reading, PA and Morgantown, WV. The
comparable parking portfolio had a decline of $.2 million in property net
operating income when comparing 1997 to 1996 due to increased real estate tax
expense and the expiration of a fixed minimum rent contract. The property net
operating income for the apartment complex purchased in December 1996 was offset
by the property net operating income lost from the sale of two office buildings
with an attached parking garage in 1996 and the shopping mall sold in
January 1997.
In September 1996, the registrant invested in a joint venture that owns
eight shopping malls and 50% of another mall. The joint venture produced $.3
million in investment income and $.8 million in management fees for the
registrant's affiliated management company in the first quarter of 1997.
Mortgage investment income declined when comparing 1997 to 1996 due
primarily to the repayment of a wraparound mortgage investment in February 1997,
as noted previously.
Short-term investment income increased in 1997 as compared to 1996 due
to the registrant having an average of $26 million invested in short-term
securities in 1997 versus a minimal amount of short-term investments in 1996.
The proceeds from income, the repayment of the wrap-around mortgage investment
in February 1997 and the net proceeds of the issuance of shares of beneficial
interest after repayment of bank and mortgage loans were invested temporarily
in short-term securities in the first quarter of 1997.
Mortgage interest expense increased in 1997 versus 1996 due to three
mortgages obtained in the last nine months of 1996 for $36 million at an average
rate of 7.6%.
Interest on bank loans decreased when comparing 1997 to 1996. The
registrant had an average of $6 million outstanding under its bank credit
agreement in 1997 versus an average balance of $66 million in 1996. The net
proceeds from the sale of preferred shares of beneficial interest in October
1996, $17 million from the proceeds of the sale of shares of beneficial interest
in January 1997, and the $9 million proceeds from the sale of a shopping mall,
were used to repay bank loans during the fourth quarter of 1996 and first
quarter of 1997.
Depreciation and amortization decreased by $.5 million compared to the
first quarter of 1996. The decline is primarily attributed to the one-time, $.7
million write-off of a tenant allowance in 1996 due to the registrant replacing
an anchor tenant at its shopping mall in Morgantown, WV. The one-time write-off
in 1996 is partially offset by the increase in depreciation expense associated
with the registrant's ongoing capital improvement program.
General and administrative expenses for 1996 included a non-recurring,
non-cash charge of $.7 million for the termination of an employment contract of
a former executive. In 1997, general and administrative expenses included the
additional expenses to manage the nine properties acquired by the joint venture.
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PART II - OTHER INFORMATION
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Item 1. Legal Proceedings.
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None.
Item 2. Changes in Securities.
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None.
Item 3. Defaults Upon Senior Securities.
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None.
Item 4. Submission of Matters to a Vote of Security Holders.
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The following matters were considered at the Annual Meeting of
Shareholders held on April 8, 1997:
1. Election of Trustees
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<TABLE>
<CAPTION>
Name Total Votes For Against Abstentions
---- ----------- --- ------- -----------
<S> <C> <C> <C> <C>
Kenneth K. Chalmers 17,387,805 15,729,280 -- 1,658,525
William E. Conway 17,387,805 15,671,950 -- 1,715,855
Russel R. Gifford 17,387,805 15,696,629 -- 1,691,176
</TABLE>
Continuing Term Trustees
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E. Bradley Jones 1998
James C. Mastandrea 1998
Herman T. Russell 1998
Daniel G. DeVos 1999
Allen H. Ford 1999
Spencer H. Heine 1999
2. Other Matters
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A Shareholder proposal to disallow proxy ballots
which are unmarked as an affirmative vote for the issue under consideration.
Total Votes For Against Abstentions
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7,986,479 1,987,221 6,988,013 1,011,245
Item 5. Other Information.
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None.
Item 6. Exhibits and Reports on Form 8-K.
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(a) Exhibits:
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Exhibit (3) - First Union Real Estate Equity and
Mortgage Investments Amended By-Laws.
Exhibit (10a) - Credit agreement between Imperial
Parking Limited and BT Bank of Canada
Exhibit (10b) - Put agreement entered into between BT
Bank of Canada, Hong Kong Bank of Canada
and First Union Real Estate Equity and
Mortgage Investments.
Exhibit (10c) - Share Purchase Agreement and amendments
-- Impark Investments Inc. and First
Union Real Estate Equity and Mortgage
Investments.
Exhibit (10d) - Put agreement entered into between
Impark Investments Inc., the Onex
Associates and First Union Real Estate
Equity and Mortgage Investments.
Exhibit (10e) - Senior subordinated note by 3357392
Canada Inc. to 3006302 Nova Scotia
Company.
Exhibit (10f) - Senior subordinated note by 504463 N.B.
Inc. to 3006302 Nova Scotia Company.
Exhibit (10g) - Shareholders Agreement dated April 17,
1997 between 3357392 Canada, Inc. and
3355489 Canada, Inc. and the individuals
and trusts listed on Schedule A.
Exhibit (10h) - Shareholders Agreement dated April 17,
1997 between 504308 N.B., Inc. First
Union Management, Inc. and the
individuals listed on Schedule A.
Exhibit (10i) - Assignment dated March 27, 1997 between
First Union Real Estate Equity and
Mortgage Investments and First Union
Management, Inc.
Exhibit (10j) - Assignment dated April 16, 1997 between
First Union Management, Inc. and
335489 Canada, Inc.
Exhibit (10k) - Assignment dated April 16, 1997 between
335489 Canada, Inc. and 3357392
Canada, Inc.
Exhibit (10l) - Amendment to assignment made May 8, 1997
between First Union Real Estate Equity
and Mortgage Investments and Imperial
Parking Limited.
Exhibit (11) - Statements Re: Computation of Per Share
Earnings
Exhibit (12) - Statements Re: Statements of Ratios of
Combined Income from
Operations and Combined
Net Income to Fixed
Charges
Exhibit (20) - Financial Statements (Unaudited)
Combined Balance Sheets
as of March 31, 1997 and
December 31, 1996
Combined Statements of
Income, for the Three
Months ended March 31,
1997 and 1996
Combined Statements of
Changes in Cash, for
the Three Months ended
March 31, 1997 and 1996
Notes to Combined
Financial Statements
(b) Reports on Form 8-K:
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None.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
First Union Real Estate Equity and
Mortgage Investments
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(Registrant)
Date: May 9, 1997 By: /s/ James C. Mastandrea
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James C. Mastandrea, Chairman,
President and Chief Executive
Officer
Date: May 9, 1997 By: /s/ Steven M. Edelman
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Steven M. Edelman, Executive
Vice President - Chief Financial
Officer
Date: May 9, 1997 By: /s/ John J. Dee
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John J. Dee, Senior Vice
President - Chief Accounting
Officer
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Index to Exhibits
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Exhibit (3) - First Union Real Estate Equity and Mortgage Investments amended
By-Laws
Exhibit (10a) - Credit agreement between Imperial Parking Limited and BT Bank of
Canada
(10b) - Put agreement entered into between BT Bank of Canada, Hong Kong
Bank of Canada and First Union Real Estate Equity and Mortgage
Investments
(10c) - Share Purchase Agreement and amendments-- Impark Investments
Inc. and First Union Real Estate Equity and Mortgage
Investment
(10d) - Put agreement entered into between Impark Investements Inc.,
the Onex Associates and First Union Real Estate Equity and
Mortgage Investements
(10e) - Senior subordinated note by 3357392 Canada Inc. to 3006302 Nova
Scotia Company
(10f) - Senior subordinated note by 504463 N.B. Inc. to 3006302 Nova
Scotia Company
(10g) - Shareholders Agreement dated April 17, 1997 between 3357392
Canada, Inc. and 3355489 Canada, Inc. and the individuals and
trusts listed on Schedule A.
(10h) - Shareholders Agreement dated April 17, 1997 between 504308
N.B., Inc. First Union Management, Inc. and the individuals
listed on Schedule A.
(10i) - Assignment dated March 27, 1997 between First Union Real
Estate Equity and Mortgage Investments and First Union
Management, Inc.
(10j) - Assignment dated April 16, 1997 between First Union
Management, Inc. and 335489 Canada, Inc.
(10k) - Assignment dated April 16, 1997 between 335489 Canada, Inc.
and 3357392 Canada, Inc.
(10l) - Amendment to assignment made May 8, 1997 between First Union
Real Estate Equity and Mortgage Investments and Imperial
Parking Limited.
Exhibit (11) - Statements Re: Computation of per share earnings
Exhibit (12) - Statements Re: Ratios of combined income from
operations and combined net
income to fixed charges
Exhibit (20) - Financial Statements (unaudited)
Combined Balance Sheets as of March 31, 1997 and
December 31, 1996
Combined Statements of Income for the Three
Months ended March 31, 1997 and 1996
Combined Statements of Changes in Cash for the
Three Months ended March 31, 1997 and 1996
Notes to Combined Financial Statements
Exhibit (27) - Financial Data Schedule
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Exhibit 3
FIRST UNION REAL ESTATE EQUITY
AND MORTGAGE INVESTMENTS
BY-LAWS
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ARTICLE I
MEETING OF BENEFICIARIES
SECTION 1. ANNUAL MEETING.
The annual meeting of the Beneficiaries of the Trust for the transacting of such
business as shall be specified in the notice of the meeting shall be held as
provided in the Declaration of Trust.
SECTION 2. SPECIAL MEETINGS.
Special meetings may be called at any time as provided in the Declaration of
Trust.
SECTION 3. PLACE OF MEETING.
All meetings of the Beneficiaries shall be held at the office of the Trust in
the City of Cleveland in the State of Ohio or at such other place in the State
of Ohio as may be designated, in the case of an annual meeting, by the Trustees,
or, in the case of a special meeting, by the Trustees calling such meeting or by
the person or persons requesting such meeting pursuant to the Declaration of
Trust.
SECTION 4. NOTICE OF MEETINGS.
Written notice of each annual or special meeting of the Beneficiaries, stating
the time, place and purpose thereof shall be given in accordance with the
Declaration of Trust.
SECTION 5. PROCEDURE AT MEETINGS.
At each meeting of the Beneficiaries, the Trustees shall appoint one of their
number or one of the Beneficiaries to preside thereat. The Trustees shall
appoint a Secretary for each such meeting, who shall be duly sworn to the
faithful discharge of his duties and to keep the minutes of such meeting, which
minutes shall be signed and attested by him and filed with the records of the
Trust.
SECTION 6. QUORUM.
A majority of the outstanding shares of the Trust present in person or by proxy
shall constitute a quorum for any annual or special meeting of Beneficiaries.
SECTION 7. NOMINATIONS AND BENEFICIARY BUSINESS
(a) With respect to any Annual or Special Meeting of Beneficiaries, (a
"Meeting") nominations for election to the Board of Trustees and the proposal of
matters to be considered by the Beneficiaries may be made only (I) by or at the
direction of the Board of Trustees or (ii) by any Beneficiary who was a
Beneficiary of record at the time of the giving of the notice described in this
Section 7 and at the record date for the Meeting, as defined in the Declaration
of Trust, who is entitled to vote at the Meeting and who complied with the
notice procedures set forth in this Section 7.
(b) For a nomination or proposal to be properly brought before a Meeting by a
Beneficiary, other than a shareholder proposal included in the Trust's proxy
statement
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pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as amended, the
Beneficiary must have given timely notice thereof in writing to the Secretary of
the Trust, and such Beneficiary or his representative must be present in person
at the Meeting. A Beneficiary's notice shall be timely if delivered to, or
mailed and received at, the principal executive offices of the Trust not less
than 90 days nor more than 120 days prior to the anniversary date of the
immediately preceding Annual Meeting of Beneficiaries, or Special Meeting held
in lieu thereof.
(c) A Beneficiary's notice to the Secretary shall set forth as to each
nomination or proposal the Beneficiary intends to bring before the Meeting (I)
as to any nomination, the name and address of any proposed nominee, the
nominee's business affiliation, the information required as to nominees by Item
401 of Regulation S-K under the Securities Act of 1933 and the Securities
Exchange Act of 1934, all as may be amended from time to time, and a
certification of the proponent that such nominee meets all the qualifications
for Trustees set forth in the Declaration of Trust, including, but not limited
to, Section 8.10 thereof, (ii) as to any proposal, a brief description of the
proposal desired to be brought before the Meeting, a statement of the reasons
for making such proposal at the Meeting and a certification of the proponent
that the proposal does not conflict with or violate any provision of the
Declaration of Trust, (iii) the name and address, as they appear on the Trust's
share transfer books of the Beneficiary offering such nomination or proposal and
of the beneficial owners (if any) of the shares registered in such Beneficiary's
name and the name and address of any other Beneficiaries (or beneficial owner of
shares) known by such Beneficiary to be supporting such nomination or proposal
on the date of the Beneficiary's notice, (iv) the class and number of shares of
the Trust's capital shares which are beneficially owned by the Beneficiary and
such beneficial owners (if any) on the date of such Beneficiary's notice and by
any other Beneficiaries known by such Beneficiary to be supporting such
nomination or proposal on the date of such Beneficiary's notice, and (v) any
financial interest of the Beneficiary or any such beneficial owner in such
proposal. Nothing contained in this Subsection (e) shall be deemed to supersede
the provisions of Section 7.2 of the Declaration of Trust relating to business
that may be transacted at a Special Meeting.
(d) If the Board of Trustees, or a designated committee thereof, determines that
any Beneficiary nomination or proposal was not timely made in accordance with
the provisions of this Section 7, or that any proposed nominee does not meet the
qualifications set forth in the Declaration of Trust, or that any proposal
conflicts with or violates a provision of the Declaration of Trust, then such
nomination or proposal shall not be presented for action at the Meeting in
question. If the Board of Trustees, or a designated committee thereof,
determines that the information provided in the Beneficiary's notice does not
satisfy the informational requirements of this section in any material respect,
the Secretary of the Trust shall promptly notify such Beneficiary of the
deficiency in the notice. Such Beneficiary shall have the opportunity to cure
such deficiency by providing additional information to the Secretary within the
period of time, not to exceed five (5) days from the date such deficiency notice
is given to such Beneficiary, determined by the Board or such committee. If the
deficiency is not cured within such period, or if the Board of Trustees or such
committee determines that the additional information provided by the
Beneficiary, together with the information previously provided, does not satisfy
the requirements of this Section 7 in any material respect, then such nomination
or proposal shall not be presented for action at the Meeting in question.
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(e) Notwithstanding the procedure set forth in the preceding paragraph, if
neither the Board of Trustees nor such committee makes a determination as to the
compliance of any Beneficiary nomination or proposal with the provisions of this
Section 7, as set forth above, the presiding Officer of the Meeting shall
determine and declare at the Meeting whether the Beneficiary nomination or
proposal was made in compliance with the provisions of this Section 7, and if
such presiding Officer determines and declares that such nomination or proposal
was not made in compliance with such provisions, such nomination or proposal
shall not be acted upon at the Meeting.
ARTICLE II
SECTION 1. REGULAR MEETINGS.
Regular meetings of the Trustees may be held at such times and places within the
State of Ohio as may be provided for in resolution adopted by the Trustees.
SECTION 2. SPECIAL MEETINGS.
Special meetings of the Trustees may be held at any time or place within the
State of Ohio upon call of any two of the Trustees at the time and place
designated in the notice of meeting.
SECTION 3. NOTICE OF MEETINGS.
Notice of each meeting, regular or special, shall be given by mailing or by
sending to each Trustee (addressed to the address last furnished to the Trust by
the Trustee) a letter at least 4 days before the meeting, or a telegram at least
24 hours before the meeting. Notice of any special or regular meeting, as
provided in the Declaration of Trust, may be waived in writing or by telegram by
any Trustee either before or after such meeting, and such notice shall be deemed
to have been waived by the Trustees attending such meeting. Except as provided
in Article V hereof, unless otherwise indicated in the notice thereof, any
business may be transacted at any regular or special meeting.
SECTION 4. QUORUM.
At any meeting a majority of the Trustees then in office shall constitute a
quorum.
SECTION 5. COMPENSATION OF TRUSTEES.
The Trustees are authorized to fix a reasonable retainer for members of the
Board of Trustees and the Chairman and a reasonable fee for attendance at
meetings. In addition to such compensation there shall be reimbursement for
expenses for traveling to and from such meetings.
SECTION 6. COMMITTEES OF THE BOARD OF TRUSTEES.
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The Trustee may elect from their members committees of the Board and give them
any or all powers of the Trustees during intervals between the meetings of the
Trustees, except that such committees shall not be empowered to declare
dividends or fill vacancies in the Board of Trustees or committees. All actions
of such committees shall be reported to the Trustees at their next meeting and
shall be subject to approval by the Trustees, provided that no right of any
third person shall be affected by such alteration.
SECTION 7. QUALIFICATIONS OF NOMINEES - AGE.
No nominee for Trustee shall be more than 72 years of age at the time of his
election as Trustee, nor shall any Trustee nominated for a subsequent term be
more than 72 years of age at the time of his election for such subsequent term,
provided that any Trustee elected prior to attaining age 72 may continue to
serve the remainder of his term despite attaining the age of 72 before the
expiration of his term.
ARTICLE III
OFFICERS
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SECTION 1. DESIGNATION OF OFFICERS.
The Trustees shall elect a Chairman of the Board, a President, a Secretary, a
Treasurer, and such Vice Presidents and other officers, or assistant officers,
as they shall deem advisable. Each officer and assistant officer shall have such
functions and duties as the Trustees shall from time to time designate, and, in
the absence of such designation, such duties as are usually associated with such
office. Except as otherwise determined by the Trustees, any two or more offices
may be held by the same person.
SECTION 2. TENURE OF OFFICE.
The officers of the Trust shall hold office at the pleasure of the Trustees, and
until successors are chosen and qualified. A vacancy in any office, however
created, may be filled by election by the Trustees.
SECTION 3. DELEGATION OF DUTIES.
The Trustees may delegate the duties of any officer to any other officer and
generally may control the action of the officers and require the performance of
duties in addition to those mentioned herein.
SECTION 4. COMPENSATION.
The Trustees are authorized to determine or to provide the method of determining
the compensation of officers.
SECTION 5. SIGNING CHECKS AND OTHER INSTRUMENTS.
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The Trustees shall determine or provide the method of determining how checks,
notes, bills of exchange and similar instruments issued by or on behalf of the
Trust shall be signed, countersigned, or endorsed.
SECTION 6. CONTROL BY TRUSTEES.
Nothing contained herein shall be interpreted to relieve the Trustees, in any
manner, of their duty to control and manage the Trust property.
ARTICLE IV
SHARES IN TRUST
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SECTION 1. ISSUE OF CERTIFICATE OF BENEFICIAL OWNERSHIP
The Chairman shall cause to be issued to each Beneficiary one or more
certificates, under the seal of the Trust, signed as provided in Article III,
Section 5 hereof, certifying the number of shares owned by such Beneficiary in
the Trust. Such certificates shall be countersigned by the Transfer Agent and
registered by the Registrar and shall be transferable on the books of the Trust
as provided in the Declaration of Trust.
ARTICLE V
AMENDMENTS
- ----------
SECTION 1. AMENDMENT OF BY-LAWS.
The Trustees, by the affirmative vote of a majority, may at any meeting,
provided the substance of the proposed amendment shall have been stated in a
notice of the meeting, alter, change, or amend in any respect, or supersede by
new by-laws, in whole or in part, any of these by-laws.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 1. FISCAL YEAR.
The fiscal year of the Trust shall be as determined from time to time by the
Trustees.
SECTION 2. NOTICE AND WAIVER OF NOTICE.
Whenever any notice is required by these by-laws to be given, personal notice is
not required unless expressly so stated; and any notice so required shall be
deemed to be sufficient if given by depositing the same in a post-office box in
a sealed post-paid wrapper, addressed to the person entitled thereto (at his
last known post-office address as shown by the register of the Trust) and such
notice shall be deemed to have been given on the day of such mailing.
SECTION 3. CHECKS FOR MONEY.
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All checks, drafts or orders for the payment of money shall be signed by the
Treasurer or Assistant Treasurer or by such other officer, officers, Trustee or
Trustees as the Trustees may from time to time designate.
SECTION 4. FORM OF CERTIFICATE OF BENEFICIAL INTEREST.
The form of certificate of beneficial interest representing shares of $1 par
value shall be substantially as follows:
No. Shares
-------------------------------------------------
FIRST UNION
Real Estate Equity and Mortgage Investments
THIS CERTIFIES THAT ________________________ is the registered holder of ______
Fully Paid and Non-assessable Share of Beneficial Interest, $1 Par Value. in
FIRST UNION
Real Estate Equity and Mortgage Investments
a Trust established in business trust from under the laws of the State of Ohio
under a Declaration of Trust dated as of August 1, 1961, as amended from time to
time, a copy of which is on file with the Transfer Agents of the Trust by all
the terms and provisions of which the holder or transferee hereof by accepting
this certificate agrees to be bound. The Trust is not a bank or trust company
and does not and will not solicit, receive or accept deposits as a business. The
shares represented hereby are transferable on the records of the Trust only by
the registered holder hereof or by his agent duly authorized in writing on
delivery to a Transfer Agent of the Trust of this certificate properly endorsed
or accompanied by duly executed instrument of transfer together with such
evidence of the genuineness thereof and such other matters as may reasonably be
required. The transferability of the shares represented hereby is subject to
such regulation. as may from time to time be adopted by the Trustees of the
Trust and set forth in the By-Laws to which reference is hereby made to prevent
transfers of shares which would result in disqualification of the Trust for
taxation as a real estate investment trust under the Internal Revenue Code an
amended.
This certificate is not valid unless countersigned by a Transfer Agent and
registered by a Registrar of the Trust.
IN WITNESS WHEREOF, the Trustees of this Trust have caused this certificate to
be signed by facsimile signatures.
[ON REVERSE SIDE]
The By-Laws of the Trust provide, among other things, that no person may acquire
Trust securities (including these securities) if, thereafter, he would
beneficially own more than 9.8% of the Trust's shares of beneficial interest. In
applying this restriction, convertible securities of the Trust beneficially
owned by such person (including convertible securities) are to be treated as if
already converted into shares of beneficial
7
<PAGE> 8
interest. A copy of the By-Laws and information about the limitation on
ownership may be obtained from the Secretary of the Trust.
SECTION 5. REGULATIONS ON TRANSFER OF SHARES TO PREVENT DISCLAIM
Notification of the Trust Under the Internal Revenue Code.
The Chief Executive Officer of the Trust or an officer designated by him shall:
a) From time to time cause to be prepared a list of holders of record (with
their holdings) of shares of the Trust (preferred and common) and shall
designate those holders which the officer acting shall have reason to believe
are not also the beneficial owners of the holdings of record in their respective
names;
b) Review the list with counsel and impose such restrictions on transfer of
shares as counsel shall advise should be imposed to prevent disqualification of
the Trust as a Real Estate Investment Trust under Section 856 et seq.
of the Internal Revenue Code.
SECTION 6. RESTRICTIONS ON ISSUANCE AND TRANSFER OF SECURITIES.
a) No person may own more than 9.8% of the outstanding Shares (the Limit), and
no Securities shall be issued or transferred to any person if, following such
issuance or transfer, such person's ownership of Shares would exceed the Limit.
For purposes of computing the Limit, Convertible Securities owned by such person
shall be treated as if the Convertible Securities owned by such person had been
converted into Shares.
b) If any Securities in excess of the Limit are issued or transferred to any
person in violation of Paragraph a) hereof (the "Excess Securities"), such
issuance or transfer shall be valid only with respect to such amount of
Securities as does not result in a violation of Paragraph a) hereof, and such
issuance or transfer shall be null and void with respect to such Excess
Securities.
If the last clause of the foregoing sentence is determined to be invalid by
virtue of any legal decision, statute, rule or regulation, such person shall be
conclusively deemed to have acted as an agent on behalf of the Trust in
acquiring the Excess Securities and to hold such Excess Securities on behalf of
the Trust. As the equivalent of treasury Securities for such purposes, the
Excess Securities shall not be entitled to any voting rights; shall not be
considered to be outstanding for quorums or voting purposes; and shall not be
entitled to receive dividends. interest or any other distribution with respect
to the Securities. Any person who receives dividends, interest or any other
distribution in respect to Excess Securities shall hold the same as agent for
the Trust and (following a permitted transfer) for the transferee thereof.
Notwithstanding the foregoing, any holder of Excess Securities may transfer the
same (together with any distributions thereon) to any person who, following such
transfer, would not own Shares (within the meaning of Paragraph a) in excess of
the Limit. Upon such permitted transfer, the Trust shall pay or distribute to
the transferee any distributions on the Excess Securities not previously paid or
distributed.
8
<PAGE> 9
c) Ownership of Securities is conditional upon the owner or prospective owner
having provided to the Trust definitive written information respecting his
ownership of Securities. Failure to provide such information, upon reasonable
request shall result in the Securities so owned being treated as Excess
Securities pursuant to Paragraph b) for so long as such failure continues.
d) For purposes of this Section 6:
(i) Person. includes an individual, corporation, partnership, association, joint
stock company, trust, unincorporated association or other entity.
(ii) Shares. means Shares of Beneficial Interest, par value $1 per share.
(iii) Convertible Securities. means any securities of the Trust that are
convertible into Shares.
(iv) Securities. means Shares and Convertible Securities.
(v) Ownership. means beneficial ownership. Beneficial ownership, for this
purpose, may be determined on the basis of the beneficial ownership rules
applicable under the Securities Exchange Act of 1934, as amended, or such other
basis as management reasonably determines to be appropriate to effectuate the
purposes hereof.
e) Nothing herein contained shall limit the ability of the Trust to impose, or
to seek judicial or other imposition of additional restrictions if deemed
necessary or advisable to protect the Trust and the interests of its security
holders by preservation of the Trust's status as a qualified real estate
investment trust under the Code.
f) These restrictions on issuance and transfer of Securities shall be applied
only on a prospective basis. Accordingly, Paragraphs a) and b) hereof shall not
apply to Shares in excess of the limit that were owned (within the meaning of
Paragraph a) by any person at the close of business on June 3, 1981, but
Paragraph a) and b) shall prospectively apply to the transfer of such Shares and
to further acquisitions of Securities by any such person. Similarly, Paragraphs
a) and b) shall not apply to the conversion of Convertible Securities that were
owned by any person at the close of business on such date or to the resultant
Shares owned by such person, but Paragraph a) and b) shall prospectively apply
to such Shares and to such person.
g) Notwithstanding any other provision of this Section 6, a lower percentage
(the Temporary Limit) shall operate in place of the 9.81 ownership Limit set
forth in Paragraph a) hereof for so long as there are outstanding Securities
excepted from the restrictions of this Section 6 pursuant to Paragraph f) hereof
("Exempt Securities"). The Temporary Limit shall initially be 6%, but upon the
transfer of Exempt Securities the Temporary Limit shall be fixed by the Trustees
from time to time but shall in no event exceed an amount equal to 25% of the
difference between (i) 49% of the Shares outstanding and (ii) the number of
Shares owned by any person who owns Exempt Securities. For purposes of this
calculation, Convertible Securities owned by such person shall be treated as if
the Convertible Securities owned by such person had been converted into Shares.
9
<PAGE> 10
h) If any provision of this Section 6 or any application of any such provision
is determined to be invalid by any federal or state court having jurisdiction
over the issue, the validity of the remaining provisions shall not be affected
and other applications of such provision shall be affected only to the extent
necessary to comply with the determination of such court.
10
<PAGE> 11
<TABLE>
<CAPTION>
INDEX
PAGE
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<S> <C> <C>
ARTICLE I - MEETING OF BENEFICIARIES
Section 1. Annual Meeting 35
Section 2. Special Meetings 35
Section 3. Place of Meetings 35
Section 4. Notice of Meetings 35
Section 5. Procedure at Meetings 35
Section 6. Quorum 35
Section 7. Nominations and Beneficiary Business 35
ARTICLE II - TRUSTEES
Section 1. Regular Meetings 35
Section 2. Special Meetings 36
Section 3. Notice of Meetings 36
Section 4. Quorum 36
Section 5. Compensation of Trustees 36
Section 6. Committees of the Board of Trustees 36
Section 7. Qualifications of Nominees-Age 36
ARTICLE III OFFICERS
Section 1. Designation of Officers 37
Section 2. Tenure of Office 37
Section 3. Delegation of Duties 37
Section 4. Compensation 37
Section 5. Signing Checks and Other Instruments 37
Section 6. Control by Trustees 37
ARTICLE IV SHARES IN TRUST
Section 1. Issue of Certificate of Beneficial
Ownership 37
ARTICLE V AMENDMENTS
Section 1. Amendment of By-Laws 38
ARTICLE VI MISCELLANEOUS PROVISIONS
Section 1. Fiscal Year 38
Section 2. Notice and Waiver of Notice 38
Section 3. Checks for Money 38
Section 4. Form of Cetificate of Beneficial Interest 38
Section 5. Regulations on Transfer of Shares to
Prevent Disclaim 39
Section 6. Restrictions on Issuance and Transfer
Of Securities 40
</TABLE>
<PAGE> 1
Exhibit 10a
IMPERIAL PARKING LIMITED
as Borrower
- and -
504463 N.B. INC.
as Guarantor
- and -
THE FINANCIAL INSTITUTIONS SET FORTH
ON THE SIGNATURE PAGES HEREOF
- and -
BT BANK OF CANADA
as Agent
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of April 17, 1997
<PAGE> 2
Exhibit 10a
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
<S> <C> <C> <C>
ARTICLE 1
INTERPRETATION
Section 1.1. Defined Terms. 2
Section 1.2. Gender and Number. 24
Section 1.3. Headings. 24
Section 1.4. Currency. 24
Section 1.5. Certain Phrases, etc. 24
Section 1.6. Accounting Terms. 25
Section 1.7. Deeming Provision. 25
Section 1.8. Rateable Portion of Accommodations. 25
Section 1.9. Incorporation of Schedules. 25
Section 1.10. Interpretation. 25
ARTICLE 2
CREDIT FACILITIES
Section 2.1. Availability. 25
Section 2.2. Commitments and Facility Limits. 26
Section 2.3. Use of Proceeds. 26
Section 2.4. Mandatory Repayments. 27
Section 2.5. Mandatory Prepayments. 27
Section 2.6. Optional Prepayments and Reductions of Commitments. 27
Section 2.7. Fees. 28
Section 2.8. Payments under this Agreement. 29
Section 2.9. Application of Payments and Prepayment. 29
Section 2.10. Computations of Interest and Fees. 30
Section 2.11. Payments on Maturity. 30
ARTICLE 3
ADVANCES
Section 3.1. The Advances. 30
Section 3.2. Procedure for Borrowing. 30
Section 3.3. Interest on Advances. 31
ARTICLE 4
BANKERS' ACCEPTANCES
Section 4.1. Acceptances and Drafts. 31
Section 4.2. Form of Drafts. 32
Section 4.3. Procedure for Drawing. 32
Section 4.4. Presigned Draft Forms. 33
Section 4.5. Payment, Conversion or Renewal of Bankers' Acceptances. 33
Section 4.6. Circumstances Making Bankers' Acceptances Unavailable. 34
ARTICLE 5
LETTERS OF CREDIT
Section 5.1. Letters of Credit. 34
Section 5.2. Procedure for Issue. 35
Section 5.3. Form of Letters of Credit. 35
Section 5.4 Use of Letters of Credit. 35
Section 5.5 Reimbursements of Amounts Drawn. 35
Section 5.6 Risk of Letters of Credit. 36
Section 5.7 Fees. 37
Section 5.8 Repayments. 37
ARTICLE 6
CONDITIONS OF LENDING
Section 6.1 Conditions Precedent to the Initial Accommodation. 38
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
Section 6.2. Conditions Precedent to All Accommodations. 40
Section 6.3 Acquisition Facility. 40
Section 6.4. No Waiver. 42
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
Section 7.1. Representations and Warranties. 42
Section 7.2. Survival of Representations and Warranties. 49
ARTICLE 8
COVENANTS
Section 8.1. Affirmative Covenants. 49
Section 8.2. Negative Covenants. 53
Section 8.3. Financial Covenants. 57
ARTICLE 9
EVENTS OF DEFAULT
Section 9.1. Events of Default. 58
Section 9.2. Remedies Upon Demand and Default. 61
ARTICLE 10
THE AGENT AND THE LENDERS
Section 10.1. Authorization and Action. 62
Section 10.2. No Liability. 63
Section 10.3. BT Bank of Canada. 63
Section 10.4. Discount Rate Determinations. 64
Section 10.5. Holding of Security; Sharing of Payments, etc. 64
Section 10.6. Lender Credit Decisions. 65
Section 10.7. Indemnification. 65
Section 10.8. Liability of the Lenders inter se. 65
Section 10.9. Successor Agents. 66
ARTICLE 11
MISCELLANEOUS
Section 11.1. Amendment. 66
Section 11.2. Waiver. 66
Section 11.3. Evidence of Debt and Accommodation Notices. 67
Section 11.4. Notices, etc. 67
Section 11.5. Confidentiality. 68
Section 11.6. Costs, Expenses and Indemnity. 68
Section 11.7. Confirmation of Security Interests. 70
Section 11.8. Successors and Assigns. 70
Section 11.9. Right of Set-off. 72
Section 11.10. Accommodations by Lenders. 72
Section 11.11. Rateable Payments. 73
Section 11.12. Interest on Accounts. 73
Section 11.13. Advice. 73
Section 11.14. Governing Law. 73
Section 11.15. Counterparts. 74
ARTICLE 5
LETTERS OF CREDIT
Section 5.1. Documentary Credits. 34
Section 5.2. Procedure for Issue. 34
Section 5.3. Form of Letters of Credit. 35
Section 5.4 Use of Letters of Credit. 35
Section 5.5 Reimbursements of Amounts Drawn. 35
Section 5.6 Risk of Letters of Credit. 35
Section 5.7 Fees. 36
Section 5.8 Repayments. 37
ARTICLE 6
CONDITIONS OF LENDING
Section 6.1 Conditions Precedent to the Initial Accommodation. 37
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
Section 6.2. Conditions Precedent to All Accommodations. 39
Section 6.3 Acquisition Facility. 40
Section 6.4. No Waiver. 41
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
Section 7.1. Representations and Warranties. 41
Section 7.2. Survival of Representations and Warranties. 48
ARTICLE 8
COVENANTS
Section 8.1. Affirmative Covenants. 49
Section 8.2. Negative Covenants. 53
Section 8.3. Financial Covenants. 57
ARTICLE 9
EVENTS OF DEFAULT
Section 9.1. Events of Default. 57
Section 9.2. Remedies Upon Demand and Default. 60
ARTICLE 10
THE AGENT AND THE LENDERS
Section 10.1. Authorization and Action. 61
Section 10.2. No Liability. 62
Section 10.3. BT Bank of Canada. 62
Section 10.4. Discount Rate Determinations. 63
Section 10.5. Holding of Security; Sharing of Payments, etc. 63
Section 10.6. Lender Credit Decisions. 64
Section 10.7. Indemnification. 64
Section 10.8. Liability of the Lenders inter se. 64
Section 10.9. Successor Agents. 65
ARTICLE 11
MISCELLANEOUS
Section 11.1. Amendment. 65
Section 11.2. Waiver. 66
Section 11.3. Evidence of Debt and Accommodation Notices. 66
Section 11.4. Notices, etc. 66
Section 11.5. Confidentiality. 67
Section 11.6. Costs, Expenses and Indemnity. 67
Section 11.7. Confirmation of Security Interests. 69
Section 11.8. Successors and Assigns. 69
Section 11.9. Right of Set-off. 71
Section 11.10. Accommodations by Lenders. 71
Section 11.11. Rateable Payments. 72
Section 11.12. Interest on Accounts. 72
Section 11.13. Advice. 72
Section 11.14. Governing Law. 72
Section 11.15. Counterparts. 73
SCHEDULES
Schedule 1 - Form of Borrowing Notice
Schedule 2 - Form of Notice of Interest Rate Election
Schedule 3 - Form of Drawing Notice
Schedule 3A - Form of Issue Notice
Schedule 4 - Notice Periods and Amounts
Schedule 5 - List of Additional Loan Parties, Security Documents and other Credit Documents
Schedule 6 - Insurance
Schedule 7 - Location of Assets and Business
Schedule 8 - Environmental Permits
Schedule 9 - Owned Properties
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C>
Schedule 10 - Leased Properties and Management Properties
Schedule 11 - Permitted Indebtedness
Schedule 12 - Share Ownership
Schedule 13 - Material Agreements
Schedule 14 - Tax Claims
Schedule 15 - Intentionally Deleted
Schedule 16 - Form of Compliance Certificate
Schedule 17 - Qualifying Shareholder Arrangements
Schedule 18 - Incorporation and Qualification
Schedule 19 - Litigation
Schedule 20 - Form of Assumption Agreement
</TABLE>
<PAGE> 6
AMENDED AND RESTATED CREDIT AGREEMENT
Amended and Restated Credit Agreement dated as of April 17,
1997, among IMPERIAL PARKING LIMITED, a corporation amalgamated and existing
under the laws of Canada, as Borrower, 504463 N.B. Inc., a corporation
incorporated and existing under the laws of the Province of New Brunswick, as
Guarantor, the financial institutions set forth on the signature pages hereof,
as Lenders, and BT BANK OF CANADA, as Agent.
WHEREAS this agreement amends and restates the Original Credit
Agreement (as hereinafter defined) entered into by the Borrower, Canadian
Imperial Bank of Commerce as both Lender and Agent and Hongkong Bank of Canada
as Lender dated as of November 13, 1996;
AND WHEREAS Canadian Imperial Bank of Commerce assigned
certain rights and obligations as Lender and Agent under the Original Credit
Agreement to BT Bank of Canada pursuant to an Assignment Agreement dated April
17, 1997;
AND WHEREAS in connection with the acquisition by First Union
Management, Inc. ("FUMI") of an indirect controlling interest in Imperial
Holdings No. 2 Inc. pursuant to a share purchase agreement dated February 18,
1997, as amended, among First Union Real Estate Equity and Mortgage Investments
("FUR"), Impark Investments Inc. and certain management vendors, the Borrower
is, for the benefit of its shareholders, participating in a recapitalization of
Borrower and certain of its subsidiaries and affiliates (the "TRANSACTION");
AND WHEREAS the Guarantor has, inter alia, given a guarantee
of even date herewith in favour of the Agent and the Lenders with respect to the
obligations of the Borrower under the Credit Documents (defined hereinafter);
AND WHEREAS, as part of such recapitalization, the Agent and
the Lenders have agreed to continue to make available to the Borrower certain
credit facilities on the revised terms and subject to the revised conditions set
forth in this Agreement;
AND WHEREAS the Lenders, the Borrower and the Agent desire to
amend and restate all of the current facilities made available to the Borrower
by the Agent and the Lenders on the terms and subject to the conditions set
forth in this Agreement;
NOW THEREFORE, in consideration of the Agreement set forth
herein and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Agent, the Lenders and the Borrower hereby agree
that the Original Credit Agreement is hereby amended and restated in its
entirety as follows:
ARTICLE I
INTERPRETATION
SECTION 1. DEFINED TERMS. As used in this Agreement, the following terms have
the following meanings:
"ACCOMMODATION" means (i) an Advance made by a Lender on the occasion
of any Borrowing; (ii) the creation and purchase of Bankers' Acceptances or the
purchase of completed Drafts by a Lender or by any other Person on the occasion
of any Drawing; and (iii) the issue of a Letter of Credit by BT (each of which
is a "TYPE" of Accommodation).
"ACCOMMODATION NOTICE" means a Borrowing Notice or a Drawing Notice.
<PAGE> 7
-2-
"ACCOMMODATIONS OUTSTANDING" means at any time under a Credit Facility,
an amount equal to (i) in relation to the Borrower and all Lenders, the sum of
(u) the aggregate principal amount of all outstanding Advances; (v) the
aggregate Face Amount of all outstanding Bankers' Acceptances, completed Drafts
and, without duplication, BA Equivalent Notes which the Lenders have purchased
or arranged to have purchased; and (w) the aggregate Face Amount of all Letters
of Credit for which BT is contingently liable; and (ii) in relation to the
Borrower and any Lender, the sum of (x) the aggregate principal amount of all
outstanding Advances made by such Lender; (y) the aggregate Face Amount of all
outstanding Bankers' Acceptances, completed Drafts and, without duplication, BA
Equivalent Notes which such Lender has purchased or arranged to have purchased;
and (z) in the case of BT only, the aggregate Face Amount of all Letters of
Credit for which BT is contingently liable.
"ACCOUNT" means any and all of the Borrower's accounts, contract
rights, instruments, chattel papers and general intangibles, whether secured or
unsecured, now existing or hereafter created, whether or not specifically sold
or assigned to the Lenders.
"ACQUISITION COMMITMENT" means, at any time, in respect of the
Acquisition Facility, Cdn. $10,000,000 (as reduced pursuant to Section 2.6).
"ACQUISITION FACILITY" means the Credit Facility to be made available
to the Borrower hereunder for the purpose specified in Section 2.3.
"ADDITIONAL LOAN PARTIES" means, at any time, the Guarantor and other
Persons specified in Schedule 5 as guarantors and any Persons which may from
time to time become guarantors of all of the obligations of the Borrower under
this Agreement and/or the other Credit Documents and their respective successors
and assigns, who have delivered to the Agent a guarantee and security over all
of their property and assets together with an opinion of counsel, all in form
and substance satisfactory to the Agent, acting reasonably, whether or not there
are any Accommodations Outstanding at such time.
"ADVANCES" means advances made by a Lender under Article 3 and
"ADVANCE" means any one of such advances. Advances will be denominated in
Canadian Dollars as a "CANADIAN PRIME RATE ADVANCE".
"AFFILIATE" has the meaning ascribed thereto in the Securities Act
(Ontario) as in effect on the date hereof.
"AGENT" means BT, as agent for the Lenders hereunder, and any successor
thereto appointed pursuant to Section 10.9.
"AGREEMENT" means this credit agreement and all schedules and
instruments in amendment or confirmation of it; "HEREOF", "HERETO" and
"HEREUNDER" and similar expressions refer to this Agreement and not to any
particular Article or Section; and the expressions "ARTICLE" and "SECTION"
followed by a number mean and refer to the specified Article or Section of this
Agreement.
"ANCILLARY AGREEMENT" means an ancillary agreement entered into by BT,
Hongkong Bank of Canada and FUR dated the 17th day of April, 1997.
"ANNUALIZED CAPITAL EXPENDITURES" means for any period of months,
commencing April 1, 1997, an amount equal to the aggregate amount of Capital
<PAGE> 8
- 3 -
Expenditures for such period multiplied by a fraction, the numerator of which is
12 and the denominator of which is the number of calendar months which have
elapsed since April 1, 1997.
"ANNUALIZED CONSOLIDATED EBITDA" means for any period of months,
commencing April 1, 1997, an amount equal to Consolidated EBITDA for such period
multiplied by a fraction, the numerator of which is 12 and the denominator of
which is the number of calendar months which have elapsed since April 1, 1997.
"ANNUALIZED CONSOLIDATED INTEREST CHARGES" means for any period of
months commencing April 1, 1997, an amount equal to the Consolidated Interest
Charges for such period multiplied by a fraction, the numerator of which is 12
and the denominator of which is the number of calendar months which have elapsed
since April 1, 1997.
"ARM'S LENGTH" has the meaning ascribed thereto in the Income Tax Act
(Canada), as in effect on the date hereof.
"ASSETS" means, with respect to each of the Borrower, the Guarantor and
their respective Subsidiaries, all property and assets of the Borrower, the
Guarantor and each such Subsidiary of every kind and wheresoever situate,
whether now owned or hereafter acquired.
"ASSIGNEE" has the meaning specified in Section 11.8(3).
"AUTHORIZATION" means, with respect to any Person, any authorization,
order, permit, approval, grant, license, consent, right, franchise, privilege,
certificate, judgment, writ, injunction, award, determination, direction,
decree, by-law, rule or regulation of any Governmental Entity having
jurisdiction over such Person, whether or not having the force of Law.
"BANKERS' ACCEPTANCE" has the meaning specified in Section 4.1.
"BA EQUIVALENT NOTE" has the meaning specified in Section 4.3(3).
"BENEFICIARY" means, in respect of each Letter of Credit, the
beneficiary named in the Letter of Credit.
"BORROWER" means, at any time, Imperial Parking Limited, its successors
and permitted assigns, whether or not there are any Accommodations Outstanding
hereunder at such time.
"BORROWER'S ACCOUNTS" means the Borrower's Canadian Dollar accounts
maintained by the Agent at its offices, the particulars of which shall have been
notified by the Agent to the Borrower.
"BORROWER'S BUSINESS" means, with respect to the Borrower and its
Subsidiaries, the businesses presently and heretofore carried on by the Borrower
and its Subsidiaries consisting of the operation of parking facilities on Owned
Properties or under management contracts and/or leases, valet parking, providing
ancillary and related services such as signs, repairs, and consulting, the
manufacture of parking lot and parking garage equipment and the ownership of
real property for the purpose of conducting a parking operation or as part of
the assets acquired directly or indirectly as part of a Qualifying Acquisition.
<PAGE> 9
- 4 -
"BORROWER EXCESS CASH FLOW" means for any period Excess Cash Flow minus
all amounts relating to the Guarantor and its Consolidated Subsidiaries.
"BORROWER'S NOTE PURCHASE AGREEMENT" means a Note Purchase Agreement
dated April 17, 1997 executed by the Borrower and Financeco respecting
Cdn.$55,000,000 Senior Subordinated Partial PIK Notes due April 17, 2009.
"BORROWING" means a borrowing consisting of one or more Advances.
"BORROWING NOTICE" has the meaning specified in Section 3.2(1).
"BT" means BT Bank of Canada.
"BUILDINGS AND FIXTURES" means all plant, buildings, structures,
erections, improvements, appurtenances and fixtures (including fixed machinery
and fixed equipment) situate on the Owned Properties.
"BUSINESS DAY" means any day of the year, other than a Saturday, Sunday
or other day on which banks are required to close in Toronto, Ontario.
"CANADIAN DOLLARS" and "Cdn.$" each means lawful money of Canada.
"CANADIAN PRIME RATE" means, at any time, the rate of interest per
annum equal to the greater of (i) the per annum rate of interest quoted,
published and commonly known as the "prime rate" of the Agent which the Agent
establishes at its main office in Toronto, Ontario as the reference rate of
interest in order to determine interest rates for loans in Canadian Dollars to
its Canadian borrowers, adjusted automatically with each quoted or published
change in such rate, all without the necessity of any notice to the Borrower or
any other Person; and (ii) the average of the 30 day discount rates on banker's
acceptances as quoted on Reuters Screen CDOR Page at approximately 10:00 a.m.
(Toronto time) plus 1.0%, adjusted automatically with each quoted, published or
displayed change in such rate, all without necessity of any notice to the
Borrower or any other Person.
"CAPITAL EXPENDITURES" means expenditures made for the purchase, lease
or acquisition of fixed assets or for research and development required to be
capitalized in accordance with Generally Accepted Accounting Principles, other
than capitalized leases with respect to an interest in real property for the
purpose of conducting a parking operation and any expenditures made (whether
with respect to payment of the purchase price or otherwise) in connection with
the making of a Qualified Acquisition.
"CHANGE OF CONTROL" means FUMI (or any successor thereto continuing
from any amalgamation, merger or other reorganization thereof) ceasing to
beneficially own, directly or indirectly, sufficient issued and outstanding
securities in the capital of either the Borrower or Guarantor to give it
effective voting control over such corporation.
"CLAIM" means any claim of any nature whatsoever, including any demand,
liability, obligation, cause of action, suit, proceeding, judgment, award,
assessment and reassessment.
"CLOSING DATE" means April 17, 1997.
"COLLATERAL" means the Assets in respect of which any Lender has or
will have a Security Interest pursuant to a Security Document.
"COMMITMENT" means, at any time, the Term Commitment, the
Acquisition
<PAGE> 10
- 5 -
Commitment and the Operating Commitment.
"COMPLIANCE CERTIFICATE" means a certificate of the Borrower signed on
its behalf by its chief financial officer, or any other officer acceptable to
the Agent substantially in the form of Schedule 16.
"CONNECTED AGREEMENTS" means all Security Documents and other
agreements, certificates and instruments delivered or given pursuant to or in
connection with this Agreement; and "Connected Agreement" means any one of such
Security Documents, agreements, certificates or other instruments.
"CONSOLIDATED DEPRECIATION AND AMORTIZATION EXPENSE" means, for any
period of months, the depreciation and amortization expense of the Borrower, the
Guarantor and their respective Consolidated Subsidiaries determined in
accordance with Generally Accepted Accounting Principles.
"CONSOLIDATED EBITDA" means, for any period of months, the Consolidated
Net Income of the Borrower, the Guarantor and their respective Consolidated
Subsidiaries (or with respect to the definition of Target EBITDA, the relevant
target entity mutatis mutandis) increased by the sum of (i) Consolidated
Interest Charges, (ii) Consolidated Income Tax Expense, and (iii) Consolidated
Depreciation and Amortization Expense, (in each case, for such period and
calculated prior to extraordinary items), and (iv) such out-of-pocket expenses
incurred by such entities on a one time basis and which can reasonably be solely
attributed to the carrying out of the Transaction.
"CONSOLIDATED INCOME TAX EXPENSE" means, for any period of months, the
aggregate of all taxes (including deferred taxes) based on income of the
Borrower, the Guarantor and their respective Consolidated Subsidiaries for such
period determined in accordance with Generally Accepted Accounting Principles.
"CONSOLIDATED INDEBTEDNESS" means the aggregate of all Debts For
Borrowed Money of the Borrower, the Guarantor and their respective Consolidated
Subsidiaries less (x) Subordinated Debt, (y) cash and Permitted Marketable
Securities on the balance sheet of the latest financial statements delivered to
the Agent pursuant to Section 8.1(a), provided that such cash is maintained in
an account at BT and such Permitted Marketable Securities are held by the Agent
as custodian and (z) such other cash and Permitted Marketable Securities on the
balance sheet of the latest financial statements delivered to the Agent pursuant
to Section 8.1(a) to the extent that such cash does not exceed an aggregate
amount of U.S. $250,000, is not deposited with BT and is held outside of Canada.
"CONSOLIDATED INTEREST CHARGES" means, for any period of months for the
Borrower, the Guarantor and their respective Consolidated Subsidiaries, the
total of (i) all items properly classified as interest expense (whether expended
or capitalized) in accordance with Generally Accepted Accounting Principles; and
(ii) the imputed interest component for any element of Consolidated Indebtedness
(such as capital leases and deferred revenues) which would not be classified as
interest expense pursuant to Generally Accepted Accounting Principles,
calculated using an interest rate equal to the then prevailing Canadian Prime
Rate, in each case for such period, provided that, notwithstanding the
foregoing, with respect to the FUR Subordinated Debt no interest will be
included in this calculation.
"CONSOLIDATED NET INCOME" means, for any period of months, the net
income (loss) of the Borrower, the Guarantor and their respective Consolidated
<PAGE> 11
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Subsidiaries determined in accordance with Generally Accepted Accounting
Principles but excluding (i) any gain or loss arising from the sale of capital
assets; (ii) any gain or loss arising from any write-up or write-down of assets;
(iii) earnings of any other Person, substantially all of the assets of which
have been acquired by the Borrower, the Guarantor or a Consolidated Subsidiary
in any manner, to the extent that such earnings were realized by such other
Person prior to the date of such acquisition; (iv) net earnings of any Person
(other than a Consolidated Subsidiary) in which the Borrower, the Guarantor or a
Consolidated Subsidiary has an ownership interest, to the extent that such
earnings have not actually been received by the Borrower, the Guarantor or such
Consolidated Subsidiary in the form of cash distributions; (v) the earnings of
any Person to which assets of the Borrower, the Guarantor or a Consolidated
Subsidiary have been sold, transferred or disposed of or into which the
Borrower, the Guarantor or a Consolidated Subsidiary shall have merged, to the
extent that such earnings arose prior to the date of such transactions; and (vi)
any gain arising from the disposition of any securities of the Borrower, the
Guarantor or a Consolidated Subsidiary.
"CONSOLIDATED NET WORTH" means, at any time, with respect to any Person
and its Consolidated Subsidiaries, the aggregate of (i) the total shareholders'
equity determined as of such time in accordance with Generally Accepted
Accounting Principles; plus (ii) the FUR Subordinated Debt; where shareholders
equity for greater certainty and without duplication includes any shares in the
capital of such Person or its Subsidiaries which are redeemable at the option of
the holder in accordance with their terms; provided, however that the Borrower
hereby acknowledges that Section 8.2(h) contains a restriction with respect to
the redemption of shares by the Borrower.
"CONSOLIDATED PARKING CONTRACTS" means, at any time, with respect to
the Borrower, the Guarantor and their respective Consolidated Subsidiaries, the
aggregate of (i) the total number of existing contracts and leases which are in
full force and effect for the management or operation of parking lots or parking
garages; and (ii) the number of parking lots or parking garages operated on
properties owned by the Borrower, the Guarantor and their respective
Consolidated Subsidiaries.
"CONSOLIDATED SUBSIDIARY" means, at any date, in respect of any Person,
a Subsidiary of such Person which is or should be consolidated with such Person
in its consolidated financial statements prepared as of such date.
"CONTINUING REPRESENTATIONS" means, collectively, the representations
and warranties contained in Section 7.1(c), (f), (h), (j)(B), (u), (w), (x),
(y), (aa), (ab), (ac), (ad) and (af).
"CREDIT DOCUMENTS" means this Agreement, the Original Credit Agreement,
the Drafts, the Bankers' Acceptances, the BA Equivalent Notes, the Security
Documents, the Hedging Agreements, the Fee Letters and all other Connected
Agreements.
"CREDIT FACILITIES" means, collectively, the Term Facility, the
Acquisition Facility and the Operating Facility.
"DEBT" of any Person means (i) all indebtedness of such Person for
borrowed money (even though the rights and remedies of the holder of such
indebtedness in the event of default may be limited to the foreclosure or sale
of specific property), including borrowings of commodities, bankers'
acceptances, letters of credit or letters of guarantee (except for letters of
<PAGE> 12
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guarantee issued by the Borrower in the normal course of the Business which
secure the performance of certain obligations of the Borrower or any of its
Subsidiaries, as the case may be, as lessee under certain Leases and/or
management contracts); (ii) all indebtedness of such Person for the deferred
purchase price of property or services other than for goods and services
purchased in the ordinary course of business; (iii) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and remedies
of the seller or Lender under such agreement in the event of default are limited
to repossession or sale of such property); (iv) all current liabilities of such
Person represented by a note, bond, debenture or other evidence of Debt; (v) all
obligations under leases which have been or should be, in accordance with
Generally Accepted Accounting Principles, recorded as capital leases in respect
of which such Person is liable as lessee; and (vi) all Debt Guaranteed by such
Person.
"DEBT FOR BORROWED MONEY" of any Person means (without duplication) (i)
all indebtedness of such Person for borrowed money, including bankers'
acceptances, letters of credit or letters of guarantee (except for letters of
guarantee issued by the Borrower to landlords in the normal course of business
which secure the performance of certain obligations of the Borrower or any of
its Subsidiaries, as the case may be as lessee under certain Leases and/or
Management Contracts); (ii) all indebtedness of such Person for the deferred
purchase price of property or services other than for goods and services
purchased in the ordinary course of business; (iii) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and remedies
of the seller or Lender under such agreement in the event of default are limited
to repossession or sale of such property); (iv) all current liabilities of such
Person represented by a note, bond, debenture or other evidence of Debt; and (v)
all obligations under leases which have been or should be, in accordance with
Generally Accepted Accounting Principles, recorded as capital leases in respect
of which such Person is liable as lessee.
"DEBT GUARANTEED" by any Person means all Debt of the kinds referred to
in (i) through (v) of the definition of Debt which is directly or indirectly
guaranteed by such Person or which such Person has agreed (contingently or
otherwise) to purchase or otherwise acquire, or in respect of which such Person
has otherwise assured a creditor or other Person against Loss.
"DEBT REPAYMENT AMOUNT" means, as applicable, an optional prepayment of
the Term Facility, an optional prepayment of the Acquisition Facility or an
optional permanent reduction of any Letter of Credit issued under the Operating
Facility.
"DEFAULT" means an event which, with the giving of notice or passage of
time, or both, would constitute an Event of Default.
"DISTRIBUTION" means (i) any dividend or other distribution on issued
shares of the Borrower, the Guarantor or any of their respective Subsidiaries;
(ii) the purchase, redemption or retirement of any issued shares of the
Borrower, the Guarantor or any of their respective Subsidiaries redeemed or
purchased by the Borrower, the Guarantor or any such Subsidiary, as the case may
be, or any payments made under any employee stock option agreement; (iii) any
consulting fee, management fee or management bonus paid or payable to any
director, officer, shareholder or Affiliate of the Borrower, the Guarantor or
any of their respective Subsidiaries or any Person not dealing at Arm's Length
<PAGE> 13
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with the Borrower, the Guarantor or any of their respective Subsidiaries or
their respective directors, officers, shareholders or Affiliates; or (iv) any
payment on account of any principal and interest on any loans or advances owing
at any time by the Borrower, the Guarantor or any of their respective
Subsidiaries to any of their respective directors, officers, shareholders or
Affiliates.
"DRAFT" means at any time a blank bill of exchange, within the meaning
of the Bills of Exchange Act (Canada), drawn by the Borrower on a Lender or any
other Person and bearing such distinguishing letters and numbers as such Lender
or such Person may determine, but which at such time has not been completed or
accepted by such Lender or such Person.
"DRAWING" means (i) the creation and purchase of Bankers' Acceptances
by a Lender or by any other Person pursuant to Article 4; or (ii) the purchase
of completed Drafts by a Lender or by any other Person pursuant to Article 4.
"DRAWING DATE" means any Business Day fixed pursuant to Section 4.3 for
a Drawing .
"DRAWING FEE" means, with respect to each Draft or Bankers' Acceptance
drawn by the Borrower hereunder and purchased by any Person on any Drawing Date,
an amount equal to 1.75% multiplied by the aggregate Face Amount of such Draft,
calculated on the basis of the term to maturity of such Draft and a 365/366 day
year.
"DRAWING NOTICE" has the meaning specified in Section 4.3(1).
"DRAWING PURCHASE PRICE" means, in respect of Bankers' Acceptances or
Drafts to be purchased by a Lender or any other Person, the difference between
(i) the result (rounded to the nearest whole cent, with one-half of one cent
being rounded up) obtained by dividing the aggregate Face Amount of such
Bankers' Acceptances or Drafts by the sum of one plus the product of (x) the
Reference Discount Rate multiplied by (y) a fraction the numerator of which is
the number of days in the term of maturity of such Bankers' Acceptances or
Drafts, as the case may be, and the denominator of which is 365; and (ii) the
applicable aggregate Drawing Fee.
"ENCUMBRANCES" means liens, charges, mortgages, pledges, Security
Interests, adverse claims, defects of title, restrictions, deposit arrangements,
voting trusts, rights of set-off, any other rights of third parties relating to
anti property and any other encumbrances of any kind.
"ENVIRONMENTAL LAWS" means all applicable Laws relating to the
environment, occupational health and safety matters or conditions, Hazardous
Substances, pollution or protection of the environment.
"ENVIRONMENTAL LIABILITIES AND COSTS" means all Losses and Claims
imposed by, under or pursuant to Environmental Laws or otherwise relating to any
environmental condition, fact or circumstance, including all Losses and Claims
related to Remedial Actions and all reasonable fees, disbursements and expenses
of counsel, experts, personnel and consultants.
"ENVIRONMENTAL NOTICE" means, with respect to any Person, any claim,
citation, directive, request for information, statement of claim, notice of
investigation, letter or other written communication, from any Governmental
Entity in connection with any violation or alleged violation of Environmental
<PAGE> 14
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Laws.
"ENVIRONMENTAL PERMITS" includes all permits, certificates, approvals,
registrations and licences issued by any Governmental Entity to the Borrower,
the Guarantor or any of their respective Subsidiaries or to the Business
pursuant to Environmental Laws and relating to or required for the operation of
the Business or the use of the Owned Properties, Leased Properties or other
Assets.
"ERISA" means the Employee Retirement Income Security Act (1974) and
any amendments thereto and applicable regulations promulgated thereunder.
"EVENT OF DEFAULT" has the meaning specified in Section 9.1.
"EXCESS CASH FLOW" means, for any period, the sum of (i) Consolidated
Net Income; (ii) Consolidated Depreciation and Amortization Expense; (iii)
deferred income taxes; and (iv) 50% of the net change in Other Non-Cash Items
during such period, all as are or would be included in a consolidated statement
of changes in financial position of the Borrower, the Guarantor and their
respective Consolidated Subsidiaries for such period less the aggregate for such
period of (v) all Capital Expenditures made by the Borrower, the Guarantor and
their respective Subsidiaries; and (vi) all cash amounts spent to acquire any
interest in real property or to purchase any share, other securities or assets
permitted in accordance with this Agreement.
"EXCLUDED LOAN PARTIES" means Holdco 1, Holdco 2, Impark Management
Inc. and Imperial Parking (Asia) Limited.
"EXISTING SECURITY INTERESTS" means the Security Interests set forth
in Schedule 11.
"FACE AMOUNT" means (i) in respect of a Draft, a Bankers' Acceptance
or a BA Equivalent Note, as the case may be, the amount payable to the holder
thereof on its maturity, and (ii) in respect of a Letter of Credit, the maximum
amount which the issuing Person is contingently liable to pay the Beneficiary.
"FEE LETTERS" means the letter agreements between the Borrower and the
Agent in respect of certain fees and other consideration payable to the Lenders.
"FEES" means the fees payable by the Borrower under Section 2.7.
"FINANCECO" means 3006302 Nova Scotia Company, a wholly owned
subsidiary of FUR, incorporated and existing under the laws of the Province of
Nova Scotia, and its permitted successors and assigns.
"FINANCIAL QUARTER" means a period of three consecutive months in each
Financial Year of the Borrower ending on March 31, June 30, September 30 and
December 31, as the case may be, of such year.
"FINANCIAL YEAR" means, in relation to the Borrower, its financial year
commencing on January 1 of each calendar year and ending on December 31 of that
calendar year.
"FUMI" means First Union Management Inc. and its successors and
permitted assigns.
<PAGE> 15
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"FUR" means First Union Real Estate Equity and Mortgage Investments and
its successors and permitted assigns.
"FUR SUBORDINATED DEBT" means two separate debt obligations payable by
the Borrower and the Guarantor separately to Financeco which are at all times
subordinate in right of payment (including the payment of interest thereon) to
the payment in full of the Accommodations Outstanding and all other amounts
payable hereunder and under the other Credit Documents.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means, at any time,
accounting principles generally accepted in Canada as recommended in the
Handbook of the Canadian Institute of Chartered Accountants at the relevant time
applied on a consistent basis (except for changes made with the prior written
consent of the Agent and approved by the Borrower's independent auditors in
accordance with promulgations of the Canadian Institute of Chartered
Accountants).
"GOVERNMENTAL ENTITY" means any (i) multinational, federal, provincial,
state, municipal, local or other government, governmental or public department,
central bank, court, commission, board, bureau, agency or instrumentality,
domestic or foreign; (ii) any subdivision, agent, commission, board, or
authority of any of the foregoing; or (iii) any quasi-governmental or private
body exercising any regulatory, expropriation or taxing authority under or for
the account of any of the foregoing.
"GUARANTOR" means 504463 N.B. Inc., a corporation incorporated and
existing under the laws of the Province of New Brunswick, and its permitted
successors and assigns.
"GUARANTOR'S BUSINESS" means with respect to the Guarantor and its
Subsidiaries, the businesses presently and heretofore carried on by the
Guarantor and its Subsidiaries consisting of ancillary and related services such
as security, collection and distribution of parking lot and parking garage
equipment or as part of the assets acquired directly or indirectly as part of a
Qualifying Acquisition.
"GUARANTOR'S NOTE PURCHASE AGREEMENT" means a Note Purchase Agreement
dated April 17, 1997 executed by the Guarantor and Financeco respecting
Cdn.$9,166,666 Senior Subordinated Partial PIK Notes due April 17, 2009.
"HAZARDOUS SUBSTANCE" means any substance, waste, liquid, gaseous or
solid matter, fuel, micro-organism, sound, vibration, ray, heat, odour,
radiation, energy, vector, plasma and organic or inorganic matter, which is or
is deemed to be, alone or in any combination, hazardous, hazardous waste, toxic,
a pollutant, a deleterious substance, a contaminant or a source of pollution or
contamination under any Environmental Law, whether or not such substance or
other thing is defined as hazardous under the Environmental Law.
"HEDGING AGREEMENTS" means one or more agreements between the Borrower
and one or more of the Lenders in the form published by the International Swaps
and Derivatives Association Inc. providing for "full two-way payments", with
schedules and confirmations relating thereto approved by the Agent and
evidencing (i) any interest rate hedge (including any interest rate snap, cap or
collar); or (ii) any foreign exchange hedge.
"HOLDCO 1" means 3355489 Canada Inc., a corporation incorporated and
existing under the laws of Canada and its permitted successors and assigns.
<PAGE> 16
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"HOLDCO 2" means 504308 N.B. Inc., a corporation incorporated and
existing under the laws of the Province of New Brunswick and its permitted
successors and assigns.
"HOSTILE TAKE-OVER BID" means an acquisition which would be considered
to be a take-over bid within the meaning of the Securities Act (Ontario) or any
other applicable securities legislation, in respect of which the board of
directors of the target recommends rejection of the take-over bid.
"INTEREST COVERAGE RATIO" means (i) for periods beginning on April 1,
1997 and ending on the last day of each Financial Quarter up to and including
the Financial Quarter ended March 31, 1998, the ratio of Annualized Consolidated
EBITDA less Annualized Capital Expenditures to Annualized Consolidated Interest
Charges; and (ii) for any Financial Quarter after the Financial Quarter ended
March 31, 1998, the ratio of Consolidated EBITDA less Capital Expenditures to
Consolidated Interest Charges for the twelve month period ending on the last day
of such Financial Quarter.
"ISSUE" means an issue of a Letter of Credit by BT, Participant or
Assignee pursuant to Article 5.
"ISSUE DATE" has the meaning specified in Section 5.2(1).
"ISSUE NOTICE" has the meaning specified in Section 5.2(1).
"LAWS" means all statutes, codes, ordinances, decrees, rules,
regulations, municipal by-laws, orders, decisions, rulings or awards, policies,
voluntary restraints, guidelines, or any provisions of the foregoing, including
general principles of common and civil law and equity, binding on or affecting
the Person referred to in the context in which such word is used; and "LAW"
means any one of the foregoing.
"LEASED PROPERTIES" means the real properties forming the subject
matter of the Leases to which the Borrower, the Guarantor or one of the other
Additional Loan Parties is a party in connection with the operation of the
Borrower's Business or Guarantor's Business, as applicable, including on the
date of this Agreement the real properties at the municipal addresses listed on
Schedule 10.
"LEASES" means the leases and subleases of real property to which each
of the Borrower, the Guarantor and the Additional Loan Parties is a party,
including on the date of this Agreement the leases and subleases set out on
Schedule 10.
"LENDER'S ACQUISITION COMMITMENT" means, at any time, the relevant
amount designated as such and set forth opposite such Lender's name on the
signature pages hereof, as reduced pursuant to Article 2.
"LENDER'S OPERATING COMMITMENT" means, at any time, the relevant amount
designated as such and set forth opposite such Lender's name on the signature
pages hereof, as reduced pursuant to Article 2.
"LENDER'S TERM COMMITMENT" means, at any time, the relevant amount
designated as such and set forth opposite such Lender's name on the signature
pages hereof, as reduced pursuant to Article 2.
"LENDERS" mean, collectively the financial institutions set forth on
the
<PAGE> 17
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signature pages hereof and any financial institution which from time to time
becomes a lender hereunder, and in the singular, any one of them.
"LETTER OF CREDIT" means a standby letter of credit issued or to be
issued by BT for the account of the Borrower pursuant to Article 5.
"LEVERAGE RATIO" means (i) for periods beginning on April 1, 1997 and
ending on the last day of each Financial Quarter up to and including the
Financial Quarter ended March 31, 1998, the ratio of Consolidated Indebtedness
to Annualized Consolidated EBITDA; and (ii) for any Financial Quarter after the
Financial Quarter ended March 31, 1998, the ratio of Consolidated Indebtedness
to Consolidated EBITDA for the twelve month period ending on the last day of
such Financial Quarter;
"LOAN YEAR" means a 365 day period commencing on the date of this
Agreement, or any anniversary of the date of this Agreement as the context may
require, and references to a Loan Year and a number shall mean and refer to that
number which such Loan Year is after the date of this Agreement.
"LOSS" means any loss or expense whatsoever (other than loss of
profits, except to the extent that loss of profits are in connection with
breakage costs calculated by the Agent or a Lender in accordance with its usual
practices), whether direct or indirect, including expenses, costs, damages,
judgments, penalties, fines, charges, claims, demands, liabilities and any and
all legal fees and disbursements including, without limitation, preparation and
enforcement of applicable documentation and legal advice relating to the
Transaction.
"MAJORITY LENDERS" means, at any time, Lenders who, taken together, are
beneficially entitled to at least 66-2/3% of the aggregate Accommodations
Outstanding at such time, or, if there are no Accommodations Outstanding at such
time, Lenders whose Commitments, taken together, are at least 66-2/3% of the
aggregate amount of the Commitments.
"MANAGEMENT CONTRACTS" means the management contracts with respect to
the management of parking lots to which the Borrower or an Additional Loan Party
is a party, including on the date of this Agreement those listed and described
on Schedule 10.
"MANAGEMENT PROPERTIES" means the real properties upon which the
Borrower or an Additional Loan Party carries on the business of managing parking
lots pursuant to the Management Contracts, including on the date of this
Agreement the real properties at the municipal addresses listed on Schedule 10.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
Business, operations, results of operations, assets, liabilities or financial
condition of the Borrower, the Guarantor and their respective Subsidiaries,
taken as a whole; (ii) the ability of the Borrower, Guarantor or any other
Additional Loan Party to perform its or their respective obligations under any
of the Credit Documents; (iii) the ability of the Agent or any of the Lenders to
enforce their rights under any of the Credit Documents or realize upon the
Collateral; or (iv) the value of the Collateral or the amount which the Agent or
the Lenders would be likely to receive (after giving consideration to delays in
payment and costs of enforcement) in the liquidation of such Collateral.
"MATERIAL AGREEMENTS" has the meaning ascribed thereto in Section
7.1(x).
<PAGE> 18
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"ONEX" means Onex Corporation, a corporation incorporated and existing
under the laws of Ontario.
"OPERATING COMMITMENT" means, at any time, in respect of the
Operating Facility, Cdn. $6,500,000 (as reduced pursuant to Article 2).
"OPERATING FACILITY" means the Credit Facility to be made available to
the Borrower hereunder for the purposes specified in Section 2.3.
"ORIGINAL CREDIT AGREEMENT" means the credit agreement among the
Borrower, Canadian Imperial Bank of Commerce, as both Lender and Agent, and
Hongkong Bank of Canada dated as of November 13, 1996.
"ORIGINAL CREDIT AGREEMENT DEBT" means all indebtedness and liability
of the Borrower outstanding pursuant to the Original Credit Agreement.
"ORIGINAL CREDIT AGREEMENT SECURITY" means the Security Interests in
favour of the Agent or the Lenders, or both, in the assets and properties
securing the obligations of the Borrower and the Additional Loan Parties under
the Original Credit Agreement or other credit documents delivered pursuant
thereto.
"OTHER NON-CASH ITEMS" means, collectively, accounts receivable,
inventory and trade accounts payable.
"OWNED PROPERTIES" means, collectively, the land and premises owned by
the Borrower, the Guarantor and their respective Subsidiaries and the Buildings
and Fixtures thereon, including on the date of this Agreement the land and
premises listed on Schedule 9.
"PARTICIPANT" has the meaning specified in Section 11.8(3).
"PAYMENT ACCOUNT" means the Canadian Dollar accounts maintained by the
Agent at its principal office, the particulars of which the Agent shall, from
time to time, notify to the Borrower.
"PERMITTED ENCUMBRANCES" means any one or more of the following:
(a) Encumbrances for taxes, rates, assessments or governmental
charges or levies not at the time due and delinquent or the
validity of which is being contested at the time by the
Borrower in good faith by proper legal proceedings;
(b) Encumbrances resulting from any judgment rendered or Claim
filed against the Borrower which the Borrower shall be
contesting in good faith by proper legal proceedings;
(c) undetermined or inchoate Encumbrances which have not at such
time been filed or registered pursuant to Law against the
Borrower or which relate to obligations not due or delinquent;
(d) Encumbrances affecting real property which are (i) title
defects or irregularities of a minor nature; or (ii)
restrictions, easements, rights-ofway, servitudes or other
similar rights in land (including, without restriction,
rights-of-way and servitudes for railways, sewers, drains,
gas and oil pipelines, gas and water mains, electric light
and power and telephone or telegraph or cable television
conduits, poles, wires, cables or other incidental
<PAGE> 19
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equipment) granted to or reserved by other Persons; in each
case where such Encumbrances in the aggregate do not
materially impair the usefulness of the property for the
purposes for which it is held and mortgages of and other
Encumbrances against the said easements, rights-of-way,
servitudes or other similar rights in real property;
(e) the right reserved to or vested in any Governmental Entity
by any statutory provision, or by the terms of any lease,
license, franchise, grant or permit of the Borrower, to
terminate any such lease, license, franchise, grant or
permit, or to require annual or other payments as a
condition to the continuance thereof;
(f) liens or other Encumbrances for the excess of the amount of
any past due taxes for which a final assessment has not
been received over the amount of such taxes, rates,
assessments, charges and levies as estimated and paid by
the Borrower;
(g) reservations in any original grants from the Crown of any
land or interest therein, statutory exceptions to title,
and reservations of mineral rights (including coal, oil and
natural gas) in any grants from the Crown or from any other
predecessors in title;
(h) liens and privileges arising out of judgments or awards
with respect to which an appeal or proceedings for review
is being prosecuted in good faith and by appropriate
proceedings and with respect to which there shall have been
secured a stay of execution pending the appeal or
proceedings for review or for which security acceptable to
the Agent has been posted by the Borrower;
(i) liens or deposits in connection with bids, tenders,
contracts or expropriation proceedings of the Borrower or
to secure workers' compensation, unemployment insurance or
other similar statutory assessments, or to secure costs of
litigation when required by law, and surety or appeal bonds
in connection with such litigation;
(j) warehouseman's, carriers' or other similar common law liens
or privileges, where the action to enforce the same has not
proceeded to final judgment, is being defended in good
faith by the Borrower and by appropriate proceedings and in
respect of which it shall have set aside on its books
reserves deemed by it to be adequate therefor;
(k) any other liens or privileges or other title
irregularities, encroachments or encumbrances of a nature
similar to the foregoing which are of a minor nature and
will not in the aggregate materially and adversely affect
the use of the property for the purposes for which it is
held by the Borrower or any of its Subsidiaries;
(l) deposits of cash or securities in connection with any liens
or privileges referred to in paragraphs (a) and (h) above;
(m) assignments of insurance provided to landlords (or their
mortgagees) pursuant to the terms of any lease and liens or
rights reserved in or exercised under any lease for rent or
compliance with the terms of such lease;
<PAGE> 20
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(n) mechanics', workers', repairers' or other like possessory
liens, arising in the ordinary course of business for
amounts the payment of which is either not delinquent or is
being contested in good faith by appropriate proceedings;
(o) plans of subdivision, site plans, municipal agreements or
restrictive covenants affecting the use to which lands may
be put, provided that such covenants are complied with and
do not materially detract from the value of the land
concerned or materially impair its use in the operation of
the Business;
(p) rights and interests created by notice registered by any
Department of Highways or similar authority with respect to
proposed highways and which do not materially detract from
the value of the land concerned or materially impair its
use in the operation of the Business;
(q) zoning and building laws and ordinances and municipal
by-laws (including site specific by-laws);
(r) lis pendens that may be registered against any real
property or interests therein of the Borrower or any of its
Subsidiaries in respect of any action or proceeding against
the Borrower or any of its Subsidiaries or in which it is a
defendant, but with respect to which action or proceeding
no judgment, award or attachment against the Borrower or
such Subsidiary has been granted or made and which the
Borrower or such Subsidiary is defending in good faith and
by appropriate proceedings and for which security
satisfactory to the Agent has been posted by the Borrower
or its Subsidiary, as the case may be;
(s) the granting by the Borrower in the ordinary course of its
business of any lease, sub-lease, tenancy or right of
occupancy to any Person in respect of property owned or
leased by the Borrower and dealings by such Persons with
their leasehold interests, including any notice thereof or
any security interest therein provided that, with respect
to any of the foregoing having annual rental payments
greater than $50,000, the rights of any such Person shall
have been subordinated to the rights of the Lenders under
the Security Documents pursuant to a written subordination
agreement in form and substance satisfactory to Lender,
acting reasonably;
(t) any Encumbrance resulting from security given to a utility
when required by such utility in connection with the
operation of the Business;
(u) Encumbrances in favour of the Lenders created by the
Security Documents;
(v) Encumbrances existing on the date hereof and disclosed in
Schedule 11 only to the extent such Encumbrances conform to
their description in Schedule 11, and not any extension or
renewal or replacement thereof or increase in the amount
secured thereby;
(w) Purchase Money Mortgages, securing Debt, in an aggregate
amount not to exceed $1,000,000;
(x) Encumbrances in favour of Financeco, subordinate to the
encumbrances referred to in (u) above, given in connection
with the
<PAGE> 21
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FUR Subordinated Debt; and
(y) other Encumbrances in an aggregate amount not to exceed
$50,000.
"PERMITTED INDEBTEDNESS" means the Consolidated Indebtedness as
specifically described on Schedule 11 and not any extension or renewal or
replacement thereof or increase in the amount.
"PERMITTED MARKETABLE SECURITIES" means any securities held by the
Borrower or any of its Subsidiaries which are publicly traded on a recognized
stock exchange and do not represent greater than 5% of the issued and
outstanding securities of the issuing corporation and any fixed income
securities for which a public market exists.
"PERSON" means an individual, partnership, corporation, joint stock
company, trust, unincorporated association, joint venture or other entity or
Governmental Entity.
"PURCHASE MONEY MORTGAGE" means any Security Interest charging property
acquired by the Borrower, which is or has been granted or assumed by the
Borrower or which arises by operation of Law in favour of the transferor
substantially concurrently with and for the purpose of the acquisition of such
property, in each case where (i) the principal amount secured by such Security
Interest is not in excess of the cost to the Borrower of the property acquired;
and (ii) such Security Interest extends only to the property acquired.
"QUALIFYING ACQUISITION" means (i) an acquisition by the Borrower of
100% of the issued and outstanding shares in the capital of a corporation or an
acquisition of all or substantially all of the assets pertaining to a business,
where, in each case (x) not less than 90% of the assets or revenues of the
corporation or business are located or generated, as the case may be, in Canada
or the United States or such other jurisdiction as the Agent may agree, acting
reasonably; (y) at least 90% of the business acquired pursuant thereto is
comprised of the Borrower's Business; and (z) the ratio of TEV/Target EBITDA of
the corporation or business being acquired is not greater than 5.0:1.0, except
in the case where new (additional) equity financing or Subordinated Debt is
provided to fund the difference between the acquisition price and the TEV which
would have been represented by 5.0 x Target EBITDA; (ii) if less than 100% of
the issued and outstanding shares in the capital of any corporation is being
acquired (x) the conditions set forth under (x), (y) and (z) of (i) above are
satisfied; (y) at least 51 % of the issued and outstanding shares in the capital
of such corporation is being acquired, except in an arrangement as described in
subparagraph (iii) below; and (z) a shareholders' agreement containing the
Qualifying Shareholder Arrangements has been or will be entered into by all
relevant Persons within 30 days of the Qualifying Acquisition; and in any event,
a Qualifying Acquisition does not include a Hostile Take-Over Bid; and (iii) an
investment by the Borrower in a joint venture or other private business
arrangement with FUR, FUMI or any Subsidiary or Affiliate thereof, to develop
businesses involving, or ancillary to, the Borrower's Business, provided that
such investment is limited to an amount no greater than Cdn.$2,000,000 and the
investment satisfies the tests set out in subparagraph (i) (x) and (y) above.
"QUALIFYING SHAREHOLDER ARRANGEMENTS" means a shareholders agreement in
respect of a corporation in which the Borrower is acquiring less than 100% of
the issued and outstanding shares which agreement shall be in compliance with
the provisions set forth in Schedule 17.
<PAGE> 22
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"REFERENCE DISCOUNT RATE" means, in respect of any Bankers' Acceptances
or Drafts to be purchased by a Lender or any other Person pursuant to Article 4,
(i) which is a Schedule I Bank, the average discount rate on bankers'
acceptances as quoted on Reuters' Screen CDOR Page at approximately 10:00 a.m.
(Toronto time) on the relevant Drawing Date or (ii) which is a Schedule II Bank,
the lesser of (x) their bid rate; and (y) the discount rate calculated in (i)
above plus 0.07%.
"RELEASE" when used as a verb includes release, spill, leak, emit,
deposit, discharge, leach, migrate or dispose into the environment and the term
"Release" when used as a noun has a correlative meaning.
"RELEVANT REPAYMENT DATE" means, in respect of the repayment of all
Accommodations made under (i) the Operating Facility; (ii) the Term Facility;
and (iii) the Acquisition Facility, the third anniversary of the Closing Date.
"REMEDIAL ACTION" means any action, whether voluntary or compelled,
that is reasonably necessary to (i) clean up, remove, treat or in any other way
deal with Hazardous Substances in the environment; (ii) prevent any Release of
Hazardous Substances where such Release would violate any Environmental Laws or
would endanger or threaten to endanger public health or welfare or the
environment; or (iii) perform remedial studies, investigations, restoration and
post-remedial studies, investigations and monitoring on, about or in connection
with any of the Owned Properties, Leased Properties or other Assets.
"SCHEDULE I BANK" means a bank under the Bank Act (Canada) listed in
Schedule I thereto.
"SCHEDULE II BANK" means a bank under the Bank Act (Canada) listed in
Schedule II thereto.
"SECURITY" means, at any time, the Security Interests in favour of the
Agent or the Lenders, or both, in the assets and property securing the
obligations of the Borrower, Guarantor and the other Additional Loan Parties
under this Agreement or under any of the other Credit Documents.
"SECURITY DOCUMENTS" means the agreements and other instruments
described in Schedule 5 and any other agreements granting security to the Agent
or the Lenders, or both, for the obligations of the Borrower, Guarantor and the
other Additional Loan Parties under this Agreement or under any of the other
Credit Documents.
"SECURITY INTEREST" means any hypothec, mortgage, pledge, security
interest, assignment, encumbrance, lien, charge or deposit arrangement or any
other arrangement or condition that in substance secures payment or performance
of an obligation and includes the interest of a vendor or lessor under any
conditional sale agreement, capitalized lease or other title retention
agreement.
"SECURITY TRUST INDENTURE" entered into by BT, Hongkong Bank of Canada,
FUR and Montreal Trust Company of Canada dated as of the 17th day of April,
1997.
"SUBORDINATED DEBT" means both (a) the principal amount outstanding at
any time of Debt payable by the Borrower, Guarantor or any of their respective
Subsidiaries (and for the purposes of a Qualifying Acquisition, the relevant
<PAGE> 23
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target entity) which is non-cash interest bearing and is subordinate and junior
in right of payment (including the payment of interest thereon) to the payment
in full of the Accommodations Outstanding and all other amounts payable
hereunder and under the other Credit Documents, on terms and conditions
satisfactory to the Agent, acting reasonably; and (b) the FUR Subordinated Debt.
"SUBSIDIARY" means, at any time, as to any Person, any corporation or
other Person, if at such time the first mentioned Person owns, directly or
indirectly, securities or other ownership interests in such corporation or other
Person, having ordinary voting power to elect a majority of the board of
directors or persons performing similar functions for such corporation or other
Person.
"TARGET EBITDA" means, with respect to the target entity of a
Qualifying Acquisition, the Consolidated EBITDA for such target entity
calculated based on all existing contracts and arrangements of such target
entity, adjusted to exclude or include, as the case may be, all specifically
identifiable cost items with respect to the rent payments and employee salaries
which will be eliminated or added under management by the Borrower and such
other cost items as the Agent may approve, acting reasonably, but excluding all
one-time or extraordinary cost or revenue items incurred in connection with such
Qualifying Acquisition. The above components of Consolidated EBITDA (including
all such cost or revenue items) shall be detailed in an officer's certificate of
the Borrower delivered to the Agent prior to effecting the Qualifying
Acquisition and such components shall be calculated for such purposes with
respect to such target entity (instead of with respect to the Borrower,
Guarantor and their respective Consolidated Subsidiaries) on a consolidated and
annualized basis.
"TERM COMMITMENT" means, at any time, in respect of the Term Facility,
Cdn. $33,500,000 (as reduced pursuant to Article 2).
"TERM FACILITY" means the Credit Facility to be made available to the
Borrower hereunder for the purposes set out in Section 2.3.
"TEV" means total enterprise value of a Person determined by
calculating (i) in respect of an acquisition of shares of such Person, the sum
of (x) the implied value of 100% of the outstanding share capital of such
Person, calculated based on the per share price paid for the shares of such
Person acquired as part of such acquisition, and (y) the market value on the
date of such acquisition of the Debt of such Person, less (z) all cash or cash
equivalents of such Person; and (ii) in respect of an acquisition of assets of
such Person (x) the aggregate purchase price paid for such assets, less (y)
without duplication, cash or cash equivalent of such Person acquired by the
Borrower as part of a Qualifying Acquisition.
"TOTAL REMAINING DEBT" means $50,000,000 less all mandatory prepayments
of the Term Facility and the Acquisition Facility made pursuant to Section 2.5.
"TRANSACTION" means the transaction as defined in the recitals above.
"WORKING CAPITAL LINE" means a working capital line of credit not
exceeding $6,500,000 Cdn. provided to the Borrower by a bank from time to time.
2. GENDER AND NUMBER. Any reference in the Credit
Documents to gender shall include all genders, and words importing the
singular number only
<PAGE> 24
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shall include the plural and vice versa.
SECTION 3. HEADINGS. The provisions of a Table of Contents,
the division of this Agreement into Articles and Sections, and the insertion of
headings are for convenience of reference only and shall not affect the
interpretation of this Agreement.
SECTION 4. CURRENCY. All references in the Credit Documents
to dollars, unless otherwise specifically indicated, are expressed in Canadian
currency.
SECTION 5. CERTAIN PHRASES, ETC. In any Credit Document (i)
(y) the words "including" and "includes" mean "including (or includes) without
limitation" and (z) the phrase "the aggregate of", "the total of", "the sum of",
or a phrase of similar meaning means "the aggregate (or total or sum), without
duplication, of"; (ii) except where specifically stated otherwise, whether any
act, occurrence, conduct, event or state of affairs is "material", "adverse" or
"materially adverse" or any grammatical variation of such words, shall be
determined by the Agent, acting reasonably; and (iii) in the computation of
periods of time from a specified date to a later specified date, unless
otherwise expressly stated, the word "from" means "from and including" and the
words "to" and "until" each mean "to but excluding".
SECTION 6. ACCOUNTING TERMS. All accounting terms not
specifically defined in this Agreement shall be construed in accordance with
Generally Accepted Accounting Principles.
SECTION 7. DEEMING PROVISION. Sections in this Agreement
may be properly referred to in other documents, including, without limitation,
the Credit Documents, as numbers 1.1, 1.2, 1.3, 1.4, etc., or alternatively
numbers 1.01, 1.02, 1.03, 1.04, etc.
SECTION 8. RATEABLE PORTION OF ACCOMMODATIONS. References in
this Agreement to a Lender's rateable portion of tions. Advances, Drawings,
Drafts, Banker's Acceptances and Documentary credits or rateable share of
payments of principal, interest, Fees or any other amount payable hereunder,
shall mean and refer to a rateable portion or share as nearly as may be rateable
in the circumstances, as determined in good faith by the Agent. Each such
determination by the Agent shall be prima facie evidence of such rateable share.
SECTION 9. INCORPORATION OF SCHEDULES. The schedules
attached hereto shall, for all purposes hereof, form an integral part of this
Agreement.
SECTION 10. INTERPRETATION. The parties intend that this
Agreement constitutes an amendment and restatement of the Original Credit
Agreement. This Agreement supersedes the Original Credit Agreement relating to
the subject matter hereof. This shall not constitute a novation or
extinguishment of the Original Credit Agreement. The Original Credit
Agreement, as amended and restated hereby, shall remain in full force and
effect and is hereby ratified and confirmed. The Original Credit
<PAGE> 25
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Agreement is hereby amended and restated in its entirety, on the terms
and conditions herein contained.
ARTICLE 2
CREDIT FACILITIES
SECTION 1. AVAILABILITY. (1) The Borrower acknowledges and
confirms that the Original Credit Agreement Debt, which has been advanced prior
to the Closing Date, shall continue to be outstanding as part of the
Accommodations Outstanding hereunder. No indebtedness of the Borrower
outstanding under the Original Credit Agreement is extinguished or discharged
hereby and the principal of any Accommodations Outstanding thereunder shall be
deemed Accommodations Outstanding hereunder with no extinguishment, discharge or
novation.
(2) Subject to the next following sentence, each Lender severally
agrees, on the terms and conditions of this Agreement, to make Accommodations
rateably to the Borrower in accordance with such Lender's Operating Commitment,
Lender's Term Commitment and Lender's Acquisition Commitment. Accommodations
shall be made available as (i) Advances, pursuant to Article 3; (ii) Drawings
pursuant to Article 4; and (iii) Letter of Credit, pursuant to Article 5.
(3) The failure of any Lender to make an Accommodation shall not
relieve any other Lender of its obligation, if any, in connection with such
Accommodation, but no Lender shall be responsible for such other Lender' s
failure in respect of such Accommodation.
(4) The Agent shall give each Lender prompt notice of (i) any
Accommodation Notice received from the Borrower and of each Lender's rateable
portion of any Accommodation; and (ii) any other notice received by it
hereunder.
SECTION 2. COMMITMENTS AND FACILITY LIMITS. (1) The Term
Facility shall not revolve and any amount prepaid or repaid under the Term
Facility cannot be reborrowed and shall reduce the Term Commitment (and each
Lender's Term Commitment), by the amount prepaid or repaid. The Acquisition
Facility shall not revolve and any amount prepaid or repaid under the
Acquisition Facility cannot be reborrowed and shall reduce the Acquisition
Commitment (and each Lender's Acquisition Commitment), by the amount prepaid or
repaid. The Operating Facility shall not revolve.
(2) A conversion from one Type of Accommodation to another Type of
Accommodation shall not constitute a repayment or prepayment hereunder. Subject
to the terms of this Agreement, the Borrower shall have the right at all times
to determine the manner and proportions in which it will utilize the different
Types of Accommodations hereunder.
SECTION 3. USE OF PROCEEDS. (1) The Borrower shall use the
proceeds of any Accommodation under the Operating Facility for the purpose of
(i) supporting its working capital requirements under the Working Capital Line;
(ii) financing costs and expenses associated with this Agreement; (iii) the
issuance of Letters of Credit in accordance with Article 5; and (iv) making
payments in respect of existing Debt.
<PAGE> 26
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(2) The Borrower shall use the proceeds of any Accommodation under the
Term Facility for the purpose of (i) making payments in respect of existing
Debt; and (ii) financing transaction costs and expenses associated with this
Agreement.
(3) The Borrower shall use the proceeds of any Accommodation under the
Acquisition Facility for the purposes of financing Qualifying Acquisitions.
SECTION 4. MANDATORY REPAYMENTS. (1) On the Relevant Repayment
Date, the Operating Facility shall terminate, and all amounts owing, including
fees, with respect to the Operating Facility shall be immediately due and
payable.
(2) Subject to Section 2.9(1), the Borrower shall repay, and there
shall become due and payable on the Relevant Payment Date, the Accommodations
Outstanding under the Term Facility, together with all interest and fees accrued
thereon and all other amounts payable hereunder.
(3) The Borrower shall repay, and there shall become due and payable on
the Relevant Repayment Date, the Accommodations Outstanding under the
Acquisition Facility, together with all interest and Fees accrued thereon and
all other amounts payable hereunder.
(4) The Borrower shall pay or repay on April 16, 2000 all amounts owing
hereunder and not previously paid or repaid.
SECTION 5. MANDATORY PREPAYMENTS. (1) The Borrower shall
prepay Accommodations ments. Outstanding under the Term Facility in accordance
with Section 8.2(d)(iv).
(2) The Borrower shall prepay annually, upon and together with each
delivery of financial statements in accordance with 8.1(a), (i) the
Accommodations Outstanding under the Term Facility; and (ii) provided that the
Accommodations Outstanding under the Term Facility have been paid in full, the
Accommodations Outstanding under the Acquisitions Facility, in each case, in an
amount equal to 50% of the Excess Cash Flow in respect of each such Financial
Year, subject to a maximum amount of 90% of Borrower Excess Cash Flow in each
such Financial Year.
SECTION 6. OPTIONAL PREPAYMENTS AND REDUCTIONS OF
COMMITMENTS. (1) The Borrower may, subject to the provisions of this
Agreement, prepay the Accommodations Outstanding or reduce the respective
Lender's Commitments under either the Term Facility or the Acquisition
Facility, in each case in whole or rateably in part, upon the number of
Business Days' notice to the Agent specified in Schedule 4 stating the
proposed date and aggregate principal amount of the prepayment or reduction,
and if such notice is given the Borrower shall pay the Lenders in accordance
with such notice the amount, if any, by which the Accommodations Outstanding
under such Credit Facility exceed the proposed reduced Term Commitment or
Acquisition Commitment, as the case may be. Each partial prepayment or
reduction shall be in an aggregate principal amount of Cdn. $100,000 or an
integral multiple thereof.
(2) The Borrower may not, pursuant to this Section 2.6, prepay the
<PAGE> 27
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amount of any Drawing, except on the maturity date for the relevant Bankers'
Acceptances, Drafts or BA Equivalent Notes.
(3) Neither the Acquisition Facility nor the Term Facility is
prepayable after October 16, 1999, subject to payments required to be made under
Section 2.5.
(4) To the extent that optional prepayments are made, and not as
mandated under Section 2.5, on or before October 16, 1999, of either the
Acquisition Facility or the Term Facility, an additional payment by way of a fee
shall be made by the Borrower to the Agent for the account of the appropriate
Lender or Lenders at the time of making such prepayment equal to:
(a) in the case of a prepayment on or before April 16, 1998,
an amount equal to $105,000 Cdn. TIMES the Debt Repayment
Amount DIVIDED by the Total Remaining Debt at such time,
provided that such calculated amount with respect to all such
prepayments shall in no event cumulatively exceed $105,000
Cdn. in aggregate;
(b) in the case of a prepayment after April 16, 1998 but on or
before April 16, 1999, an amount equal to $120,000 Cdn. TIMES
the Debt Repayment Amount DIVIDED by the Total Remaining Debt
at such time, provided that such calculated amount with
respect to all such prepayments shall in no event cumulatively
exceed $120,000 Cdn. in aggregate;
(c) in the case of a prepayment after April 16, 1999 but on or
before October 16, 1999, an amount equal to 0.55 of 1% per
annum of the Debt Repayment Amount calculated for the period
from the Closing Date to the date of such prepayment,
compounded annually.
SECTION 7. FEES. (1) The Borrower shall pay to the Agent
for the account of the Lenders a standby fee of 0.125% per annum on the
unutilized portion of both the Acquisition Facility.
(2) The above standby fee shall be calculated daily in Canadian Dollars
and shall be payable in Canadian Dollars, monthly in arrears on the first
Business Day of each month and on the Relevant Repayment Date.
(3) The Borrower shall pay the fees and other consideration payable
pursuant to the applicable Fee Letters.
SECTION 8. PAYMENTS UNDER THIS AGREEMENT. (1) Unless otherwise
expressly provided in this Agreement, the Borrower shall make any payment
required to be made by it to the Agent or any Lender by depositing the amount of
such payment in the relevant currency to the relevant Payment Account not later
than 2:00 p.m. (Toronto time) on the date such payment is due. The Borrower
shall make each payment to be made hereunder in respect of Accommodations in
Canadian Dollars. The Agent shall cause to be distributed to each Lender,
promptly on the date of receipt by the Agent of each payment on account of the
Accommodations Outstanding or any other amount due to the Lender hereunder, an
amount equal to the amount then due each Lender and, if such distribution is not
so made on such date, shall pay interest thereon to such Lender for each day,
from the date such amount is received by, the Agent until the date of
distribution, at the prevailing interbank rate for late payments. Any amount
<PAGE> 28
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received by the Agent for the account of the Lenders shall be held in trust for
the benefit of the Lenders until such distribution.
(2) Unless otherwise expressly provided in this Agreement, the Agent
shall make any Accommodation or other payment to the Borrower hereunder by
crediting the relevant Borrower's Account (or causing of the Borrower's Account
to be credited) with the amount of such payment in the relevant currency not
later than 1:00 p.m. (Toronto time) on the date such payment is to be made.
(3) The Borrower hereby authorizes each Lender, if and to the extent
payment owed to such Lender by the Borrower is not made when due hereunder, to
charge from time to time any amount so due against any or all of the Borrower's
accounts with such Lender.
SECTION 9. APPLICATION OF PAYMENTS AND PREPAYMENT. (1)
All amounts received by the Agent from or on behalf of the Borrower and not
previously applied pursuant to this Agreement shall be applied by the Agent as
follows (i) first, in reduction of the Borrower's obligation to pay any unpaid
interest accrued on the principal amount of Advances or on any other amount
owing hereunder and any Fees which are due and owing; (ii) second, in reduction
of the Borrower's obligation to pay any Claims or Losses referred to in Sections
11.6(2), (3) and (4); (iii) third, in reduction of the Borrower's obligation to
pay any amounts due and owing on account of any unpaid principal amount of
Advances which is due and owing; (iv) fourth, in reduction of the Borrower's
obligation to pay any other unpaid Accommodations Outstanding which are due and
owing; (v) fifth, in reduction of any other obligation of the Borrower under
this Agreement; and (vi) sixth, to the Borrower or such other Persons as may
lawfully be entitled to the remainder, or as any court of competent jurisdiction
may otherwise direct.
SECTION 10. COMPUTATIONS OF INTEREST AND FEES. (1) All
computations of interest shall be made by the Agent Fees. taking into account
the actual number of days occurring in the period for which such interest is
payable pursuant to Section 3.3 and on the basis of a 365/366 day year.
(2) All computations of fees shall be made by the Agent on the basis of
a 365/366 day year, taking into account the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
fees are payable, adjusted, in the case of the Fee payable pursuant to Section
2.7, to the date of any reduction in the Acquisition Commitment pursuant to
Section 2.6. The difference between any Fee paid by the Borrower prior to the
date of any such reduction and the amount of the Fee payable by the Borrower
after giving effect to such reduction shall be repaid rateably by the Lenders to
the Borrower promptly upon any such reduction.
(3) For purposes of the Interest Act (Canada), (i) the principle of
deemed reinvestment of interest does not apply to any interest calculation under
this Agreement; and (ii) the rates of interest stipulated in this Agreement are
intended to be nominal rates and not effective rates or yields.
SECTION 11. PAYMENTS ON MATURITY. On the Relevant Payment
Date, the Borrower will pay to the Agent for the benefit of the Lenders, in
addition to all amounts payable at such time pursuant to this Agreement, an
amount by way of fee equal
<PAGE> 29
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to 0.55 of 1% per annum of the aggregate amounts outstanding under all the
Credit Facilities for the period from the Closing Date to the Relevant Repayment
Date calculated on a daily basis and compounded annually.
ARTICLE 3
ADVANCES
SECTION 1. THE ADVANCES. (1) Each Lender severally agrees,
on the terms and conditions of this Agreement, to make Advances to the Borrower
under the Acquisition Facility from time to time on any Business Day.
(2) Each Borrowing shall consist of Advances made to the Borrower on
the same day rateably by the Lenders. Each Advance shall be in the aggregate
minimum amount and in an integral multiple of the amount set forth in Schedule
4.
SECTION 2. PROCEDURE FOR BORROWING. (1) Subject to waiver at
the discretion of the ing. Agent, each Borrowing shall be made on the number of
days prior notice specified in Schedule 4, given not later than 2:00 p.m.
(Toronto time) by the Borrower to the Agent. Each notice of a Borrowing (a
"Borrowing Notice") shall be in substantially the form of Schedule 1, shall be
irrevocable and binding on the Borrower and shall specify (i) the requested date
of such Borrowing; (ii) the Credit Facility under which such Borrowing is to be
made; and (iii) the aggregate amount of such Borrowing. Upon receipt by the
Agent of funds from the Lenders, and fulfilment of the applicable conditions set
forth in Article 6, the Agent will make such funds available to the Borrower in
accordance with Article 2.
SECTION 3. INTEREST ON ADVANCES. (1) The Borrower shall pay
interest on the unpaid principal amount of each Canadian Prime Rate Advance made
to it from the date of such Canadian Prime Rate Advance until such principal
amount shall be repaid in full subject as provided in the next following
sentence, at a rate per annum equal at all times to the sum of the Canadian
Prime Rate in effect from time to time plus .75 of 1% per annum calculated, on
the daily balance, and payable monthly in arrears (i) on the first Business Day
of each month in each year; and (ii) when such Canadian Prime Rate Advance
becomes due and payable in full. Any amount of principal of or interest on any
such Canadian Prime Rate Advance which is not paid when due (whether at stated
maturity, by acceleration or otherwise) shall bear interest (both before and
after judgment), from the date on which such amount is due until such amount is
paid in full, payable on demand, at a rate per annum equal to the sum of the
Canadian Prime Rate in effect from time to time and .75 of 1% per annum.
<PAGE> 30
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ARTICLE 4
BANKERS' ACCEPTANCES
SECTION 1. ACCEPTANCES AND DRAFTS. (1) Each Lender severally
agrees, on the terms and conditions of this Agreement and from time to time on
any Business Day prior to the Relevant Repayment Date (i) in the case of a
Lender which is willing and able to accept Drafts, to create acceptances
("BANKERS' ACCEPTANCES") by accepting Drafts and to purchase such Bankers'
Acceptances in accordance with Section 4.3(2); (ii) in the case of a Lender
which is unwilling or unable to accept Drafts, to purchase completed Drafts
(which have not and will not be accepted by such Lender or any other Lender or
Person) in accordance with Section 4.3(2); (iii) in the case of a Lender which
has participated or assigned all or any part of its interest in the Credit
Facilities to a Participant or Assignee which is willing and able to accept
Drafts, to arrange for the creation of Bankers' Acceptances by such Participant
or Assignee and for the purchase of such Bankers' Acceptances by such
Participant or Assignee, to the extent of such participation or assignment, in
accordance with Section 4.3(2); and (iv) in the case of a Lender which has
participated or assigned all or any part of its interest in the Credit
Facilities to a Participant or Assignee which is unwilling or unable to accept
Drafts, to arrange for the purchase by such Participant or Assignee of completed
Drafts (which have not and will not be accepted by such Lender or any other
Lender or Person), to the extent of such participation or assignment, in
accordance with Section 4.3(2).
(2) Each Drawing shall be in a minimum aggregate Face Amount and in an
integral multiple of the amount set forth in Schedule 4, and shall consist of
the creation and purchase of Bankers' Acceptances or the purchase of Drafts on
the same day, in each case for the Drawing Purchase Price, effected or arranged
by the Lenders in accordance with Section 4.3 and their respective Lender's Term
Commitment and Lender's Acquisition Commitment.
(3) If the Agent determines, in good faith, which determination shall
be final, conclusive and binding upon the Borrower and the Lenders, that the
Bankers' Acceptances to be created and purchased or Drafts to be purchased on
any Drawing (upon a conversion or otherwise) will not be created and purchased
rateably by the Lenders (or any of their respective Participants or Assignees)
in accordance with Sections 4.1(2) and 4.3, then the requested Face Amount of
Bankers' Acceptances and Drafts relating to such Drawing shall be reduced to the
nearest lesser amount that will permit such rateable sharing and the amount by
which the requested Face Amount shall have been so reduced shall be converted or
continued, as the case may be, as a Canadian Prime Rate Advance under the Term
Facility or the Acquisition Facility, as the case may be.
SECTION 2. FORM OF DRAFTS. Each Draft presented by the
Borrower (i) shall be in an integral multiple of Cdn. $100,000; (ii) shall be
dated the date of the Drawing; and (iii) shall mature and be payable by the
Borrower (in common with all other Drafts presented in connection with such
Drawing) on a Business Day which occurs approximately 30, 60, 90 or 180 days
after the Drawing Date and on or prior to the Relevant Repayment Date and which
would not conflict with the repayment schedule set out in Section 2.4.
SECTION 3. PROCEDURE FOR DRAWING. (1) Each Drawing shall be
made on notice (a ng. "Drawing Notice") given by the Borrower to the Agent not
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later than 2:00 p.m. (Toronto time) on the number of days notice specified in
Schedule 4. Each Drawing Notice shall be in substantially the form of Schedule
3, shall be irrevocable and binding on the Borrower and shall specify (i) the
Drawing Date; (ii) the Credit Facility under which such Drawing is to be made;
(iii) the aggregate Face Amount of Drafts to be created; and (iv) the contract
maturity date for such Drafts.
(2) Not later than 2:00 p.m. (Toronto time) on an applicable Drawing
Date, each Lender shall (i) complete one or more Drafts in accordance with the
Drawing Notice, accept such Drafts and purchase the Bankers' Acceptances thereby
created for the Drawing Purchase Price; (ii) complete one or more Drafts in
accordance with the Drawing Notice and purchase such Drafts for the Drawing
Purchase Price; (iii) arrange for a Participant or Assignee to complete one or
more Drafts in accordance with the Drawing Notice, to accept such Drafts and to
purchase the Bankers' Acceptances thereby created for the Drawing Purchase
Price; or (iv) arrange for a Participant or Assignee to complete one or more
Drafts in accordance with the Drawing Notice and arrange for such Participant or
Assignee to purchase such Drafts for the Drawing Purchase Price. In each case,
upon receipt of such Drawing Purchase Price and upon fulfilment of the
applicable conditions set forth in Article 6, the Agent shall make such funds
available to the Borrower in accordance with Article 2.
(3) The Borrower shall, at the request of a Lender, issue one or more
non-interest bearing promissory notes (each a "BA EQUIVALENT NOTE"), in such
form as such Lender may specify, in a principal amount equal to the Face Amount
of, and in exchange for, any unaccepted Drafts which such Lender has purchased
or has arranged to have purchased in accordance with Section 4.3(2).
(4) Bankers' Acceptances purchased by a Lender, Participant or Assignee
hereunder may be held by it for its own account until the contract maturity date
or sold by it at any time prior thereto in any relevant market therefor in
Canada, in such Person's sole discretion.
SECTION 4. PRESIGNED DRAFT FORMS. To enable the Lenders to
make Drawings in the manner specified in this Article 4, the Borrower shall
supply each Lender with such number of Drafts as such Lenders may reasonably
request, duly endorsed and executed on behalf of the Borrower. Each Lender shall
exercise such care in the custody and safekeeping of Drafts as it would exercise
in the custody and safekeeping of similar property owned by it. Each Lender
will, upon request by the Borrower, promptly advise the Borrower of the number
and designations, if any, of the uncompleted Drafts then held by it. The
signature of any duly authorized officer of the Borrower on a Draft may be
mechanically reproduced in facsimile and Drafts and Bankers' Acceptances bearing
such facsimile signature shall be binding upon the Borrower as if they had been
manually signed by such officer. Notwithstanding that any of the individuals
whose manual or facsimile signature appears on any Draft as one of such officers
may no longer hold office at the date thereof or at the date of its acceptance
by the Lender hereunder or at any time thereafter, any Draft or Bankers'
Acceptance so signed shall be valid and binding upon the relevant Borrower.
SECTION 5. PAYMENT, CONVERSION OR RENEWAL OF BANKERS'
ACCEPTANCES. (1) Upon the maturity of a Bankers' Acceptance, Draft or BA
Equivalent Note, the Borrower may (i) elect to issue a replacement Bankers'
Acceptance, Draft or BA Equivalent Note by giving a Drawing Notice in accordance
with Section 4.3(1);
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(ii) elect to have all or a portion of the Face Amount of such Bankers'
Acceptance, Draft or BA Equivalent Note converted to an Advance, by giving a
Borrowing Notice in accordance with Section 3.2; or (iii) pay, on or before 2:00
p.m. (local time) on the maturity date for such Bankers' Acceptance, Draft or BA
Equivalent Note, an amount in Canadian Dollars equal to the Face Amount of such
Bankers' Acceptance, Draft or BA Equivalent Note (notwithstanding that a Lender
or any Participant or Assignee may be the holder thereof at maturity). Any such
payment shall satisfy the Borrower's obligations under the Bankers' Acceptances
to which it relates and the relevant Lender shall thereafter be solely
responsible for the payment of such Bankers' Acceptances.
(2) If the Borrower fails to pay any Bankers' Acceptance when due, or
to issue a replacement Bankers' Acceptance, Draft or BA Equivalent Note in the
Face Amount of such Bankers' Acceptance, Draft or BA Equivalent Note pursuant to
Section 4.5(1), the unpaid amount due and payable in respect thereof shall be
converted, as of such date, and without any necessity for the Borrower to give a
Borrowing Notice in accordance with Section 3.2, to a Canadian Prime Rate
Advance made by the Lenders rateably under the applicable Credit Facility and
shall bear interest calculated and payable as provided in Article 3.
SECTION 6. CIRCUMSTANCES MAKING BANKERS' ACCEPTANCES
UNAVAILABLE. (1) If a Lender determines in good faith, which determination shall
be final, conclusive and binding upon the Borrower, and notifies the Agent and
the Borrower that, by reason of circumstances affecting the money market, there
is no market for Bankers' Acceptances, then,
(a) the right of the Borrower to request a Drawing shall be suspended
until such Lender determines that the circumstances causing such suspension no
longer exist and such Lender so notifies the Agent and the Borrower; and
(b) any Drawing Notice which is outstanding shall be cancelled and
the Drawing requested therein shall not be made.
(2) The Agent shall promptly notify the Borrower and the Lenders of the
suspension of the Borrower's right to request a Drawing and of the termination
of any such suspension.
ARTICLE 5
LETTERS OF CREDIT
SECTION 1. LETTERS OF CREDIT. BT which has an Operating
Commitment agrees, on the terms and conditions of this Agreement, to issue (or
arrange for a Participant or Assignee to issue) Letters of Credit denominated in
Canadian dollars, under the Operating Facility, for the account of the Borrower
from time to time on any Business Day prior to the Relevant Repayment Date.
SECTION 2. PROCEDURE FOR ISSUE. (1) Each Issue shall be made
on notice (an "ISSUE NOTICE") given by the Borrower to the Agent not later than
2:00 p.m. (Toronto time) on the number of days notice specified in Schedule 4.
The Issue Notice shall be in substantially the form of Schedule 3A, shall be
irrevocable and binding on the Borrower and shall specify (i) the requested date
of Issue (the "Issue Date"), (ii) the Face Amount of each Letter of Credit,
(iii) the expiration date, and (iv) the name and address of the Beneficiary. The
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Borrower shall not request a maturity date for a Letter of Credit which would be
after the Relevant Repayment Date.
(2) Not later than 2:00 p.m. (Toronto time) on the Issue Date, BT shall
issue (or cause its Participants and Assignees to issue) a Letter of Credit
completed in accordance with the Issue Notice in the appropriate form. Upon
receipt of the Letter of Credit and upon fulfilment of the conditions set forth
in Article 6, the Agent shall deliver the Letters of Credit to or to the order
of the Borrower.
(3) No Letter of Credit shall require that payment against a conforming
draft be made on the same Business Day upon which the draft was presented,
unless such presentation is made before 2:00 p.m. (Toronto time) on such
Business Day.
(4) Prior to the Issue Date, the Borrower shall provide a precise
description of the documents and the verbatim text of any certificates to be
presented by the Beneficiary which, if presented by the Beneficiary, would
require a Lender, Participant or Assignee, as the case may be, to make payment
under the Letter of Credit. BT, Participant or Assignee may require changes in
any such document or certificate.
SECTION 3. FORM OF LETTERS OF CREDIT. Each Letter of Credit
(i) shall be dated the Issue Date, (ii) shall have an expiration date on a
Business Day which occurs no later than the earlier of (x) one year after the
Issue Date, and (y) the Relevant Payment Date; and (iii) shall comply with the
definition of Letter of Credit.
SECTION 4 USE OF LETTERS OF CREDIT. The Borrower shall use
Letters of Credit for the sole purpose of supporting (i) its day to day
operating finance requirements, (ii) the Borrower's workers' compensation
liabilities or directors' and officers' insurance, (iii) the obligations of
third party insurers in any jurisdiction requiring third party insurers, (iv)
Debt of the Borrower in respect of industrial revenue or development bonds or
financings, or (v) performance, payment, deposit or surety obligations of the
Borrower, in any case if required by Law or in accordance with custom and
practice in its industry.
SECTION 5 REIMBURSEMENTS OF AMOUNTS DRAWN. (1) At or
before 2:00 p.m. (Toronto time) on the date specified by a Beneficiary as a
drawing date under a Documentary Credit, the Borrower shall pay to the Lenders
an amount in same day funds equal to the amount to be drawn by the Beneficiary
in Canadian dollars.
(2) If the Borrower fails to pay to BT the amount drawn under any
Letter of Credit, the unpaid amount due and payable shall, automatically as of
such date, and without the necessity for the Borrower to give any Borrowing
Notice pursuant to Section 3.2, be deemed to be a Canadian Prime Rate Advance
advanced by BT upon the basis set out in Section 3.3 above.
SECTION 6 RISK OF LETTERS OF CREDIT. (1) In determining
whether to pay under a Letter of Credit, BT, Participant and Assignee shall be
responsible only to determine that the documents and certificates required to be
delivered under such Letter of Credit have been delivered and that they comply
on their face with the requirements of such Letter of Credit.
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(2) The reimbursement obligation of the Borrower under any Letter of
Credit shall be unconditional and irrevocable and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances, including
(i) any lack of validity or enforceability of a Letter of Credit, (ii) the
existence of any claim, set-off, defense or other right which the Borrower may
have at any time against a Beneficiary or any transferee of a Letter of Credit,
the Lender or any other Person, whether in connection with the Credit Documents,
the transactions contemplated therein or any other transaction (including any
underlying transaction between the Borrower and the Beneficiary), (iii) any
draft, demand, certificate or any other document presented with a Letter of
Credit proving to be forged, fraudulent or invalid or any statement in it being
untrue or inaccurate, (iv) the existence of any act or omission or any misuse
of, a Letter of Credit or misapplication of proceeds by the Beneficiary,
including any fraud in any draft, demand, certificate or any other document
presented with a Letter of Credit, (v) payment by BT under the Letter of Credit
against presentation of a demand, draft or certificate or other document which
does not comply with the terms of the Letter of Credit unless such payment
constitutes fraud, gross negligence or wilful misconduct of BT, or (vi) the
existence of a Default or Event of Default.
(3) BT, Participant and Assignee shall be responsible for (i) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
under it or proceeds of it, in whole or in part, which may prove to be invalid
or ineffective for any reason, (ii) errors, omissions, interruptions or delays
in transmission or delivery of any messages by mail, telecopy or otherwise,
(iii) errors in interpretation of technical terms, (iv) any loss or delay in the
transmission of any document required in order to make a drawing, and (v) any
consequences arising from causes beyond the control of the Lender, including the
acts or omissions, whether rightful or wrongful, of any Governmental Entity.
None of the above shall affect, impair, or prevent the vesting of any of the
BT's rights or powers under this Agreement. Any action taken or omitted by BT,
Participant or Assignee under or in connection with any Letter of Credit or the
related certificates, if taken or omitted in good faith, shall not put BT,
Participant or Assignee under any resulting liability to the Borrower provided
that BT, Participant or Assignee acts in accordance with the standards of
reasonable care specified in the UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY
CREDITS (1993 Revision), ICC Publication 500 (or any replacement publication).
SECTION 7 FEES. (1) The Borrower shall pay to BT, a Fee equal
to .125 of 1% per annum of its Face Amount, for the period during which a Letter
of Credit is outstanding. Such Fee shall be calculated daily and payable in
advance on the Issue Date in Canadian dollars and shall be non-refundable.
(2) The Borrower shall pay to BT a Fee equal to 1.625% per annum for
the period during which a Letter of Credit is outstanding. Such Fee shall be
calculated, on a 365/366 day year basis based on the daily total utilization by
the Borrower of its Working Capital Line to the extent it is supported by a
Letter of Credit issued hereunder, and payable in arrears on the 15th day of
each month with respect to the immediately preceding calendar month.
(3) The Borrower shall pay to BT, upon the issuance, amendment or
transfer of each Letter of Credit issued by BT and each drawing made thereunder,
BT's standard and prevailing documentary and administrative charges for issuing,
amending, transferring or drawing under, as the case may be,
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Letters of Credit of similar amount, term and risk.
SECTION 8 REPAYMENTS. (1) If the Borrower shall be required to
repay the Accommodations pursuant to Article 2 or Article 9, then the Borrower
shall pay to BT, to the extent required in those Articles, an amount equal to
BT's, Participant's or Assignee's contingent liability in respect of (i) any
outstanding Letter of Credit, and (ii) any Letter of Credit which is the subject
matter of any order, judgment, injunction or other such determination (a
"JUDICIAL ORDER") restricting payment under and in accordance with such Letter
of Credit or extending BT's, Participant's or Assignee's liability under such
Letter of Credit beyond its stated expiration date. Payment in respect of each
Letter of Credit shall be due in Canadian dollars.
(2) BT, Participant or Assignee shall, with respect to any Letter
of Credit, upon the later of:
(a) the date on which any final and non-appealable order,
judgment or other such determination has been
rendered or issued either terminating the applicable
Judicial Order or permanently enjoining BT,
Participant or Assignee from paying under such Letter
of Credit; and
(b) the earlier of (i) the date on which either (x) the
original counterpart of the Letter of Credit is
returned to BT, Participant or Assignee for
cancellation, or (y) BT, Participant or Assignee is
released by the Beneficiary from any further
obligations, and (ii) the expiry (to the extent
permitted by any applicable Law) of the Letter of
Credit,
pay to the Borrower an amount equal to the difference between the amount paid to
BT, Participant or Assignee pursuant to Section 5.8(1) and the amounts paid by
BT, Participant or Assignee under the Letter of Credit.
ARTICLE 6
CONDITIONS OF LENDING
SECTION 1 CONDITIONS PRECEDENT TO THE INITIAL ACCOMMODATION.
The obligation of each Lender to make its initial Accommodation under the Credit
Facilities on or after the date of this Amended and Restated Credit Agreement is
subject to (i) the conditions precedent in Section 6.2; and (ii) the condition
precedent that the Agent and the Lenders shall be satisfied with, or the
Borrower and the Additional Loan Parties shall have delivered to the Agent, as
the case may be, on or before the day of such initial Accommodation, the
following, in form, substance and dated as of a date satisfactory to the Lenders
and their counsel, registered, where applicable, as deemed appropriate by such
counsel, and in sufficient quantities for each Lender:
(a) a certified copy of (i) the charter documents and by-laws of the
Borrower and each Additional Loan Party; (ii) the resolutions of the board of
directors (or any duly authorized committee thereof) of the Borrower and of each
of the Additional Loan Parties approving the borrowing and other matters
contemplated by this Agreement and approving the entering into of all other
Credit Documents to which it is a party and the completion of all transactions
contemplated thereunder; and (iii) all other instruments evidencing necessary
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corporate action of the Borrower and the Additional Loan Parties and of required
Authorizations, if any, with respect to such matters;
(b) a certificate of an officer of the Borrower and each Additional
Loan Party certifying the names and true signatures of its officers authorized
to sign this Agreement and the other Credit Documents;
(c) a certificate of status, compliance, good standing or like
certificate with respect to the Borrower and each Additional Loan Party issued
by the appropriate government officials of the jurisdiction of its incorporation
and of each jurisdiction in which it owns any material assets or carries on any
material business;
(d) the Credit Documents;
(e) favourable opinions of counsel to the Borrower and each of the
Additional Loan Parties in the form and substance satisfactory to the Agent;
(f) satisfactory review by the Agent of all corporate searches
undertaken against the Borrower and each of the Additional Loan Parties;
(g) evidence satisfactory to the Agent as to the shareholdings in the
capital of the Borrower;
(h) the Agent shall have received payment of all fees and reimburseable
expenses to the date hereof;
(i) the Agent shall be satisfied, acting reasonably, that no material
adverse change in the financial condition, business, operations or otherwise of
the Borrower, the Guarantor and their respective Subsidiaries, taken as a whole,
has occurred;
(j) pro-forma balance sheets of Holdco 1, Holdco 2 and the Guarantor
provided under the certificate of an officer of the applicable corporation;
(k) the Agent shall be satisfied in its sole judgment that all
necessary actions have been taken to complete the Transaction, on terms
satisfactory to the Agent, and the recapitalization of the Borrower and various
subsidiaries and affiliates and shall be satisfied with the terms and conditions
of all applicable documentation including the Ancillary Agreement and the
Security Trust Indenture and any other documents entered into by BT in
connection with this transaction;
(l) satisfaction of the Agent and its legal counsel with the validity
and enforceability of the Security Documents; and
(m) such other closing documents, instruments and legal opinions in
respect to the Transaction or otherwise as the Agent or its counsel may
reasonably require.
SECTION 2. CONDITIONS PRECEDENT TO ALL ACCOMMODATIONS.
(1) The obligation of each Lender to make Accommodations or otherwise give
effect to any Accommodation Notice hereunder shall be subject to the conditions
precedent that on the date of such Accommodation Notice and Accommodation, and
after giving effect thereto and to the application of any proceeds therefrom,
(i) in the case of Accommodations (other than conversions or renewals of
Drawings under Section 4.5, the Continuing Representations are,
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subject to the next following sentence, true and correct on and as of such date,
all as though made (unless such representation relates only to a specified date)
on and as of such date; (ii) no event or condition has occurred and is
continuing, or would result from such Accommodation or giving effect to such
Accommodation Notice, which constitutes a Default or an Event of Default; and
(iii) such Accommodation, or otherwise giving effect to such Accommodation
Notice, will not violate any applicable Law then in effect. If a Continuing
Representation not qualified by a Material Adverse Effect standard is not true
and correct for the purposes of this Section 6.2, the condition precedent
described in item (i) above shall be deemed to have been satisfied provided that
no event or circumstance has arisen subsequent to the Closing Date which would
result in such Continuing Representation not being true and correct and which
could reasonably be expected to have a Material Adverse Effect on and as of such
date, as though made (unless such representation relates only to a specified
date) on and as of such date.
(2) Each of the giving of any Accommodation Notice by the Borrower and
the acceptance by the Borrower of any Accommodation shall be deemed to
constitute a representation and warranty by the Borrower that, on the date of
such Accommodation Notice or Accommodation, as the case may be, and after giving
effect thereto and to the application of any proceeds therefrom, the statements
set forth in Section 6.2(1) are true and correct.
SECTION 3 ACQUISITION FACILITY. The obligation of the Lenders
to make Accommodations under the Acquisition Facility shall, in addition to the
conditions precedent set out in Sections 6.1 and 6.2 hereof, be subject to the
additional conditions precedent that on or prior to the date of any proposed
Qualifying Acquisition:
(a) if the proposed Qualifying Acquisition is for the purchase of
shares of a corporation representing less than 100% of the issued and
outstanding shares of such corporation, the Borrower shall have provided to the
Agent a confirmation, signed by an officer acceptable to the Agent, certifying
that the Qualifying Shareholder Arrangements are, or within 30 days of the
Closing Date of such acquisition, shall be, in place in respect of such
corporation and shall deliver to the Agent, as soon as reasonably possible
thereafter, a certified copy of such Qualifying Shareholder Arrangements;
(b) the Borrower shall have provided to the Agent for the benefit of
the Lenders (x) in the case of a proposed acquisition of assets other than
shares in the capital of a corporation, a first ranking Security Interest on the
assets being acquired subject to Permitted Encumbrances, if any, Encumbrances
which may be consented to by the Agent, acting reasonably, and Encumbrances on
real property being acquired pursuant to such Qualifying Acquisition which are
uneconomic to discharge (provided that the aggregate of the Debt incurred in
respect of the Accommodation under the Acquisition Facility used to finance such
acquisition and the Debt related to such Encumbrances is not greater than 5.0 x
Target EBITDA) and, (y) in the case of a proposed acquisition of assets
comprising shares in the capital of a corporation, (i) an unconditional
guarantee of the corporation being acquired of all of the obligations of the
Borrower under the Credit Documents or, in the case of the acquisition of a
corporation incorporated other than under the laws of Canada or under the laws
of a province where, in each case, the ability of such corporation to grant a
full and unconditional guarantee the obligations of the Borrower under the
Credit Documents is restricted, a guarantee of such corporation of the
obligations of the Borrower under the Credit Documents to the Lenders limited to
a maximum amount which such corporation has the power
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and authority to guarantee; (ii) a first ranking Security Interest securing the
obligations of such corporation under such guarantee on all of the assets of the
acquired corporation, subject to Permitted Encumbrances, if any, Encumbrances
which may be consented to by the Agent, acting reasonably, and Encumbrances on
real property being acquired pursuant to such Qualifying Acquisition which is
uneconomic to discharge (provided that the aggregate of the Debt incurred in
respect of the Accommodation under the Acquisition Facility used to finance such
acquisition and the Debt related to such Encumbrances is not greater than 5.0 x
Target EBITDA); and (iii) a pledge of such shares, all in form and substance
satisfactory to the Agent, acting reasonably in all cases, together with an
opinion satisfactory to the Agent, acting reasonably;
(c) the Borrower shall have provided a certificate of an officer of
the Borrower as contemplated by the definition of Target EBITDA;
(d) no Default or Event of Default shall have occurred or be continuing
or will result after giving effect to the proposed acquisition, and without
limiting the generality of the foregoing, after completion of any proposed
acquisition, the Borrower will remain in compliance with the provisions of
Section 8.3;
(e) the Borrower shall have delivered to the Agent with respect to and
as it relates to the Persons involved in the Qualifying Acquisition, the
documents set forth in Section 6.1(a), (b) and (c); and
(f) the Borrower shall have delivered to the Agent (i) environmental
audits as may be reasonably required by the Agent; (ii) landlord consents and
acknowledgements for all Leases, other than Leases entered into in connection
with the operation of parking lots, in form and substance satisfactory to the
Agent, acting reasonably, if any, as may be required by the Agent; and (iii)
non-disturbance agreements from any mortgagees registered on title to any real
property owned by the corporation, the assets or shares of which are being
acquired by the Borrower.
SECTION 4. NO WAIVER. The making of an Accommodation or
otherwise giving effect to any Accommodation Notice hereunder, without the
fulfilment of one or more conditions set forth in Section 6.1, 6.2 or 6.3, shall
not constitute a waiver of any such condition and the Agent and the Lenders
reserve the right to require fulfilment of such condition in connection with any
subsequent Accommodation Notice or Accommodation.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
SECTION 1. REPRESENTATIONS AND WARRANTIES. Each of the
Borrower and Guarantor represents and warrants with respect to itself and its
Subsidiaries to each Lender, acknowledging and confirming that each Lender is
relying thereon without independent inquiry in entering into this Agreement and
providing Accommodations hereunder, that:
(a) INCORPORATION AND QUALIFICATION. Each of the Borrower, Guarantor
and the other Additional Loan Parties is a corporation duly
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incorporated and validly existing under the laws of the jurisdictions as set
forth in Schedule 18 and is duly qualified, licensed or registered to carry on
business under the Laws applicable to it in all jurisdictions in which the
nature of its Assets or business makes such qualification necessary except where
failure to be so qualified would not have a Material Adverse Effect.
(b) CORPORATE POWER. The Borrower, Guarantor and each of the other
Additional Loan Parties have all requisite corporate power and authority to (i)
own and operate its properties and Assets and to carry on its business as now
being conducted by it; and (ii) to enter into and perform its obligations under
this Agreement and the other Credit Documents to which it is a party.
(c) CONFLICT WITH OTHER INSTRUMENTS. The execution and delivery of the
Credit Documents by the Borrower, Guarantor and each other Additional Loan Party
which is a party thereto and the performance by the Borrower and each Additional
Loan Party of their respective obligations thereunder and compliance with the
terms, conditions and provisions thereof, will not (i) conflict with or result
in a breach of any of the terms, conditions or provisions of (t) its constating
documents or by-laws, (u) any applicable law, rule or regulation having the
force of Law where failure to comply would have a Material Adverse Effect, (v)
any contractual restriction binding on or affecting it or its properties where
failure to comply would have a Material Adverse Effect, or (w) any judgment,
injunction, determination or award which is binding on it; or (ii) result in,
require or permit (x) the imposition of any Encumbrance (other than a Permitted
Encumbrance) in, on or with respect to the properties now owned by it (other
than pursuant to the Security Documents), (y) the acceleration of the maturity
of any Debt of the Borrower or any Additional Loan Party binding on or affecting
it, or (z) any third party to terminate or acquire rights under any Material
Agreement.
(d) AUTHORIZATION, GOVERNMENTAL APPROVALS, ETC. The execution and
delivery of each of the Credit Documents by the Borrower, Guarantor and each
other Additional Loan Party which is a party thereto and the performance by the
Borrower, Guarantor and each other Additional Loan Party of their respective
obligations hereunder and thereunder have been duly authorized by all necessary
corporate action and no Authorization, under any applicable Law, and no
registration, qualification, designation, declaration or filing with any
Governmental Entity, is or was necessary in connection with the execution of the
Credit Documents or the performance thereof, except (i) such Authorizations as
have been obtained and are in full force and effect, unamended, at the date
hereof and (ii) where failure to obtain such Authorization would not have a
Material Adverse Effect.
(e) EXECUTION AND BINDING OBLIGATION. This Agreement and the other
Credit Documents have been duly executed and delivered by the Borrower,
Guarantor and each other Additional Loan Party which is a party thereto and
constitute legal, valid and binding obligations of the Borrower, Guarantor and
each other Additional Loan Party which is a party thereto, enforceable against
it in accordance with their respective terms, subject to (i) applicable Laws
relating to bankruptcy, insolvency, reorganization, moratorium or creditors'
rights generally; and (ii) the discretion that a court may exercise in the
granting of equitable remedies.
(f) CONDUCT OF BUSINESS. Since the date of the last audited
statements of the Borrower, the Business has been carried on in the ordinary
course.
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(g) LOCATION OF BUSINESS. Except as notified to the Agent, the only
jurisdictions (or registration districts within such jurisdictions) in which the
Borrower or any of its Subsidiaries has any place of business or stores any
tangible personal property having a value in excess of $50,000 are as set forth
in Schedule 7.
(h) AUTHORIZATIONS, ETC. The Borrower, Guarantor and each of their
respective Subsidiaries possess all Authorizations of federal, provincial and
local governments and regulatory authorities as may be necessary to properly
conduct the Business, except where the failure to obtain such Authorizations
would not have a Material Adverse Effect.
(i) TRADEMARKS, PATENTS, ETC. To the best knowledge of the Borrower and
Guarantor, the Borrower, Guarantor and each of their respective Subsidiaries
possesses all the trademarks, trade names, copyrights, patents, licences, or
rights in any thereof, material to the conduct of the Business as now conducted
and presently proposed to be conducted. To the best knowledge of the Borrower
and Guarantor, neither it nor any of its Subsidiaries is infringing or, as of
the date hereof, is alleged to be infringing on the rights of any Person with
respect to any patent, trademark, trade name, copyright (or any application or
registration respecting any thereof), discovery, improvement, process, formula,
know-how, data, plan, specification, drawing or the like.
(j) OWNERSHIP OF PROPERTY. (A) Each of the Borrower, Guarantor and
their respective Subsidiaries owns all of its Assets with good and marketable
title thereto, free and clear of all Encumbrances, except for Permitted
Encumbrances. (B) None of the Borrower, Guarantor or any of their respective
Subsidiaries owns any real property other than the Owned Properties and is not
bound by any agreement to own or lease any real property except for the Leases
and except as disclosed quarterly in the Compliance Certificate.
(k) LEASED PROPERTIES. Each Lease in respect of the Leased Properties,
as it applies to the Borrower, Guarantor or any of their respective
Subsidiaries, is in good standing in all material respects and all material
amounts owing thereunder having been paid by the Borrower, Guarantor or their
respective Subsidiaries.
(I) USE OF LANDS. Except as set forth in Schedules 9 and 10,
respectively, the uses to which the Owned Properties and, to the actual
knowledge of the Borrower or Guarantor, the Leased Properties have been put are
not in material breach of any Environmental Laws or other Laws or official
plans.
(m) WORK ORDERS. There are no outstanding work orders requiring, in
aggregate, expenditures exceeding $50,000 relating to the Owned Properties from
or required by any police or fire department, sanitation, health, environmental
or factory authorities or from any other federal, provincial or municipal
authority, nor are any matters relating to the Owned Properties under discussion
with any such departments or authorities relating to work orders which could
reasonably be expected to result in expenditures exceeding $50,000.
(n) EXPROPRIATION. As at the date hereof, no part of the Owned
Properties or the Buildings and Fixtures located thereon has been taken or
expropriated by any federal, provincial, municipal or other competent authority
nor has any written notice or proceeding in respect thereof been delivered to
the Borrower, Guarantor or any of their respective Subsidiaries nor is the
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Borrower or Guarantor aware of any intent or proposal to give any such notice or
commence any proceedings.
(o) ENCROACHMENTS. Except for Permitted Encumbrances or as specified in
Schedule 9, to the knowledge of the Borrower or Guarantor, the Buildings and
Fixtures are located entirely within the Owned Properties in conformity with
applicable set-back and coverage requirements and no dwellings of abutting
owners encroach upon the Owned Properties.
(p) COMPLIANCE WITH LAWS. The Borrower, Guarantor and their respective
Subsidiaries are in compliance with all applicable Laws, non-compliance with
which would result in a Material Adverse Effect.
(q) NO DEFAULT. Neither the Borrower, Guarantor nor any of their
respective Subsidiaries is in violation of its constating documents or by-laws.
(r) NO VIOLATION OF AGREEMENTS. None of the Borrower, Guarantor or
any of their respective Subsidiaries is in material default under any indenture,
mortgage, deed of trust or other similar instrument to which it is a party or by
which it or any of its property may be bound.
(s) SUBSIDIARIES, ETC. The only Subsidiaries of the Borrower and
Guarantor are set forth in Schedule 12. The only Subsidiaries which have net
asset values or revenues, in either case, greater than $50,000 are Additional
Loan Parties. Such Subsidiaries are wholly-owned except as set out in Schedule
12, and no other Person has any interest in any of the Subsidiaries that is not
disclosed in Schedule 12. Except for those affiliates of the Borrower and
Guarantor set forth on Schedule 12 which are not Subsidiaries of the Borrower
and Guarantor, neither the Borrower nor Guarantor does owns or holds any shares
of, or any other interest in, any other Person other than Permitted Marketable
Shares.
(t) NO BURDENSOME AGREEMENTS. Neither the Borrower, Guarantor nor any
of their respective Subsidiaries is a party to any agreement or instrument or
subject to any restriction (including any restriction set forth in its
constating documents or by-laws) which could reasonably be expected to have a
Material Adverse Effect.
(u) NO LITIGATION. As of the closing date, all material actions, suits
and proceedings to which the Borrower, Guarantor or any of their respective
Subsidiaries are a party and for which the Borrower, Guarantor or any of their
Subsidiaries has been served notice are set forth on Schedule 19. Except as
disclosed in Schedule 19, there are no actions, suits or proceedings pending,
taken or, to the Borrower's or Guarantor's knowledge, threatened, before or by
any Person in Canada or elsewhere, whether or not having the force of law, and
to the actual knowledge of the Borrower and Guarantor no law or regulation which
may affect the Borrower, Guarantor or any of their respective Subsidiaries has
been enacted, promulgated or applied which challenges, or to the actual
knowledge of the Borrower and Guarantor, has been proposed, which may challenge
the validity of the transactions contemplated under the Credit Documents or
which could be reasonably anticipated to have a Material Adverse Effect.
(v) EXISTING SECURITY INTERESTS. The Existing Security Interests
relate solely to (i) Purchase Money Mortgages; (ii) the Owned Properties; and
(iii) as otherwise described in Schedule 11.
(w) PENSION PLANS. Neither the Borrower, Guarantor nor any of their
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respective Subsidiaries has ever maintained or contributed to any pension plans
or beneficial plans including, without limitation, (i) a multi-employer plan as
defined under Section 3(37) of ERISA; (ii) a defined benefit plan as defined
under Section 3(35) of ERISA; or (iii) a plan to which Section 302 of ERISA or
Section 417 of the Internal Revenue Code of the United States of America
applies.
(x) MATERIAL AGREEMENTS. Neither the Borrower, Guarantor nor any of
their respective Subsidiaries is a party or otherwise subject to or bound or
affected by any agreement or instrument which is material to the Business,
operations, results of operations, assets, liabilities or financial condition of
the Borrower, Guarantor or any of their respective Subsidiaries taken as a whole
("MATERIAL AGREEMENT") except as set out in Schedule 13 or as notified to the
Agent. Except as set forth in Schedule 13 or as notified to the Agent, all such
Material Agreements are in full force and effect, unamended, and none of the
Borrower, Guarantor or any such Subsidiary, or to the best of the Borrower's or
Guarantor's knowledge, any other party to any Material Agreement is in material
default with respect thereto.
(y) BOOKS AND RECORDS. All books and records of the Borrower, Guarantor
and their respective Subsidiaries have been fully, properly and accurately kept
and completed in accordance with Generally Accepted Accounting Principles and
there are no material inaccuracies or discrepancies of any kind contained or
reflected therein. The Borrower's, Guarantor's and their respective
Subsidiaries' records, systems, controls, data or information are not recorded,
stored, maintained, operated or otherwise wholly or partly dependent upon or
held by any means (including any electronic, mechanical or photographic process,
whether computerized or not) which (including all means of access thereto and
therefrom) are not under the direct control of the Borrower in all material
respects.
(z) TAX LIABILITY. Except as disclosed in Schedule 14, the Borrower,
Guarantor and each of their respective Subsidiaries has filed all tax returns
which are required to be filed and has paid all taxes, interest and penalties,
if any, which have become due pursuant to such returns or pursuant to any
assessment received by it and adequate provision for payment has been made for
taxes not yet due.
(aa) CORPORATE STRUCTURE. Except as notified to the Agent, the only
shareholders of the Borrower, Guarantor and their respective Subsidiaries are as
set forth in Schedule 12. Schedule 12 hereto sets forth the complete particulars
at the date hereof of (i) such shareholders; and (ii) the interest of each
shareholder in the Borrower, Guarantor and their respective Subsidiaries. Except
as described in Schedule 12, none of the shareholders is a party to any
shareholders or other agreement relating to the shares owned by such shareholder
in the Borrower, Guarantor or any of their respective Subsidiaries.
(ab) DISCLOSURE. All (i) forecasts and projections supplied to the
Agent by or on behalf of the Borrower and Guarantor were prepared in good faith,
adequately disclosed all assumptions relevant thereto and are reasonable
estimates (at the date hereof) of the prospects for the Borrower's Business and
the Guarantor's Business respectively; and (ii) other written information
heretofore supplied to the Agent and the Lenders by or on behalf of the Borrower
and Guarantor is true and accurate in all material respects. There is no fact
known to the Borrower or Guarantor which has not been fully disclosed to the
Agent which has had or is reasonably likely to have a Material Adverse
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Effect. There is no change in the business and affairs of the Borrower,
Guarantor or any of their respective Subsidiaries which could reasonably be
anticipated to have a Material Adverse Effect since the date of the last
financial statements delivered to the Lenders.
(ac) COMPLIANCE WITH ENVIRONMENTAL LAWS. To the actual knowledge of
the Borrower and Guarantor, respectively, the Borrower's Business and the
Guarantor's Business have always been and are now being operated, and the Owned
Properties, Leased Properties and other Assets are now and have always been
used by the Borrower, Guarantor and their respective Subsidiaries in material
compliance with all Environmental Laws. Neither the Borrower, Guarantor nor any
of their respective Subsidiaries nor any of their directors or officers, in
such capacity, has ever (i) been convicted of any offense for non-compliance
with any Environmental Laws; (ii) been fined or otherwise penalized for
non-compliance with Environmental Laws; or (iii) settled any prosecution in
respect thereof prior to conviction. Without limiting the generality of the
foregoing:
(1) ENVIRONMENTAL PERMITS. The Borrower, Guarantor and each of
their respective Subsidiaries holds, and has conducted and is
now conducting its business and undertaking in material
compliance with, all material Environmental Permits. All
Environmental Permits are (i) listed in Schedule 8; and (ii)
valid and in full force and effect and no proceeding is
pending or to the actual knowledge of the Borrower, Guarantor
or any of their respective Subsidiaries is threatened which
will review, make subject to limitations or conditions,
suspend, revoke, terminate or limit any of such Environmental
Permits.
(2) DEALING WITH SUBSTANCES. Neither the Borrower, Guarantor nor
any of their respective Subsidiaries has used any of the Owned
Properties, Leased Properties or other Assets or permitted
them to be used to generate, manufacture, refine, treat,
transport, store, handle, recycle, dispose of, deposit,
transfer, produce or process Hazardous Substances or wastes,
except in material compliance with all Environmental Laws.
(3) ENVIRONMENTAL REPORTS. The Borrower, Guarantor and each of
their respective Subsidiaries has made all substantive reports
required by Environmental Laws to all appropriate Governmental
Entities on the happening of all events which are required to
be so reported pursuant to Environmental Laws. The Agent and
the Lenders have been provided with correct and complete
copies of all such substantive reports and correspondence
relating thereto.
(4) RECORD KEEPING. To the extent responsible for record keeping,
the Borrower, Guarantor and each of their respective
Subsidiaries has in all material respects maintained all
environmental and operating documents and records relating to
the Owned Properties, Leased Properties and other Assets and
the Business in the manner and for the periods required by all
Environmental Laws.
(ad) ENVIRONMENTAL LIABILITIES. Neither the Borrower, Guarantor nor
any of their respective Subsidiaries has incurred or is incurring any material
liability pursuant to any Environmental Law. There is no past or present fact,
condition or circumstance relating to the Owned Properties, the other Assets or
the Business or, to the Borrower's or Guarantor's actual knowledge, the Leased
Properties, that could result in any material liability under any Environmental
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Laws in force as of the date this representation and warranty is given or
renewed by the Borrower.
(ae) DISCLOSURE REGARDING PROPERTIES. To the actual knowledge of the
Borrower or Guarantor, none of the Owned Properties, Leased Properties or other
Assets or any other property currently or formerly owned or leased by or under
the charge, management or control of the Borrower, Guarantor or any of their
respective Subsidiaries or their agents and employees (i) has ever been used by
any Person as a landfill site, a waste disposal site, or as a location for the
disposal of Hazardous Substances or waste; (ii) has ever had asbestos, PCB
waste, radioactive substances or underground storage vessels, active or
abandoned, located thereon; or (iii) has ever been subject to a material Release
of any Hazardous Substance by, or caused or permitted by, the Borrower,
Guarantor or any of their respective Subsidiaries.
(af) REMEDIAL ACTION. No Remedial Action is presently being taken by
the Borrower, Guarantor or any of their respective Subsidiaries and no
Environmental Notice has been received by the Borrower, Guarantor or any of
their respective Subsidiaries nor to the actual knowledge of the Borrower or
Guarantor are there any grounds which could reasonably be expected to give rise
to an Environmental Notice that any Remedial Action is required to be taken by
the Borrower, Guarantor or any of their respective Subsidiaries as a condition
of continued compliance by the Borrower, Guarantor or any of their respective
Subsidiaries with any Environmental Permits or Environmental Laws.
SECTION 2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties herein set forth or contained in any certificates
or documents delivered to the Agent and the Lenders pursuant hereto shall not
merge in or be prejudiced by and shall survive any Accommodation hereunder and
shall continue in full force and effect so long as any amounts are owing by the
Borrower to the Lenders hereunder.
ARTICLE 8
COVENANTS
SECTION 1. AFFIRMATIVE COVENANTS. So long as any amount owing
hereunder remains unpaid or any Lender has any obligation to the Borrower under
this Agreement, and unless consent is given in accordance with Section 11.1
hereof, the Borrower and the Guarantor shall:
(a) FINANCIAL REPORTING. Furnish to the Agent (with sufficient copies
for each of the Lenders) (i) as soon as practicable and in any event within 45
days after the end of each of the first three Financial Quarters in each
Financial Year (y) a consolidated balance sheet of Holdco 1, Holdco 2, the
Borrower, Guarantor and their respective Consolidated Subsidiaries as of the end
of such Financial Quarter, and (z) the related consolidated statements of
earnings and changes in financial position for such Financial Quarter and for
the period commencing at the end of the previous Financial Year and ending with
the end of such Financial Quarter; in each case (except for the statement of
changes in financial position) setting forth in comparative form the figures for
the corresponding Financial Quarter and corresponding portion of the previous
Financial Year; (ii) as soon as practicable and in any event within 120 days
after the end of each Financial Year, a copy of the audited consolidated
financial statements of the Borrower, Guarantor and their
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respective Consolidated Subsidiaries for such Financial Year reported on by the
Borrower's independent auditors and unaudited consolidated financial statements
of Holdco 1 and Holdco 2; (iii) as soon as practicable and in any event no more
than 30 days prior to the end of each Financial Year of the Borrower,
consolidated financial projections, including the balance sheet, income
statement and cash flow statements for each of the next 12 months of the next
Financial Year together with the detailed budget for such Financial Year
providing supplementary detailed schedules as necessary and required by the
Agent; and (iv) together with each such delivery of financial statements, a
Compliance Certificate.
(b) ENVIRONMENTAL REPORTING. Promptly, and in any event within 10 days
of each occurrence, (i) notify the Agent of any proceeding or order before any
Governmental Entity requiring the Borrower, Guarantor or their respective
Subsidiaries to comply with or take action under any Environmental Laws where
such compliance or action requires expenditures in the amount of Cdn. $500,000
or more, the violation thereof involves the possibility of the imposition of a
fine or fines aggregating Cdn. $500,000 or more or the closing of any property
referred to in Schedule 9 or 10 for a period in excess of 48 hours where such
closure would have a Material Adverse Effect; and (ii) notify the Agent of any
material occurrence relating to environmental matters that does not require
notification under (i) above, together with each delivery of financial
statements pursuant to Section 8.1(a). Such material occurrences shall include
occurrences where any of the Borrower, Guarantor or their respective
Subsidiaries (iii) receives a written notice or claim to the effect that the
Borrower, Guarantor or any of their respective Subsidiaries is liable to any
Person as a result of the Release or threatened Release of any Hazardous
Substance into the environment in, on, under or adjacent to the Owned Properties
or Leased Properties; (iv) receives any written notice that the Borrower,
Guarantor or any of their respective Subsidiaries is subject to investigation by
any Governmental Entity evaluating whether any Remedial Action is needed to
respond to the Release or threatened Release of any Hazardous Substance into the
environment in, on, under or adjacent to the Owned Properties or Leased
Properties; (v) receives any written notice that all or any portion of the Owned
Properties or Leased Properties is subject to an order or a Security Interest
under or pursuant to any Environmental Law; (vi) receives any written notice of
a condition with respect to the Owned Properties or Leased Properties which
might reasonably result in a notice of violation by the Borrower, Guarantor or
any of their respective Subsidiaries of any Environmental Law; (vii) receives
any written notice of the commencement of any judicial or administrative
proceeding alleging a violation by the Borrower, Guarantor or any of their
Subsidiaries of any Environmental Law with respect to the Owned Properties or
Leased Properties; or (viii) undertakes any activities as a result of new or
proposed changes to any existing Environmental Law that could have a material
adverse effect on the condition of the Borrower, Guarantor or any of their
respective Subsidiaries.
(c) ADDITIONAL REPORTING REQUIREMENTS. Deliver to the Agent (with
sufficient copies for each of the Lenders) (i) as soon as possible, and in any
event within five days after the occurrence of each Default or Event of Default,
a statement of the chief financial officer or chief operating officer of the
Borrower or any other officer acceptable to the Agent setting forth the details
of such Default or Event of Default and the action which the Borrower or
Guarantor, as the case may be, proposes to take or has taken with respect
thereto; (ii) promptly notify the Agent in writing of any default, or event,
condition or occurrence which with notice or lapse of time, or both, would
constitute a default under any agreement in respect of Debt to which the
Borrower, Guarantor or any of their respective Subsidiaries is a party and
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under which the Borrower, the Guarantor or any such Subsidiary owes
(contingently or otherwise) at least Cdn. $500,000 (or the equivalent amount in
any other currency); (iii) from time to time upon request of the Agent, evidence
of the maintenance of all insurance required to be maintained by Section 8.1(m),
including such originals or copies as the Agent may request of policies,
certificates of insurance, riders and endorsements relating to such insurance
and proof of premium payments; (iv) promptly upon the issuance thereof, copies
of all notices, reports, press releases, circulars, offering documents and other
documents filed with, or delivered to, the British Columbia Securities
Commission or to a similar Governmental Entity in any other jurisdiction with
respect to the Borrower, Guarantor or any of their respective Subsidiaries; (v)
such information as the Agent may require, provided by the lender of the Working
Capital Line, to enable the Agent to calculate the Fee referred to in Section
5.7(2) above on a monthly basis; and (vi) such other information respecting the
condition or operations, financial or otherwise, of the Business, the Borrower,
Guarantor or any of their Subsidiaries as the Agent, on behalf of the Lenders,
may from time to time reasonably request.
(d) CORPORATE EXISTENCE. Preserve and maintain, and cause each of its
Subsidiaries to preserve and maintain, its corporate existence except for
Subsidiaries having an asset value and gross revenues, in each case, of less
than $50,000.
(e) COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its
Subsidiaries to comply, with the requirements of all applicable Laws,
non-compliance with which would cause a Material Adverse Effect.
(f) STATUS OF ACCOUNTS AND COLLATERAL. With respect to the Collateral
(i) immediately notify the Agent if any account in excess of Cdn. $100,000
arises out of contracts with any Governmental Entity, and execute any
instruments and take any steps reasonably required by the Majority Lenders in
order that all moneys due or to become due with respect to any such Account
shall be assigned to the Lenders and notice thereof be given to any such
Governmental Entity; and (ii) report immediately to the Agent any matters
materially adversely affecting the value, enforceability or collectibility of
any material portions of the Collateral
(g) CREDIT POLICY AND ACCOUNTS RECEIVABLE. Maintain, at all times,
credit policies consistent with good business practices, adhere to such policies
and collect, and cause each of its Subsidiaries to collect, accounts receivable
in the ordinary course of business.
(h) CONDUCT OF BUSINESS. Conduct, and cause each of its Subsidiaries
to conduct, in each Financial Year, no other business other than the Business.
(i) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve, and cause
each of its Subsidiaries to maintain and preserve, all of its and their
properties used or useful in the Business in all material aspects in good
repair, working order and condition (reasonable wear and tear excepted), and in
material compliance with Environmental Laws and, from time to time, make all
needed and proper repairs, renewals, replacements, additions and improvements
thereto, so that the Business may be properly and advantageously conducted at
all times in accordance with prudent business management.
(j) AUDITORS. Appoint and maintain as its auditors a firm of national
standing.
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(k) PAYMENT OF TAXES AND CLAIMS. Pay and discharge, and cause each of
its Subsidiaries to pay and discharge, before the same shall become delinquent,
(i) all taxes, assessments and governmental charges or levies imposed upon it or
upon the Assets or upon its Subsidiaries; and (ii) all lawful Claims which, if
unpaid, might by Law become an Encumbrance (other than a Permitted Encumbrance)
upon the Assets, except any such tax or Claim which is being contested in good
faith and by proper proceedings.
(l) VISITATION AND INSPECTION. During business hours and upon
reasonable written notice, permit each Lender to visit the properties of the
Borrower or any of its Subsidiaries, and to discuss the affairs, finances and
accounts of the Borrower or any of its Subsidiaries with the officer appointed
as (or performing the functions of) the chief financial officer thereof.
(m) MAINTENANCE OF INSURANCE. Maintain, in respect of itself and each
of its Subsidiaries, insurance at all times with responsible insurance carriers
in such amounts and covering such risks as are usually carried by companies
engaged in similar businesses and owning similar properties in the same general
areas in which the Borrower or such Subsidiaries, as the case may be, operate,
such policies to show the Agent and the Lenders as loss payees or additional
insureds, as their interests may appear thereof under a mortgage clause, where
applicable, in a form approved by the Insurance Bureau of Canada and as soon as
practicable after written request from the Agent, furnish or cause to be
furnished evidence thereof to the Agent. Schedule 6 sets forth a complete list
of the insurance policies carried with respect to the Borrower and its
Subsidiaries as of the Closing Date.
(n) FURTHER ASSURANCES. At its cost and expense, upon request of the
Agent, duly execute and deliver or cause to be duly executed and delivered to
the Agent such further instruments and do and cause to be done such further acts
as may be necessary or proper in the reasonable opinion of the Agent to carry
out more effectually the provisions and purposes of the Credit Documents.
(o) IMPERIAL PARKING (TAIWAN) LIMITED. Cause Imperial Parking (Taiwan)
Limited to grant to the Agent a guarantee and security therefor in form and
substance satisfactory to the Agent, acting reasonably, and deliver such
documentation as the Agent may reasonably request in connection with such
guarantee and security if the sale of the shares of Imperial Parking (Taiwan)
Limited is not completed prior to May 14, 1997.
SECTION 2. NEGATIVE COVENANTS. So long as any amount owing
hereunder remains unpaid or any Lender has any obligation to the Borrower under
this Agreement and, unless consent is given in accordance with Section 11.1
hereof, neither the Borrower nor Guarantor shall:
(a) DEBT. Create, incur, assume or suffer to exist or permit any of its
Subsidiaries to create, incur, assume or suffer to exist any Debt other than (i)
Debt to the Lenders hereunder; (ii) Debt incurred in respect of one or more
Purchase Money Mortgages up to an aggregate outstanding amount, at any time, of
Cdn. $1,000,000 (or the equivalent amount in any other currency); (iii)
Permitted Indebtedness; (iv) subject to Section 8.2(t), FUR Subordinated Debt;
(v) Debt incurred with respect to performance bonds posted, in the ordinary
course of the Business; (vi) Debt Guaranteed by the Borrower of the obligations
of employees in connection with the purchase of shares in the capital of the
Borrower in an amount not to exceed $2,000,000; and (vii) Debt incurred with
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respect to the Working Capital Line up to a maximum of $6,500,000 Cdn.
(b) ENCUMBRANCES. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist, any
Encumbrance on any of their respective Assets, other than Permitted
Encumbrances.
(c) MERGERS, ETC. Subject to the next following sentence, enter into,
or permit any of its Subsidiaries to enter into, any transaction (whether by way
of reconstruction, reorganization, consolidation, amalgamation, winding-up,
merger, transfer, sale, lease or otherwise) whereby all or any substantial part
of its undertaking or Assets would become the property of any other Person;
provided however that the Borrower, Guarantor and any other Additional Loan
Party other than Excluded Loan Parties may enter into any such transaction with
each other.
(d) DISPOSAL OF ASSETS GENERALLY. Sell, exchange, lease, release or
abandon or otherwise dispose of, or permit any of its Subsidiaries to sell,
exchange, lease, release or abandon or otherwise dispose of any Assets to any
Person other than (i) any bona fide sales, exchanges, leases, abandonments or
other dispositions in the ordinary course of business, for the purpose of
carrying on the Business; (ii) property or Assets which have no material
economic value in the Business or are obsolete; (iii) assets having a fair
market value of not greater than $100,000 in the aggregate in any Financial
Year; and (iv) assets, including shares of Subsidiaries which are not Additional
Loan Parties provided that 100% of the net proceeds of such dispositions are
applied forthwith as a prepayment of Accommodations Outstanding under the Term
Facility.
(e) TRANSACTIONS WITH INSIDERS. Directly or indirectly (i) purchase,
acquire or lease any material property from; (ii) sell, transfer or lease any
material property to; or (iii) permit any of its Subsidiaries to purchase,
acquire or lease any material property from, or sell, transfer or lease any
material property to, any Person not at Arm's Length with the Borrower,
Guarantor or any of their respective Subsidiaries, except at prices and on terms
not less favourable to the Borrower, Guarantor or such Subsidiary, as the case
may be, than those which would have been obtained in an Arm's Length transaction
with an Arm's Length purchaser; provided that the Borrower and its Subsidiaries,
may (iv) make financial accommodations for employees in connection with housing
loan programs, stock option or purchase plans or other similar employee benefit
programs; and (v) in the case of the Borrower or any Additional Loan Party other
than Excluded Loan Parties, enter into such transactions with each other,
subject to, in each case, the provisions of Section 8.2(i).
(f) CHANGE IN BUSINESS. Make, or permit any of its Subsidiaries to
make, any material change in the nature of the Business.
(g) SHARE CAPITAL. Issue, or permit any of its Subsidiaries to issue,
any shares, or any options, warrants or securities convertible into shares,
except in the case of the Subsidiaries of the Borrower, to the Borrower or to an
Additional Loan Party other than Excluded Loan Parties.
(h) DISTRIBUTIONS. Declare, make or pay, or permit any of its
Subsidiaries to declare, make or pay, any Distributions, except (i) directors'
fees in an aggregate amount not to exceed $30,000; (ii) performance bonuses paid
by the Borrower, Guarantor or any of their respective Subsidiaries in the
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ordinary course of business as part of remuneration for services rendered at
fair market value; (iii) Distributions by an Additional Loan Party or by the
Borrower to the Borrower or to an Additional Loan Party other than Excluded Loan
Parties; (iv) payments made under management or employment agreements entered
into by the Borrower, Guarantor or any of their respective Subsidiaries with
senior employees in the ordinary course of business; (v) loans made to employees
as specified in Section 8.2(e)(iv); (vi) non-cash dividend payments to Onex on
the Borrower's outstanding non-voting common shares held by Onex made by way of
the issue of additional non-voting common shares, provided that such additional
shares have the same characteristics as the non-voting common shares held by
Onex on the date of this Agreement; and (vii) cash interest payments on account
of the FUR Subordinated Debt in amounts permitted pursuant to Section 8.2(t).
(i) INVESTMENTS. Make any loans, incur any obligations (contingent or
otherwise), or make any investments in any Person or permit any of its
Subsidiaries to do the same, except for (i) foreign currency hedges, interest
rate swaps or similar interest rate and currency hedging obligations or
agreements in the ordinary course of good financial management; (ii)
indebtedness and obligations incurred in the ordinary course of business and
Debt permitted under Sections 8.2(a); (iii) those investments contemplated to be
made under the Acquisition Facility in accordance with Section 2.3(3); (iv)
Permitted Marketable Securities; (v) loans permitted under Section 8.2(e) or
(h); (vi) any investment which is covered by paragraph (iii) of the "Qualifying
Acquisition" definition above; or (vii) inter-company loans to or investments in
(x) an Additional Loan Party other than Excluded Loan Parties where, in each
case, such Additional Loan Party is not located outside of Canada; (y) an
Additional Loan Party other than Excluded Loan Parties where, in each case, such
Additional Loan Party is located in the United States, provided that such
inter-company loans are evidenced by a promissory note assigned to the Agent as
security; and (z) other Consolidated Subsidiaries provided that in connection
with any inter-company loans, such Subsidiaries have executed and delivered to
the Agent guarantees of all of the obligations of the Borrower under this
Agreement and/or the other Credit Documents and security over all of their
property and assets together with an opinion with respect thereto satisfactory
to the Agent, acting reasonably.
(j) LEASE-BACKS. Enter into or permit any of its Subsidiaries to enter
into any arrangements, directly or indirectly, with any Person, whereby the
Borrower, Guarantor or such Subsidiary, as the case may be, shall sell or
transfer any property, whether now owned or hereafter acquired, used or useful
in the Business, in connection with the rental or lease of the property so sold
or transferred or of other property for substantially the same purpose or
purposes as the property so sold or transferred.
(k) SUBSIDIARIES. (i) Incorporate or acquire, after the date hereof,
any Subsidiaries or commence to carry on the Business, otherwise than through
the Borrower and its Subsidiaries existing as of the date hereof, except for the
incorporation or acquisition of Subsidiaries in North America or such other
jurisdictions as the Agent may agree to, acting reasonably, where in each case,
such Subsidiary has executed and delivered to the Agent a guarantee of all of
the obligations of the Borrower under this Agreement and/or the other Credit
Documents and security over all of its property and assets satisfactory to the
Agent and accompanied by opinions satisfactory to the Agent, in each case,
acting reasonably, prior to or contemporaneously with such Subsidiary having net
asset values or revenues, in either case, greater than $50,000; or (ii) permit
any Subsidiary to exist after the date hereof having net asset values or
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revenues, in either case, greater than $50,000 unless such Subsidiary is an
Additional Loan Party.
(l) MAINTENANCE AND OWNERSHIP OF SUBSIDIARIES. Except as permitted
under Section 8.2(d), sell or otherwise dispose of any shares of any of its
Subsidiaries or permit any of such Subsidiaries to issue, sell or otherwise
dispose of the shares of any other Subsidiary, except to the Borrower or an
Additional Loan Party other than Excluded Loan Parties.
(m) COMPROMISE OF ACCOUNTS. Compromise or adjust or permit any of its
Subsidiaries to compromise or adjust any material Accounts of the Borrower or
such Subsidiary (or extend the time for payment thereof) or grant any discounts,
allowances or credits thereon, in each case other than in the ordinary course of
business.
(n) BUSINESS OUTSIDE CERTAIN JURISDICTIONS. Have any place of business
or keep or store any tangible properly outside of those jurisdictions (or
registration districts within such jurisdictions), as set forth in Schedule 7
opposite the Borrower, Guarantor or the Subsidiary, as the case may be, or
permit any of its Subsidiaries to do the same (i) except upon 30 days' written
notice thereof to the Agent; and (ii) unless the Borrower, Guarantor or such
Subsidiary has done all such acts and things and executed and delivered all such
deeds, transfers, assignments and instruments as the Agent may reasonably
require for perfecting a Security Interest in such property in favour of the
Agent and the Lenders.
(o) FINANCIAL YEAR. Change its Financial Year.
(p) AMENDMENTS. Allow any amendments to any Material Agreement.
(q) PAYMENTS IN ORDINARY COURSE OF BUSINESS, ETC. Place or permit any
of its Subsidiaries to place any funds on trust with third parties outside of
the ordinary course of business.
(r) ACQUISITION OF REAL PROPERTY. Acquire any real property unless
such real property will be used for the purposes of conducting parking
operations in conjunction with the Business.
(s) ONEX COMMON SHARES. Permit any dividends to be paid to Onex in
respect of the non-voting common shares issued by the Borrower to Onex other
than the dividends in the form of additional non-voting common shares issued by
the Borrower and having the same characteristics as the non-voting common shares
held by Onex on the date of this Agreement.
(t) FUR SUBORDINATED DEBT. Permit any increase in the FUR Subordinated
Debt established under the Borrower's Note Purchase Agreement and the
Guarantor's Note Purchase Agreement, as applicable, unless the same terms apply
to the increased Subordinated Debt and the increase is utilized to make
repayments of the Accommodations Outstanding under the Credit Facilities; or
make interest payments on the outstanding principal amount of the FUR
Subordinated Debt in excess of the required payments set out in the Borrower's
Note Purchase Agreement and the Guarantor's Note Purchase Agreement, as
applicable, provided that the foregoing is not intended to prevent the accrual
of interest on account of the usual operation of the provisions in the
Borrower's Note Purchase Agreement and the Guarantor's Note Purchase Agreement.
SECTION 3. FINANCIAL COVENANTS.
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So long as any amount owing hereunder remains unpaid or any Lender has any
obligation to the Borrower under this Agreement, and unless consent is given in
accordance with Section 11.1 hereof, the Borrower shall:
(a) MAINTENANCE OF NET WORTH. Ensure that, on the last day of each
Financial Year, calculated as at such day, the aggregate Consolidated Net Worth
of Holdco 1, Holdco 2 and their respective Consolidated Subsidiaries is at least
an amount equal to the sum of Cdn. $50,000,000 determined in accordance with
Generally Accepted Accounting Principles.
(b) MAINTENANCE OF DEBT FOR BORROWED MONEY TO NET WORTH RATIO. Ensure
that, as at the last day of each Financial Quarter, the ratio, calculated as at
such day, of the aggregate Consolidated Indebtedness to the aggregate
Consolidated Tangible Net Worth of Holdco 1, Holdco 2 and their respective
Consolidated Subsidiaries is not more than 0.75:1.
(c) MAINTENANCE OF INTEREST COVERAGE RATIO. Ensure that Holdco 1,
Holdco 2 and their respective Consolidated Subsidiaries have, as at the end of
each Financial Quarter, a minimum Interest Coverage Ratio of 2.75:1.
(d) MAINTENANCE OF LEVERAGE RATIO. Ensure that Holdco 1, Holdco 2
and their respective Consolidated Subsidiaries have, as at the end of each
Financial Quarter a Leverage Ratio of not more than 5.00:1.
(e) MAINTENANCE OF PARKING CONTRACTS. Ensure the existence on a
consolidated basis on the last day of each Financial Quarter of an aggregate of
at least 1,200 Consolidated Parking Contracts.
ARTICLE 9
EVENTS OF DEFAULT
SECTION 1. EVENTS OF DEFAULT. If any of the following events
(each an "Event of Default") shall occur and be continuing:
(a) the Borrower shall fail to pay any amount of Accommodations
Outstanding when such amount becomes due and payable hereunder
and in any case, such failure shall remain unremedied for two
Business Days;
(b) the Borrower shall fail to pay any interest or Fees or any
other amounts payable when the same becomes due and payable
hereunder and, in any case, such failure shall remain
unremedied for a period of five Business Days;
(c) any representation or warranty or certification made or deemed
to be made by the Borrower, Guarantor or any other Additional
Loan Party or any director or officer thereof in this
Agreement or any other Credit Document shall prove to have
been incorrect in any material respect when made or deemed to
be made; and, if the circumstances giving rise to such
incorrect representation or warranty are capable of
modification or rectification (such that, thereafter such
representation or warranty would be correct), such
representation or warranty remains uncorrected for a period of
30 days;
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(d) the Borrower or the Guarantor shall fail to perform, observe
or comply with any of the covenants contained in Sections
8.2(c), (g), (h), (k), (l) or Section 8.3;
(e) the Borrower or Guarantor shall fail to perform, observe or
comply with any of the covenants contained in Sections 8.2(a),
(b), (d), (e), (f), (i), (j), (m), (n), (o), (p), (q) and (r),
(s) and (t) and such failure shall remain unremedied for 30
days, provided that the circumstances giving rise to such
failure are capable of rectification;
(f) the Borrower or Guarantor shall fail to perform, observe or
comply with any of the covenants contained in Section 8.1
(except Section 8.1(n)) and such failure shall remain
unremedied for 30 days;
(g) the Borrower, Guarantor or any other Additional Loan Party
shall fail to perform or observe any other term, covenant or
agreement contained in any Credit Document to which it is a
party and such failure shall remain unremedied for 45 days
following written notice thereof by the Agent to the Borrower;
(h) the Borrower or any of its Subsidiaries shall fail to pay the
principal of or premium or interest on any Debt of the
Borrower or such Subsidiary, as applicable, (excluding any
Debt hereunder) which is outstanding in an aggregate amount
exceeding $500,000 Cdn. (or the equivalent amount in any other
currency), when such amount becomes due and payable (whether
by scheduled maturity, required prepayment, acceleration,
demand or otherwise) and such failure shall continue after the
applicable grace period, if any, specified in the agreement or
instrument relating to such Debt or otherwise agreed to in
writing by the relevant creditor; or any other event shall
occur or condition shall exist, and shall continue after the
applicable grace period, if any, specified in any agreement or
instrument relating to any such Debt, if the effect of such
event is to accelerate, or permit the acceleration of such
Debt, or any such Debt shall be declared to be due and payable
prior to the stated maturity thereof;
(i) the, Guarantor or any of its Subsidiaries shall fail to pay
the principal of or premium or interest on any Debt of the
Guarantor or such Subsidiary, as applicable, (excluding any
Debt hereunder) which is outstanding in an aggregate amount
exceeding $1,500,000 Cdn. (or the equivalent amount in any
other currency), when such amount becomes due and payable
(whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall
continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Debt or
otherwise agreed to in writing by the relevant creditor; or
any other event shall occur or condition shall exist, and
shall continue after the applicable grace period, if any,
specified in any agreement or instrument relating to any such
Debt, if the effect of such event is to accelerate, or permit
the acceleration of such Debt, or any such Debt shall be
declared to be due and payable prior to the stated maturity
thereof;
(j) the Borrower, Guarantor or any of their respective
Subsidiaries shall fail to perform or observe any material
term, covenant or agreement contained in any Material
Agreement on its part to be
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performed or observed and the effect of such failure is that
such material contract is terminated; or any Material
Agreement shall be terminated or revoked or permitted to lapse
(other than as approved by the Agent), and, in each case, such
termination or revocation or lapse has, or is reasonably
likely to have, a Material Adverse Effect;
(k) the Borrower, Guarantor or any other Additional Loan Party
shall (i) become insolvent or generally not pay its debts as
such debts become due; (ii) admit in writing its inability to
pay its debts generally, or shall make a general assignment
for the benefit of creditors; (iii) institute or have
instituted against it any proceeding seeking (x) to adjudicate
it a bankrupt or insolvent, (y) any liquidation, winding-up,
reorganization, arrangement, adjustment, protection, relief or
composition of it or its Debts under any Law relating to
bankruptcy, insolvency or reorganization or relief of debtors,
or (z) the entry of an order for relief or the appointment of
a receiver, trustee or other similar official for it or for
any substantial part of its Assets, and in the case of any
such proceeding instituted against it (but not instituted by
it), either such proceeding shall remain undismissed or
unstayed for a period of 60 days, or any of the actions sought
in such proceeding (including the entry of an order for relief
against it or the appointment of a receiver, trustee,
custodian or other similar official for it or for any
substantial part of its Assets) shall occur, or (iv) take any
corporate action to authorize any of the foregoing actions;
(l) any judgment or order for the payment of money in excess of
$500,000 shall be rendered against the Borrower, Guarantor or
any of their respective Subsidiaries and either (i)
enforcement proceedings shall have been commenced by any
creditor upon such judgment or order and such proceedings have
not been discontinued, dismissed or settled; or (ii) there
shall be any period of fifteen consecutive days during which a
stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect;
(m) the Borrower, Guarantor or any of their respective
Subsidiaries incurs any Environmental Liability and Costs, or
is subject to a final judgment requiring it to complete any
Remedial Action, which in each case will have or may be
reasonably expected to have a rectification cost, in excess of
$500,000;
(n) there shall be any Change of Control;
(o) there shall have occurred, in the opinion of the Majority
Lenders, acting reasonably, any material adverse change in the
Assets, Business, operations, undertaking or condition
(financial or otherwise) of the Borrower, Guarantor and their
respective Subsidiaries, taken as a whole; or
(p) the report of the Borrower's or Guarantor's auditors delivered
in connection with the audited consolidated financial
statements of the Borrower or the Guarantor, as applicable, in
respect of any Financial Year contains a qualification which
relates to a matter which materially and adversely affects the
financial conditions of the Borrower, Guarantor and their
respective Subsidiaries, taken as
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a whole,
then, the Agent may, and shall at the request of the Majority Lenders, (i)
terminate the Lenders' obligations to make further Accommodations under the
Credit Facilities; (ii) (at the same time or at any tired after such
termination) declare the Accommodations Outstanding, all interest and Fees
accrued thereon and all other amounts payable under this Agreement in respect of
the Credit Facilities to be immediately due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower; and (iii) with respect to any outstanding Bankers'
Acceptances or Letters of Credit, the Borrower shall pay to the Agent for the
benefit of the Lenders an amount equal to the aggregate of the Face Amounts of
each such outstanding Bankers' Acceptance and equal to BT's contingent liability
under each outstanding Letter of Credit which amount shall be held by the Agent
until the Lenders have no further obligation under any such Bankers' Acceptance
or Letter of Credit, at which time the Agent will pay to the Borrower an amount
equal to any excess of the amount so received by the Agent hereunder in respect
of the Bankers' Acceptances and Letters of Credit over the total amounts
necessary to reimburse the Lenders for amounts paid by them under or in
connection with any Bankers' Acceptance or Letter of Credit.
SECTION 2. REMEDIES UPON DEMAND AND DEFAULT. (1) Upon
declaration in writing to the Borrower that the Accommodations Outstanding
under the Credit Facilities are immediately due and payable pursuant to Section
9.1, the Agent shall at the request of, or may with the consent of, the Majority
Lenders, commence such legal action or proceedings as it, in its sole
discretion, may deem expedient, including the commencement of enforcement
proceedings under the Security Documents, or any other security granted by the
Borrower or others to the Agent or the Lenders, or both, all without any
additional notice, presentation, demand, protest, notice of dishonour, entering
into of possession of any of the property or Assets, or any other action, notice
of all of which the Borrower hereby expressly waives.
(2) The rights and remedies of the Agent and the Lenders hereunder and
under the other Credit Documents are cumulative and are in addition to and not
in substitution for any other rights or remedies. Nothing contained herein or in
the Security Documents or any other security hereafter held by the Agent and the
Lenders, with respect to the indebtedness or liability of the Borrower to the
Agent and the Lenders, or any part thereof, nor any act or omission of the Agent
or the Lenders with respect to the Security Documents, the Security or such
other security, shall in any way prejudice or affect the rights, remedies and
powers of the Agent and the Lenders hereunder or under the Security Documents or
such Security.
ARTICLE 10
THE AGENT AND THE LENDERS
SECTION 1. AUTHORIZATION AND ACTION. (1) Each Lender hereby
irrevocably appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated to
it by the terms hereof, together with such powers as are reasonably incidental
thereto. As to any matters not expressly provided for by this Agreement, the
Agent shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protected
in so
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acting or refraining from acting) upon the joint instructions of the
Majority Lenders and such instructions shall be binding upon all Lenders. The
Agent shall not be required to take any action pursuant to such instructions or
otherwise (i) which exposes it to personal liability; (ii) which is contrary to
this Agreement or applicable Law; or (iii) which would require the Agent to
become registered to do business in any jurisdiction or would subject the Agent
to taxation by reason thereof.
(2) The Agent shall have no duties or obligations other than as
expressed herein, and without limitation, the Agent does not undertake, and the
Lenders relieve the Agent from, any implied duties (including fiduciary duties)
and there shall not be construed against the Agent any implied covenants or
terms. The Agent may execute or perform, and may delegate the execution and
performance of, any of its powers, rights, discretions or duties hereunder and
under the Credit Documents through or to any of its own employees or other
Persons designated by it. References in any Credit Document to the Agent shall
include references to any such Persons to whom the Agent shall have delegated
any of its powers, rights, discretions and duties.
(3) The Agent shall not be obliged (i) to take or refrain from taking
any action or to exercise or to refrain from exercising any right or discretion
under this Agreement or the other Credit Documents; or (ii) to incur or subject
itself to any cost or expenditure in connection herewith and therewith, unless
it is first specifically indemnified or furnished with security by the Lenders
on a rateable basis, in form and substance satisfactory to it (which may include
further agreements of indemnity or the deposit of funds or security or other
suitable measures).
SECTION 2. NO LIABILITY. Neither the Agent nor its directors,
officers, agents or employees shall be liable to any Lender for any action taken
or omitted to be taken by it or them under or in connection with this Agreement,
except for its or their own gross negligence or wilful misconduct. Without
limiting the generality of the foregoing, the Agent (i) may treat any Lender as
the payee of amounts attributable to such Lender's Commitment hereunder unless
and until the Agent receives an agreement in the form contemplated in Section
11.8; (ii) may consult with legal counsel (including legal counsel for the
Borrower), independent accountants and other experts selected by it and shall
not be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (iii) makes
no warranty or representation to any Lender and shall not be responsible to any
Lender for the form, substance, accuracy or completeness of any Credit Document
or any other documents, information or financial data made available to the
Lenders, or for any statements, warranties or representations made in or in
connection with this Agreement; (iv) shall not have any duty to ascertain or to
inquire as to the existence of a Default or an Event of Default or the
performance or observance of any of the terms, covenants or conditions of this
Agreement on the part of the Borrower or to inspect the Assets (including the
books and records) of the Borrower; (v) shall not be responsible to any Lender
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of any of the Credit Documents; and (vi) shall incur no
liability under or in respect of this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be sent by
facsimile transmission, by telex or by hand) believed by it to be genuine and
signed or sent by the proper party or parties.
SECTION 3. BT BANK OF CANADA.
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With respect to its Lender's Operating Commitment, Lender's Term Commitment and
Lender's Acquisition Commitment and the Accommodations made by it, BT has the
same rights and powers under this Agreement as any other Lender hereunder and
may exercise the same as though it were not the Agent and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include it in its
individual capacity. BT and its Affiliates may accept deposits from, lend money
to, act as trustee under indentures of, and generally engage in any kind of
business with the Borrower or any Person who may do business with or own
securities of the Borrower, all as if it were not the Agent, and without any
duty to account therefor to the Lenders.
SECTION 4. DISCOUNT RATE DETERMINATIONS. The Agent shall give
prompt notice to the Borrower and the Lenders of the interest or discount rate
determined by the Agent for an applicable Advance or Drawing Date and the
applicable interest and discount rates, if any, furnished by BT for determining
the applicable rate.
SECTION 5. HOLDING OF SECURITY; SHARING OF PAYMENTS, ETC. (1)
The Security Interests and Security constituted by the Security Documents shall
be held by the Agent for the rateable benefit of the Lenders, in accordance with
their respective terms, and any proceeds from any realization thereof shall be
applied to the Accommodations Outstanding, all interest and Fees accrued thereon
and all other amounts payable under this Agreement in respect of the Credit
Facilities and under the Credit Documents to each Lender rateably based on the
amount of Accommodations Outstanding under all of the Credit: Facilities and
Credit Documents, all interest and Fees accrued thereon and all other amounts
payable under this Agreement and the other Credit Documents owing to each Lender
to the aggregate amount of Accommodations Outstanding under all of Credit
Facilities and Credit Documents, all interest and Fees accrued thereon and all
other amounts payable under this Agreement and the other Credit Documents owing
to all of the Lenders (whether such Security is held in the name of the Agent or
in the name of any one or more of the Lenders and without regard to any priority
to which any Lender ma) otherwise be entitled under applicable Law).
(2) Each Lender agrees with the other Lenders that it will not, without
the prior consent of the other Lenders, take or obtain any Security Interest on
any property of the Borrower to secure the obligations of the Borrower
hereunder, except for the benefit of all Lenders or as may otherwise be required
by Law.
(3) If any Lender obtains any payment (whether voluntary, involuntary
or through the exercise of any right of set-off hereunder or the realization of
any Security Interest) on account of Accommodations made by it (other than
amounts paid pursuant to Section 10.7) in excess of its rateable share of
payments on account of the Accommodations made by all the Lenders, such Lender
shall account to and pay over to the other Lenders their rateable shares thereof
and shall upon request forthwith purchase from the other Lenders such
participations in the Accommodations made by such other Lenders as shall be
necessary to cause such purchasing Lender to share the excess payment rateably
with such other Lenders. If all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and each Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal
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to such Lender's rateable share (according to the proportion that the amount
such Lender's required repayment bears to the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Lender so
purchasing a participation from another Lender pursuant to this Section 10.5
may, to the fullest extent permitted by Law, exercise all its rights of payment
(including any right of set-off hereunder) with respect to such participation as
fully as if such Lender were a direct creditor of the Borrower in the amount of
such participation and the Borrower hereby expressly acknowledges the creation
of such right.
SECTION 6. LENDER CREDIT DECISIONS. Each Lender acknowledges
that it has, independently and without reliance upon the Agent and based on the
financial statements of the Borrower and such other documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Lender also acknowledges that it will, independently
and without reliance upon the Agent and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement.
SECTION 7. INDEMNIFICATION. Each Lender shall indemnify and
save the Agent harmless (to the extent not reimbursed by the Borrower) rateably
(according to the amount of its Lender's Term Commitment) from any Claim or Loss
suffered by, imposed upon or asserted against the Agent as a result of, in
respect of, connected with or arising out of the Credit Documents or any action
taken or omitted by the Agent under the Credit Documents, provided that no
Lender shall be liable for any portion of such Loss resulting from the gross
negligence or wilful misconduct of the Agent in its capacity as Agent. Without
limitation of the foregoing, each Lender agrees to reimburse the Agent upon
demand for its rateable share of any out-of-pocket expenses (including counsel
fees and disbursements) incurred by the Agent in connection with the
preparation, execution, administration or enforcement of, or legal advice in
respect of rights or responsibilities under, the Credit Documents, to the extent
that the Agent is not reimbursed for such expenses by the Borrower.
SECTION 8. LIABILITY OF THE LENDERS INTER SE. Each of the
Lenders hereby agrees with each of the other Lenders that, except as
otherwise herein expressly provided, none of the Lenders has or shall have any
duty or obligation, or shall in any way be liable to any of the other Lenders,
in connection with the Credit Documents or any action taken or omitted to be
taken in, under or in connection herewith.
SECTION 9. SUCCESSOR AGENTS. The Agent may resign at any time
by giving written notice thereof to the Lenders and the Borrower, such
resignation to be effective upon the appointment of a successor Agent. Upon
notice of any such resignation the Majority Lenders shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed by
the Majority Lenders, and shall have accepted such appointment, within 30 days
after the retiring Agent's notice of resignation, then the retiring Agent may,
on behalf of the Lenders, appoint a successor Agent, which shall be a Lender.
Upon the acceptance of any appointment hereunder by a successor Agent, such
successor shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent and the retiring Agent shall
be
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discharged from its duties and obligations under this Agreement. After any
retiring Agent's resignation hereunder, the provisions of this Article 10 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement.
ARTICLE 11
MISCELLANEOUS
SECTION 1. AMENDMENT. (1) Subject to subsections (2) (3), no
amendment or waiver of any provision of this Agreement or any of the other
Credit Documents, nor consent to any departure by the Borrower or any party
thereto from such provisions, shall be effective unless approved by the Majority
Lenders. Any amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
(2) No amendment, waiver or consent shall, unless in writing and signed
by all the Lenders, (i) increase a Lender's Operating Commitment, Lender's Term
Commitment or Lender's Acquisition Commitment or subject any Lender to any
additional obligation; (ii) reduce the amount of, or interest on, any
Accommodation Outstanding or any Fees hereunder; (iii) postpone any date fixed
for any payment of principal of, or interest on, any Accommodation Outstanding
or any Fees payable to the Lenders or to the Agent for the account of the
Lenders; (iv) permit any release of Collateral having a value in excess of
$500,000 under the Security Documents or the Security; (v) change the definition
of Majority Lenders; or (viii) amend this Section 11.1(2).
(3) No amendment, waiver or consent shall, unless in writing and signed
by the Agent in addition to the Majority Lenders, affect the rights or duties of
the Agent under the Credit Documents.
SECTION 2. WAIVER. (1) No failure on the part of any Lender or
the Agent to exercise, and no delay in exercising, any right under any of the
Credit Documents shall operate as a waiver of such right; nor shall any single
or partial exercise of any right under any of the Credit Documents preclude any
other or further exercise thereof or the exercise of any other right.
(2) Except as otherwise expressly provided in this Agreement, the
covenants, representations and warranties of the parties contained in this
Agreement shall not merge on and shall survive the initial Accommodation
hereunder and, notwithstanding such initial Accommodation, or any investigation
made by or on behalf of any party, shall continue in full force and effect. The
closing of this transaction shall not prejudice any right of one party against
any other party in respect of anything done or omitted hereunder or in respect
of any right to damages or other remedies.
SECTION 3. EVIDENCE OF DEBT AND ACCOMMODATION NOTICES. (1)
The indebtedness of the Borrower resulting from all Accommodations under the
Credit Facilities shall be evidenced by the records of the Lenders (or the Agent
acting on behalf of the Lenders) which shall, absent manifest error, constitute
prima facie evidence of such indebtedness.
(2) Prior to the receipt of any Accommodation Notice the Agent may act
upon the basis of telephonic notice (containing the same information as
<PAGE> 59
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required to be contained in such Accommodation Notice) believed by it in good
faith to be from such authorized persons representing the Borrower as shall have
been indicated to the Agent prior thereto. In the event of conflict between the
Agent's record of the applicable terms of any Accommodation and such
Accommodation Notice, the Agent's record shall prevail, absent manifest error.
SECTION 4. NOTICES, ETC. Any notice, direction or other
instrument required or permitted to be given hereunder shall, except as
otherwise permitted hereunder, be in writing and given by delivering it or
sending it by telecopy or other similar form of communication addressed, if to
the Borrower or Guarantor, to it at: Suite 300, 601 West Cordova Street,
Vancouver, British Columbia, V6B lG1, Attention: Chief Executive Officer,
Telephone: (604) 681-7311, Telecopier: (604) 681-4098, with a copy to First
Union Management Inc., at 55 Public Square, Suite 1910, Cleveland, Ohio,
Attention: Legal Department, Telecopier: (216) 781-7364, if to the Agent, to it
at: BT Bank of Canada, Royal Bank Plaza, Suite 1700, North Tower, P.O. Box 100,
Toronto, Ontario M5J 2J2, Attention: Harvey Naglie, President and Chief
Executive Officer, and, if to the Lenders, at the addresses shown on the
signature pages hereof. Any such notice, direction or other instrument shall be
deemed to have been effectively given, if sent by telecopy or other similar form
of telecommunication, on the next Business Day following such transmission or,
if delivered, to have been received on the date of such delivery. Any party may
change its address for service from time to time by notice given in accordance
with the foregoing and any subsequent notice shall be sent to the party at its
changed address.
SECTION 5. CONFIDENTIALITY. Each Lender agrees to ensure that
any financial statement or other information relating to the Business, Assets or
condition, financial or otherwise, of the Borrower, Guarantor and their
respective Subsidiaries which may be delivered to such Lender pursuant to this
Agreement which is not publicly filed or otherwise made available to the public
generally will, to the extent permitted by Law, be treated confidentially by
such Lender and will not, except with the prior written consent of the Borrower
and Guarantor, be distributed or otherwise made available by such Lender to any
Person other than such Lender's employees, authorized agents, counsel or other
representatives (provided such other representatives have agreed to keep all
information confidential) required, in the reasonable opinion of such Lender, to
have such information. The Agent and each Lender is hereby authorized to deliver
a copy of any financial statement or any other information relating to the
Business, Assets or financial condition of the Borrower, Guarantor and its
Subsidiaries which may be furnished to it under this Agreement or otherwise, to
(i) any actual or potential Participant or Assignee provided written or verbal
notice thereof is given to the Borrower and Guarantor and the Participant or
Assignee agrees to keep all such information confidential in accordance with the
provisions hereof; (ii) at the direction of any court, regulatory body or agency
having jurisdiction over such Lender; and (iii) any Affiliate of such Lender
required, in the reasonable opinion of such Lender, to have such information,
provided such Affiliate agrees to keep all such information confidential in
accordance with the provisions hereof.
SECTION 6. COSTS, EXPENSES AND INDEMNITY. (1) The Borrower
shall, whether or not the transactions hereby contemplated are consummated,
indemnify and hold each Lender and the Agent harmless from, and shall pay upon
notice by the Agent any amounts required to compensate such Person for, any
Claim or Loss
<PAGE> 60
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suffered by, imposed on or asserted against the Agent and each Lender as a
result of, in respect of, connected with or arising out of (i) the preparation,
execution and delivery of, preservation of rights under, enforcement of, and
refinancing, renegotiation or restructuring of, the Credit Documents and any
amendment, waiver or consent relating thereto; (ii) reasonable fees associated
with any advice of Agent's counsel as to the rights and duties of the Agent and
the Lenders with respect to the Transaction and the administration of the Credit
Facilities, the Credit Documents or any transaction contemplated thereunder;
(iii) a default (whether or not constituting a Default or an Event of Default)
by the Borrower or Guarantor hereunder; and (iv) any proceedings brought against
the Agent or any of the Lenders due to its entering into this Agreement,
performing its obligations under this Agreement, providing any Accommodation or
any use of any Accommodation by the Borrower, save and except in each case for
the gross negligence, fraud or misconduct of the Agent or any Lender.
(2) The Borrower shall indemnify and hold the Lenders and the Agent and
each of their respective officers, directors, employees and agents
(collectively, the `'Indemnified Parties") harmless from and against any and all
Environmental Liabilities and Costs incurred or suffered by, or asserted
against, any of the Indemnified Parties (except for Environmental Liabilities
and Costs attributable to the gross negligence, fraud or wilful misconduct of
the Indemnified Parties) in connection with the Credit Facilities, including all
Environmental Liabilities and Costs with respect to or as a direct or indirect
result of, (i) the presence on or under or the Release or likely Release of
Hazardous Substances from any properties now, or any time heretofore or
hereafter, owned, leased, operated or used by the Borrower, Guarantor or any of
their respective Subsidiaries; or (ii) the breach by any mortgagor, owner or
lessee of such properties in their use of such properties of any Environmental
Laws.
(3) If, with respect to any Lender (i) any change in Law, or any change
in the interpretation or application of any Law occurring or becoming effective
after the date hereof; or (ii) compliance by such Lender with any direction,
request or requirement (whether or not having the force of Law) of any
Governmental Entity made or becoming effective after the date hereof, has the
effect of causing Loss to such Lender by (v) increasing the cost to such Lender
of performing its obligations under this Agreement or in respect of any
Accommodations Outstanding (including the costs of maintaining any capital,
reserve or special deposit requirements in connection therewith), (w) requiring
such Lender to maintain or allocate any capital or additional capital or
affecting its allocation of capital in respect of its obligations under this
Agreement or in respect of any Accommodations Outstanding or otherwise reducing
the effective return to such Lender under this Agreement or in respect of any
Accommodations Outstanding, (x) reducing any amount payable to such Lender under
this Agreement or in respect of any Accommodations Outstanding by any amount it
deems material, acting reasonably (other than a reduction resulting from a
higher rate of income or capital tax relating to such Lender's income or capital
in general), (y) causing such Lender to make any payment or to forego any return
on, or calculated by reference to, any amount received or receivable by such
Lender under this Agreement or in respect of any Accommodations Outstanding, or
(z) otherwise reducing the effective return to such Lender under this Agreement
or in respect of any Accommodations Outstanding or on its total capital as a
result of entering into this Agreement, then such Lender may give written notice
to the Borrower specifying the nature of the event giving rise to such Loss and
the Borrower may either, (iii) on demand, pay such amounts as such Lender may
specify to be necessary to compensate it for any such Loss; or (iv) provided no
Loss has yet been suffered by a Lender or the
<PAGE> 61
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Borrower has paid the compensating amount to the Lender, repay the
Accommodations Outstanding and terminate such Lender's Commitments. A
certificate as to the amount of any such Loss, submitted in good faith by a
Lender to the Borrower, shall constitute evidence of such amounts absent
manifest error.
(4) The Borrower shall pay to each Lender no later than three Business
Days after receiving written notice from the Agent any amounts required to
compensate such Lender for any Loss suffered or incurred by such Lender as a
result of (i) any payment being made (due to acceleration of the maturity of any
Accommodation pursuant to Article 9, a mandatory or optional prepayment of
principal or otherwise) in respect of a Bankers' Acceptance, Draft, BA
Equivalent Note or Letter of Credit or Advance, otherwise than on the maturity
or expiration thereof; (ii) the failure of the Borrower to give any notice in
the manner and at the times required by this Agreement; (iii) the failure of the
Borrower to effect an Accommodation in the manner and at the time specified in
any Accommodation Notice; or (iv) the failure of the Borrower to make a payment
or a mandatory repayment in the manner at the time specified in this Agreement
or any notice given by the Borrower to the Agent in accordance with the terms of
this Agreement. A certificate as to the amount of any such Loss submitted in
good faith by a Lender to the Borrower shall constitute evidence of such amount.
(5) The provisions of this Section 11.6 shall survive the termination
of this Agreement and the repayment of all Accommodations Outstanding. The
Borrower acknowledges that neither its obligation to indemnify, nor any actual
indemnification by it, of any Lender, the Agent or any other Indemnified Party
hereunder in respect of such Person's Losses for the legal fees and expenses of
such Person's counsel shall in any way affect the confidentiality or privilege
relating to any information communicated by such Person to its counsel.
SECTION 7. CONFIRMATION OF SECURITY INTERESTS. The Borrower
hereby acknowledges and agrees that the Original erests. Credit Agreement Debt
is secured by the Original Credit Agreement Security and that the Original
Credit Agreement Security continues to be in full force and effect, unamended,
and shall stand as continuing collateral security for the Original Credit
Agreement Debt, the Accommodations Outstanding and all other liabilities and
obligations under the Credit Document.
SECTION 8. SUCCESSORS AND ASSIGNS. (1) This Agreement shall
become effective when it shall have been executed by the Borrower, the Agent and
each Lender and thereafter shall be binding upon and enure to the benefit of the
Borrower, the Lenders and the Agent and their respective successors and
permitted assigns.
(2) The Borrower shall not have the right to assign its rights or
obligations hereunder or any interest herein without the prior written consent
of all the Lenders, which consent may be arbitrarily withheld.
(3) A Lender may, subject to Section 11.8(7), upon prior written
consent of the Agent and the Borrower, such consent not to be unreasonably
withheld, (i) grant participations in all or any part of its interest in the
Credit Facilities to one or more financial institutions (each a "PARTICIPANT"),
or (ii) assign all or any part of its interest in the Credit Facilities to one
or more financial institutions (each an "ASSIGNEE"), provided that the amount
<PAGE> 62
- 57 -
of each such participation or assignment shall be equal to or greater than Cdn.
$5,000,000 and, to the extent of any such participation or assignment (unless
otherwise stated therein), the Participant or Assignee shall have the same
rights and benefits and be subject to the same limitations hereunder and under
the other Credit Documents as it would have if it was a Lender hereunder,
provided that no such Participant or Assignee shall be entitled to receive any
greater payment, on a cumulative basis, pursuant to Section 11.6 than the Lender
which granted such participation or assignment would have been entitled to
receive.
(4) The Borrower shall, at the cost and expense of the relevant Lender,
provide such certificates, acknowledgments and further assurances in respect of
this Agreement and the Credit Facilities as such Lender may reasonably require
in connection with any participation or assignment pursuant to this Section
11.8.
(5) Except in the case of an Assignee which has delivered an assumption
agreement pursuant to Section 11.8(6), prior to the occurrence of a Default or
an Event of Default, a Lender granting a participation or making an assignment
shall act on behalf of all of its Participants and Assignees in all dealings
with the Borrower in respect of the Credit Facilities.
(6) A Lender may deliver to the Borrower an agreement substantially in
the form of Schedule 20 by which any Assignee of such Lender assumes the
obligations and agrees to be bound by all the terms and conditions of this
Agreement, all as if such Assignee had been an original party hereto. Upon any
such assignment and assumption of the obligations of such Lender by an Assignee,
the assigning Lender and the Borrower shall be released from their respective
obligations hereunder (to the extent of such assignment and assumption) and
thereafter shall not have any liability or obligations to each other to such
extent, except in respect of matters arising prior to such assignment.
(7) No Lender (in this Section 11.8(7) called the "Assigning Lender")
shall grant participations in all or any part of its interest in the Credit
Facilities or assign or transfer all or any part of its interest in the Credit
Facilities except as follows:
(i) any such participation or assignment must be offered in writing to
the other Lender (in this section 11.8(7) called the "Receiving Lender");
(ii) if the Receiving Lender gives the Assigning Lender notice within
30 days of receipt of the offer that it will take all but not less than all of
such participation or assignment so offered, then the Assigning Lender will
assign the appropriate amount of its Credit Facilities to the Receiving Lender
on the terms set out herein;
(iii) the Assigning Lender is free to grant a participation or assign
its interest in the Credit Facilities and the Credit Documents contemplated
hereby which is not taken by the Receiving Lender to a financial institution
provided any such assignment is in compliance with the provisions hereof.
SECTION 9. RIGHT OF SET-OFF. Upon the occurrence and during
the continuance of any Event of Default, each Lender is hereby authorized at any
time and from time to time, to the fullest extent permitted by Law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Lender to or for the credit or the
<PAGE> 63
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account of the Borrower against any and all of the obligations of the Borrower
now or hereafter existing under any of the Credit Documents, irrespective of
whether or not such Lender shall have made any demand under any of the Credit
Documents. Each Lender agrees promptly to notify the Borrower after any such
set-off and application made by such Lender, provided that the failure to give
such notice shall not affect the validity of such set-off and application. The
rights of the Lenders under this Section 11.9 are in addition to other rights
and remedies (including all other rights of set-off) which the Lenders may have.
SECTION 10. ACCOMMODATIONS BY LENDERS. Unless the Agent shall
have received notice from a . Lender prior to the date of any Borrowing or
Drawing that such Lender will not make available to the Agent such Lender's
rateable portion of such Borrowing or Drawing, the Agent may assume that such
Lender has made such portion available to the Agent on the date of such
Borrowing or Drawing and the Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If and to the
extent such Lender shall not have made its rateable portion available to the
Agent, such Lender shall pay such corresponding amount to the Agent forthwith on
demand. If such Lender shall pay such corresponding amount to the Agent, the
amount so paid shall constitute such Lender's Advance as part of such Borrowing
or Drawing for purposes of this Agreement. If such Lender shall not pay such
corresponding amount to the Agent forthwith on demand and such amount shall have
been made available to the Borrower, the Borrower shall pay such corresponding
amount to the Agent forthwith on demand and the Borrower hereby agrees that any
such amount received and so reimbursed would not and will not constitute an
Accommodation hereunder. The Agent shall also be entitled to recover from such
Lender or the Borrower, as the case may be, interest on such corresponding
amount, for each day from the date such amount is made available to the Borrower
until the date such amount is repaid to the Agent, at a rate per annum equal to
the Agent's cost of funds.
SECTION 11. RATEABLE PAYMENTS. Unless the Agent shall have
received notice from the Borrower prior to the date on which any payment is due
to the Lenders hereunder that the Borrower will not make such payment in full,
the Agent may assume that the Borrower has made such payment in full on such
date and the Agent may, in reliance upon such assumption, cause to be
distributed to each Lender on such due date an amount equal to the amount then
due to such Lender. If and to the extent the Borrower shall not have so made
such payment in full, each Lender shall repay to the Agent forthwith on demand
such amount distributed to such Lender together with interest thereon, for each
day from the date such amount is distributed to such Lender until the date such
Lender repays such amount to the Agent, at a rate per annum equal to the Agent's
cost of funds.
SECTION 12. INTEREST ON ACCOUNTS. Except as may be expressly
provided otherwise in this Agreement, all amounts owed by the Borrower to the
Agent and to any of the Lenders, which are not paid when due (whether at stated
maturity, on demand, by acceleration or otherwise) shall bear interest (both
before and after default and judgment), from the date on which such amount is
due until such amount is paid in full, payable on demand, at a rate per annum
equal at all times to the sum of the Canadian Prime Rate in effect from time to
time plus .75 of 1% per annum.
<PAGE> 64
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SECTION 13. ADVICE. Each Lender has advised the other Lender
of the nature and extent of all indebtedness of the Borrower and the Additional
Loan Parties to it as at the date of this Agreement and each Lender consents to
the nature and extent of such indebtedness.
SECTION 14. GOVERNING LAW. This Agreement shall be governed
by and interpreted and enforced in accordance with the laws of the Province of
Ontario and the federal laws of Canada applicable therein.
<PAGE> 65
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SECTION 11.15. COUNTERPARTS. This Agreement may be executed
in any number of counterparts and all of such counterparts taken together shall
be deemed to constitute one and the same instruments.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
IMPERIAL PARKING LIMITED
Per:
Authorizing Signing Officer
c/s
Per: /s/ Authorized Signer
Authorizing Signing Officer
504463 N.B. INC.
Per: /s/ Authorized Signer
Authorizing Signing Officer
c/s
Per: /s/ Authorized Signer
Authorizing Signing Officer
COMMITMENTS THE LENDERS
BT BANK OF CANADA
Operating
Commitment:
Cdn. $6,500,000 Per: /s/ Authorized Signer
Authorizing Signing Officer
Term Per: /s/ Authorized Signer
Commitment: --------------------------
Cdn. $16,750,000 Authorizing Signing Officer
Address:
Acquisition Royal Bank Plaza
Commitment: Suite 1700, North Tower
Cdn. $5,000,000 P.O. Box 100
Toronto, Ontario
M5J 2 J2
<PAGE> 66
- 61 -
<TABLE>
<S> <C> <C>
Telephone: (416) 865-2222
Telecopier: (416) 865-0779
Attention: Harvey Naglie
President and Chief Executive Officer
Operating
Commitment:
NIL
HONG KONG BANK OF CANADA
Term
Commitment: Per: /s/ Authorized Signer
Cdn. $16,750,000 Authorizing Signing Office
Per: /s/ Authorized Signer
Acquisition Authorizing Signing Office
Commitment:
Cdn. $5,000,000 Address:
Suite 200
885 West Georgia Street
Vancouver, British Columbia
V6C 3G1
Telephone: (604) 641-1811
Telecopier: (604) 641-3095
Attention: Vice President,
Commercial Banking
</TABLE>
<PAGE> 1
Exhibit 10b
ANCILLARY AGREEMENT
THIS AGREEMENT made the 17th day of April, 1997.
B E T W E E N:
BT BANK OF CANADA
(hereinafter referred to as "BT")
OF THE FIRST PART
- AND -
HONGKONG BANK OF CANADA
(hereinafter referred to as "HKB")
OF THE SECOND PART
- AND -
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE
INVESTMENTS, a business trust existing under the laws
of the State of Ohio,
(hereinafter referred to as "FUR")
OF THE THIRD PART
WHEREAS:
A. The Borrower, BT and HKB have entered into the Amended and Restated Credit
Agreement (as defined below);
B. In connection with the Amended and Restated Credit Agreement, the parties
hereto have agreed to enter this Agreement and the Security Trust Indenture (as
defined below);
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of these respective
covenants, agreements, representations, warranties and indemnities of the
parties hereinafter contained and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged by each party), the
parties hereby agree as follows:
<PAGE> 2
-2-
ARTICLE 1
INTERPRETATION
1.1 DEFINED TERMS - For the purposes of this Agreement, unless the context
otherwise requires, the following terms shall have the meanings set out below
and grammatical variations of such terms shall have corresponding meanings:
(a) "ACQUISITION FACILITY" has the meaning given to such term in the Amended
and Restated Credit Agreement;
(b) "ADDITIONAL EQUITY" means at any time, with respect to FUR, the net
proceeds from the issuance of equity securities subsequent to April 17,
1997;
(c) "AGREEMENT" means this Agreement, and all schedules attached hereto as it
may be amended from time to time;
(d) "AFFILIATE" has the meaning given to such term in the CBCA;
(e) "AGENT" means the Agent under the Amended and Restated Credit Agreement;
(f) "AGGREGATE ACCOMMODATIONS OUTSTANDING" means all Accommodations Outstanding
under the Amended and Restated Credit Agreement, plus all interest, fees
(excluding any fee payable under Section 2.11 of the Amended and Restated
Credit Agreement) and other amounts payable under the Amended and Restated
Credit Agreement to BT and HKB all as determined at the time of the Put
Closing Date without regard to or taking into account reductions in such
amount under any proposal, plan of compromise, arrangement or moratorium in
respect of the Borrower under any insolvency or reorganization, including
without limitation, the Bankruptcy and Insolvency Act (Canada), the
Companies Creditors Arrangement Act (Canada) or the Winding-up and
Restructuring Act (Canada) or similar laws in other jurisdictions;
(g) "AMENDED AND RESTATED CREDIT AGREEMENT" means the credit agreement dated as
of November 13, 1996 among the Borrower, as borrower, Canadian Imperial
Bank of Commerce ("CIBC") and HKB, as lenders, and CIBC, as agent, as
assigned in part to BT by CIBC, in its capacity as lender and as agent, by
assignment agreement dated as of the date hereof (the "CIBC/BT Assignment
Agreement"), and as amended and restated by an amended and restated credit
agreement, dated as of the date hereof, and as may be amended or restated
or assigned from time to time;
<PAGE> 3
-3-
(h) "ASSIGNED INTEREST" means with respect to either BT or HKB that person's
right, title and interest in and to the Amended and Restated Credit
Agreement including without limitation (i) the Aggregate Accommodations
Outstanding, (ii) all Security given by the Borrower to the Agent pursuant
to the Amended and Restated Credit Agreement, and (iii) the guarantee given
by the Guarantors to the Agent pursuant to the Amended and Restated Credit
Agreement;
(i) "ASSIGNMENT AGREEMENT" means the form of assignment agreement set out in
Schedule "A" attached hereto, or such other form of assignment agreement as
the parties may mutually agree upon;
(j) "ASSOCIATE" has the meaning given to such term in the CBCA;
(k) "BORROWER" means Imperial Parking Limited and its successors;
(l) "BT" means BT Bank of Canada and its successors;
(m) "BUSINESS DAY" means any day, other than Saturday or Sunday, on which banks
are generally open for business in Toronto, Ontario and Cleveland, Ohio;
(n) "CANADIAN DOLLAR EQUIVALENT" means, on any date, the amount of Canadian
dollars which can be purchased with a specified amount of United States
dollars at the spot buying rate for Canadian dollars quoted by BT at
approximately 12:00 noon (Toronto time) on such day if it is a business day
or the immediately preceding business day if such day is not a business
day;
(o) "CBCA" means the Canada Business Corporations Act, as in effect on the date
hereof;
(p) "COLLATERAL AMOUNT" means, as at the third day following the delivery of a
Collateralization Notice, the aggregate of:
(i) the full amount outstanding under the Term Facility;
(ii) the maximum amount that is available under the Acquisition Facility;
and
(iii) the maximum amount that is available under the Operating Facility,
all pursuant to the terms of the Amended and Restated Credit Agreement;
(q) "COLLATERALIZATION NOTICE" as the meaning set out in Section 6.1;
<PAGE> 4
-4-
(r) "COLLATERALIZATION EVENT" means any of:
(i) the Net Worth of FUR as calculated as at the end of any three month
period ending on the last day of March, June, September or December in
each year being less than the total of:
(A) $150,000,000; and
(B) 80% of Additional Equity;
(ii) a Material Adverse Change occurring concerning FUR;
(iii) any event or series of events by which (i) any "person" or "group"
(as such terms are used in Sections 13(d) and 14(d)(2) of the United
States Securities Exchange Act of 1934 (the "Exchange Act") becomes,
whether by means of any issuance or direct or indirect transfer of
securities, merger, consolidation, liquidation, dissolution or
otherwise, the "beneficial owner" (as such term is used in Rule 13d-3
under the Exchange Act, except that a person shall be deemed to be a
beneficial owner of all securities that any such person has the right
to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly through one or more
intermediaries, of more than 30% of the total voting rights attaching
to the then-outstanding voting securities of FUR or FUMI, or (ii)
during any period of two consecutive years, individuals who at the
beginning of such period constituted FUR's board of trustees or FUMI's
board of directors (together with any new trustees or new directors
whose election by the FUR's board of trustees or FUMI's board of
directors (as the case may be) or whose nomination for election by
FUR's or FUMI's stockholders, as applicable, was approved by a vote of
66-2/3% of FUR's trustees or FUMI's directors (as applicable) then
still in office who were either trustees or directors (as applicable)
at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason (other than
death or disability) to constitute a majority of FUR's trustees or
FUMI's directors (as applicable) then still in office;
(iv) without the prior written consent of BT and HKB, FUR selling assets in
a transaction or series of transactions having a value (determined in
a manner similar to that adopted in determining Total Asset Value for
purposes of this Section 1.1(r)(iv)) greater than 25% of its Total
Asset Value;
(v) the total liabilities of FUR less the current liabilities of FUR
(excluding any current liabilities of FUR relating to the current
portion of long
<PAGE> 5
-5-
term debt of FUR), all determined in accordance with United States
generally accepted accounting principles, being greater than 65% of
its adjusted total asset value where adjusted total asset value is
equal to (A) the sum of (y) the Total Asset Value determined in
accordance with United States generally accepted accounting
principles and (z) all accumulated depreciation relating to the
total assets of FUR less (B) FUR's current assets;
(vi) FUMI and its Affiliates ceasing to own shares of the Borrower
carrying at least 66 2/3% of the votes attaching to all the
outstanding voting shares of the Borrower;
(vii) any Immediate Put Event, except that (A) if such Immediate Put
Event is one described in Section 1.1(y)(ii), it shall not be deemed
to give rise to a Collateralization Event if it is cured within 15
business days after written notice of the same has been given to
FUR, and (B) if such Immediate Put Event is one described in Section
1.1(y)(iii), it shall not be deemed to give rise to a
Collateralization Event if it is cured within five business days
after written notice of the same has been given to FUR; and
(viii) any event of default or other circumstance under any agreement to
which FUR is a party (other than this Agreement or the Security
Trust Indenture) that automatically or otherwise has resulted in an
acceleration of the time for payment of any monetary obligation of
FUR in an amount exceeding $10,000,000 unless the same has been
remedied or waived within five business days after arising.
(s) "ELIGIBLE SECURITIES" means bonds, debentures or other evidences of
indebtedness of or fully guaranteed as to the payment of principal and
interest by the full faith and credit of the Government of the United
States of America or the Government of Canada, provided the same are
denominated in United States dollars or Canadian dollars and have a term
to maturity at the time of deposit by FUR with the Trustee or at the time
of purchase by the Trustee, as the case may be, of not more than one year;
(t) "FUMI" means First Union Management, Inc. and its successors;
(u) "GUARANTEES AND GUARANTEE SECURITY" means, collectively, the guarantees
given by the Guarantors to the Agent pursuant to the Amended and Restated
Credit Agreement and all security therefor;
(v) "GUARANTORS" means guarantors identified in Schedule D to the CIBC/BT
Assignment Agreement;
<PAGE> 6
(w) "HKB" means Hongkong Bank of Canada and its successors;
(x) "IMMEDIATE PUT CLOSING DATE" has the meaning given to such term in Section
3.2;
(y) "IMMEDIATE PUT EVENT" means the occurrence of any of the following:
(i) a default or breach by FUR of any of its covenants and obligations
under this Agreement or the Security Trust Indenture arising upon or
otherwise relating to the failure by FUR to (A) make any payment
required to be made by it pursuant to any provision of this
Agreement or the Security Trust Indenture, (B) deposit with the
Trustee any Eligible Securities required to be so deposited pursuant
to this Agreement or the Security Trust Indenture or (C) file any
financing statement, financing change statement or any other
document or to do any other act or thing necessary or advisable, in
the reasonable opinion of counsel to BT or HKB, to perfect or to
maintain the perfection of the Pledge or to ensure that for so long
as the Security Trust Indenture remains in effect the Pledge
constitutes a first priority Security Interest in the Collateral
(the terms "Pledge", "Security Interest" and "Collateral" having the
respective meanings given to them in the Security Trust Indenture);
(ii) a default or breach by FUR of any of its covenants and obligations
under this Agreement or the Security Trust Indenture other than a
default or breach described in paragraph (y)(i) above; or
(iii) an inaccuracy or breach in any representation and warranty made by
FUR herein or in the Security Trust Indenture;
(iv) FUR (1) taking any action for the termination, winding-up,
liquidation or dissolution of FUR, or ceasing to carry on business,
or ceasing to pay its current obligations in the ordinary course of
business as they generally become due, (2) making a general
assignment for the benefit of creditors or becoming insolvent or
unable to meet its obligations as they generally become due, (3)
filing a petition in voluntary liquidation or bankruptcy, (4) filing
a petition or answer or consent seeking the reorganization of FUR,
or the readjustment of any of the indebtedness of FUR, (5)
commencing any case or proceeding in respect of FUR under applicable
insolvency or bankruptcy laws now or hereafter existing (including
the Companies' Creditors Arrangement Act), (6) consenting to the
appointment of any receiver, receiver-manager, administrator,
custodian, liquidator or trustee of all or any part of its assets or
property (provided that the mere grant by FUR of security interests
over all or part of their respective assets or property to a
<PAGE> 7
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trustee, other than to a trustee-in-bankruptcy, in accordance with
the provisions of normal course security arrangements shall not of
itself constitute an Immediate Put Event), (7) taking any corporate
or other organizational action for the purpose of effecting any of
the foregoing including by (A) convening any meeting of FUR for the
purpose of considering any resolution for (or to petition for) its
winding-up, liquidation or dissolution or (b) the passing by the
security holders of FUR of a resolution for its winding-up,
liquidation or dissolution, or (8) being adjudicated as bankrupt or
insolvent;
(v) if any petition for any proceedings in bankruptcy or liquidation or
for the winding-up, reorganization or readjustment of indebtedness
of FUR shall be filed, or any case or proceeding shall be commenced,
under any applicable bankruptcy or insolvency laws now or hereafter
existing (including the Companies' Creditors Arrangement Act),
against FUR, or any receiver, receiver-manager, administrator,
custodian, liquidator or trustee shall be appointed for FUR or for
all or any part of FUR's assets or property, or any order for relief
or for the winding-up, dissolution or liquidation shall be entered
in a proceeding with respect to FUR under the provisions of the
United States Bankruptcy Code, the CBCA, the Bankruptcy and
Insolvency Act (Canada), the Companies' Creditors Arrangement Act
(Canada) or any other applicable or similar bankruptcy or insolvency
laws, in each case, as amended, and such proceeding or appointment
shall not be dismissed or discharged, as the case may be, within 45
days after the filing thereof of such appointment;
(vi) the commencement by or on behalf of FUR in any court of competent
jurisdiction of any action or proceeding to challenge, or the
inclusion in pleadings filed by or on behalf of FUR with any court
of competent jurisdiction of a request for relief that challenges,
the validity of this Agreement or the Security Trust Indenture;
(z) "IMMEDIATE PUT NOTICE" has the meaning given to such term in Section 3.2;
(aa) "IMMEDIATE PUT RIGHT" has the meaning given to such term in Section 3.2;
(bb) "MATERIAL ADVERSE CHANGE" means any state of fact, change, event or
occurrence which has a material adverse effect on (i) the business,
operations, results of operations, assets, liabilities, prospects or
financial condition of FUR considered on a consolidated basis with its
subsidiaries, or (ii) the ability of FUR to perform its obligations under
this Agreement (including without limitation its obligations under
Articles 3 and 4 hereof);
<PAGE> 8
-8-
(cc) "NET WORTH" means at any time, with respect to FUR, the total equity of
FUR determined as of such time in accordance with accounting principles
generally accepted in the United States, at the relevant time applied on a
consistent basis;
(dd) "OPERATING FACILITY" has the meaning given to such term in the Amended and
Restated Credit Agreement;
(ee) "PERSON" means an individual, a firm, a corporation, a syndicate, a
partnership, an association, a joint venture, a trust, a government or
governmental agency and every other legal or business entity whatsoever;
(ff) "PURCHASE PRICE" means, with respect to the purchase and sale of any
portion of the Assigned Interest upon the exercise of the Put Right or
Immediate Put Right by either BT or HKB hereunder, the sum of (i) the
portion of the Aggregate Accommodations Outstanding owing to the Vendor,
and (ii) $135,000 less all prepayment amounts previously paid to the
Lenders (as defined in the Amended and Restated Credit Agreement)
multiplied by a fraction equal to the portion of the Aggregate
Accommodations Outstanding owing to the Vendor over the Aggregate
Accommodations Outstanding;
(gg) "PUT CLOSING DATE" means January 17, 2000;
(hh) "PUT NOTICE" has the meaning given to such term in Section 3.1;
(ii) "PUT OPTION PRICE" has the meaning given to such term in Section 2.1;
(jj) "PUT PERIOD" means any time during the 30-day period which runs from
November 18, 1999 to December 17, 1999;
(kk) "PUT RIGHT" has the meaning given to such term in Section 3.1;
(ll) "QUARTERLY REPORT" has the meaning given to such term in Section 8.1;
(mm) "SECURITY" means all security given by the Borrower to the Agent pursuant
to the Amended and Restated Credit Agreement;
(nn) "SECURITY TRUST INDENTURE" means the agreement dated as of the date hereof
among FUR, BT, HKB and Montreal Trust Company of Canada;
(oo) "TAX ACT" means the Income Tax Act (Canada), as amended from time to time;
(pp) "TERM FACILITY" has the meaning given to such term in the Amended and
Restated Credit Agreement;
<PAGE> 9
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(qq) "TOTAL ASSET VALUE" means at any time with respect to FUR the total assets
of FUR determined in accordance with United States generally accepted
accounting principles or, in the discretion of FUR, the aggregate current
fair market value of the total assets of FUR determined by FUR confirmed
in a manner and by an independent third party acceptable to each of BT and
HKB;
(rr) "TRUSTEE" means Montreal Trust Company of Canada, acting in its capacity
as collateral agent under the Security Trust Indenture; and
(ss) "VENDOR means the party, being either BT, in its capacity as lender and
as Agent, or HKB that has exercised its Put Right with respect to its
Assigned Interest.
1.2 HEADINGS - The division of this Agreement into sections, paragraphs and
clauses and the insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of this Agreement. The terms
"this Agreement", "hereof", "herein", "hereunder" and similar expressions refer
to this Agreement and not to any particular section or other portion hereof and
include any agreement or instrument supplemental or ancillary hereto.
1.3 CURRENCY - Unless otherwise indicated, all dollar amounts referred to in
this Agreement are expressed in United States funds.
1.4 GOVERNING LAW - This Agreement shall be construed and interpreted in
accordance with the laws of the State of Ohio. Each of the parties hereby
irrevocably attorns to the non-exclusive jurisdiction of the courts of the State
of Ohio.
1.5 SEVERABILITY - If any provision contained herein is determined to be void or
unenforceable in whole or in part, it shall not be deemed to affect or impair
the validity of any other provision herein and each such provision is deemed to
be separate and distinct.
1.6 ENTIRE AGREEMENT - This Agreement and the Security Trust Indenture
constitute the entire agreement between the parties with respect to the subject
matter hereof.
1.7 BUSINESS DAYS - Any action or payment required or permitted to be taken or
made hereunder on a day that is not a business day may be taken or made on the
next succeeding business day.
1.8 NUMBER AND GENDER - Words importing the singular number only shall include
the plural and vice versa and words importing the use of any gender shall
include all genders.
<PAGE> 10
-10-
ARTICLE 2
PUT OPTION PRICE
2.1 PUT OPTION PRICE - In consideration of the grant by FUR to BT and HKB of the
Put Right and the other covenants and agreements of FUR contained in this
Agreement, each of BT and HKB hereby agree to pay to FUR $225,000 (in the
aggregate, the "Put Option Price").
2.2 SATISFACTION OF PUT OPTION PRICE - BT and HKB hereby agree to deliver to
FUR, upon the execution and delivery of this Agreement by FUR, in full payment
and satisfaction of the Put Option Price, one or more certified cheques or bank
drafts made payable to or to the order of FUR in immediately available funds in
the aggregate amount of the Put Option Price less applicable withholding taxes.
ARTICLE 3
PUT RIGHTS
3.1 PUT RIGHT - At any time during the Put Period, each of BT and HKB shall have
the right (the "Put Right") exercisable by notice (the "Put Notice") in writing
delivered to FUR and the Trustee to require FUR to purchase all but not less
than all of the Assigned Interest of such person on the Closing Date, which
purchase is to be made at the Purchase Price.
3.2 IMMEDIATE PUT RIGHT - Upon the occurrence of any Immediate Put Event, each
of BT and HKB shall have the right (the "Immediate Put Right"), exercisable by
notice (the "Immediate Put Notice") in writing delivered to FUR at any time
following the occurrence of the Immediate Put Event until the fifth day
following the giving of notice by FUR to BT and HKB of such Immediate Put Event,
to require FUR to purchase all but not less than all of the Assigned Interest of
such person on the applicable Immediate Put Closing Date, which purchase is to
be made at the applicable Purchase Price. A copy of the Immediate Put Notice
shall be provided to the Trustee as soon as reasonably practicable after being
given to FUR. The Immediate Put Notice shall set out the Immediate Put Closing
Date for the purchase and sale of such Assigned Interest, which date shall not
be more than 10 days following the date of delivery to FUR of the Immediate Put
Notice (the "Immediate Put Closing Date"). The due delivery of an Immediate Put
Notice shall override any other Put Notice theretofore or thereafter given, and
the closing of the purchase and sale transaction effected by the giving of the
Immediate Put Notice shall occur in accordance with such Immediate Put Notice
notwithstanding any other provision hereof to the contrary.
3.3 PURCHASE AND SALE UPON EXERCISE - Upon the exercise of the Put Right or
Immediate Put Right, the Vendor shall sell, and FUR shall purchase, the Assigned
Interest as required to be so purchased and sold pursuant to the terms of this
Section
<PAGE> 11
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3. Any such purchase and sale of the Assigned Interest shall be completed on
such other terms and conditions as are set out in Section 4.
ARTICLE 4
CLOSING ARRANGEMENTS
4.1 PLACE AND TIME OF CLOSING - The closing of the purchase and sale of the
Assigned Interest shall take place at the offices of Fasken Campbell Godfrey at
10:00 a.m. (Toronto time) on the Put Closing Date (or in the case of an
Immediate Put Right on the Immediate Put Closing Date), or at such other place
and time as FUR and the Vendor may mutually determine, the actual time of
closing on such Closing Date being hereinafter referred to as the "Time of
Closing".
4.2 CLOSING DELIVERIES
At the Time of Closing:
(i) FUR shall pay the Purchase Price for the Assigned Interest by delivery
to the Vendor of a certified cheque or bank draft in immediately
available Canadian funds in the amount of the Purchase Price; and
(ii) each Vendor shall deliver to FUR:
(A) an acknowledgement in writing of the receipt by such Vendor of
any payment made pursuant to Subsection 4.2(i) and that such
delivery to the Vendor constitutes good delivery to such Vendor
of the Purchase Price for the Assigned Interest being sold by
such Vendor;
(B) a representation and warranty in writing from such Vendor that
it is not a non-resident of Canada within the meaning of the Tax
Act; and
(iii) FUR and the Vendor or Vendors, if both BT and HKB exercise their
respective Put Rights, shall enter into the Assignment Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties by FUR - FUR represents and warrants to each
of BT and HKB as follows and acknowledges and confirms that they are relying on
such representations and warranties in connection with the transactions
contemplated hereby:
<PAGE> 12
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(a) FUR is a business trust duly formed and validly existing under the laws of
the State of Ohio and has all necessary power and authority to own or lease
its property, to enter into this Agreement and the Security Trust Indenture
and to perform its obligations hereunder and thereunder;
(b) all necessary proceedings have been taken by FUR to enable it to enter into
this Agreement and the Security Trust Indenture and to perform its
obligations hereunder and thereunder;
(c) the execution and delivery of this Agreement and the Security Trust
Indenture by FUR and the consummation of the transactions contemplated
hereby and thereby will not, with or without the giving of notice, lapse of
time or both, breach or violate any of the provisions of, constitute a
default under, conflict with or cause the acceleration of any obligation of
FUR under:
(i) the Security Trust Indenture, as amended, or any resolution of the
board of trustees (or any committee thereof) of FUR;
(ii) any agreement to which FUR is a party or by which it is bound;
(iii) any judgment, decree, order or award of any court, governmental body
or arbitrator having jurisdiction over FUR; or
(iv) any applicable law, statute, ordinance, regulation or rule;
(d) each of this Agreement and the Security Trust Indenture has been duly
executed and delivered by FUR and is a legal, valid and binding obligation
of FUR, enforceable against FUR by BT and HKB in accordance with its terms;
(e) there is no requirement for FUR to make any filing with, give any notice to
or obtain any licence, permit, certificate, registration, authorization,
consent or approval of, any government or regulatory authority nor is the
consent or approval of any other third party required as a condition to the
lawful consummation by FUR of the transactions contemplated by this
Agreement or the Security Trust Indenture; and
(f) the execution of this Agreement, the Security Trust Indenture and the
Amended and Restated Credit Agreement and the completion of the
transactions contemplated thereby will not affect the qualification of FUR
as a "real estate investment trust" under the Internal Revenue Code of
1986, as amended.
5.2 REPRESENTATIONS AND WARRANTIES RELATING TO BT AND HKB - Each of BT and HKB
represents and warrants to FUR in respect of itself as follows and acknowledges
<PAGE> 13
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that FUR is relying on such representations and warranties in connection with
the matters contemplated hereby:
(a) at the Put Closing Date or the Immediate Put Closing Date, it will be
legally authorized to enter into and deliver the Assignment Agreement to
which it is a party; and
(b) at the Put Closing Date or the Immediate Put Closing Date, it will be the
legal and beneficial owner of its Assigned Interest and that it will not
have granted in respect of such Assigned Interest any adverse claims, liens
or other encumbrances of any kind.
5.3 ABSENCE OF REPRESENTATIONS AND WARRANTIES CONCERNING THE ASSIGNED INTEREST -
Except as set forth in Section 5.2, neither BT nor HKB makes any representation
or warranty to FUR concerning the form, substance, accuracy or completeness of
the Amended and Restated Credit Agreement, the Security, the Guarantees and the
Guarantee Security, or the other Credit Documents (as defined in the Amended and
Restated Credit Agreement) or any other document or information made available
to FUR and shall not be responsible to FUR for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of any of the
Amended and Restated Credit Agreement, the Security, the Guarantees and the
Guarantee Security or of the Credit Documents (as defined in the Amended and
Restated Credit Agreement). Any Assigned Interest acquired hereunder by FUR from
either BT or HKB shall be acquired on an "as-is-where-is" basis subject to
Section 5.2.
ARTICLE 6
COLLATERALIZATION
6.1 REQUIRED NOTIFICATIONS AND COOPERATION
(a) Either BT or HKB may deliver to FUR written notice of the occurrence of a
Collateralization Event (the "Collateralization Notice") as soon as
reasonably practicable thereafter. Such notice shall contain a brief
description of the event or circumstance giving rise to such
Collateralization Event.
(b) Each of BT and HKB shall have the right, if in its sole judgment a
Collateralization Event may exist or may possibly occur in the future at
any time, from time to time to require by notice in writing delivered to
FUR that FUR provide or cause to be provided to it such information
relating to FUR as may be reasonably necessary to permit BT and HKB to
assess the likelihood of the prospective occurrence of a Collateralization
Event or to verify that such an event has occurred.
6.2 DEPOSIT OF ELIGIBLE SECURITIES - On the 3rd day following the delivery by
either BT or HKB of a Collateralization Notice, FUR shall deliver to and deposit
with the
<PAGE> 14
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Trustee to be held by the Trustee in accordance with the Security Trust
Indenture Eligible Securities having an aggregate face value (or in the case of
Eligible Securities denominated in United States dollars, the Canadian Dollar
Equivalent thereof) equal to the Collateral Amount.
6.3 DEPOSIT OF ADDITIONAL ELIGIBLE SECURITIES - In the event that as at the end
of any calendar quarter the aggregate value of all Eligible Securities then held
by the Trustee under the Security Trust Indenture is less than the Collateral
Amount as a result of the diminution of the Canadian Dollar Equivalent
(calculated as at the end of the calendar quarter) value of any Eligible
Securities then held by the Trustee that are denominated in United States
dollars, then FUR shall, within 3 days of delivery to BT and HKB of a Quarterly
Report relating to such calendar quarter, deliver Eligible Securities having an
aggregate cost (not including commissions, fees and expenses of acquisition) at
least equal to the difference between the aggregate of all Eligible Securities
held by the Trustee at the end of the calender quarter and the Collateral
Amount. If FUR shall hedge the foreign exchange risk relating to the deposit
with the Trustee of Eligible Securities denominated other than in Canadian
dollars in a manner other than as set forth in this Section 6.3 but with similar
effect, then it may request the consent of BT and HKB to the waiver of the
provisions of this Section 6.3, which consent is not to be unreasonably
withheld.
ARTICLE 7
RECOURSE
7.1 RIGHTS AGAINST THE BORROWER - The rights of BT and HKB under this Agreement
shall be in addition to, and not in substitution for, all rights which BT and
HKB or either of them may possess with respect to the Borrower, the Guarantors
and other parties under the Amended and Restated Credit Agreement, the Security,
the Guarantees and Guarantee Security or any other Credit Documents. The
obligations of FUR under this Agreement shall not be diminished or affected by,
and neither BT nor HKB shall be liable or accountable to FUR for any failure to
take, any action or exercise any remedies under the Amended and Restated Credit
Agreement, the Security, the Guarantees and Guarantee Security or any other
Credit Documents.
7.2 RECOURSE AGAINST FUR - In addition to the rights of BT and HKB pursuant to
the Security Trust Indenture, upon the occurrence of any Immediate Enforcement
Default under the Security Trust Indenture, each of BT and HKB shall have
recourse in executing any judgment against FUR to all the property and assets of
FUR.
<PAGE> 15
-15-
ARTICLE 8
ADDITIONAL COVENANTS
8.1 QUARTERLY REPORTS - FUR shall deliver to BT and HKB as soon as practicable
following the end of each calendar quarter (but in any event nor more than 45
days thereafter), a report (a "Quarterly Report") certified by any two senior
officers of FUR setting out the Total Asset Value and Net Worth for FUR and, if
a Collateralization Event has occurred, the aggregate value of all Eligible
Securities then held by the Trustee under the Security Trust Indenture and
accompanied by all supporting calculations and further information as may be
reasonably necessary to permit BT and HKB to verify the Total Asset Value, Net
Worth and the value of Eligible Securities as set out therein.
8.2 CONFIDENTIALITY - BT and HKB shall treat all information received pursuant
to the provisions of this Agreement (including, without limitation, any
financial statements of the Borrower and any information provided by FUR
pursuant to Section 6.1) as confidential and shall not use or disclose to any
person (other than its directors, officers, agents, employees or representatives
(collectively, the "Representatives") who have a need to know it) or permit any
of its Representatives to use or disclose to any person, directly or indirectly,
any such information at any time hereafter; provided, however, that nothing in
this Section 8.2 shall preclude BT, HKB or any Representative from using or
disclosing any such information:
(a) if such information is available to the public or in the public domain
at the time of such disclosure or use, without breach of this
Agreement;
(b) if disclosure is required to be made by any law, regulation,
governmental body or authority or stock exchange or dealer quotation
system on which securities of BT, HKB or any of its Affiliates are
. listed or quoted or by court order; or
(c) if disclosure is made to a court which is determining the rights of
the parties under this Agreement or if use or disclosure otherwise may
be reasonably necessary in connection with the rights, remedies,
obligations and liabilities of BT or HKB under this Agreement or any
other agreement contemplated hereby.
8.3 IMPLEMENTATION - Each of the parties hereto agrees to execute and deliver
all such instruments and other documents and to do all such other acts and
things as may be necessary or advisable from time to time to give effect fully
to the provisions and intent of this Agreement.
<PAGE> 16
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ARTICLE 9
MISCELLANEOUS
9.1 NOTICES -
(a) Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be delivered in person or
transmitted by telecopy or similar means of recorded electronic
communication, addressed as follows:
(i) If to BT:
BT Bank of Canada
Royal Bank Plaza
Suite 1700, North Tower
P.O. Box 100
TORONTO ON M5J 2J2
Attention: H. Naglie
President and Chief Executive Officer
------------------------------------------------
Telecopy No.: (416) 865-0779
with a copy to:
BT Securities Corporation
Real Estate Investment Banking
280 Park Avenue, 21W
New York, New York 10017
Attention: J. Baevsky
Vice-President, Corporate Finance
--------------------------------------------
Telecopy No.: (212) 454-1733
with a copy to:
Osler, Hoskin & Harcourt
Suite 6600, P.O. Box 50
TORONTO ON M5X 1B8
Attention: J. Lisson
---------------------
Telecopy No.: (416) 862-6666
<PAGE> 17
-17-
(ii) If to HKB:
Hongkong Bank of Canada
Suite 200
885 West Georgia Street
Vancouver, British Columbia V6C 3G1
Attention: B. Young
--------------------
Telecopy No.: (604) 641-3095
with a copy to:
Clark, Wilson
885 West Georgia Street, Suite 800
VANCOUVER BC V6C 3H1
Attention: D. Howard
---------------------
Telecopy No.: (604) 687-6314
(iii) If to FUR:
First Union Real Estate Equity and Mortgage
Investments
55 Public Square, Suite 1910
Cleveland, Ohio 44113-1937
Attention: Senior Vice President
General Counsel and Secretary
-----------------------------------------
Telecopy No.: (216) 781-7364
with copies to:
Fasken, Campbell, Godfrey
Suite 3700, P.O. Box 20
Toronto Dominion Bank Tower
Toronto-Dominion Centre
TORONTO ON M5K 1N6
Attention: W. Palmer
---------------------
Telecopy No.: (416) 364-7813
<PAGE> 18
-18-
- and to -
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603-3441
Attention: T. Anderson
-----------------------
Telecopy No.: (312) 706-8101
(b) any such notice or other communication so delivered or transmitted shall be
deemed to have been given and received on the day on which it was delivered
personally or by reputable overnight courier or transmitted by facsimile
(or, if such day is not a business day, on the next following business
day); and
(c) any party may at any time change its address for service from time to time
by giving notice to the other parties in accordance with this Section 8.1.
9.2 ASSIGNMENT AND ENFORCEABILITY - This Agreement shall be binding upon and
enforceable by the parties and their respective successors and permitted
assigns. No party may assign any of its rights or benefits under this Agreement
or delegate any of its duties or obligations under this Agreement to any person
except as expressly permitted hereby. BT and HKB may assign all or any part of
their rights under this Agreement to any assignee to which their respective
Assigned Interests are transferred in accordance with Section 11.8 of the
Amended and Restated Credit Agreement.
9.3 TIME OF THE ESSENCE - Time shall be of the essence of this Agreement.
9.4 AMENDMENTS AND WAIVER - This Agreement may be amended by instrument in
writing executed by FUR, BT and HKB and not in any other manner. The waiver of
any covenant or agreement made in favour of any party may be effected only by
instrument in writing executed by such party and no failure to exercise any
right or remedy or any delay in doing so, and no partial exercise of any such
right or remedy shall be construed as a waiver thereof, and no waiver in any one
instance shall be construed as a waiver in any subsequent or other instance
unless the instrument in writing effecting the same expressly so provides.
9.5 COUNTERPARTS - This Agreement may be executed in counterparts, each of which
shall constitute an original and all of which taken together shall constitute
one and the same instrument. Delivery of this Agreement may be effected by
facsimile transmission.
<PAGE> 19
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9.6 TERMINATION - This Agreement shall terminate only:
(a) by agreement in writing made by FUR, BT and HKB;
(b) automatically at such time (but without prejudice to the rights of the
parties relating to any defaults hereunder existing at such time) as all of
the Assigned Interest at any time held by BT and HKB shall have been
purchased by FUR pursuant to the exercise of the Put Right and the Purchase
Price in respect of all such Assigned Interest shall have been paid and
satisfied in full as provided for herein including, without limitation, in
Section 4.2 hereof; or
(c) on prepayment or payment in full of the Aggregate Accommodations
Outstanding.
9.7 RESTRICTION ON LIABILITY - Notwithstanding anything herein to the contrary
contained, this Agreement is made and executed on behalf of FUR, a business
trust organized under the laws of the State of Ohio, by its officers on behalf
of the trustees thereof, and none of the trustees or any additional or successor
trustee hereafter appointed, or any beneficiary, officer, employee or agent of
FUR shall have any liability in his personal or individual capacity but instead,
all parties shall look solely to the property and assets of FUR (including,
without limitation, those assets subject to the Security Trust Indenture) for
satisfaction of claims of any nature arising under or in connection with this
Agreement.
<PAGE> 20
-20-
IN WITNESS WHEREOF this Agreement has been executed by the parties.
BT BANK OF CANADA
PER: /S/ Authorized Signer
-------------------------
HONGKONG BANK OF CANADA
PER: /S/ Authorized Signer
-------------------------
FIRST UNION REAL ESTATE EQUITY AND
MORTGAGE INVESTMENTS
PER: /S/ Authorized Signer
-------------------------
PER: /S/ Authorized Signer
-------------------------
<PAGE> 21
SCHEDULE "A"
FORM OF ASSIGNMENT AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
Assignment and Assumption Agreement dated as of ______________, 19__ made
among ___________, (the "Assignor"), a Lender under the Amended and Restated
Credit Agreement referred to and defined hereafter, Imperial Parking Limited
(the "Borrower") and First Union Real Estate Equity and Mortgage Investments
(the "Assignee"), a business trust existing under the laws of the State of Ohio.
WHEREAS pursuant to an amended and restated credit agreement dated as of
November 13, 1996 (as amended, supplemented and restated from time to time, the
"Amended and Restated Credit Agreement") among the Borrower, BT Bank of Canada
("BT"), as agent (the "Agent") and the financial institutions specified therein
(the "Lenders"), the Lenders have provided certain credit facilities to the
Borrower;
WHEREAS pursuant to an ancillary agreement dated as of April 17, 1997 (as
amended, supplemented and restated from time to time, the "Ancillary
Agreement"), among BT, HongKong Bank of Canada ("HKB") and the Assignee, the
parties agreed that BT and HKB have the right to require the Assignee to
purchase the Assigned Interest of each of BT and HKB under certain terms and
conditions as set out therein;
AND WHEREAS the Assignor has agreed to assign and sell to the Assignee its
right, title and interest in the Assigned Interest and the Assignee has agreed
to accept and purchase the Assigned Interest and to assume all liabilities and
obligations of the Assignor in respect of the Assigned Interest;
NOW THEREFORE, in consideration of the foregoing premises, the sum of
$10.00 in lawful money of Canada now paid by the Assignor to the Assignee and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. Terms defined in the Ancillary Agreement which
appear herein without definition shall have the meanings ascribed thereto in the
Ancillary Agreement.
SECTION 2. CONVEYANCE OF INTEREST IN ASSIGNED INTEREST. The Assignor hereby
assigns, sells, conveys and transfers to the Assignee its Assigned Interest.
<PAGE> 22
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SECTION 3. ASSUMPTION. The Assignee hereby accepts and assumes the Assigned
Interest by payment to the Assignor of $_______ and the Assignee hereby agrees
to be bound by the terms and conditions of the Amended and Restated Credit
Agreement as if it was the Assignor and acknowledges and expressly assumes in
the name, place and stead of the Assignor all obligations and liabilities
attaching to the Assigned Interest and agrees to perform the terms, conditions
and agreements on its part to be performed as Assignor in respect thereof under
the Amended and Restated Credit Agreement.
SECTION 4. RELEASE BY THE BORROWER. The Borrower hereby acknowledges the
release of the Assignor from all obligations and liabilities attaching to the
Assigned Interest and acknowledges the assumption of all such liabilities and
obligations by the Assignee.
SECTION 5. RECOGNITION AS LENDER. The parties hereto acknowledge that the
Assignee is, by virtue of compliance with the provisions of Section 11.8 of the
Amended and Restated Credit Agreement, as of and from the date hereof, a Lender
under and as defined in the Amended and Restated Credit Agreement.
SECTION 6. GOVERNING LAW. This assignment and assumption agreement shall be
governed by and construed in accordance with the laws of the Province of Ontario
and of Canada applicable therein and shall be treated in all respects as an
Ontario contract.
SECTION 7. ENUREMENT. This assignment and assumption agreement shall enure
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns.
SECTION 8. COUNTERPARTS. This assignment and assumption agreement may be
executed in counterparts, each of which shall be deemed an original and which,
taken together, shall constitute one and the same instrument.
<PAGE> 23
-3-
IN WITNESS WHEREOF the parties have executed this assignment and assumption
agreement under the hands of their proper officers duly authorized in that
behalf as of the date first above written.
[ASSIGNOR]
Per:
------------------------------------
Authorized Signing Officer
FIRST UNION REAL ESTATE EQUITY AND
MORTGAGE INVESTMENTS
Per:
------------------------------------
Authorized Signing Officer
IMPERIAL PARKING LIMITED
Per:
------------------------------------
Authorized Signing Officer
<PAGE> 1
Exhibit 10c
IMPARK INVESTMENTS INC.
AND
FIRST UNION REAL ESTATE
EQUITY AND MORTGAGE INVESTMENTS
----------------------------------------
SHARE PURCHASE AGREEMENT
----------------------------------------
February 18, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. Interpretation..................................................................................2
1.1 Defined Terms..........................................................................2
1.2 Currency..............................................................................10
1.3 Sections and Headings.................................................................10
1.4 Number and Gender.....................................................................11
1.5 Entire Agreement......................................................................11
1.6 Time of Essence.......................................................................11
1.7 Applicable Law........................................................................11
1.8 Severability..........................................................................11
1.9 Amendment and Waivers.................................................................11
1.10 Knowledge.............................................................................11
1.11 Best Efforts..........................................................................12
1.12 Documents Made Available for Review...................................................12
1.13 References to Contracts and Statutes..................................................12
1.14 Deposit...............................................................................12
1.15 Schedules.............................................................................12
2. Purchase and Sale of Purchased Shares..........................................................13
2.1 Purchase and Sale of Purchased Shares.................................................13
2.2 Purchase Price........................................................................13
2.3 Payment of Purchase Price.............................................................13
2.4 Working Capital Adjustment............................................................14
2.5 Amounts Held by Escrow Agent..........................................................16
3. Representations and Warranties of the Vendors..................................................16
3.1 Representations and Warranties Relating to the Vendors................................16
4. General Representations and Warranties of the Vendors..........................................17
4.1 Organization..........................................................................18
4.2 Authorization; No Violation...........................................................18
4.3 Authorized and Issued Capital of Holdco and the Company...............................18
4.4 Authorized and Issued Capital of Subsidiaries.........................................19
4.5 No Options, Etc.......................................................................19
4.6 Title to Property.....................................................................19
4.7 Accounts Receivable...................................................................19
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
4.8 Intellectual Property.................................................................19
4.9 Insurance.............................................................................20
4.10 Material Contracts....................................................................20
4.11 Compliance with Laws; Permits.........................................................21
4.12 Consents and Approvals................................................................22
4.13 Financial Statements..................................................................22
4.14 Corporate Records.....................................................................22
4.15 Absence of Changes....................................................................22
4.16 Taxes.................................................................................23
4.17 Litigation............................................................................24
4.18 Non-Arm's Length Transactions.........................................................25
4.19 Environmental.........................................................................25
4.20 Employee Plans........................................................................27
4.21 Union Contracts.......................................................................28
4.22 Employees.............................................................................29
4.23 Location of Real Property.............................................................29
4.24 Real Property.........................................................................29
4.25 No Expropriation......................................................................31
4.26 Leased Property.......................................................................31
4.27 Commissions...........................................................................31
4.28 GST Registration......................................................................31
4.29 Bank Accounts. ......................................................................31
4.30 Condition and Status of Assets........................................................32
4.31 Joint Venture Interest................................................................32
4.32 Holdco................................................................................32
5. Representations and Warranties of the Purchaser................................................32
5.1 Organization..........................................................................32
5.2 Authorization; No Violation...........................................................32
5.3 Consents and Approvals................................................................33
5.4 Sources of Funds......................................................................33
6. Survival of Representations and Warranties.....................................................33
6.1 Survival of Representations and Warranties of the Vendors.............................33
6.2 Survival of Representations and Warranties of the Purchaser...........................34
7. Covenants......................................................................................34
7.1 Access................................................................................34
7.2 Curative Efforts......................................................................35
7.3 Delivery of Books and Records.........................................................35
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
7.4 Conduct Prior to Closing..............................................................36
7.5 Covenants of the Purchaser Prior to Closing...........................................37
7.6 Regulatory Filings....................................................................38
7.9 Purchaser's Knowledge.................................................................40
7.10 Tail Directors' and Officers' Insurance...............................................40
8. Conditions of Closing in Favour of the Purchaser...............................................40
8.1 Representations and Warranties........................................................40
8.2 Covenants.............................................................................41
8.3 Regulatory Consents...................................................................41
8.4 Other Consents. The .................................................................41
8.5 Material Adverse Change...............................................................41
8.6 No Action or Proceeding...............................................................41
8.7 Shareholders' Agreement, Etc..........................................................41
8.8 Options...............................................................................41
8.9 Legal Matters.........................................................................41
8.10 Legal Opinion.........................................................................42
8.11 Resignations..........................................................................42
8.12 Section 116 Certificates..............................................................42
8.13 Non-Performance.......................................................................42
9. Conditions of Closing in Favour of the Vendors.................................................42
9.1 Representations and Warranties........................................................42
9.2 Covenants.............................................................................43
9.3 Regulatory Consents...................................................................43
9.4 No Action or Proceeding...............................................................43
9.5 Legal Matters.........................................................................43
9.6 Legal Opinion.........................................................................43
9.7 Non-Performance.......................................................................43
10. Closing Arrangements...........................................................................44
10.1 Place of Closing......................................................................44
10.2 Implementation........................................................................44
10.3 Further Assurances....................................................................44
10.4 Early Termination.....................................................................44
10.5 Non-Competition Agreement.............................................................45
11. Indemnification................................................................................46
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
11.1 Indemnification by the Vendors........................................................46
11.2 Indemnification by the Purchaser......................................................47
11.3 Notice of Claim.......................................................................48
11.4 Direct Claims.........................................................................49
11.5 Third Party Claims....................................................................49
11.6 Settlement of Third Party Claims......................................................50
11.7 Co-operation..........................................................................50
11.8 Limitations...........................................................................50
11.9 Indemnity Payment Adjustments.........................................................50
11.11 Exclusivity...........................................................................51
11.12 Mitigation............................................................................51
11.13 Liquidated Damages....................................................................51
12. Miscellaneous..................................................................................52
12.1 Authority of Investco.................................................................52
12.2 Management............................................................................52
12.3 Notices...............................................................................53
12.4 Transaction Costs.....................................................................54
12.5 Consultation..........................................................................54
12.6 Disclosure............................................................................55
12.7 Assignment and Enforceability.........................................................55
12.8 Onex Corporation......................................................................55
12.9 Management Vendors....................................................................55
12.10 Construction..........................................................................56
12.11 Counterparts..........................................................................56
12.12 Restriction on Liability..............................................................57
</TABLE>
<PAGE> 6
SHARE PURCHASE AGREEMENT
------------------------
THIS AGREEMENT made the 18th day of February, 1997,
B E T W E E N:
IMPARK INVESTMENTS INC.,
a corporation existing under the laws of the
Province of Ontario,
(hereinafter referred to as "Investco"),
OF THE FIRST PART,
- and -
THE PERSONS LISTED ON SCHEDULE 1 HERETO WHO
HEREAFTER BECOME VENDORS HEREUNDER,
OF THE SECOND PART,
- and -
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE
INVESTMENTS, a business trust existing under the
laws of the State of Ohio,
(hereinafter referred to as the "Purchaser"),
OF THE THIRD PART.
THIS AGREEMENT WITNESSES THAT in consideration of the
respective covenants, agreements, representations, warranties and indemnities of
the parties hereinafter contained and for other good and valuable consideration
(the receipt and sufficiency of which are hereby acknowledged by each party),
the parties hereby agree as follows:
<PAGE> 7
-2-
1. Interpretation
--------------
1.1 DEFINED TERMS. For the purposes of this Agreement, unless the
context otherwise requires, the following terms shall have the respective
meanings set out below and grammatical variations of such terms shall have
corresponding meanings:
(1) "ACT" means the Business Corporations Act (Ontario), as in effect
on the date hereof;
(2) "AFFILIATE" has the meaning attributed to that term in the Act;
(3) "ASSOCIATE" has the meaning attributed to that term in the Act;
(4) "AUDITED FINANCIAL STATEMENTS" means the audited consolidated
financial statements of Holdco as at and for the nine month period
ended December 31, 1996, including the notes thereto and the reports of
Holdco's auditors thereon, a copy of which is annexed hereto as
Schedule 1.1(e);
(5) "BUSINESS" means the businesses carried on, directly or indirectly,
by Holdco, the Company and its Subsidiaries consisting of the operation
of parking facilities on the Real Properties or under management
contracts and/or leases, valet parking, providing services ancillary to
the operation of parking facilities such as maintenance, ticketing,
security, collection and consulting, the distribution and manufacture
of parking lot and parking garage equipment and the ownership of real
property for purposes relating to the parking business;
(6) "BUSINESS DAY" means any day other than a Saturday or a Sunday on
which banks generally are open for business in Toronto, Ontario;
(7) "CLAIM" has the meaning set out in Section 11.3;
(8) "CLOSING" means the completion of the transactions contemplated by
Section 2;
(9) "CLOSING DATE" means the date on which all the conditions set out
in Sections 8 and 9 are satisfied or waived in writing by the Vendors
or the Purchaser, as the case may be, but in any event not later than
April 2, 1997;
(10) "CLOSING DEBT" means the aggregate indebtedness, as at the close
of business on the earlier of March 31, 1997 and the day immediately
preceding the Closing Date, of Holdco, the Company and the
Subsidiaries, on a consolidated basis, to the creditors identified in
Schedule 1.1(j), including the current portion thereof and all accrued
and unpaid interest on the principal amount thereof, less the amount
(up to
<PAGE> 8
-3-
a maximum of the sum of "A" and "B", where "A" is $1,000,000 and "B" is
the aggregate amount received by Holdco in respect of the subscription
price for the common shares to be issued to Investco or the Management
Vendors at or prior to the Time of Closing) of cash balances and short
term deposits or depositary instruments held by Holdco, the Company or
the Subsidiaries with Canadian chartered banks or other financial
institutions on the Closing Date;
(11) "CLOSING DEBT CERTIFICATE" means a certificate of the Chief
Financial Officer of the Company as to the amount of the Closing Debt
in the form attached hereto as Schedule 1.1(l) to be delivered at the
Time of Closing;
(12) "CODE" means the United States Internal Revenue Code of 1986, as
amended;
(13) "COMPANY" means Imperial Parking Limited;
(14) "CONTRACT" means any agreement, indenture, contract, lease, deed
of trust, licence (excluding a Permit), option or instrument;
(15) "DIRECT CLAIM" has the meaning set out in Section 11.3;
(16) "EMPLOYEE PLANS" means all bonus, deferred compensation, incentive
compensation, share purchase, share appreciation and share option,
severance or termination pay, hospitalization or other medical
benefits, life or other insurance, dental, disability, salary
continuation, vacation, supplemental unemployment benefits,
profit-sharing, mortgage assistance, employee loan, employee
assistance, pension, retirement or supplemental retirement plan or
agreement (including any defined benefit or defined contribution
pension plan and any group registered retirement savings plan), and
each other employee benefit plan or agreement (whether oral or written,
formal or informal, funded or unfunded, registered or unregistered)
sponsored, maintained or contributed to or required to be contributed
to by Holdco, the Company or any of the Subsidiaries for the benefit of
any of the present or former employees, officers or directors of
Holdco, the Company, any of the Subsidiaries or any of their respective
ERISA Affiliates in such capacities whether or not insured and whether
or not subject to any applicable law, and includes an employee benefit
plan as defined in section 3(3) of ERISA except that the term "Employee
Plans" shall not include any statutory plans with which Holdco, the
Company or any Subsidiary is required to comply, including the
Canada/Quebec Pension Plan or plans administered pursuant to applicable
Employment Legislation;
(17) "EMPLOYMENT LEGISLATION" means, collectively, the Canada Labour
Code, the Labour Relations Act (Ontario), the Canada Human Rights Act,
the Employment
<PAGE> 9
-4-
Standards Act (Ontario), the Workers' Compensation Act (Ontario), the
Pay Equity Act (Ontario), the Pension Benefits Act (Ontario), the Human
Rights Code (Ontario), the Occupational Health and Safety Act
(Ontario), the Employment Equity Act (Canada), the Pension Benefits
Standards Act (Canada), the Pension Benefits Standards Act (British
Columbia), the Workers= Compensation Act (British Columbia), the
Workplace Act (British Columbia), the Unemployment Insurance Act
(Canada) and the respective regulations and orders promulgated
thereunder and any similar federal, provincial, state or other
legislation applicable in any province of Canada or in any other
jurisdiction in which the Business is conducted;
(18) "ENCUMBRANCE" means any encumbrance, lien, charge, hypothec,
pledge, mortgage, title retention agreement, security interest of any
nature, reservation, easement, right of occupation or usage, option,
pre-emptive right or privilege;
(19) "ENVIRONMENTAL AUTHORITIES" means governmental or regulatory
authorities having jurisdiction over Holdco, the Company, the
Subsidiaries or their assets under any Environmental Laws, including
any department, commission, bureau, board, administrative agency or
body of any of the foregoing and including, without limitation, the
British Columbia Ministry of Environment, Lands and Parks (and the
ministry, government department or agency having similar
responsibilities in any other jurisdiction in which the Business is
conducted);
(20) "ENVIRONMENTAL LAWS" means all applicable federal, provincial,
state, municipal and local treaties, conventions, laws, statutes,
by-laws, regulations and all policies, guidelines, standards, orders,
directives, decisions and the like rendered or promulgated by any
ministry, department or administrative or regulatory agency to the
extent relating to the protection or preservation of the environment
(or any part thereof) including the treatment, storage, disposal or
discharge Hazardous Substances in force as at the date hereof,
including the Resource Conservation and Recovery Act (U.S.A.), the
Comprehensive Environmental Response Compensation and Liability Act
(U.S.A.), any so-called "Superfund" or "Superlien" law and the Toxic
Substances Control Act (U.S.A.);
(21) "ENVIRONMENTAL PERMITS" means all Permits required under
Environmental Laws;
(22) "ERISA" means the Employee Retirement Income Security Act of 1974;
(23) "ERISA AFFILIATE" means, with respect to any person, any
corporation, trade or business which, together with such person, is a
member of a controlled group of corporations or a group of trades or
businesses under common control within the meaning of sections 414(b)
or (c) of the Code.
<PAGE> 10
-5-
(24) "ESCROW AGENT" means Kelly Affleck Greene or their successor under
the Escrow Agreement;
(25) "ESCROW AGREEMENT" means the agreement dated the date of this
Agreement between Investco, the Purchaser and the Escrow Agent;
(26) "ESCROW AMOUNT" means the amount of money delivered by or on
behalf of the Escrow Agent at the Time of Closing to the Vendors
representing the principal amount deposited by the Purchaser with the
Escrow Agent pursuant to Section 1.14, together with all interest or
other income earned thereon to but excluding the date on which such
amount is released to the Vendors in accordance with the terms of the
Escrow Agreement upon the closing of the purchase and sale of the
Purchased Shares;
(27) "ETA" means the Excise Tax Act (Canada), as amended from time to
time;
(28) "FORECAST WORKING CAPITAL STATEMENT" means the document attached
hereto as Schedule 1.1(bb);
(29) "GAAP" means generally accepted accounting principles which have
been established in Canada, including those approved from time to time
by the Canadian Institute of Chartered Accountants or any successor
body thereto; and, for the purposes hereof in respect of Holdco, the
Company and the Subsidiaries, it is agreed that all amounts shall be
determined on a basis consistent with that used in the preparation of
the Audited Financial Statements (except for changes made with the
prior written consent of the parties hereto and which are also
certified by the auditors of Holdco to be consistent with generally
accepted accounting principles as recommended in the Handbook of the
Canadian Institute of Chartered Accountants);
(30) "GROSS MARGIN CONTRIBUTION" means, with respect to any Operating
Agreement, the gross revenues attributable to such Operating Agreement
less direct operating expenses (including Taxes) incurred in the
performance of the obligations of the Company or the relevant
Subsidiary thereunder or, in the case of management contracts,
management fees;
(31) "GST" means any Taxes payable under Part IX of the ETA or under
any provincial legislation similar to or integrated with Part IX of the
ETA;
(32) "HAZARDOUS SUBSTANCES" means any waste, hazardous substance,
contaminant, toxic substance, special waste, dangerous good,
deleterious substance or pollutant regulated or controlled pursuant to
any Environmental Law;
<PAGE> 11
-6-
(33) "HOLDCO" means Imperial Holdings No. 2 Inc.;
(34) "INCLUDING" and "INCLUDES" shall be deemed to be followed by the
statement "without limitation" and neither of such terms shall be
construed to limit any word or statement which it follows to the
specific or similar items or matters immediately following it;
(35) "INDEMNIFIED PARTY" has the meaning set out in Section 11.3;
(36) "INSTRUMENT OF ADHESION" has the meaning set out in Section 12.9;
(37) "INTELLECTUAL PROPERTY" means, collectively, all trade marks,
trade names, business names, patents, service marks, brand marks,
copyrights, industrial designs, trade secrets and other industrial or
intellectual property owned or used under licence or Contract by
Holdco, the Company or the Subsidiaries and all applications therefor
and all goodwill of Holdco, the Company or the Subsidiaries connected
therewith, including all licences or similar rights used by or granted
to Holdco, the Company or any of the Subsidiaries in connection with
the Business as now carried on;
(38) "LEASE" means any lease, agreement to lease, licence or similar
agreement in respect of any office premises to which the Company or any
of the Subsidiaries is a party (excluding ticketing offices leased
pursuant to any lease that constitutes an Operating Agreement);
(39) "LEASED PROPERTY" means all premises leased by the Company or any
of the Subsidiaries pursuant to a Lease;
(40) "LOSSES" means, in respect of any matter, all claims, demands,
proceedings, losses, damages (other than special, indirect or
consequential damages), liabilities, costs and expenses arising
directly or indirectly as a consequence of such matter;
(41) "MAJOR ACCOUNTING FIRM" means any of Price Waterhouse, Ernst &
Young, Coopers & Lybrand, Arthur Andersen or Deloitte & Touche;
(42) "MANAGEMENT VENDORS" means all persons who are directors or
employees of Holdco, the Company or the Subsidiaries and who hereafter
become holders of shares in the capital of Holdco in accordance and
compliance with Section 12.9 on or before February 21, 1996;
<PAGE> 12
-7-
(43) "MATERIAL ADVERSE EFFECT" means a material adverse effect on any
of the Business, operations or financial condition of the Company and
the Subsidiaries taken as a whole;
(44) "MATERIAL CONTRACT" has the meaning given to such term in Section
4.10;
(45) "NET WORKING CAPITAL DEFICIENCY" means the amount reflected on the
Working Capital Statement as the excess of current liabilities,
excluding the current portion of long term debt over current assets (as
such terms are used therein, which shall be consistent with the manner
in which they are used in the Audited Financial Statements);
(46) "ONEX ASSOCIATES" means each of the persons listed in paragraph 1
of Schedule 3.1(b) and in Schedule 3.2;
(47) "OPERATING AGREEMENTS" means all parking management agreements and
licences and leases of real property entered into by the Company or any
of the Subsidiaries for the purpose of providing parking services to
the public;
(48) "PENSION PLAN" means an Employee Plan that is a "Registered
Pension Plan" as that term is defined in subsection 248(1) of the Tax
Act or an Employee Plan which is an employee pension benefit plan
within the meaning of section 3(2) of ERISA;
(49) "PERMIT" means any licence, permit, approval, consent,
certificate, registration or authorization issued by any governmental
or regulatory authority;
(50) "PERMITTED ENCUMBRANCES" means, collectively:
(1) Encumbrances for Taxes, assessments and governmental charges due
and being contested in good faith and diligently by appropriate
proceedings (and for the payment of which adequate provision has been
made and provided that such contestation effectively postpones
enforcement of any such Encumbrances);
(2) servitudes, easements, restrictions, rights-of-way and other
similar rights in real property or any interest therein, provided the
same are not of such nature as to materially detract from the value of
the real property or materially impair its use in the operation of the
Business as now carried on and do not have a Material Adverse Effect;
(3) Encumbrances for Taxes or public utility charges not due and
payable or delinquent;
<PAGE> 13
-8-
(4) undetermined or inchoate Encumbrances or charges in respect of real
property or any interest therein that are incidental to current
construction or current operations and statutory Encumbrances in
respect of real property or any interest therein claimed or held by any
governmental authority which have not at the time been filed or
registered against the title to the property or interest or served upon
Holdco, the Company or any of the Subsidiaries pursuant to law and
which relate to obligations not due and payable or delinquent;
(5) assignments of insurance provided to landlords (or their
mortgagees) pursuant to the terms of any Lease and liens or rights
reserved in any Lease or available to landlords at law for rent or for
compliance with the terms of such Lease;
(6) security given in the ordinary course of the Business to any public
utility, municipality or government or to any statutory or public
authority in connection with the provision of power, water or similar
services consumed in the operation of the Business (excluding, for
greater certainty, security for borrowed money);
(7) the reservations in any original grants from the Crown of any real
property or interest therein;
(8) purchase money security interests and other vendor security for the
unpaid purchase price of goods acquired in the ordinary course of the
Business;
(9) carriers', warehousemen's, mechanics', materialmens', repairmens',
or other like liens arising in the ordinary course of the Business in
respect of liabilities not yet due or that are due but are being
contested in good faith, if adequate provision has been made therefor;
(10) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of the Business;
(11) zoning and building by-laws and ordinances, municipal by-laws
(including site specific by-laws) and regulations and restrictive
covenants which will not materially and adversely affect the ability to
use the real property in the operation of the Business as now used;
(12) title defects or irregularities in respect of any real property
that is of a minor nature and in the aggregate does not materially
adversely affect the value of any such
<PAGE> 14
-9-
real property or materially impair its use in the operation of the
Business as now used;
(13) subdivision, site plan control, development or similar agreements
entered into from time to time in respect of any real property and
which have been complied with to date;
(14) statutory exceptions to title which do not individually or in the
aggregate materially detract from the value of the real property or
materially impair its use in the operation of the Business; and
(15) the Encumbrances identified as Permitted Encumbrances on Schedule
1.1(xx);
(51) "PERSON" shall be broadly interpreted and includes an individual,
a corporation, a limited liability company, a partnership, a trust, a
joint venture, an association, an unincorporated organization, the
government of a country or any subdivision thereof, any agency or
department of any such government, any regulatory agency or any other
juridical entity and the heirs, executors, administrators or legal
representatives of an individual;
(52) "PRO RATA SHARE" means, at any time in respect of any Vendor, the
percentage obtained by multiplying by 100 the quotient obtained by
dividing the number of common shares of Holdco held by such Vendor by
the total number of common shares of Holdco issued and outstanding at
such time; provided that for the purpose of determining, at any time,
the Pro Rata Share of Investco, Investco shall be deemed to hold all
common shares of Holdco other than those held by the Management
Vendors, and further provided that at and after the Time of Closing the
Pro Rata Share of any Vendor shall be that Vendor's Pro Rata Share as
at the Time of Closing, determined as aforesaid;
(53) "PURCHASE PRICE" has the meaning ascribed thereto in Section 2.2;
(54) "PURCHASED SHARES" means, at any time, all the issued and
outstanding shares in the capital of Holdco;
(55) "REAL PROPERTY" means all real property owned by the Company or
any of the Subsidiaries;
(56) "SUBSIDIARIES" means, collectively, the corporations and companies
identified as Subsidiaries in Schedule 4.4;
<PAGE> 15
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(57) "TAX" or "TAXES" means all taxes, charges, fees, levies, imposts
and other assessments, including all income, sales, use, goods and
services, value added, capital, capital gains, alternative, net worth,
transfer, profits, withholding, payroll, employer health, excise,
franchise, real property and personal property taxes, and any other
taxes, customs duties, fees, assessments, royalties, duties, fees,
deductions, compulsory loans or similar charges, including Canada
Pension Plan and provincial pension plan contributions, employment and
unemployment insurance payments, health insurance premiums and workers
compensation premiums, together with any instalments with respect
thereto, and any interest, fines and penalties, imposed by any
governmental authority (including federal, state, provincial, municipal
and foreign governmental authorities (or any agency or political
subdivision thereof)), and whether disputed or not;
(58) "TAX ACT" means the Income Tax Act (Canada), as amended from time
to time;
(59) "THIRD PARTY" has the meaning set out in Section 11.3;
(60) "THIRD PARTY CLAIM" has the meaning set out in Section 11.3;
(61) "TIME OF CLOSING" means 9:30 a.m. (Toronto time) on the Closing
Date, or such other time on the Closing Date as the Vendors and the
Purchaser may mutually determine;
(62) "VENDORS" means, collectively, the Management Vendors and Investco
(or any Affiliate of Investco to which the rights, benefits,
liabilities and obligations of Investco hereunder are assigned pursuant
to Section 12.7); and
(63) "WORKING CAPITAL STATEMENT" has the meaning given to such term in
Section 2.4(a).
1.2 CURRENCY. Unless otherwise indicated, all dollar amounts referred
to in this Agreement are expressed in Canadian funds.
1.3 SECTIONS AND HEADINGS. The division of this Agreement into Sections
and the insertion of headings are for reference purposes only and shall not
affect the interpretation of this Agreement. Unless otherwise indicated, any
reference in this Agreement to a Section or Schedule refers to the specified
Section of or Schedule to this Agreement.
1.4 NUMBER AND GENDER. In this Agreement, words importing the singular
number only shall include the plural and vice versa and words importing gender
shall include all genders.
<PAGE> 16
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1.5 ENTIRE AGREEMENT. This Agreement together with the documents
contemplated hereby to be executed by the parties hereto constitute the entire
agreement between the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings, negotiations and discussions,
whether written or oral except for the confidentiality agreement dated February
7, 1997 between Investco, Impark Holdings Inc., Holdco, the Company, the
Purchaser and First Union Management, Inc., and a Confidentiality and Standstill
Agreement dated January 30, 1997 between the Company and the Purchaser. Investco
agrees to be bound by such Confidentiality and Standstill Agreement on the same
basis as the Company. There are no conditions, covenants, agreements,
representations, warranties or other provisions, express or implied, collateral,
statutory or otherwise, relating to the subject matter hereof except as provided
herein or in any other agreement referred to in this Section 1.5. For greater
certainty, upon the execution and delivery of this Agreement by the Purchaser
and the Vendors, the letter of intent dated February 5, 1997 between the
Purchaser and Onex Corporation shall be terminated and of no further force or
effect.
1.6 TIME OF ESSENCE. Time shall be of the essence of this Agreement.
1.7 APPLICABLE LAW. This Agreement shall be construed, interpreted and
enforced in accordance with, and the respective rights and obligations of the
parties shall be governed by, the laws of the Province of Ontario and the
federal laws of Canada applicable in such province, and each party hereby
irrevocably and unconditionally submits to the non-exclusive jurisdiction of the
courts of such province and all courts competent to hear appeals therefrom.
1.8 SEVERABILITY. If any provision of this Agreement is determined by a
court of competent jurisdiction to be invalid, illegal or unenforceable in any
respect, such determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct.
1.9 AMENDMENT AND WAIVERS. No amendment or waiver of any provision of
this Agreement shall be binding on any party unless consented to in writing by
such party. No waiver of any provision of this Agreement shall constitute a
waiver of any other provision, nor shall any waiver constitute a continuing
waiver unless otherwise specified in such waiver.
1.10 KNOWLEDGE. Where any representation and warranty is expressed to
be given by the Vendors hereunder to their knowledge or is otherwise expressed
to be limited in scope to matters known to the Vendors, the knowledge of the
Vendors shall be comprised solely of those matters actually known to the Chief
Executive Officer, the President and the Chief Financial Officer of the Company.
The Vendors hereby represent and warrant that each such individual has made
appropriate enquiries of such other officers of Holdco, the Company and the
Subsidiaries who would reasonably be expected to have responsibility for or
knowledge of the matters relevant to such representation and warranty.
<PAGE> 17
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1.11 BEST EFFORTS. For all purposes of this Agreement, an obligation on
the part of any party to use its best efforts to obtain any waiver, consent,
approval, permit, licence or other document or to do any other act or thing
shall not require such party to make any payment to any person for the purpose
of procuring the same, other than payments for amounts due and payable to such
person, payments for incidental expenses incurred by such person and payments
required by any applicable law or regulation.
1.12 DOCUMENTS MADE AVAILABLE FOR REVIEW. For the purposes of the
representations and warranties set out in Sections 3 and 4, a document shall be
considered to have been made available by the Vendors to the Purchaser if the
original or a copy of such document was included in the materials made available
for review by representatives of the Purchaser.
1.13 REFERENCES TO CONTRACTS AND STATUTES. All references contained in
this Agreement to any Contract or statute shall be taken, unless otherwise
indicated herein, to be references to such Contract or statute, as the same may
be amended, supplemented or replaced from time to time.
1.14 DEPOSIT. Immediately upon the execution and delivery of this
Agreement by the Vendors and the Purchaser, the Purchaser shall deliver to the
Escrow Agent a certified cheque or bank draft in, or shall pay to the Escrow
Agent by wire transfer of immediately available funds (to the account specified
by the Escrow Agent), the amount of $2,000,000, which amount shall be held by
the Escrow Agent pursuant to and in accordance with the terms of the Escrow
Agreement.
1.15 SCHEDULES. The following Schedules are attached to and form part
of this Agreement:
<TABLE>
<S> <C>
Schedule 1 - Vendors
Schedule 1.1(e) - Audited Financial Statements
Schedule 1.1(j) - Closing Debt
Schedule 1.1(l) - Closing Debt Certificate
Schedule 1.1(bb) - Forecast Working Capital Statement
Schedule 1.1(xx) - Additional Permitted Encumbrances
Schedule 3.1(a) - Ownership of Purchased Shares at Closing
Schedule 3.1(b) - Options on Holdco Shares
Schedule 3.2 - Current Ownership of Purchased Shares
Schedule 4.2 - Violations
Schedule 4.4 - Subsidiaries
Schedule 4.5 - Options
Schedule 4.8 - Intellectual Property
Schedule 4.9 - Insurance Policies
Schedule 4.10 - Material Contracts
Schedule 4.12(a) - Regulatory Consents
Schedule 4.12(b) - Contractual Consents
</TABLE>
<PAGE> 18
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<TABLE>
<S> <C>
Schedule 4.16 - Tax Matters
Schedule 4.17 - Litigation
Schedule 4.18 - Related Party Transactions
Schedule 4.19 - Environmental Matters
Schedule 4.20 - Employee Plans
Schedule 4.21 - Collective Agreements
Schedule 4.22(a) - Employees
Schedule 4.22(b) - Employment Agreements
Schedule 4.23 - Real Property
Schedule 4.24 - Required Repairs and Maintenance
Schedule 4.26 - Leased Real Property
Schedule 4.28 - GST Registrations
Schedule 4.29 - Bank Account
Schedule 4.31 - Joint Venture Interests
Schedule 10.6 - Form of Acknowledgement
Schedule 10.7 - Form of CIBC Purchase Agreement
Schedule 12.9 - Instrument of Adhesion
</TABLE>
2. Purchase And Sale Of Purchased Shares
-------------------------------------
2.1 PURCHASE AND SALE OF PURCHASED SHARES. At the Time of Closing, the
Vendors shall sell, assign and transfer to the Purchaser, and the Purchaser
shall purchase from the Vendors, the Purchased Shares then owned by the Vendors
as set out in Schedule 3.1(a).
2.2 PURCHASE PRICE. Subject to any other adjustment made in accordance
with the terms of this Agreement, the aggregate price payable for the Purchased
Shares (the "Purchase Price") shall be $105,000,000 less the amount of the
Closing Debt (as shown in the Closing Debt Certificate).
2.3 PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid and
satisfied at the Time of Closing by:
(1) the delivery by the Escrow Agent to or to the order of each Vendor
of a certified cheque or bank draft, in either case drawn on a Canadian
chartered bank in immediately available funds, payable to the order of
such Vendor in the amount of such Vendor's Pro Rata Share of the Escrow
Amount, and
(2) the delivery to or to the order of each Vendor by the Purchaser of
a certified cheque or bank draft, in either case drawn on a Canadian
chartered bank in immediately available funds, payable to the order of
such Vendor in the amount of such Vendor's Pro Rata Share of the
difference between the Purchase Price and the aggregate amount paid
under Section 2.3(a) or, in the case of Investco, by the wire
<PAGE> 19
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transfer of immediately available funds in the amount of Investco's Pro
Rata Share of such difference to such account as may be specified by
Investco (subject, in the case of Vendors that are non-residents of
Canada within the meaning of the Tax Act and who have not delivered to
the Purchaser a certificate meeting the requirements of Section 8.12,
to any withholdings required to be made under the Tax Act),
against delivery to the Purchaser of a certificate or certificates representing
the Purchased Shares duly endorsed for transfer to the Purchaser or as it may
direct.
2.4 WORKING CAPITAL ADJUSTMENT.
(1) The Vendors and the Purchaser agree to use all reasonable efforts
to cause the Chief Financial Officer of the Company to prepare and
deliver to the Purchaser and the Vendors, as soon as reasonably
practicable after March 31, 1997, a statement of the consolidated
working capital of the Company as at March 31, 1997 (the "Working
Capital Statement"). The Working Capital Statement shall be prepared
substantially in the form of the Forecast Working Capital Statement and
shall be prepared on a basis consistent with the basis on which the
Forecast Working Capital Statement was prepared (including that each
line item of the Working Capital Statement reflects the same ledger
accounts used to calculate the corresponding line item in the Forecast
Working Capital Statement, with no changes to accruals or reserves
other than in the normal course for Taxes relating to periods after
December 31, 1996 and with no inclusion of cash received by Holdco on
or prior to March 31, 1997 in respect of the subscription price for the
common shares to be issued to Investco or the Management Vendors).
(2) If the Net Working Capital Deficiency as reflected in the Working
Capital Statement prepared in accordance with Section 2.4(a), (i)
exceeds $8,989,000, each Vendor shall pay its Pro Rata Share of the
amount of such excess to the Purchaser or (ii) is less than $7,989,000,
the Purchaser shall pay to each Vendor that Vendor's Pro Rata Share of
the amount by which the Net Working Capital Deficiency is less than
$7,989,000. Any payment required by this Section 2.4 shall be deemed to
be an adjustment to the Purchase Price and shall be made promptly
following finalization of the Working Capital Statement (taking into
account the resolution of any objection made in accordance with the
following provisions of this Section 2.4) by delivery to the party
entitled thereto of a certified cheque or bank draft, drawn on a
Canadian chartered bank in immediately available funds, payable to such
party.
(3) The Purchaser and Investco shall have a period of 10 days following
the date of receipt of the Working Capital Statement to review and
raise any objection to the same. For the purposes of such review, the
Purchaser and Investco and their authorized representatives shall have
full access to the Chief Financial Officer of the
<PAGE> 20
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Company and all working papers, ledgers, schedules and other
documentation that were used or relied upon in connection with the
preparation of the Working Capital Statement. If no objection to the
Working Capital Statement is given by either such party within such
10-day period, the Working Capital Statement shall be deemed to have
been approved by each party as of the last day of such period.
(4) If either such party (the "Objecting Party") objects to any aspect
of the Working Capital Statement within such 10-day period by giving
notice to the Company and the other such party setting out in
reasonable detail the nature of such objection, the Objecting Party
shall have the right to engage within 14 days after the receipt of the
Working Capital Statement any Major Accounting Firm (the "First
Reviewing Firm") to review and prepare, within 30 days after the
commencement of their engagement, a written report on the basis of the
preparation of the Working Capital Statement and, if the First
Reviewing Firm determines that there has been an error in the original
preparation of the Working Capital Statement, the First Reviewing Firm
shall provide a revised Working Capital Statement on the basis set out
in Section 2.4(a) which, subject to the following sentence, shall be
binding on the parties hereto. If the Purchaser or Investco (whichever
is not the Objecting Party) objects to any aspect of the report or the
revised Working Capital Statement by the First Reviewing Firm, then
such party (the "Second Objecting Party") may engage, within 14 days
after the receipt of the report and revised Working Capital Statement
prepared by the First Reviewing Firm, any other Major Accounting Firm
(the "Second Reviewing Firm") to review the report and Working Capital
Statement prepared by the First Reviewing Firm. The Second Reviewing
Firm shall consult with the First Reviewing Firm with a view to
settling a final Working Capital Statement on the basis set out in
Section 2.4(a). If the First Reviewing Firm and the Second Reviewing
Firm cannot agree within 14 days after the engagement of the Second
Reviewing Firm on the basis upon which the Working Capital Statement
should be prepared, the matter shall be referred to a third Major
Accounting Firm (the "Arbitrating Firm") selected by mutual agreement
of the First Reviewing Firm and the Second Reviewing Firm (and failing
any such agreement within such 14-day period, either such party may
make application to the Ontario Court (General Division) on not less
than three days= notice to the other party for the appointment of the
Arbitrating Firm). The Arbitrating Firm shall prepare a Working Capital
Statement on the basis set out in Section 2.4(a) which shall be final,
conclusive and binding upon the parties hereto. For greater certainty,
no Vendor other than Investco shall be entitled to raise any objection
under Section 2.4(c) or this Section 2.4(d).
(5) For the purposes of this Section 2.4(e), the Vendors shall be
considered collectively as a single party, any objection to any Working
Capital Statement made by Investco shall be considered to have been
made on behalf of all the Vendors, and any amount required to be paid
under this Section 2.4(e) by the Vendors shall be paid
<PAGE> 21
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by the Vendors in their Pro Rata Shares. The Objecting Party shall pay
all fees and expenses of the First Reviewing Firm and the Second
Objecting Party shall pay all fees and expenses of the Second Reviewing
Firm. The Objecting Party and the Second Objecting Party shall each pay
50% of the fees and expenses of the Arbitrating Firm.
2.5 AMOUNTS HELD BY ESCROW AGENT. Unless (a) otherwise dealt with by
the Escrow Agent in accordance with section 3.2 of the Escrow Agreement, (b)
applied in partial satisfaction of the Purchase Price in accordance with Section
2.3(a) hereof, or (c) applied in accordance with Section 11.13 hereof, all
amounts held by the Escrow Agent upon the termination pursuant to Section 8.12
or 9.7 of the parties' obligations under this Agreement (other than under
Sections 12.2, 12.3, 12.4 or 12.5 hereof) shall forthwith be paid to (x) the
Vendors in their Pro Rata Shares if the proximate cause of the non-performance
or non-fulfilment of the condition giving rise to the right of termination under
Section 8.12 or 9.7 was any inaccuracy in any representation or warranty of the
Purchaser made herein or any breach by the Purchaser in the performance of any
of its obligations hereunder, and (y) the Purchaser in any other case.
3. Representations and Warranties of the Vendors
---------------------------------------------
3.1 REPRESENTATIONS AND WARRANTIES RELATING TO THE VENDORS. Each of the
Vendors represents and warrants to the Purchaser in respect of itself as follows
and acknowledges that the Purchaser is relying on such representations and
warranties in connection with the transactions contemplated hereby:
(1) at the Time of Closing, such Vendor will be the registered and
beneficial owner of that number of the Purchased Shares as is set out
opposite such Vendor's name in Schedule 3.1(a) and such Vendor will
have good and marketable title thereto, free and clear of all
Encumbrances;
(2) except as set out in Schedule 3.1(b), no person (other than the
Purchaser) has any Contract or option, or any right or privilege
(whether by law, pre-emptive or contractual) capable of becoming a
Contract or option, for the purchase or the acquisition of any of the
Purchased Shares which will be at the Time of Closing held by such
Vendor and no such Purchased Shares are or will be at any time after
the date hereof and prior to the Time of Closing, subject to any
shareholders' agreement, voting trust or similar arrangement except as
described in Schedule 3.1(b);
(3) the execution and delivery of this Agreement by such Vendor and the
consummation of the transactions contemplated hereby will not, with or
without the giving of notice, lapse of time or both, (i) breach or
violate any of the provisions of, constitute a default under, or
conflict with or cause the acceleration of any obligation of such
Vendor under: (A) any Contract to which such Vendor is a party or by
which
<PAGE> 22
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such Vendor is bound; (B) any judgment, decree, order or award of any
court, governmental body or arbitrator having jurisdiction over such
Vendor; (C) any Permit held by such Vendor; or (D) any applicable law,
statute, ordinance, regulation or rule; or (ii) create or impose any
Encumbrance on any of the Purchased Shares which are or will be at the
Time of Closing owned by such Vendor;
(4) this Agreement has been duly executed and delivered by such Vendor
and is a legal, valid and binding obligation of such Vendor,
enforceable against such Vendor by the Purchaser in accordance with its
terms; and
(5) except as set out in an Instrument of Adhesion delivered by any
Vendor, such Vendor is not a non-resident of Canada within the meaning
of the Tax Act.
3.2 ADDITIONAL REPRESENTATIONS BY INVESTCO. Investco hereby represents
and warrants to the Purchaser as follows and acknowledges that the Purchaser is
relying on such representations and warranties in connection with the
transactions contemplated hereby:
(1) the Purchased Shares outstanding on the date hereof are, as at the
date of this Agreement, held of record as set out in Schedule 3.2;
(2) Investco has the right to purchase, and to cause each of the Onex
Associates to sell to it, the Purchased Shares beneficially owned by
such Onex Associates;
(3) Investco is a corporation validly existing under the laws of the
Province of Ontario and has all necessary corporate power and authority
to enter into this Agreement and to perform its obligations hereunder;
and
(4) all necessary proceedings of the directors and shareholders of
Investco have been taken to enable Investco to enter into this
Agreement and to perform its obligations hereunder.
4. General Representations and Warranties of the Vendors
-----------------------------------------------------
The Vendors represent and warrant to the Purchaser as follows and
acknowledge that the Purchaser is relying on such representations and warranties
in connection with the transactions contemplated hereby:
4.1 ORGANIZATION. Holdco is a corporation duly incorporated and
organized and existing under the laws of the Province of Ontario and has all
necessary corporate power and authority to own or lease its property, to carry
on its business as now being conducted by it and to enter into and perform its
obligations under this Agreement. The Company is a company duly incorporated and
organized and validly existing and in good standing under the laws of the
Province
<PAGE> 23
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of British Columbia and has all necessary corporate power and authority to own
or lease its property and to carry on the Business as now being conducted by it.
Each of the Subsidiaries is a corporation duly incorporated or amalgamated and
organized and validly existing and in good standing under the laws of its
jurisdiction of incorporation as set out in Schedule 4.4 and has all necessary
corporate power and authority to own or lease its property and to carry on its
business as now being conducted by it. Each of Holdco, the Company and the
Subsidiaries is duly registered or qualified to carry on business in each
jurisdiction in which the nature of its business or the property and assets
owned or leased by it makes such registration or qualification necessary, except
to the extent that the absence of any such registration or qualification does
not have a Material Adverse Effect.
4.2 AUTHORIZATION; NO VIOLATION. Except as disclosed in Schedule 4.2,
the execution and delivery of this Agreement and the performance by the Vendors
of their covenants under this Agreement and the consummation of the transactions
contemplated hereby will not, with or without the giving of notice, lapse of
time or both, (i) breach or violate any of the provisions of, constitute a
default under, conflict with or cause the acceleration or modification of any
obligation or the termination or modification, in any material respect, of any
right of Holdco, the Company or any of the Subsidiaries (or entitle any other
person to accelerate or modify any such obligation or terminate or modify any
such right) under (A) the constating or organizational documents of Holdco, the
Company or any of the Subsidiaries or any resolution of the shareholders or
directors (or any committee thereof) of Holdco, the Company or any of the
Subsidiaries, (B) any Material Contract, (C) any judgment, decree, order or
award of any court, governmental body or arbitrator having jurisdiction over
Holdco, the Company or any of the Subsidiaries, (D) any material Permit held by
Holdco, the Company or any of the Subsidiaries or (E) any applicable law,
statute, ordinance, regulation or rule (except, as regards this subclause (E),
with respect to the occurrence of a taxation year-end consequent upon a change
of control of Holdco, the Company and the Subsidiaries); or (ii) create or
impose any Encumbrance on any material property or asset of Holdco, the Company
or any of the Subsidiaries.
4.3 AUTHORIZED AND ISSUED CAPITAL OF HOLDCO AND THE COMPANY. The
authorized capital of Holdco consists of and is limited to an unlimited number
of common shares and an unlimited number of preference shares, of which
33,580,000 (and no more) common shares and no preference shares are outstanding
as fully paid and non-assessable. The authorized capital of the Company consists
of and is limited to 150,000,000 shares divided into 100,000,000 common shares
and 50,000,000 Class A preferred shares, issuable in series, of which 11,970,269
common shares and no Class A preferred shares (and no more) are outstanding as
fully paid and non-assessable. All the issued and outstanding common shares of
the Company are owned beneficially by Holdco and held of record by Canadian
Imperial Bank of Commerce, as agent.
4.4 AUTHORIZED AND ISSUED CAPITAL OF SUBSIDIARIES. Neither Holdco nor
the Company owns, directly or indirectly, any equity securities or ownership
interests in any person, except as set out in Schedule 4.4 and except for
Holdco's ownership of common shares of the Company. The authorized and issued
capital of each of the Subsidiaries is as set out on Schedule 4.4. All issued
and
<PAGE> 24
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outstanding shares of the Subsidiaries have been duly issued and are validly
outstanding as fully paid and non-assessable. Except as set out in Schedule 4.4,
all of such issued and outstanding shares are owned by the Company, whether
directly or indirectly through one or more other Subsidiaries, as the beneficial
owner with a good and marketable title thereto, free and clear of all
Encumbrances.
4.5 NO OPTIONS, ETC. Except as disclosed in Schedule 4.5, no person has
any Contract or option, or any right or privilege (whether by law, pre-emptive
or contractual) capable of becoming a Contract or option, including convertible
securities, warrants or convertible obligations of any nature, for the purchase,
subscription, allotment or issuance of any unissued shares or other securities
of Holdco, the Company or any of the Subsidiaries.
4.6 TITLE TO PROPERTY. The property and assets reflected in the Audited
Financial Statements are owned beneficially by the Company and the Subsidiaries,
except such as may have been disposed of in the ordinary course of business
since the date of the Audited Financial Statements, free and clear of all
Encumbrances other than Permitted Encumbrances and other than Encumbrances
relating to Taxes (which are addressed in Section 4.16). The aggregate book
value of the property and assets of Holdco, the Company and the Subsidiaries
located in the United States is less than U.S. $15,000,000 and Holdco, the
Company and the Subsidiaries have not made aggregate sales in or into the United
States of U.S. $25,000,000 or more in the most recent calendar year.
4.7 ACCOUNTS RECEIVABLE. All material accounts receivable, accounts,
book debts and other debts due or accruing to Holdco, the Company and the
Subsidiaries are bona fide, have arisen in the normal course of the Business,
and are not subject to set-off or counterclaim.
4.8 INTELLECTUAL PROPERTY. Schedule 4.8 sets out a complete and
accurate list, in all material respects, of all Intellectual Property and
includes particulars that are complete and accurate in all material respects of
all registrations or applications for registration of any Intellectual Property
made by Holdco, the Company or any Subsidiary and of all licences of
Intellectual Property to which Holdco, the Company or any Subsidiary is a party.
The Company (or a Subsidiary) is the beneficial owner of the rights constituting
the Intellectual Property, free and clear of all Encumbrances. Except as set out
on Schedule 4.8, no person other than Holdco or a Subsidiary has been granted
any interest in or right to use all or any of the Company's or any Subsidiary's
rights to the Intellectual Property. The Vendors have no knowledge of any claim
of infringement or breach by Holdco, the Company or any of the Subsidiaries of
any industrial or intellectual property rights of any other person or of any
basis on which such a claim may reasonably be made. The Vendors have no
knowledge of any person that is now infringing the Intellectual Property.
4.9 INSURANCE. Schedule 4.9 sets out all insurance policies (specifying
the insurer, the amount of coverage, the type of insurance, the deductible, and,
if available, the policy number) maintained by Holdco, the Company and the
Subsidiaries on their respective properties and assets or personnel. The Vendors
have provided or made available to the Purchaser a true copy of each
<PAGE> 25
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insurance policy referred to in Schedule 4.9 or a certificate of insurance
relating thereto. Holdco, the Company and the Subsidiaries are in compliance in
all material respects with such insurance policies, have paid all premiums when
due and have not failed to give any notice or present any material claim under
any such insurance policy in a due and timely fashion.
4.10 MATERIAL CONTRACTS. Except for Contracts disclosed in Schedule
1.1(xx), 4.9, 4.10, 4.20, 4.21, 4.22(b), 4.26 and 4.31 (collectively, the
"Material Contracts"), none of Holdco, the Company or any of the Subsidiaries is
a party to or bound by any of the following:
(1) any Contract for the purchase of materials, supplies, inventory,
equipment or services (other than parking lot services) for aggregate
consideration of more than $250,000 in respect of any one Contract or
creating ongoing obligations to purchase for a term in excess of three
years;
(2) any Operating Agreement to which there was attributable in the 1996
calendar year a Gross Margin Contribution of $45,000 or more (as
reflected in the books and records of the Company, consistent with past
practice, and determined on a consistent basis as between Operating
Agreements);
(3) any trust indenture, mortgage, promissory note, loan agreement,
debenture, security agreement or other Contract relating to the
borrowing of money or any security therefor, or a leasing transaction
of the type required to be capitalized in accordance with GAAP;
(4) any Contract for capital expenditures, excluding Contracts for
capital expenditures not exceeding $250,000 in the case of any such
Contract or $1,000,000 in the aggregate in the case of all such
Contracts;
(5) any Contract for the sale of any assets material to the Company and
the Subsidiaries taken as a whole, other than inventory in the ordinary
course of business;
(6) any Contract pursuant to which Holdco, the Company or any of the
Subsidiaries is a lessor or lessee of any machinery, equipment or
assets having a value in excess of $250,000; or
(7) any agreement of guarantee, support, indemnification, assumption or
endorsement of, or any other similar commitment with respect to, the
obligations, liabilities (whether accrued, absolute, contingent or
otherwise) or indebtedness of any person other than Holdco, the Company
and the Subsidiaries.
Holdco, the Company and the Subsidiaries have complied in all material
respects with all of their respective material obligations and are entitled to
all material benefits under, and
<PAGE> 26
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are not in material default or breach and have not received notice of any
alleged material default or breach in respect of, any Material Contract. All
Material Contracts are, to the Vendors' knowledge, in good standing and in full
force and effect, and no event, condition, circumstance or occurrence exists
which would constitute a material default or breach under any Material Contract.
As soon as practicable following the date hereof, and in any event by February
17, 1997, the Vendors will have provided or made available to the Purchaser a
copy of each written Contract. Except as otherwise disclosed in this Agreement
(including the Schedules hereto), the execution and delivery of this Agreement,
and the performance by the Vendors of their obligations hereunder and the
consummation of the transactions contemplated hereby will not, with or without
the giving of notice, lapse of time or both, breach or violate any of the
provisions of, constitute a default under, conflict with or cause the
acceleration or modification of any obligation or the termination or
modification, in any material respect, of any right of Holdco, the Company or
any of the Subsidiaries (or entitle any other person to accelerate or modify any
such right) under, and Holdco, the Company and the Subsidiaries have complied
with their obligations and are entitled to all benefits under, and are not in
default or breach and have not received notice of any cancellation or
termination or intention to cancel or terminate (whether or not arising from a
default or breach) or alleged default or breach in respect of any Contract, to
the extent that any of the same individually or in the aggregate would cause a
Material Adverse Effect.
4.11 COMPLIANCE WITH LAWS; PERMITS.
(1) Holdco, the Company and each of the Subsidiaries have complied in
all material respects with all applicable laws, statutes, ordinances,
regulations, rules, judgments, decrees and orders (other than Environmental Laws
which are addressed in Section 4.19) in each jurisdiction in which the Business
is carried on, except for violations which would not have a Material Adverse
Effect.
(2) The Company and the Subsidiaries have all material Permits (other
than Environmental Permits which are addressed in Section 4.19) required to own
or lease their assets and carry on the Business. Each Permit (other than
Environmental Permits which are addressed in Section 4.19) held by the Company
or any Subsidiary is valid, subsisting and in good standing and the Company or
the Subsidiary which holds such Permit, as the case may be, is in substantial
compliance with the terms thereof, except for violations which would not have a
Material Adverse Effect. Neither the Company nor any of the Subsidiaries has
received written notice that any proceeding is pending or threatened to revoke
or limit any such Permit.
4.12 CONSENTS AND APPROVALS. There is no requirement to make any filing
with, give any notice to or obtain any licence, permit, certificate,
registration, authorization, consent or approval of, any governmental or
regulatory authority (other than Environmental Authorities which are addressed
in Section 4.19) as a condition to the lawful consummation of the transactions
contemplated by this Agreement, except for those requirements described in
Schedule 4.12(a). Except as described in Schedule 4.12(b), there is no
requirement under any Material Contract or
<PAGE> 27
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material Permit to which Holdco, the Company or any of the Subsidiaries is a
party or by which any of their respective assets are bound to give any notice
to, or to obtain the consent or approval of, any party to such Contract or
Permit (other than Environmental Permits which are addressed in Section 4.19) in
connection with the completion of the transactions contemplated by this
Agreement.
4.13 FINANCIAL STATEMENTS. The Audited Financial Statements have been
prepared in accordance with GAAP and present fairly in all material respects the
assets, liabilities and financial condition of the Company on a consolidated
basis, as at the respective dates thereof and the sales, earnings and results of
operations of the Company for the period covered thereby. The Vendors have
provided the Purchaser with a copy of the management representation letter
delivered by the Company to its auditors in connection with the Audited
Financial Statements.
4.14 CORPORATE RECORDS. The minute books and corporate records of
Holdco, the Company and the Subsidiaries contain complete and accurate minutes
(or copies thereof) of all meetings and proceedings of the shareholders and
directors (or any committee thereof) of Holdco, the Company and the Subsidiaries
and the share certificate books, registers of transfers, registers of
shareholders and registers of directors of the Holdco, Company and the
Subsidiaries are complete and accurate in all material respects.
4.15 ABSENCE OF CHANGES. Since December 31, 1996, Holdco, the Company
and the Subsidiaries have carried on the Business and conducted their operations
and affairs only in the ordinary and normal course, consistent with past
practice, and, except as disclosed in the Audited Financial Statements there has
not been:
(1) any material adverse change in any of the Business, operations or
financial condition of Holdco, the Company and the Subsidiaries taken
as a whole;
(2) any material damage, destruction or loss (whether or not covered by
insurance) affecting any property or asset material to Holdco, the
Company and the Subsidiaries taken as a whole;
(3) any declaration or payment of any dividend or other distribution in
respect of any securities of Holdco, the Company or any of the
Subsidiaries or any direct or indirect redemption, purchase or other
acquisition of any such securities;
(4) any write-down of the value of inventory or any other property or
asset of the Company or any of the Subsidiaries or any write-off as
uncollectible of any accounts or notes receivable of the Company or any
of the Subsidiaries, and no events have occurred which could reasonably
be expected to result in such a write-down or write-off, except for
write-downs and write-offs and expected write-downs and write-offs
that, in the aggregate, do not exceed $500,000;
<PAGE> 28
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(5) any cancellation or compromise of any debts or claims, or any
amendment, termination or waiver of any rights (including rights under
any Contracts or Permits), of the Company or any of the Subsidiaries in
amounts involving in excess of $200,000 in the aggregate or, if a
monetary value for the same is not readily ascertainable, that do not
have, in the aggregate, a Material Adverse Effect;
(6) any general increase in the compensation of employees of Holdco,
the Company or any of the Subsidiaries (including any increase pursuant
to any Employee Plan) or any material increase in the compensation or
bonus payable to any officer, employee, consultant or agent of Holdco,
the Company or any of the Subsidiaries, other than increases in the
ordinary and normal course of the Business consistent with past
practice;
(7) any material change in the accounting or Tax practices followed by
the Company or any of the Subsidiaries; or
(8) any incurrence of indebtedness, liability or obligation, in any
case for borrowed money, other than for working capital purposes in the
ordinary course of business under credit facilities existing on
December 31, 1996.
4.16 TAXES. Except as set out in Schedule 4.16, Holdco, the Company and
each of the Subsidiaries have duly filed or caused to be filed on a timely basis
all Tax returns required to be filed by them in all relevant jurisdictions, all
of which were true, correct and complete in all material respects, and have paid
all Taxes due and payable by them. Holdco, the Company and each of the
Subsidiaries have made provision for Taxes payable by them for all periods for
which Tax returns are not yet required to be filed or payments are not yet
required to be made. Except as set out in Schedule 4.16, there are no actions,
suits, proceedings, investigations or claims pending or, to the knowledge of the
Vendors, threatened against Holdco, the Company or any of the Subsidiaries in
respect of Taxes. Holdco, the Company and each of the Subsidiaries have withheld
or collected all amounts required to be withheld or collected by them on account
of Taxes and have remitted all such amounts to the appropriate Tax authority
when required by law to do so. There are no Encumbrances for unpaid Taxes, other
than Permitted Encumbrances. The Canadian and United States federal income and
capital Tax liability of Holdco, the Company and each of the Subsidiaries has
been assessed by Revenue Canada and the United States Internal Revenue Service,
as applicable, and any Canadian provincial income and capital Tax liability of
Holdco, the Company and each of the Subsidiaries has been assessed by the
appropriate taxing authority, for all taxation periods ending on or prior to the
dates set out in Schedule 4.16, and, except as described in Schedule 4.16, there
are no agreements, waivers or other arrangements (collectively, "waivers")
providing for an extension of time with respect to the filing of any Tax return
by, the payment of any Tax, governmental charge or deficiency by, or the
issuance of an assessment or reassessment against, Holdco, the Company or any of
the Subsidiaries. There are no circumstances existing other than in the ordinary
course of business which could result in the application of section 78 of the
Tax Act or any equivalent
<PAGE> 29
-24-
provincial provision to Holdco, the Company of any of the Subsidiaries. None of
sections 80 through to and including section 80.04 of the Tax Act, or any
equivalent provincial provision, have applied to Holdco, the Company or any of
the Subsidiaries. None of Holdco, the Company or any of the Subsidiaries has
acquired an asset from a person with which it deals at non-arm's length for
consideration greater than the fair market value of such asset at the time of
its acquisition. None of Holdco, the Company or any Subsidiary has entered into
an agreement contemplated by section 191.3 of the Tax Act or any equivalent
provincial provision. Neither Holdco, the Company nor any Subsidiary has agreed,
or is required, to make any adjustment in a post-Closing period under section
481(a) of the Code by reason of a change in the accounting method or otherwise.
None of Holdco, the Company or any Subsidiary has entered into a transaction
which is being accounted for as an instalment obligation under section 453 of
the Code nor is Holdco, the Company nor any Subsidiary party to an interest rate
swap, currency swap or other similar transaction. None of Holdco, the Company or
any of the Subsidiaries is subject to any material liability for Taxes of any
person (other than Holdco, the Company or any Subsidiary) including, without
limitation, liability arising from the application of U.S. Treasury Regulation
section 1.1502-6 or any analogous provision of state, local or foreign law. None
of Holdco, the Company or any of the Subsidiaries is or has been a party to any
tax sharing agreement which is binding and in effect on the date hereof. No
material claim has ever been made by an authority in a jurisdiction where
Holdco, the Company or any Subsidiary does not file Tax returns that it is or
may be subject to taxation by that jurisdiction.
4.17 LITIGATION. Except as described in Schedule 4.17, and except for
such claims, demands, actions, suits, proceedings, investigations or grievances
arising after the date hereof for which there is no reasonable basis in fact,
law or equity, there are no claims, demands, actions, suits, proceedings,
investigations or grievances underway, pending or, to the knowledge of the
Vendors, threatened in writing against the Company or any of the Subsidiaries at
law or in equity or before or by any federal, provincial, municipal or other
governmental department, court, commission, board, bureau, agency or
instrumentality, domestic or foreign, or by or before any arbitrator or
arbitration board which, if adversely determined, would have a Material Adverse
Effect.
4.18 NON-ARM'S LENGTH TRANSACTIONS. Since the date of the last Audited
Financial Statements, none of Holdco, the Company or any of the Subsidiaries has
made any payment or loan to, or borrowed any monies from, any officer, director,
employee, shareholder or any other person not dealing at arm=s length (within
the meaning of the Tax Act) with Holdco, the Company, the Subsidiaries and the
Vendors, except as disclosed in Schedule 4.18 and except for usual employee
reimbursements and compensation paid in the ordinary and normal course of the
Business. Except as described in Schedule 4.18 and except for Contracts of
employment, none of Holdco, the Company or any of the Subsidiaries is a party to
any material Contract with any officer, director, employee, shareholder or any
other person not dealing at arm's length with Holdco, the Company and the
Subsidiaries (within the meaning of the Tax Act).
4.19 ENVIRONMENTAL. Except as described in Schedule 4.19:
<PAGE> 30
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(1) Holdco, the Company and the Subsidiaries have complied and are in
compliance with all applicable Environmental Laws other than violations which
would not have a Material Adverse Effect and there is no past or present fact,
condition or circumstance that, to the Vendors' knowledge, could result in any
liability of Holdco, the Company or any of the Subsidiaries under any applicable
Environmental Laws which would have a Material Adverse Effect;
(2) Holdco, the Company and the Subsidiaries have obtained all material
Environmental Permits required for the operation of the Business, all of which
are described in section (b) of Schedule 4.19. Each such Environmental Permit is
valid, subsisting and in good standing and none of Holdco, the Company or any of
the Subsidiaries is in default or breach of any Environmental Permit, other than
defaults or breaches that would not have a Material Adverse Effect, and no
proceeding is pending or, to the Vendors' knowledge, threatened to revoke, amend
or limit any material Environmental Permit;
(3) none of Holdco, the Company or any of the Subsidiaries has used or
permitted to be used any of its past or present properties (including the Real
Property and the Leased Property) or facilities to generate, use, dispose of or
handle any material quantities of Hazardous Substance except in compliance with
Environmental Laws or where non-compliance would not have a Material Adverse
Effect;
(4) none of Holdco, the Company or any of the Subsidiaries has received
in the three years preceding the date hereof any written notice of, or been
prosecuted for an offence alleging, non-compliance with any Environmental Law.
In the ten years preceding the date of this Agreement: (i) none of Holdco, the
Company or any of the Subsidiaries has been required to pay any amount, whether
in respect of a fine, penalty, damages or otherwise, in respect of any
proceeding or prosecution for or allegation of non-compliance with any
Environmental Law, (ii) there have been no orders or directions of Environmental
Authorities communicated in writing to Holdco, the Company or any of the
Subsidiaries relating to environmental matters requiring any work, repairs,
construction or capital expenditures to be made with respect to the Business or
any property of the Company or any of the Subsidiaries and (iii) none of Holdco,
the Company or any of the Subsidiaries has made any material expenditure to
remediate any contamination caused by the release into the environment of any
Hazardous Substance;
(5) except in compliance with Environmental Laws or as would not have a
Material Adverse Effect, none of Holdco, the Company or any of the Subsidiaries
has caused, allowed or permitted, or has any knowledge of, the release into the
environment, in any manner whatsoever, or the presence of any Hazardous
Substance on, under, around or from any of its past or present properties
(including the Real Property and the Leased Property), assets or facilities. All
Hazardous Substances used in whole or in part by Holdco, the Company or any of
the Subsidiaries or resulting from the Business have been disposed of, treated
and stored in compliance with all Environmental Laws, other than for violations
that would not have a Material Adverse Effect. Section (e) of Schedule 4.19
identifies, to the knowledge of the Vendors, all of the locations where
Hazardous
<PAGE> 31
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Substances used in whole or in part by Holdco, the Company or any of the
Subsidiaries are being stored or disposed of. No Hazardous Substances used in
whole or in part by Holdco, the Company or any of the Subsidiaries has been
disposed of at any location in the United States other than as identified in
section (e) of Schedule 4.19;
(6) there is no requirement to make any filing with, give any notice to
or obtain any Environmental Permit as a condition to the lawful consummation of
the transactions contemplated by this Agreement, except for those requirements
described in section (f) of Schedule 4.19. Except as described in section (f) of
Schedule 4.19, there is no requirement under any material Environmental Permit
to which Holdco, the Company or any of the Subsidiaries is a party or by which
they are bound to give any notice to, or to obtain the consent or approval of,
any party to such Environmental Permit in connection with the completion of the
transactions contemplated by this Agreement; and
(7) the Vendors have provided or made available (or will have as soon
as practicable after the date hereof and, in any event by February 17, 1997) to
the Purchaser copies of all written environmental audits, evaluations,
assessments, studies or tests relating to the Real Property and the Leased
Property in their possession or under their control.
4.20 EMPLOYEE PLANS.
(1) Except as set forth in Schedule 4.20, none of Holdco, the Company,
any of the Subsidiaries or any of their respective ERISA Affiliates is
a party to or bound by, nor does Holdco, the Company, any of the
Subsidiaries or any of their respective ERISA Affiliates have any
liability or contingent liability with respect to, any Employee Plans
that are material to the Business and that impose any binding legal
obligation on Holdco, the Company, any Subsidiary or any of their
respective ERISA Affiliates. Schedule 4.20 contains a true and complete
list of each such Employee Plan. None of the Employee Plans is a
Pension Plan or a multiemployer plan (within the meaning of Section
3(37) of ERISA). None of Holdco, the Company or any Subsidiary has a
formal plan or commitment, whether legally binding or not, to create
any additional Employee Plan or to modify or change in any material
respect any existing Employee Plan that would affect any employee or
former employee of the Business, except such modification or amendment
as may be required to secure the continued registration of any existing
Employee Plan with each applicable governmental authority.
(2) A copy of each of the following documents will be delivered to the
Purchaser as soon as practicable and, in any event, by February 17,
1997;
(1) each Employee Plan (including all amendments thereto);
<PAGE> 32
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(2) subject to applicable law, all general employee communications
since January 1, 1996 relating to the Employee Plans, whether or not
such communications have been, or are required to be, filed with any
applicable governmental authority;
(3) if the Employee Plan is funded through a trust or any third party
funding arrangement, a copy of the trust or other funding agreement
(including all amendments thereto); and
(4) all material contracts relating to the Employee Plans with respect
to which Holdco, the Company or any Subsidiary may have any liability,
including insurance contracts, investment management agreements,
monitoring agreements, subscription and participation agreements and
record keeping agreements.
(3) There are no pending or, to the Vendors' knowledge, threatened
claims by or on behalf of any person regarding the non-compliance by
Holdco, the Company, any Subsidiary or any of their respective ERISA
Affiliates with its material obligations under or relating to any
Employee Plan.
(4) All contributions to, and payments from, each Employee Plan which
may have been required to be made in accordance with the terms of any
such Employee Plan and applicable laws have been made in a timely
manner and in accordance in all material respects with the terms of the
Employee Plan and applicable laws.
(5) There are no pending or, to the Vendors' knowledge, threatened
investigations by any governmental or regulatory agency or authority
involving or relating to any Employee Plan or the assets thereof.
(6) The consummation of the transactions contemplated by this Agreement
will not constitute an event under any Employee Plan or individual
agreement with any present or former employee that will or may in
itself result in any severance or other payment or in the acceleration,
vesting or increase in benefits with respect to any present or former
employee.
(7) All Employee Plans are in compliance in all material respects with
all applicable laws and have been administered in form and in operation
in compliance in all material respects with all applicable laws.
(8) There have been no non-exempt "prohibited transactions" (as
described in section 406 of ERISA or section 4975 of the Code) with
respect to any Employee Plan and none of Holdco, the Company, any
Subsidiary or any of their respective ERISA Affiliates has engaged in
any non-exempt prohibited transaction with respect to any Employee
Plan.
<PAGE> 33
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(9) None of Holdco, the Company or any of the Subsidiaries has incurred
any liability or taken any action or has any knowledge of any action or
event that could cause any one of them to incur any liability with
respect to any employee benefit plan as defined in Section 3(3) of
ERISA maintained, sponsored or contributed to by any of their
respective ERISA Affiliates, other than the Employee Plans.
4.21 UNION CONTRACTS. Except as described in Schedule 4.21, neither the
Company nor any of the Subsidiaries has entered into any collective agreement or
voluntary recognition agreement or accreditation orders with any labour union or
employee association or made any commitments to or conducted any negotiations
with any labour union or employee association with respect to any future
collective agreement. Except as set out in Schedule 4.21, the Vendors have no
knowledge of any current attempts to organize, establish or certify any labour
union or employee association with respect to any employees of the Company or
any of the Subsidiaries or of any contractor or agency with which the Company or
any of the Subsidiaries has a contract for the provision of personnel or the
services of personnel, nor is any such union or association presently certified
with regard to a bargaining unit. There are no grievances, outstanding
complaints before any board or tribunal, applications, proceedings or orders
against the Company or any of the Subsidiaries of which such party has received
written or other formal notice under any collective agreement which could,
individually or collectively, have a Material Adverse Effect. There are no
arbitration proceedings or awards pending against the Company or any of the
Subsidiaries under any collective agreement.
4.22 EMPLOYEES. Schedule 4.22(a) contains a complete and accurate list
of all individuals who are full-time employees or individuals engaged on
Contract to provide personal services to the Company or any of the Subsidiaries
or other agents or representatives of the Company and the Subsidiaries (in this
Section 4.22, "employees") whose annual salaries (excluding bonuses) exceed
$100,000, excluding unionized employees. Holdco does not have and has never had
any employees. If requested by the Purchaser, the Vendors shall cause the
Company to provide to the Purchaser a complete and accurate list of all
employees, specifying the salary or hourly wages, length of hire and title or
classification of each employee (but which may exclude, prior to March 3, 1997,
the names of such employees) and, in the case of each non-active employee, the
reason they are non-active, whether they are expected to return to work and, if
so, during which month, and any benefits to which they are entitled (except, as
regards non-active employees, to the extent such disclosure may be prohibited by
applicable law). Except for the collective agreements described in Schedule 4.21
and the employment agreements described in Schedule 4.22(b), neither the Company
nor any of the Subsidiaries is a party to any Contract with any employee other
than oral Contracts of indefinite duration which are terminable by the employer
without cause on reasonable notice as determined in accordance with applicable
law. Except as described in Schedule 4.17 and except for claims by employees
under Workers Compensation Legislation which, if adversely determined, would
not, either individually or in the aggregate, have a Material Adverse Effect,
there are no appeals, complaints, claims or charges pending or outstanding or,
to the knowledge of the Vendors,
<PAGE> 34
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anticipated, nor are there any orders, decisions, directions, investigations,
applications, proceedings or convictions currently registered or
outstanding by any tribunal or agency against or in respect of the Company or
any of the Subsidiaries under or in respect of any Employment Legislation.
4.23 LOCATION OF REAL PROPERTY. Schedule 4.23 sets forth the municipal
addresses of the Real Property (complete and accurate legal descriptions of
which are to be delivered in accordance with Section 7.7). Except as disclosed
in Schedule 4.23 and except for leasehold interests under Leases and Operating
Agreements, none of Holdco, the Company or any of the Subsidiaries owns, or has
agreed to acquire, any real property or interest in real property other than the
Real Property.
4.24 REAL PROPERTY. The Company and the Subsidiaries have the exclusive
right to possess, use and occupy, and have good and marketable title in fee
simple to, all the Real Property, free and clear of all Encumbrances other than
Permitted Encumbrances. Except as set out in Schedule 4.24, all buildings,
structures, improvements and appurtenances situated on the Real Property (and
all equipment necessary for the operation thereof as operated on the date
hereof) are in reasonable operating condition and in a state of good maintenance
and repair having regard to their age, normal wear and tear and the uses to
which they are put, are adequate and suitable for the purposes for which they
are currently being used and the Company and the Subsidiaries have adequate
rights of ingress and egress for the operation of the Business in the ordinary
course. Except as set out in Schedule 4.24, none of such buildings, structures,
improvements or appurtenances (or any equipment therein), nor the operation or
maintenance thereof, violates in any material respect any restrictive covenant
or any provision of any federal, provincial or municipal law, ordinance, rule,
regulation or by-law, or encroaches in any material respect on any property
owned by others. Without limiting the generality of the foregoing:
(1) the Real Property, the current uses thereof and the conduct of the
Business comply in all material respects with all regulations,
statutes, enactments, laws and by-laws (excluding Environmental Laws
which are dealt with in Section 4.19) and there are no outstanding
applications for a re-zoning of any Real Property which could have a
Material Adverse Effect;
(2) no material alteration, repair, improvement or other work has been
ordered, directed or requested in writing to be done or performed to or
in respect of the Real Property or to any of the plumbing, heating,
elevating, water, drainage or electrical systems, fixtures or works by
any municipal, provincial or other competent authority, which
alteration, repair, improvement or other work has not been completed or
will be completed in accordance with the regular maintenance program of
the Company, and the Vendors have no knowledge of any notification
having been given to the Company or any of the Subsidiaries of any such
outstanding work being ordered, directed or requested, other than those
which have been complied with;
<PAGE> 35
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(3) all material accounts for work and services performed and materials
placed or furnished upon or in respect of the Real Property at the
request of the Company or any of the Subsidiaries have been or will be
fully paid and satisfied in the ordinary course of the Business and no
person is entitled to claim a lien under the Construction Lien Act
(Ontario) or similar legislation in any other jurisdiction in which the
Business is conducted against the Real Property or any part thereof,
other than current accounts payable in respect of which the payment due
date has not yet passed and other than such as are Permitted
Encumbrances;
(4) the Real Property is fully serviced and has suitable access to
public roads, and there are no outstanding material levies, charges or
fees assessed against the Real Property by any public authority
(including development or improvement levies, charges or fees) and
other than such as are Permitted Encumbrances; and
(5) neither the Company nor any of the Subsidiaries has entered into
any agreement to sell, transfer, encumber or otherwise dispose of or
impair such party's right, title and interest in and to the Real
Property or the air, density and easement rights relating thereto
(except for Permitted Encumbrances).
4.25 NO EXPROPRIATION. No property or assets of Holdco, the Company or
any of the Subsidiaries have been taken or expropriated by any federal,
provincial, state, municipal or other authority within the past three years nor
has any notice or proceeding in respect thereof been given or, to the knowledge
of the Vendors, commenced and the Vendors have no knowledge of any intent or
proposal to give any such notice or commence any such proceeding.
4.26 LEASED PROPERTY. Schedule 4.26 sets forth the municipal address or
the location of all the Leased Property and a list of all Leases. Except as
disclosed in Schedule 4.26, all buildings, structures, improvements and
appurtenances situated on the Leased Property are in reasonable operating
condition and in a state of good maintenance and repair having regard to their
age, normal wear and tear and the uses to which they are put, are adequate and
suitable for the purposes for which they are currently being used and the
Company (or the relevant Subsidiary) has adequate rights of ingress and egress
for the operation of the Business in the ordinary course. Except as so disclosed
in Schedule 4.26, to the knowledge of the Vendors, the Leased Property
(including all buildings, improvements and fixtures thereon) is fit for its
present use, and there are no material structural repairs or replacements which
are necessary for such use and there are no material repairs to, or replacements
of, the roof or the mechanical, electrical, heating, ventilating,
air-conditioning, plumbing or drainage equipment or systems which are necessary
for such use and for which the Company or any Subsidiary is responsible, and the
Leased Property is not currently undergoing any material alteration or
renovation nor is any such alteration or renovation contemplated. Neither of the
Company nor any of the Subsidiaries is a party to any Lease, whether as lessor
or lessee, other than the Leases described in Schedule 4.26 relating to the
Leased Property. Each of the Leases is in good standing and in full force and
effect without amendment thereto, and none of the Company,
<PAGE> 36
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the Subsidiaries or, to the knowledge of the Vendors, any other party thereto
has failed to perform any obligation that constitutes, or with the giving of
notice or the lapse of time or both would constitute, a material breach thereof.
4.27 COMMISSIONS. No commission, finder's fee, consulting fees or other
similar payment is payable by Holdco, the Company or any Subsidiaries to any
broker, agent or other intermediary acting or purporting to act on behalf of
them or the Vendors in connection with the transactions contemplated by this
Agreement.
4.28 GST REGISTRATION. The Company and those Subsidiaries carrying on
business in Canada are registrants for the purposes of the ETA with the
registration numbers set out in Schedule 4.28.
4.29 BANK ACCOUNTS. Schedule 4.29 sets forth a true and complete list
showing the name of each bank, trust company or similar institution in which
Holdco, the Company or any Subsidiary has accounts or safe deposit boxes, the
number or designation of each such account and safe deposit box and the names of
all persons authorized to draw thereon or to have access thereto.
4.30 CONDITION AND STATUS OF ASSETS. All material tangible personal
property of the Company and the Subsidiaries is in good working condition and
good repair having regard to its age, normal wear and tear and the uses to which
it is put, consistent with past practice.
4.31 JOINT VENTURE INTEREST. Schedule 4.31 set forth the details of all
partnerships, joint ventures and co-tenancies in or to which any of Holdco, the
Company or any Subsidiary is a partner, joint venturer, member or party.
4.32 HOLDCO. The sole business of Holdco is to hold and deal with its
shares in the capital of the Company. Holdco does not now and will not between
the date hereof and the Closing Date carry on any active business, employ any
individuals, hold any other assets or rights or have any liabilities except as
relate to the acquisition, pledge or disposition of such shares and neither
Holdco nor any of its predecessors has carried on any active business, employed
any individuals, held any other assets or rights or had any other liabilities in
the past, except, in each case, as disclosed in this Agreement.
5. Representations and Warranties of the Purchaser
--------------------------------------------------
The Purchaser represents and warrants to the Vendors as
follows and acknowledges and confirms that the Vendors are relying on such
representations and warranties in connection with the transactions contemplated
hereby:
<PAGE> 37
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5.1 ORGANIZATION. The Purchaser is a business trust duly formed and
validly existing under the laws of the State of Ohio and has all necessary power
and authority to own or lease its property and to enter into this Agreement and
perform its obligations hereunder.
5.2 AUTHORIZATION; NO VIOLATION.
(1) All necessary proceedings have been taken by the Purchaser to
enable it to enter into this Agreement and to perform its obligations hereunder.
(2) The execution and delivery of this Agreement by the Purchaser and
the consummation of the transactions contemplated hereby will not, with or
without the giving of notice, lapse of time or both, breach or violate any of
the provisions of, constitute a default under, conflict with or cause the
acceleration of any obligation of the Purchaser under (A) the Declaration of
Trust, as amended, of the Purchaser or any exercise of authority by the
securityholders thereunder or any resolution of the board of trustees (or any
committee thereof) of the Purchaser, (B) any Contract to which the Purchaser is
a party or by which it is bound, (C) any judgment, decree, order or award of any
court, governmental body or arbitrator having jurisdiction over the Purchaser,
(D) any Permit held by the Purchaser or (E) any applicable law, statute,
ordinance, regulation or rule.
(3) This Agreement has been duly executed and delivered by the
Purchaser and is a legal, valid and binding obligation of the Purchaser,
enforceable against the Purchaser by the Vendors in accordance with its terms.
5.3 CONSENTS AND APPROVALS. Except for requirements under the
Competition Act and the Investment Canada Act, there is no requirement for the
Purchaser to make any filing with, give any notice to or obtain any licence,
permit, certificate, registration, authorization, consent or approval of, any
government or regulatory authority nor is the consent or approval of any other
third party required as a condition to the lawful consummation by the Purchaser
of the transactions contemplated by this Agreement.
5.4 SOURCES OF FUNDS. The Purchaser has cash balances, short-term
deposits and/or amounts presently available for drawdown under existing credit
facilities which in the aggregate exceed the amount of the Purchase Price and,
accordingly, does not require additional financing in order to complete the
transactions contemplated hereby.
<PAGE> 38
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6. Survival of Representations and Warranties
---------------------------------------------
6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE VENDORS. The
representations and warranties of the Vendors contained in this Agreement and in
any certificate delivered pursuant hereto shall survive the closing of the
transactions contemplated for a period of thirteen months following the Closing
Date and, notwithstanding such closing or any investigation made by or on behalf
of the Purchaser, shall continue in full force and effect for the benefit of the
Purchaser during such period, except that:
(1) the representations and warranties set out in Sections 3.1(a) and
(b) and Sections 4.3 and 4.5 (and the corresponding representations and
warranties set out in the certificates to be delivered pursuant to
Section 8.1) shall survive the closing of the transactions contemplated
hereby and continue in full force and effect until the lapse of
applicable limitation periods;
(2) the representations and warranties set out in Section 4.19 (and the
corresponding representations and warranties set out in the certificate
to be delivered pursuant to Section 8.1) shall survive the closing of
the transactions contemplated hereby and continue in full force and
effect for a period of four years following the Closing Date;
(3) the representations and warranties set out in Section 4.16 in
respect of a particular taxation year, period or event (and the
corresponding representations and warranties set out in the
certificates to be delivered pursuant to Section 8.1) shall survive the
closing of the transactions contemplated hereby and continue in full
force and effect until 90 days after the expiration of the period, if
any, during which an assessment, reassessment or other form of
recognized document assessing liability for Tax under applicable Tax
legislation in respect of such taxation year, period or event could be
issued under such Tax legislation, taking into account any waivers or
similar documents extending such period given by the Company or any of
the Subsidiaries prior to (but not after) the Time of Closing; and
(4) a claim for breach of any of the representations and warranties
made by the Vendors in this Agreement or in any certificate delivered
pursuant hereto involving fraud or fraudulent misrepresentation on the
part of the Vendors may be made against the Vendors at any time
following the Closing Date, subject only to applicable limitation
periods imposed by law.
6.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The
representations and warranties of the Purchaser contained in this Agreement and
in any certificate delivered pursuant hereto shall survive the closing of the
transactions contemplated hereby for a period of one year and, notwithstanding
such closing or any investigation made by or on behalf of the Vendors, shall
continue in full force and effect for the benefit of the Vendors during such
period.
<PAGE> 39
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7. Covenants
---------
<PAGE> 40
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7.1 ACCESS. The Vendors shall forthwith make available to the Purchaser
and its authorized representatives and, if requested by the Purchaser, acting
reasonably, provide a copy to the Purchaser of all documents, books and records
relating to Holdco, the Company and the Subsidiaries, including title documents,
written environmental compliance reviews and site assessments that are in the
possession or under the control of the Vendors, Holdco, the Company or any
Subsidiary, Contracts, financial statements, minute books, share certificate
books, share registers, plans, orders, books of account, accounting records and
constating documents relating to Holdco, the Company and the Subsidiaries. The
Vendors shall cause the Company and the Subsidiaries to afford the Purchaser and
its authorized representatives access on reasonable notice to the Business and
the property, assets, undertaking, records and documents of the Company and the
Subsidiaries for the purpose of reviewing the same. The foregoing access shall
be at any times selected by the Purchaser until March 3, 1997 and thereafter
shall be restricted to during normal business hours. The Vendors shall also
cause the Company and the Subsidiaries to use their reasonable best efforts to
arrange meetings prior to March 3, 1997 with current and past major customers of
the Company and the Subsidiaries; provided, however, that Investco shall be
notified at least two Business Days prior to any meeting between representatives
of the Purchaser and such customers (whether or not arranged by the Vendors or
the Company) and a representative of Investco shall be entitled to attend any
such meeting. The Vendors shall cause the Company and the Subsidiaries, as
appropriate, forthwith following a request therefor from the Purchaser, to
deliver to all applicable governmental authorities having jurisdiction over the
Real Property and the Leased Property a request substantially in the form
prepared or described by the Purchaser that such authorities release to the
Company or any such Subsidiary any information held by such authorities in
respect to such property, upon receipt of which by the Company or any such
Subsidiary, the Vendors shall cause the recipient to make the same available to
the Purchaser. In addition, the Purchaser shall be entitled to conduct such
environmental inspections and investigations, including intrusive testing, as
the Purchaser, acting reasonably, shall deem appropriate, subject to the
execution and delivery by the Purchaser of an indemnity in respect of the same
in favour of the Vendors, Holdco, the Company and the Subsidiaries, in form and
substance acceptable to the Vendors, acting reasonably, which shall provide that
the Purchaser will be responsible for any Losses caused by or reasonably
attributable to the activities of the Purchaser and its representatives during
such investigations. The Vendors shall cause the Company and the Subsidiaries to
cooperate in assisting investigations by the Purchaser as provided in the
foregoing. Notwithstanding any other provision of this Agreement, until 9:00
a.m. (Toronto time) on March 3, 1997 the Vendors shall be entitled to mask or
delete from any Contract, Permit or other document required to be provided or
made available to the Purchaser pursuant to the terms of this Agreement any
information ("Identifying Information") which may identify the municipal address
or location of any real property which is the subject of any Operating
Agreement; provided, however, that if this Agreement has not been terminated by
the Purchaser pursuant to Section 10.4 on or before March 3, 1997, the Vendors
shall cause the Company to provide to the Purchaser the Identifying Information
as soon as is reasonably practicable thereafter.
<PAGE> 41
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7.2 CURATIVE EFFORTS. The Vendors or any of their Affiliates (other
than Holdco, the Company or any Subsidiary if to do so would render any
representation or warranty made herein to be or become untrue other than with
the Purchaser's consent, not to be unreasonably withheld) shall be entitled to
do any act or thing, including by making any payment or satisfying any
obligation that is otherwise owing by Holdco, the Company or any Subsidiary or
by acquiring common shares of Holdco (so long as the same are Purchased Shares
to be purchased and sold hereunder without any increase in the aggregate
Purchase Price, ignoring for this purpose the effect of Article 11) as may be
necessary to cure or remedy prior to the Time of Closing, any inaccuracy in any
representation or warranty or any breach of covenant made or contained herein
provided that no such curative or remedial act or thing shall have a Material
Adverse Effect.
7.3 DELIVERY OF BOOKS AND RECORDS. The Vendors shall deliver or cause
to be delivered to the Purchaser, at the Time of Closing, all of the books and
records of and relating to Holdco, the Company, the Subsidiaries and the
Business. The Purchaser agrees that it will preserve the books and records so
delivered to it for a period of six years from the Closing Date, or for such
longer period as is required by any applicable law, and will permit the Vendors
or their authorized representatives reasonable access thereto in connection with
the affairs of such Vendor relating to Tax or other appropriate matters. The
Vendors and the Purchaser agree to furnish or cause to be furnished to the other
after the Closing, upon request, as promptly as practicable, such information
(including access to books and records) and assistance relating to Holdco, the
Company or any Subsidiary as is reasonably necessary for the filing of any Tax
return, the preparation for any Tax audit, the prosecution or defence of any
claim, suit or proceeding relating to any proposed Tax adjustment for which the
Vendors or the Purchaser retains liability and for the performance by the
Vendors and the Purchaser of their respective obligations under this Agreement.
The Vendors and the Purchaser shall keep all such information and documents
received by them confidential unless otherwise required by law.
7.4 CONDUCT PRIOR TO CLOSING. Without in any way limiting any other
obligations of the Vendors hereunder, during the period from the date hereof
until the earlier of the termination of the parties' obligations under this
Agreement (other than those set forth in Sections 12.2, 12.3, 12.4 and 12.5) and
the Time of Closing:
(1) the Vendors shall cause Holdco, the Company and the Subsidiaries
to:
(1) conduct the Business and the operations and affairs of Holdco, the
Company and the Subsidiaries only in the ordinary and normal course of
business, consistent with past practice;
(2) not enter into any transaction or take any action which, if
effected before the date of this Agreement, would constitute a breach
of any representation, warranty, covenant or other obligation of the
Vendors contained herein, without the prior written consent of the
Purchaser;
<PAGE> 42
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(3) not enter into any material supply arrangements or enter into any
Contract which is material to the Company and the Subsidiaries taken as
a whole without the prior written consent of the Purchaser;
(4) not acquire or dispose of any material property other than
inventories and equipment purchased or disposed of in the ordinary and
normal course of the conduct of the Business, consistent with past
practice;
(5) not terminate, amend, supplement or otherwise alter the terms of
any material Lease or make any material improvement or other material
changes to any Leased Property or Real Property except as may be
approved by the Purchaser in writing;
(6) use its best efforts to maintain in full force and effect (and, if
applicable, to renew on substantially the same terms) all material
policies of insurance now in effect;
(7) not purchase or acquire any real property or sell or dispose of any
of the Real Property;
(8) pay and discharge the liabilities and obligations of the Company
and the Subsidiaries in the ordinary and normal course in accordance
and consistent with the past practice of the Company and the
Subsidiaries, except those contested in good faith; and
(9) not grant any general increase in the compensation of the employees
of Holdco, the Company or any of the Subsidiaries (including any
increase pursuant to any Employee Plan) or any material increase in the
compensation or bonus payable to any officer, employee, consultant or
agent of Holdco, the Company or any of the Subsidiaries, other than
increases in the ordinary and normal course of the Business consistent
with past practice; and
(2) the Vendors shall use, and shall cause the Company and the
Subsidiaries to use, their respective best efforts to:
(1) obtain, at or prior to the Time of Closing, from all appropriate
federal, provincial, state, municipal or other governmental or
regulatory bodies, the licences, permits, consents, approvals,
certificates, registrations and authorizations described in Schedule
4.12(a);
(2) give or obtain the notices, consents and approvals described in
Schedule 4.12(b);
<PAGE> 43
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(3) preserve intact the Business and the property, assets,
operations and affairs of the Company and the Subsidiaries and carry on
the Business and the affairs of the Company and the Subsidiaries as
currently conducted;
(4) take all necessary action, steps and proceedings to approve or
authorize, validly and effectively, the completion of the transactions
contemplated hereby; and
(5) satisfy the conditions set out in Sections 8 and 9.
7.5 COVENANTS OF THE PURCHASER PRIOR TO CLOSING. Without in any way
limiting any other obligations of the Purchaser hereunder, during the period
from the date hereof until the earlier of the termination of the parties
obligations under this Agreement (other than those set forth in Sections 12.2,
12.3, 12.4 and 12.5) and the Time of Closing, the Purchaser shall use its
best efforts to:
(1) take all necessary action, steps and proceedings to approve or
authorize the completion of the transactions contemplated hereby; and
(2) satisfy the conditions set out in Sections 8 and 9.
7.6 REGULATORY FILINGS. Each of the parties hereto shall, and shall
cause each of their respective subsidiaries and affiliates, if any, and as
applicable, to, use its best efforts to effect as soon as practicable all
necessary applications, registrations and filings under the Competition Act and
the Investment Canada Act in connection with the completion of the transactions
contemplated herein or any agreement, instrument or other document contemplated
hereby and to obtain any and all consents and approvals required thereunder.
7.7 TITLE REPORTS AND SURVEYS. The Vendors shall, at their own expense,
deliver to the Purchaser within five days after the date of this Agreement the
Company's most current certified building location surveys, title certificates
and copies of matters of record reflected in the title certificates or title
opinions with respect to each parcel of Real Property (except that such surveys,
certificates and opinions need not be provided for any two parcels of Real
Property having, in each case, an agreed (as between the Vendors and the
Purchaser, each acting reasonably) market value of less than $250,000). Subject
to the exceptions as to delivery set out above, the Vendors shall deliver to the
Purchaser, at or prior to the Time of Closing, updated certified building
location surveys, title certificates and copies of matters of record reflected
in the title certificates or title opinions with respect to each parcel of Real
Property, in each case dated no more than 30 days prior to the Closing Date.
7.8 SOLICITATION OF OFFERS. The Vendors may solicit and entertain
offers from persons other than the Purchaser to acquire the Purchased Shares and
may engage in communications in that regard provided that:
<PAGE> 44
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(1) nothing in this Section 7.8 shall derogate from any obligation of
the Vendors to comply with any other covenant set forth in this
Agreement or from any liability the Vendors may have under Section
11.13;
(2) in exercising its rights under this Section 7.8, the Vendors shall
not disclose the name, identity or nature of the Purchaser to any
prospective purchaser of or offeror for the Purchased Shares, or
provide such information regarding the Purchaser as would constitute
disclosure of the Purchaser's identity;
(3) officers and employees of the Company and the Subsidiaries
(excepting those who are also officers or employees of Onex
Corporation) shall not participate in any meetings or conversations
with any such prospective purchaser or offeror or their representatives
(provided that if any such officer or employee receives an unsolicited
communication from any prospective purchaser or offeror, such officer
or employee shall be permitted to redirect the call to Investco or its
representatives);
(4) no such prospective purchaser or offeror or its representatives
shall be permitted by the Vendors or the Company to be present during
the term of this Agreement at the head office of the Company, other
than in the ordinary course of the Business, consistent with past
practice, and not for any purpose related to a possible purchase of
Purchased Shares;
(5) the Vendors' representatives engaged in any such solicitation or
entertainment of offers may be present at the Company's head office
only in a manner that does not, in the reasonable judgement of the
Purchaser, materially impede the due diligence investigations of the
Purchaser and its authorized representatives, provided that Investco
and its representatives may be present at all meetings between the
Purchaser and its authorized representatives and the management or
other representatives of Holdco, the Company and the Subsidiaries and,
in any event, may be present at the Company's head office without
restriction after the earlier of (i) March 3, 1997, and (ii) the
termination of the parties' obligations under this Agreement (other
than those set forth in Sections 12.2, 12.3, 12.4 and 12.5);
(6) on March 3, 1997, if the Purchaser has not exercised any right by
that time to terminate the parties obligations under this Agreement
(other than those set forth in Sections 12.2, 12.3, 12.4 and 12.5),
Investco shall advise the Purchaser of those prospective purchasers or
offerors with which it has communicated with respect to a possible sale
of the Purchased Shares; and
(7) until the termination of the parties' obligations under this
Agreement (other than those set forth in Sections 12.2, 12.3, 12.4 and
12.5), the Vendors shall not provide
<PAGE> 45
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to any person other than the Purchaser and other than in the ordinary
course of the Business in accordance with past practice information
concerning Holdco, the Company or the Subsidiaries that is confidential
or proprietary and the disclosure of which would be materially adverse
to Holdco, the Company and the Subsidiaries or to the Purchaser
(assuming for this purpose that the Purchaser would thereafter acquire
the Purchased Shares), including details of the Leases, Operating
Agreements or other Material Contracts to which Holdco, the Company or
any Subsidiary is a party. For greater certainty, the Purchaser
acknowledges that the Vendors may provide to prospective purchasers or
offerors a confidential offering memorandum substantially in the form
previously provided to it.
7.9 PURCHASERS KNOWLEDGE. To the Purchaser's knowledge, there are no
facts, circumstances, events or conditions that it reasonably believes would
render any of the representations or warranties of the Vendors contained in this
Agreement untrue in any material respect and the Purchaser hereby agrees that if
at time prior to the Time of Closing it obtains knowledge of any such fact,
circumstance, event or condition, it shall soon as practicable thereafter advise
the Vendors of the particulars thereof, provided that:
(1) the knowledge of the Purchaser shall be comprised solely of those
matters actually known to the Chief Investment Officer or the Senior
Vice President, General Counsel and Secretary of the Purchaser and the
Purchaser hereby represents and warrants that each such individual has
made appropriate enquiries of such officers of the Purchaser and First
Union Management, Inc. who would reasonably be expected to have
responsibility for or knowledge of such matters; and
(2) the provision of any notice or advice by the Purchaser to the
Vendor pursuant to this Section 7.9 shall not constitute a waiver of
the Purchaser's rights and remedies hereunder with respect to the
information set out in such notice or advice.
7.10 TAIL DIRECTORS' AND OFFICERS' INSURANCE. The Purchaser shall cause
Holdco and the Company to maintain for a period of not less than six years
following the Closing Date liability insurance for the benefit of the current
officers and directors of Holdco and the Company. Such insurance policy shall at
all times provide coverage in the aggregate amount of not less than $15,000,000.
8. CONDITIONS OF CLOSING IN FAVOUR OF THE PURCHASER
---------------------------------------------------
The completion of the transactions contemplated by this Agreement is
subject to the following conditions for the exclusive benefit of the Purchaser,
to be fulfilled or performed at or prior to the Time of Closing:
<PAGE> 46
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8.1 REPRESENTATIONS AND WARRANTIES. Except for the representation and
warranty contained in Section 3.2(a), the representations and warranties of the
Vendors contained in this Agreement shall be true and correct in all material
respects at the Time of Closing with the same force and effect as if such
representations and warranties were made at and as of such time and a
certificate dated the Closing Date of each of the Vendors to that effect shall
have been delivered to the Purchaser, such certificates to be in form and
substance satisfactory to the Purchaser, acting reasonably.
8.2 COVENANTS. All of the terms, covenants and conditions of this
Agreement to be complied with or performed by the Vendors, Holdco, the Company
or the Subsidiaries at or before the Time of Closing shall have been complied
with or performed in all material respects and certificates dated the Closing
Date of Investco to that effect shall have been delivered to the Purchaser, such
certificates to be in form and substance satisfactory to the Purchaser, acting
reasonably.
8.3 REGULATORY CONSENTS. There shall have been obtained, from all
appropriate federal, provincial, state, municipal or other governmental or
administrative bodies, such licences, permits, consents, approvals,
certificates, registrations and authorizations as are required to be obtained to
permit the completion of the transactions contemplated hereby, including those
described in Schedule 4.12(a), all of which shall be in form and substance
satisfactory to the Purchaser, acting reasonably, and any applicable waiting
period under the Competition Act shall have expired, provided that the Purchaser
shall not be entitled to rely on this condition with respect to any such matter
that was not obtained as a result of any breach by the Purchaser of its
obligations under Section 7.5.
8.4 OTHER CONSENTS. The Vendors shall have given or obtained the
notices, consents and approvals described in Schedule 4.12(b), in each case in
form and substance satisfactory to the Purchaser, acting reasonably.
8.5 MATERIAL ADVERSE CHANGE. There shall not have occurred since
December 31, 1996 any material adverse change in any of the Business, operations
or financial condition of Holdco, the Company and the Subsidiaries, taken as a
whole.
8.6 NO ACTION OR PROCEEDING. At the Time of Closing, no legal or
regulatory action or proceeding shall be pending or threatened in writing by any
person to enjoin, restrict or prohibit the consummation of any of the
transactions contemplated hereby.
8.7 SHAREHOLDERS' AGREEMENT, ETC. At the Time of Closing, all
shareholders' agreements, voting trusts or similar agreements described in
Schedule 3.1(b) shall have been terminated.
<PAGE> 47
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8.8 OPTIONS. At the Time of Closing, all options or similar rights
described in Schedule 3.1(b) or Schedule 4.5 shall have expired or terminated or
been exercised (in which latter case, all shares issued upon the exercise
thereof shall be included as Purchased Shares hereunder).
8.9 LEGAL MATTERS. All actions, proceedings, instruments and documents
required to implement this Agreement shall have been approved as to form and
legality by counsel for the Purchaser, acting reasonably.
8.10 LEGAL OPINION. The Vendors shall have delivered to the Purchaser a
favourable opinion of counsel to the Vendors, in form satisfactory to the
Purchaser, acting reasonably.
8.11 RESIGNATIONS. The directors of Holdco, the Company and the
Subsidiaries (other than Paul Clough) shall have tendered written resignations.
8.12 SECTION 116 CERTIFICATES. Each Vendor that is a non-resident of
Canada within the meaning of the Tax Act shall have delivered a certificate
obtained under section 116 of the Tax Act with a "certificate limit" not less
than that Vendor's Pro Rata Share of the Purchase Price or a direction to the
Purchaser to withhold from the Purchase Price otherwise payable to such Vendor
any amount required to be withheld under the Tax Act.
8.13 NON-PERFORMANCE. If any of the conditions contained in Sections
8.1 through 8.12 is not performed or fulfilled at or prior to the Time of
Closing to the satisfaction of the Purchaser, acting reasonably, the Purchaser
may by notice to the Vendors terminate this Agreement and the obligations of the
parties under this Agreement (other than the obligations contained in Sections
12.2, 12.3, 12.4 and 12.5), provided that the Purchaser may also bring an action
pursuant to Section 11 against the Vendors for damages suffered by the Purchaser
where the non-performance or non-fulfilment of the relevant condition is as a
result of a breach of covenant within the control of the Vendors, Holdco, the
Company or a Subsidiary and the Vendors, Holdco, the Company or such Subsidiary
fails to use reasonable commercial efforts to comply with such covenant or cure
such breach or is as a result of a breach of representation or warranty by the
Vendors and provided further that the Vendors may bring an action pursuant to
Section 11 against the Purchaser for damages suffered by the Vendors where the
non-performance or non-fulfilment of the relevant condition is as a result of a
breach of covenant within the control of the Purchaser and the Purchaser fails
to use reasonable commercial efforts to comply with such covenant or cure such
breach. Any such condition may be waived in whole or in part by the Purchaser
without prejudice to any claims it may have for breach of covenant,
representation or warranty.
9. CONDITIONS OF CLOSING IN FAVOUR OF THE VENDORS
-------------------------------------------------
<PAGE> 48
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The completion of the transactions contemplated by this Agreement is
subject to the following terms and conditions for the exclusive benefit of the
Vendors, to be fulfilled or performed at or prior to the Time of Closing:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Purchaser contained in this Agreement shall be true and correct in all
material respects at the Time of Closing with the same force and effect as if
such representations and warranties were made at and as of such time and a
certificate dated the Closing Date of a duly authorized officer of the Purchaser
to that effect shall have been delivered to the Vendors, such certificate to be
in form and substance satisfactory to the Vendors, acting reasonably.
9.2 COVENANTS. All of the terms, covenants and conditions of this
Agreement to be complied with or performed by the Purchaser at or before the
Time of Closing shall have been complied with or performed in all material
respects and a certificate dated the Closing Date of a duly authorized officer
of the Purchaser to that effect shall have been delivered to the Vendors, such
certificate to be in form and substance satisfactory to the Vendors, acting
reasonably.
9.3 REGULATORY CONSENTS. There shall have been obtained, from all
appropriate federal, provincial, state, municipal or other governmental or
administrative bodies, such licences, permits, consents, approvals,
certificates, registrations and authorizations as are required by law to be
obtained to permit the completion of the transactions contemplated hereby, and
any applicable waiting period under the Competition Act shall have expired,
provided that the Vendors shall not be entitled to rely on this condition with
respect to any such matter that was not obtained as a result of any breach by
the Vendors of their obligations under Section 7.4(b)(iv) or (v).
9.4 NO ACTION OR PROCEEDING. No legal or regulatory action or
proceeding shall be pending or threatened by any person to enjoin, restrict or
prohibit the completion of the transactions contemplated hereby.
9.5 LEGAL MATTERS. All actions, proceedings, instruments and documents
required to implement this Agreement shall have been approved as to form and
legality by counsel to the Vendors, acting reasonably.
9.6 LEGAL OPINION. The Purchaser shall have delivered to the Vendors a
favourable opinion of counsel to the Purchaser, in form satisfactory to the
Vendors, acting reasonably.
9.7 NON-PERFORMANCE. If any of the conditions contained in Sections 9.1
through 9.6 is not performed or fulfilled at or prior to the Time of Closing to
the satisfaction of the Vendors, acting reasonably, the Vendors may terminate
this Agreement and the obligations of the parties under this Agreement (other
than the obligations contained in Sections 12.2, 12.3, 12.4 and 12.5) by giving
written notice to the Purchaser, provided that the Vendors may also bring an
action pursuant to Section 11 against the Purchaser for damages suffered by the
Vendors where the non-performance
<PAGE> 49
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or non-fulfilment of the relevant condition is as a result of a breach of a
covenant within the control of the Purchaser and the Purchaser fails to use
reasonable commercial efforts to comply with such covenant or cure such breach
or is a result of a breach of representation or warranty by the Purchaser and
provided further that the Purchaser may bring an action pursuant to Section 11
against the Vendors for damages suffered by the Purchaser where the
non-performance or non-fulfilment of the relevant condition is as a result of a
breach of covenant within the control of the Vendors and the Vendors fail to use
reasonable commercial efforts to comply with such covenant or cure such breach.
Any such condition may be waived in whole or in part by the Vendors without
prejudice to any claims the Vendors may have for breach of covenant,
representation or warranty.
10. CLOSING ARRANGEMENTS
------------------------
10.1 PLACE OF CLOSING. The closing shall take place at the Time of
Closing at the offices of Davies, Ward & Beck, 1 First Canadian Place, Toronto,
Ontario M5X 1B1 or at such other place as the Vendors and the Purchaser may
mutually determine.
10.2 IMPLEMENTATION. At the Time of Closing, upon fulfilment of all the
conditions set out in Sections 8 and 9 which have not been waived in writing by
the Vendors or the Purchaser, as the case may be, the parties shall execute all
documents and do all other acts and things necessary or advisable to implement
and give effect fully to each of the transactions contemplated hereby and,
without limitation:
(1) the Vendors shall deliver or cause to be delivered to the Purchaser
certificates representing the Purchased Shares, duly endorsed for
transfer to the Purchaser, together with all other agreements,
instruments, certificates, share certificates, directions, opinions and
other documents contemplated to be delivered to the Purchaser by the
Vendors hereunder; and
(2) the Purchaser shall deliver or cause to be delivered to the Vendors
the certified cheques or bank drafts contemplated by Section 2.3
together with all other agreements, instruments, certificates, share
certificates, receipts, opinions and other documents contemplated to be
delivered to the Vendors by or on behalf of the Purchaser.
10.3 FURTHER ASSURANCES. Each party to this Agreement agrees that, from
time to time subsequent to the Closing Date, such party will, at the request and
expense of any other party, execute and deliver all such documents, including,
without limitation, all such additional conveyances, transfers, consents and
other assurances and do all such other acts and things as any other party,
acting reasonably, may from time to time request be executed or done in order to
better evidence or perfect or effectuate any provision of this Agreement or of
any agreement or other document executed pursuant to this Agreement or any of
the respective obligations intended to be created hereby or thereby.
<PAGE> 50
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1.4 EARLY TERMINATION. The Purchaser may, by written notice delivered
to the Vendors at or prior to 9:00 a.m. (Toronto time) on March 3, 1997,
terminate the obligations of both parties under this Agreement (other than those
set forth in Sections 12.2, 12.3, 12.4 and 12.5) by reason of:
(1) the Purchaser's non-satisfaction, in its sole and absolute
discretion, with the result of its due diligence investigations
conducted pursuant to Section 7.1 (including the Purchaser's
investigation of any of the contracts, disclosures or other matters
referred to in any of the Schedules to this Agreement);
(2) the failure to execute and deliver the non-competition agreements
and confidentiality agreements described in Section 10.5.
The termination of such obligations pursuant to this Section 10.4 shall relieve
both parties of all liabilities relating hereto, other than those set forth in
Sections 12.2, 12.3, 12.4 and 12.5 and in the confidentiality agreements
referred to in Section 1.5 and other than those provisions of the Escrow
Agreement relating to the disposition of the funds then held by the Escrow
Agent.
10.5 NON-COMPETITION AGREEMENT. Onex Corporation ("Onex") and the
Purchaser shall use their best efforts to execute and deliver by February 24,
1997 (but to have effect only if and when the Closing occurs):
(1) a form of a non-competition agreement in form and substance
mutually satisfactory to Onex and the Purchaser which shall provide
that Onex will not, directly or indirectly, engage or participate in
North America for a period of five years after the date hereof in any
business substantially the same as or similar to the Business (except
any such engagement or participation in a similar business which is
incidental to the operations of Onex or any of its Affiliates where
such business constitutes less than 5% of the assets or revenues of
Onex or such Affiliate); and
(2) a confidentiality agreement in form and substance mutually
satisfactory to Onex and the Purchaser wherein Onex will agree that:
(1) it will not, directly or indirectly, use other than as may be
reasonably necessary in connection with its rights, remedies,
obligations and liabilities under this Agreement or to make such
disclosure as may be required by law any confidential information,
trade secrets or proprietary data of Holdco, the Company or the
Subsidiaries (including lists of customers of the Business and its
Intellectual Property); and
<PAGE> 51
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(2) it will not disclose, divulge or communicate, orally, in writing or
otherwise, any such confidential information, trade secrets or
proprietary data to any other person other than as may be reasonably
necessary in connection with its rights, remedies, obligations and
liabilities under this Agreement or to make such disclosure as may be
required by law.
Each Vendor who is not an employee of the Company or any of its
Subsidiaries and the Purchaser shall use their best efforts to enter into
separate non-competition agreements and confidentiality agreements substantially
on the terms and by the date described above.
For greater certainty, the failure of any party to enter into at or
prior to the Time of Closing a non-competition agreement and confidentiality
agreement as provided in this Section 10.5 shall not constitute a breach by any
party hereto of any term or provision of this Agreement nor shall such failure
be considered to constitute non-performance or non-fulfilment of any condition
to the closing of the transactions contemplated hereby, whether set out in
Section 8, Section 9 or otherwise, and the sole remedy of any party with respect
to any such failure shall be the entitlement of the Purchaser to exercise its
rights under Section 10.4 within the time period provided for such exercise.
10.6 ONEX ASSOCIATES. Investco covenants and agrees to (a) purchase, at
or before the Time of Closing, all of the Purchased Shares now held, or which
may hereafter be held, by any Onex Associate and (b) to obtain from each of the
Onex Associates, and to deliver to the Purchaser, on or before February 21,
1997, an acknowledgement in the form of Schedule 10.6.
10.7 CIBC WARRANT. Investco covenants to obtain from Canadian Imperial
Bank of Commerce ("CIBC") and to deliver to the Purchaser, on or before February
21, 1997, an agreement substantially in the form of the agreement set out as
Schedule 10.7, pursuant to which CIBC will (a) consent to the redemption, on or
before the Closing Date, of the common stock warrant granted by Holdco to CIBC
dated the 13th day of November, 1996 and the termination of the Shareholders'
Agreement among Impark Holdings Inc., CIBC, Holdco and Onex dated the 13th day
of November, 1996 and (b) confirm that it does not now hold any shares in the
capital of Holdco and that it will not exercise any right to acquire any shares
in the capital of Holdco between the date of such agreement and the Closing
Date.
11. INDEMNIFICATION
-------------------
11.1 INDEMNIFICATION BY THE VENDORS. The Vendors hereby agree to
indemnify and save harmless the Purchaser from all Losses suffered or incurred
by the Purchaser (or, if the Closing has occurred, the Purchaser, Holdco, the
Company or any Subsidiary) as a result of or arising directly or indirectly out
of or in connection with:
(1) any breach by the Vendors of or any inaccuracy of any of the
representations and warranties of the Vendors set out in this Agreement
(other than in Section 4.16,
<PAGE> 52
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which are covered by Section 11.1(c)) or any of the corresponding
representations and warranties set out in any certificate to be
delivered by the Vendors pursuant to this Agreement or in any
agreement, instrument or other document delivered pursuant to this
Agreement (provided that the indemnity provided for in this Section
11.1(a) shall not apply in the case of a breach or inaccuracy of any
representation or warranty unless the Indemnified Party shall have
provided notice to the Indemnifying Party in accordance with Section
11.3 on or prior to the expiration of such representation and warranty
as provided in Section 6.1);
(2) any breach or non-performance by the Vendors of any covenant to be
performed by the Vendors under this Agreement or under any agreement,
instrument, certificate or other document delivered pursuant hereto;
(3) Taxes of Holdco, the Company or any of the Subsidiaries (i) in
respect of any period ending before 12:00 a.m. on the Closing Date in
the case of Taxes imposed under the Tax Act, the Code or any equivalent
provincial, state or municipal laws and (ii) in respect of a time prior
to the Time of Closing in the case of other Taxes, including, without
limitation, any assessment or reassessment in respect of any of the
matters disclosed in Schedule 4.16 to the extent such Taxes exceed the
amount reserved for current taxes in respect thereof in the Audited
Financial Statements or in the Forecast Working Capital Statement;
PROVIDED that any Tax refund received by Holdco, the Company or any of
the Subsidiaries (or any successor thereto on or after the Closing
Date) in respect of any such period or time shall, to the extent not
recorded as an asset or a reduction in liabilities in the Audited
Financial Statements or in the Forecast Working Capital Statement, be
set off against any Losses referred to in this Section 11.1(c) or, if
received when no amount is payable by the Vendors under Section 11.1 or
after an indemnity payment has been made in respect of any relevant
Loss, shall forthwith be paid to the Vendors,
provided that the liability of any Vendor to indemnify the Purchaser in respect
of any such Loss shall be limited to such Vendor's Pro Rata Share of such Loss.
11.2 INDEMNIFICATION BY THE PURCHASER. The Purchaser agrees to
indemnify and save harmless the Vendors from all Losses suffered or incurred by
the Vendors as a result of or arising directly or indirectly out of or in
connection with:
(1) any breach by the Purchaser of or any inaccuracy of any
representation or warranty of the Purchaser contained in this Agreement
or in any agreement, instrument, certificate or other document
delivered pursuant to this Agreement (provided that the Purchaser shall
not be required to indemnify or save harmless the Vendors in respect of
any breach or inaccuracy of any representation or warranty unless the
Vendors shall have provided notice to the Purchaser in accordance with
<PAGE> 53
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Section 11.3 on or prior to the expiration of such representation and
warranty as provided in Section 6.2);
(2) any breach or non-performance by the Purchaser of any covenant to
be performed by it under this Agreement or under any agreement,
instrument, certificate or other document delivered pursuant hereto;
and
(3) any Tax imposed or sought to be imposed on income of Holdco, the
Company, or any Subsidiary earned after the Closing Date except to the
extent such Tax is exigible as a result of any breach by the Vendors of
or any inaccuracy of any of the representations and warranties of the
Vendors set out in Section 4.16 or any of the corresponding
representations and warranties set out in any certificate to be
delivered by the Vendors pursuant to this Agreement.
11.3 NOTICE OF CLAIM.
(1) In the event that any person (the "Indemnified Party") shall become
aware of any claim, proceeding or other matter involving any Loss (a "Claim") in
respect of which another person (the "Indemnifying Party") is required to
indemnify the Indemnified Party pursuant to this Agreement, the Indemnified
Party shall promptly give written notice thereof to the Indemnifying Party. Such
notice shall specify whether the Claim arises as a result of a claim by a person
(a "Third Party") against the Indemnified Party (a "Third Party Claim") or
whether the Claim does not involve a Third Party (a "Direct Claim"), and shall
also specify with reasonable particularity (to the extent that the information
is available) the factual basis for the Claim and the amount of the Claim, if
known.
(2) If after the Time of Closing the Purchaser, Holdco, the Company or
any Subsidiary or any agent or representative of any of them (the "Recipient")
receives any written request for information, notice of intention to assess,
assessment, reassessment, confirmation of assessment or reassessment,
determination of loss or any similar communication (a "Communication") from any
governmental authority in connection with any matter relating to any Tax in
respect of which a Claim pursuant to Section 11.1 may result, the Recipient
shall forthwith and in any event not more than 10 Business Days after receipt
thereof by the Recipient deliver to the Vendors a copy of such Communication and
shall take all action necessary to preserve any rights to object to, dispute or
contest any matter to which such Communication relates. If the Purchaser,
Holdco, the Company or any Subsidiary, as the case may be, shall fail to comply
with the foregoing, the liability of the Vendors in connection with the Tax to
which such Communication relates shall be extinguished to the extent any Vendor
suffers a Loss as result of or reasonably attributable to such failure to
comply.
(3) If, through the fault of the Indemnified Party, the Indemnifying
Party does not receive notice of any Claim in time to contest effectively the
determination of any liability
<PAGE> 54
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susceptible of being contested, the Indemnifying Party shall be entitled to set
off against the amount claimed by the Indemnified Party the amount of any Losses
incurred by the Indemnifying Party resulting from the Indemnified Party's
failure to give such notice on a timely basis.
(4) The Purchaser, Holdco, the Company and each Subsidiary agree that,
15 days prior to filing any Tax return for any taxable period ending on or
before the Closing Date, the Vendors or Investco shall have the right to review
and to approve the preparation of such Tax return, which approval may not be
unreasonably withheld provided that in any such Tax return all discretionary
deductions or other amounts in computing income or taxable income shall be
claimed to the greatest extent possible and no election shall be made not to
have subsection 256(9) of the Tax Act or any equivalent provincial provision
apply.
11.4 DIRECT CLAIMS. With respect to any Direct Claim, following receipt
of notice from the Indemnified Party of the Claim, the Indemnifying Party shall
have 90 days to make such investigation of the Claim as it considers necessary
or desirable. For the purpose of such investigation, the Indemnified Party shall
make available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the Claim, together with all such other
information as the Indemnifying Party may reasonably request. If both parties
agree at or prior to the expiration of such 90-day period (or any mutually
agreed upon extension thereof) to the validity and amount of such Claim, the
Indemnifying Party shall immediately pay to the Indemnified Party the amount of
the Loss suffered or incurred by the Indemnified Party with respect to the
Claim, failing which the matter shall be referred to binding arbitration in such
manner as the parties may agree or shall be determined by a court of competent
jurisdiction.
11.5 THIRD PARTY CLAIMS. With respect to any Third Party Claim, the
Indemnifying Party shall have the right, at its expense, to participate in or
assume control of the negotiation, settlement or defence of the Claim and, in
such event, the Indemnifying Party shall reimburse the Indemnified Party for all
the Indemnified Party's reasonable out-of-pocket expenses as a result of such
participation or assumption. If the Indemnifying Party elects to assume such
control, the Indemnified Party shall have the right to participate in the
negotiation, settlement or defence of such Third Party Claim and to retain
counsel to act on its behalf, provided that the fees and disbursements of such
counsel shall be paid by the Indemnified Party unless the Indemnifying Party
consents to the retention of such counsel or unless the named parties to any
action or proceeding include both the Indemnifying Party and the Indemnified
Party and a representation of both the Indemnifying Party and the Indemnified
Party by the same counsel would be inappropriate due to actual or potential
differing interests between them (such as the availability of different
defences). If the Indemnifying Party, having elected to assume such control,
thereafter fails to defend the Third Party Claim within a reasonable time, the
Indemnified Party shall be entitled to assume such control, and the Indemnifying
Party shall be bound by the results obtained by the Indemnified Party with
respect to such Third Party Claim. If any Third Party Claim is of a nature such
that the Indemnified Party is required by applicable law to make a payment to a
Third Party before the completion of settlement negotiations or related legal
proceedings, the Indemnified Party may make such payment and the
<PAGE> 55
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Indemnifying Party shall, forthwith after demand by the Indemnified Party,
reimburse the Indemnified Party for such payment. If the amount of any Loss
suffered or incurred by the Indemnified Party in respect of a Third Party Claim
in respect of which such payment was made, as finally determined, is less than
the amount which was paid by the Indemnifying Party to the Indemnified Party,
the Indemnified Party shall, forthwith after receipt of the difference from the
Third Party, pay the amount of such difference to the Indemnifying Party. If the
amount of any Loss suffered or incurred by the Indemnified Party in respect of a
Third Party Claim in respect of which such payment was made, as finally
determined, is greater than the amount which was paid by the Indemnifying Party
to the Indemnified Party, the Indemnifying Party shall, forthwith following such
final determination, pay the amount of such difference to the Indemnified Party.
11.6 SETTLEMENT OF THIRD PARTY CLAIMS. If the Indemnifying Party fails
to assume control of the defence of any Third Party Claim within 30 days after
its receipt of notice thereof pursuant to Section 11.5, the Indemnified Party
shall have the exclusive right to contest, settle or pay the amount claimed.
Whether or not the Indemnifying Party assumes control of the negotiation,
settlement or defence of any Third Party Claim, the Indemnifying Party shall not
settle any Third Party Claim without the written consent of the Indemnified
Party, which consent shall not be unreasonably withheld or delayed.
11.7 CO-OPERATION. The Indemnified Party and the Indemnifying Party
shall co-operate fully with each other with respect to Third Party Claims, and
shall keep each other fully advised with respect thereto (including supplying
copies of all relevant documentation promptly as it becomes available).
11.8 LIMITATIONS. The Vendors shall not be liable for any Losses
referred to in Section 11.1 ("Warranty Claims") until the aggregate of all
Warranty Claims exceeds $1,050,000, after which amount the Purchaser shall be
entitled to indemnification by each Vendor, and each Vendor shall be liable, for
its Pro Rata Share of the full amount of all Warranty Claims. Notwithstanding
any other provision hereof, the maximum liability of any Vendor under Section
11.1 shall be an amount equal to the such Vendor's Pro Rata Share of
$10,500,000, except with respect to the breach of any of the representations and
warranties referred to in section 6.1(a), in which case the maximum liability of
any Vendor shall be an amount equal to such Vendor's Pro Rata Share of the
Purchase Price.
11.9 INDEMNITY PAYMENT ADJUSTMENTS. For greater certainty, the amount
of any payment required to be made by an Indemnifying Party to an Indemnified
Party pursuant to this Section 11 shall be (i) reduced by the amount of any
insurance proceeds actually received by the Indemnified Party in respect of the
Loss or Losses to which the payment relates, (ii) increased to take account of
any net Tax cost incurred by the Indemnified Party arising from the receipt of
the payment and the incurrence or payment of the Loss or Losses (including any
net Tax cost resulting from such increase), (iii) reduced to take account of any
net Tax benefit realized by the Indemnified Party arising from the receipt of
the payment and the incurrence or payment of the Loss or Losses, and (iv)
<PAGE> 56
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deemed to constitute an adjustment to the Purchase Price. For greater certainty,
the adjustments provided for in this Section 11.9 shall not be made to the
extent they have been taken into account in calculating the amount of the
relevant Loss.
1.10 TAX COMPUTATION. For purposes of computing indemnification for
Taxes, in the case of any Taxes that are imposed on a periodic basis and are
payable for a tax period that includes (but does not end on) the Closing Date,
the portion of such Tax period ending on the day prior to the Closing Date shall
(x) in the case of any Taxes other than gross receipts, sales or use Taxes and
Taxes based upon or related to income, be deemed to be the amount of such Tax
for the entire Tax period multiplied by a fraction the numerator of which is the
number of days in the Tax period ending on the day prior to the Closing Date and
the denominator of which is the number of days in the entire Tax period, and (y)
in the case of any Tax based upon or related to income and any gross receipts,
sales or use Tax, be deemed equal to the amount which would be payable if the
relevant Tax period ended on the day prior to the Closing Date. The portion of
any credits relating to a Tax period that begins before and ends after the
Closing Date shall be determined as though the relevant Tax period ended on the
day prior to the Closing Date. All determinations necessary to give effect to
the foregoing allocations shall be made in a manner consistent with prior
practice of Vendor, Holdco, the Company and the Subsidiaries.
11.11 EXCLUSIVITY. The provisions of this Section 11 shall apply to any
Claim for breach of any covenant, representation, warranty or other provision of
this Agreement or any agreement, certificate or other document delivered
pursuant hereto to the exclusion of other relief or remedies therefor (other
than a claim for specific performance or injunctive relief), with the intent
that all such Claims shall be subject to the limitations and other provisions
contained in this Section 11.
11.12 MITIGATION. Nothing in this Section 11 shall derogate from any
party's obligation at law to mitigate any damage suffered or incurred by that
party, or any rule regarding the calculation of damages that takes into account
the ability of any party to mitigate the same.
11.13 LIQUIDATED DAMAGES. In the event that the Vendors:
(1) wilfully fail to use their best efforts to satisfy the closing
conditions in favour of the Purchaser set forth in Section 8 that are
within the Vendors' ability to satisfy;
(2) wilfully make a material misrepresentation in Sections 3 or 4
hereof or in any certificate delivered pursuant to Section 8 relating
thereto; or
(3) commit fraud with respect to any material representation and
warranty made in Sections 3 or 4 hereof or in any certificate delivered
pursuant to Section 8 relating thereto,
<PAGE> 57
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and if the Vendors fail to cure such wilful failure, material misrepresentation
or fraud prior to the Time of Closing with the effect that the Purchaser
exercises its right not to close the acquisition of the Purchased Shares, then
(the Vendors acknowledge) the Purchaser will suffer damages that are and will be
difficult to ascertain with certainty. In such circumstances, the Purchaser may,
by written notice delivered to the Vendors at or prior to the Time of Closing,
elect to exercise any rights it may have under Section 8 as a consequence
thereof not to complete the purchase and sale transaction contemplated hereby.
If the Purchaser properly makes such election, each Vendor shall pay to the
Purchaser such Vendor's Pro Rata Share of $5,000,000 by way of liquidated
damages for such wilful failure, material misrepresentation or fraud, which
amount constitutes the parties= good faith pre-estimate of the actual damages
that the Purchaser will suffer in such circumstances and is not to be construed
as a penalty, provided that Investco shall have no liability under this Section
11.13 arising out of any voluntary resignation by any or all of the individuals
named in Schedule 4.22(b) and Mr. Chip Vosmik from their employment and/or
offices with Holdco, the Company and/or the Subsidiaries. The payment by each
Vendor of its Pro Rata Share of such amount shall extinguish all other liability
of such Vendor in connection therewith (including any other liability under this
Section 11, but excluding any obligation to obtain the appropriate disposition
of funds held by the Escrow Agent pursuant to the Escrow Agreement), and shall
constitute full and final satisfaction of the Purchaser=s claims relating
thereto against such Vendor, and against receipt of such amount the Purchaser
shall deliver to such Vendor a full and final written release to that effect.
Investco acknowledges and agrees that any failure by it to purchase at or before
the Time of Closing the Purchased Shares now or hereafter held by any Onex
Associate and to tender the same as and when required hereby shall constitute an
event described in Section 11.13(a). Nothing in this Section 11.13 shall
derogate from any right that the Purchaser may have under this Agreement, at law
or in equity to seek specific performance by the Vendors of their obligations
hereunder.
12. MISCELLANEOUS
12.1 AUTHORITY OF INVESTCO. Each of the Vendors hereby irrevocably
appoints Investco as such Vendor's agent and attorney for the purpose of
executing and delivering any amendment, waiver, notice, direction or other
document or taking any other action required or permitted to be taken by or on
behalf of the Vendors pursuant to this Agreement or in connection with the
transactions contemplated hereby. Any such amendment, waiver, notice, direction
or other document or any such other action shall be deemed to have been
effectively given or taken on behalf of the Vendors and shall be binding upon
each of the Vendors as if each of them had executed and delivered such document
or taken such other action, as the case may be.
12.2 MANAGEMENT. The Purchaser intends that the Company continue the
employment of Paul T. Clough and Chip S. Vosmik (collectively, the "Managers")
and the current senior management team of the Company after the Time of Closing.
The Vendors agree to cooperate in good faith prior to the Time of Closing with
the Purchaser to retain the Managers and such senior management team in place
after the Time of Closing.
<PAGE> 58
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12.3 NOTICES.
(1) Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be delivered in person, transmitted by
telecopy or similar means of recorded electronic communication or sent by
registered mail, charges prepaid, addressed as follows:
<TABLE>
<S> <C> <C>
(1) If to Investco: Impark Investments Inc.
c/o Onex Corporation
161 Bay Street
49th Floor, P.O. Box 700
Toronto, Ontario
M5J 2S1
Attention: Mark L. Hilson or
Anthony Munk
Fax: (416) 362-5765
(2) If to the Management Imperial Parking Limited
Vendors: Suite 300
601 West Cordova Street
Vancouver, B.C.
V6B 1G1
Attention: Paul T. Clough
Fax: (604) 331-7172
(3) If to the Purchaser: First Union Real Estate Equity
and Mortgage Investments
55 Public Square
Suite 1910
Cleveland, Ohio 44113-1937
Attention: Senior Vice President,
General Counsel and Secretary
Fax: (216) 781-7364
</TABLE>
<PAGE> 59
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with copies to: Fasken Campbell Godfrey
Box 20, Suite 3700
Toronto Dominion Bank Tower
Toronto-Dominion Centre
Toronto, Ontario
M5K 1N6
Attention: Walter J. Palmer
Fax: (416) 364-7813
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603-3441
Attention: J. Trent Anderson
Fax: (312) 706-8101
(2) Any such notice or other communication shall be deemed to have been
given and received on the day on which it was delivered personally or by
reputable overnight courier or transmitted by facsimile (or, if such day is not
a Business Day, on the next following Business Day) or, if mailed, on the third
Business Day following the date of mailing; provided, however, that if at the
time of mailing or within three Business Days thereafter there is or occurs a
labour dispute or other event which might reasonably be expected to disrupt the
delivery of documents by mail, any notice or other communication hereunder shall
be delivered or transmitted by means of recorded electronic communication as
aforesaid.
(3) Any party may at any time change its address for service from time
to time by giving notice to the other parties in accordance with this Section
12.3.
12.4 TRANSACTION COSTS. Each of the Purchaser and the Vendors shall
bear their own expenses and fees incurred with respect to this Agreement and the
transactions contemplated hereby.
12.5 CONSULTATION. The parties shall consult with each other before
issuing any press release or making any other public announcement with respect
to this Agreement or the transactions contemplated hereby and, except as
required by any applicable law or regulatory requirement or by any stock
exchange on which the shares of the Purchaser or Investco or any of its
Affiliates are then listed and posted for trading, neither the Vendors nor the
Purchaser shall issue any such press release or make any such public
announcement without the prior written consent of the other, which consent shall
not be unreasonably withheld or delayed.
<PAGE> 60
12.6 DISCLOSURE. Prior to any public announcement of the transaction
contemplated hereby pursuant to Section 12.5, none of the parties shall disclose
this Agreement or any aspect of such transaction except to its board of
directors, its senior management, its legal, accounting, financial or other
professional advisors, any financial institution contacted by it with respect to
any financing required in connection with such transaction and counsel to such
institution, or as may be required by any applicable law or any regulatory
authority or stock exchange having jurisdiction.
12.7 ASSIGNMENT AND ENFORCEABILITY.
(1) This Agreement shall be binding upon and enforceable by the parties
and their respective successors and permitted assigns. No party may assign any
of its rights or benefits under this Agreement, or delegate any of its duties or
obligations under this Agreement, to any person without the prior written
consent of the other parties hereto.
(2) Notwithstanding Section 12.7(a), Investco may assign all of its
rights, benefits, liabilities and obligations under this Agreement to any
Affiliate to which the Purchased Shares owned by it are transferred or assigned
prior to the Time of Closing and such Affiliate may effect such further
transfers and assignments as it may in its sole discretion determine; provided,
however, that any such assignment or transfer shall not relieve Investco from
its liabilities and obligations pursuant to this Agreement. In the event of any
such transfer or assignment, the Affiliate to which such transfer or assignment
is made shall be for all purposes considered to be a Vendor hereunder and shall
be entitled to enforce against the Purchaser all of the rights and benefits of
Investco hereunder.
(3) Notwithstanding Section 12.7(a), the Purchaser may assign all of
its rights, benefits, liabilities and obligations under this Agreement to any
corporation which is a subsidiary of or controlled by the Purchaser or to First
Union Management, Inc. or any Affiliate of First Union Management, Inc.;
provided, however, that any such assignment or transfer shall not relieve the
Purchaser from its liabilities and obligations pursuant to this Agreement. In
the event of any such transfer or assignment, the person to which such
assignment is made shall be for all purposes considered to be the Purchaser
hereunder and shall be entitled to enforce against the Vendors all of the rights
and benefits of the Purchaser hereunder.
12.8 ONEX CORPORATION. Onex Corporation hereby covenants and agrees that if
Investco or any of its permitted assigns hereunder fails to pay any amount as
and when owing by it under Section 11.1, then Onex Corporation shall forthwith
pay or cause to be paid such amount, failing which, Onex Corporation shall be
liable therefor as a primary obligor, and not merely as surety.
2.9 MANAGEMENT VENDORS. The Vendors represent and warrant and covenant
to the Purchaser that at the Time of Closing the Purchased Shares shall be held
beneficially and of record
<PAGE> 61
-56-
by Investco and directors or employees of Holdco, the Company or the
Subsidiaries, but only if each such director or employee has executed and
delivered by February 21, 1997 an instrument (an "Instrument of Adhesion")
substantially in the form annexed hereto as Schedule 12.9, and in any case only
if the number of Purchased Shares held in the aggregate by such directors and
employees does not exceed 3,358,000 and further provided that there shall be two
such employees whose holdings of Purchased Shares, in aggregate, equal the
combined holdings of all other such directors and employees.
12.10 CONSTRUCTION. The parties hereto acknowledge that their
respective legal counsel have reviewed and participated in settling the terms of
this Agreement and that any rule of construction to the effect that any
ambiguity is to be resolved against the drafting party shall not be applicable
in the interpretation of this Agreement.
12.11 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall constitute an original and all of which taken together shall
constitute one and the same instrument. Delivery of this Agreement may be
effected by facsimile transmission.
<PAGE> 62
12.12 RESTRICTION ON LIABILITY. Notwithstanding anything herein to the
contrary contained, this Agreement is made and executed on behalf of the
Purchaser, a business trust organized under the laws of the State of Ohio, by
its officers on behalf of the trustees thereof, and none of the trustees or any
additional or successor trustee hereafter appointed, or any beneficiary,
officer, employee or agent of the Purchaser shall have any liability in his
personal or individual capacity but instead, all parties shall look solely to
the property and assets of the Purchaser for satisfaction of claims of any
nature arising under or in connection with this Agreement.
IN WITNESS WHEREOF this Agreement has been executed
by the parties as of the date first above written.
IMPARK INVESTMENTS INC.
by /s/ Authorized Signer
------------------------------
C.S.
------------------------------
FIRST UNION REAL ESTATE EQUITY
AND MORTGAGE INVESTMENTS
by /s/ Authorized Signer
------------------------------
------------------------------
- ----------------------------
<PAGE> 63
The undersigned has executed this
Agreement as of the date first above
written to take notice of the provisions
hereof, to bind itself to Sections 10.5
and 12.8 and to take any benefit
associated with its obligations in
Sections 10.5 and 12.8, and not for any
other reason.
ONEX CORPORATION
by /s/ Authorized Signer
-----------------------------
------------------------------
<PAGE> 64
SHARE PURCHASE AMENDING AGREEMENT
REFERENCE is made to the share purchase agreement made the
18th day of February, 1997 (the "Share Purchase Agreement") between Impark
Investments Inc. ("Investco") and First Union Real Estate Equity and Mortgage
Investments (the "Purchaser"), to which the following persons (the "Management
Vendors") became parties in accordance therewith pursuant to instruments of
adhesion dated February 21, 1997: Paul T.C. Clough, Charles S. Vosmik, J. Bruce
Newsome (and Laurentian Bank of Canada in trust for account no. V002679, a
registered retirement savings plan trust of which J. Bruce Newsome is the sole
beneficiary), Douglas I. Poirier (and RBC Dominion Securities Inc. in trust for
account no. 496-81890-11, a registered retirement savings plan trust of which
Douglas I. Poirier is the sole beneficiary), J. Robin Bateman (and Gundyco in
trust for account no. 590-90333-17, a registered retirement savings plan trust
of which J. Robin Batemen is the sole beneficiary), James MacKay, Michael T.
Menzies, Robert L. Noiles (and Gundyco in trust for account no. 590-77616-12, a
registered retirement savings plan trust of which Robert L. Noiles is the sole
beneficiary), Harry J. Renaud (and Midland Walwyn Capital Inc. in trust for
account no. 8RABNQS, a registered retirement savings plan trust of which Harry
J. Renaud is the sole beneficiary), Stuart M. MacKenzie (and Gundyco in trust
for account no. 590-90254-12, a registered retirement savings plan trust of
which Stuart M. MacKenzie is the sole beneficiary), Daniel Sawchuk, Vernon
Schwartz and Jonas Prince.
WHEREAS the Purchaser terminated the obligations of the
parties to the Share Purchase Agreement (other than those set forth in Sections
12.2, 12.3, 12.4 and 12.5) by written notice (the "Notice") delivered to
Investco on February 24, 1997;
NOW THEREFORE in consideration of the premises and the
respective covenants set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
each of the parties hereto, the parties hereby agree as follows:
1. Capitalized terms that are used herein without other definition and
that are defined in the Share Purchase Agreement shall have the
respective meanings herein that are ascribed thereto in the Share
Purchase Agreement, unless the context otherwise requires. References
herein to Sections mean Sections of the Share Purchase Agreement.
2. The Notice is hereby revoked with effect as if it had never been
given and as if the rights and obligations of the parties to the
Share Purchase Agreement had not been affected by the execution and
delivery of the Notice, and the Share Purchase Agreement is hereby
deemed to have been in full force and effect from and after its
execution and delivery by Investco and the Purchaser on February
18, 1997.
3. The Share Purchase Agreement is hereby amended as follows:
(a) Section 1.1(y) is deleted in its entirety and the following is
substituted therefor:
<PAGE> 65
- 2 -
"(y) "ESCROW AGREEMENT" means the agreement dated as of
February 26, 1997 between Investco, the Purchaser and
the Escrow Agent;"
(b) Section 7.1 is amended by deleting the date "March 3, 1997" each
time it appears in the final sentence of such section and substituting
therefor the date "March 7, 1997".
(c) Each of Section 4.22, 7.8(e) and 7.8(f) is amended by deleting the
date "March 3, 1997" where it appears therein and substituting
therefor the date "March 7, 1997".
(d) Section 10.4 is amended by deleting the time "9:00 a.m." where it
appears therein and substituting therefor the time "5:00 p.m." and by
deleting the date "March 3, 1997" where it appears therein and
substituting therefor the date "March 7, 1997".
(e) Section 12.4 is amended by adding the following sentence to the
end of such section:
"Notwithstanding the preceding sentence, in the event that the
Purchaser terminates the obligations of the parties under this
Agreement (other than those set forth in Sections 12.2, 12.3, 12.4 and
12.5) by exercising its rights under Section 10.4, then the Purchaser
shall pay to Investco, forthwith after such termination, the amount of
U.S. $10,000 in partial reimbursement of Investco's legal fees and
expenses incurred in connection with the negotiation and settlement of
this Agreement."
(f) Schedule 1 is amended by adding the phrase "(and registered
retirement savings plan trusts of which they are the sole
beneficiaries)" after the word "individuals" in the first line thereof
and by deleting therefrom the name "Stuart M. Murdoch" and
substituting therefor "Stuart M. MacKenzie".
4. The Purchaser acknowledges and agrees that Onex has executed and
delivered a non-competition and confidentiality agreement as described
in Section 10.5 in accordance with such section and that the Purchaser
may not rely on any alleged failure by Onex to do the same in
giving any notice referred to in Section 10.4.
5. Notwithstanding Section 7.6, Investco and the Purchaser agree to file
by fax (with originals to follow by courier or delivery as soon as
practicable thereafter) with the Director of Investigation and Research
appointed under the Competition Act (Canada) (the "Competition Act"),
by not later than 5:30 p.m. (Toronto time) on March 7, 1997,
the information set out in section 121 of the Competition Act, certified
in accordance with section 118 of the Competition Act, and such other
documents as may be required to constitute a complete short form
notification under the Competition Act relating to the transactions
contemplated by the Share Purchase Agreement.
<PAGE> 66
- 3 -
6. Investco and the Purchaser agree that neither of them shall, without
the prior written consent of the other, make any public disclosure of the
existence of or the terms and conditions of the Share Purchase Agreement
prior to March 15, 1997 unless compelled to do so by formal order of a
court or regulatory authority having jurisdiction in the premises or
required to do so by law or by the rules of any stock exchange on which
securities of Onex or the Purchaser are listed (and neither of them shall
make such disclosure on or after that date until the Closing Date unless
the party making disclosure determines in good faith and after
consultation with its legal counsel that such disclosure has been so
compelled or is so required), it being agreed that disclosure to the
legal, accounting, financial, other professional advisors and the
employees of either party who have a need to know about the transaction
does not and will not constitute public disclosure. Investco and the
Purchaser shall provide prior notice to each other and shall use their
best efforts to consult with each other before making any public
disclosure of the existence of or the terms and conditions of the Share
Purchase Agreement, with a view to making such disclosure in time, manner
and content mutually satisfactory to them. No Management Vendor shall
make any public disclosure of the existence of or the terms and
conditions of the Share Purchase Agreement unless and until public
disclosure of the same has been made by Investco or the Purchaser.
7. The Share Purchase Agreement remains in full force and effect, unamended
except as specifically provided for in paragraphs 2, 3 and 5 above.
8. This agreement may be executed in any number of counterparts, each
of which shall constitute an original and all of which taken together
shall constitute one and the same instrument, and this agreement shall be
effective as of the latest date on which any counterpart is shown to have
been executed. Delivery hereof and of any counterpart to any party may be
effected by facsimile transmission made to that party.
IN WITNESS WHEREOF this amending agreement has been executed
by the parties as of the 26th day of February, 1997.
IMPARK INVESTMENTS INC. FIRST UNION REAL ESTATE EQUITY AND
MORTGAGE INVESTMENTS
by /s/ Authorized Signer by /s/ Authorized Signer
---------------------------- -----------------------------------
/s/ Paul L. C. Clough /s/ Charles S. Vosmik
- ------------------------------ -----------------------------------
Paul T. C. Clough Charles S. Vosmik
<PAGE> 67
- 4 -
<TABLE>
<S> <C>
/S/ J. Bruce Newsome /S/ Douglas Poirier
- ------------------------------ ------------------------------
J. Bruce Newsome Douglas I. Poirier
(for himself and as sole beneficiary (for himself and as sole beneficiary
of RRSP trust account no. V002679 of RRSP trust account no. 496-81890-11
with Laurentian Bank of Canada) with RBC Dominion Securities Inc.)
/S/ J. Robin Batement /S/ Robert Noiles
- ------------------------------ ------------------------------
J. Robin Bateman Robert L. Noiles
(for himself and as sole beneficiary (for himself and as sole beneficiary
of RRSP trust account no. 590-90333-17 of RRSP trust account no. 590-77616-12
with Gundyco) with Gundyco)
/S/ James MacKay /S/ Michael T. Menzies
- ------------------------------ ------------------------------
James MacKay Michael T. Menzies
/S/ Harry J. Renaud /S/ Stuart MacKenzie
- ------------------------------ ------------------------------
Harry J. Renaud Stuart M. MacKenzie
(for himself and as sole beneficiary (for himself and as sole beneficiary
of RRSP trust account no. 8RABNQS of RRSP trust account no. 590-90254-12
with Midland Walwyn Capital Inc.) with Gundyco)
/S/ Daniel Sawchuk /S/ Venon Schwartz
- ------------------------------ ------------------------------
Daniel Sawchuk Vernon Schwartz
/S/ Jonas Price
- ------------------------------
Jonas Prince
- ------------------------------
The undersigned acknowledges and consents to
the foregoing as of the 26th day of February, 1997
ONEX CORPORATION
by /S/ Authorized Signature
---------------------------
</TABLE>
<PAGE> 68
SHARE PURCHASE SECOND AMENDING AGREEMENT
REFERENCE is made to the share purchase agreement made the
18th day of February, 1997 (the "Share Purchase Agreement") between Impark
Investments Inc. ("Investco") and First Union Real Estate Equity and Mortgage
Investments (the "Purchaser"), to which the following persons (the "Management
Vendors") became parties in accordance therewith pursuant to instruments of
adhesion dated February 21, 1997: Paul T.C. Clough, Charles S. Vosmik, J. Bruce
Newsome (and Laurentian Bank of Canada in trust for account no. V002679, a
registered retirement savings plan trust of which J. Bruce Newsome is the sole
beneficiary), Douglas I. Poirier (and RBC Dominion Securities Inc. in trust for
account no. 496-81890-11, a registered retirement savings plan trust of which
Douglas I. Poirier is the sole beneficiary), J. Robin Bateman (and Gundyco in
trust for account no. 590-90333-17, a registered retirement savings plan trust
of which J. Robin Batemen is the sole beneficiary), James MacKay, Michael T.
Menzies, Robert L. Noiles (and Gundyco in trust for account no. 590-77616-12, a
registered retirement savings plan trust of which Robert L. Noiles is the sole
beneficiary), Harry J. Renaud (and Midland Walwyn Capital Inc. in trust for
account no. 8RABNQS, a registered retirement savings plan trust of which Harry
J. Renaud is the sole beneficiary), Stuart M. MacKenzie (and Gundyco in trust
for account no. 590-90254-12, a registered retirement savings plan trust of
which Stuart M. MacKenzie is the sole beneficiary), Daniel Sawchuk, Vernon
Schwartz and Jonas Prince.
WHEREAS the Share Purchase Agreement was amended by a share
purchase amending agreement made as of the 26th day of February, 1997 (the Share
Purchase Agreement as so amended being referred to herein as the "Amended Share
Purchase Agreement");
NOW THEREFORE in consideration of the premises and the
respective covenants set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
each of the parties hereto, the parties hereby agree as follows:
1. Capitalized terms that are used herein without other definition and that
are defined in the Amended Share Purchase Agreement shall have the
respective meanings herein that are ascribed thereto in the Amended
Share Purchase Agreement, unless the context otherwise requires.
References herein to Sections mean Sections of the Amended Share
Purchase Agreement.
2. The Amended Share Purchase Agreement is hereby amended as follows:
(a) Section 1.1 is amended by:
(i) deleting the word "and" at the end of Section 1.1(jjj);
(ii) deleting the period at the end of Section 1.1(kkk) and
substituting therefor ";and"; and
(iii) adding to the end thereof a new Section 1.1(lll) as
follows:
<PAGE> 69
- 2 -
"(lll) "SECOND AMENDING AGREEMENT" means the
agreement dated as of March 3, 1997 between
Investco, the Purchaser and the Management
Vendors.
(b) Section 10.4 is amended by:
(i) deleting the period at the end of Section 10.4(b) and
substituting therefor ";and"; and
(ii) inserting immediately following Section 10.4(b) thereof a new
Section 10.4(c) as follows:
"(c) the failure by 3:00 p.m. (Toronto time) on March
7, 1997: (i) to obtain the consent, on terms and
conditions acceptable to the Purchaser, of
Canadian Imperial Bank of Commerce and Hong Kong
Bank of Canada referred to in paragraph 3 of the
Second Amending Agreement; and (ii) to execute and
deliver, and to obtain the execution and delivery
by Investco (in its own capacity and as agent and
attorney of the Management Vendors under Section
12.1) of, an amendment to this Agreement as
contemplated by paragraph 4 of the Second Amending
Agreement."
3. The Purchaser and the Vendors acknowledge that the Purchaser wishes to
have the Company and its Affiliates implement a reorganization (the
"Reorganization") of the Company and certain of its Affiliates and
that such Reorganization cannot be implemented without the consent of
Canadian Imperial Bank of Commerce and Hong Kong Bank of Canada
pursuant to the credit agreement dated as of November 13, 1996 as
described in Schedule 4.2 to the Amended Share Purchase Agreement.
Investco and the Purchaser agree to use their best efforts (as such
term is construed under Section 1.11) to obtain the consent of such
banks to the Reorganization.
4. Investco and the Purchaser agree to use their best efforts (as such
term is construed under Section 1.11) to execute and deliver an
agreement to further amend the Amended Share Purchase Agreement to
provide for: (i) the Reorganization; (ii) the subscription by Investco
or an Affiliate of it (and/or the Vendors) for preferred shares of the
Company or an Affiliate of it; and (iii) an exchange agreement to be
entered into between the Purchaser and Investco or an Affiliate of it
(and/or the Vendors) relating to such preferred shares.
5. The Amended Share Purchase Agreement remains in full force and effect,
unamended except as specifically provided for in paragraph 2 above.
<PAGE> 70
- 3 -
6. This agreement may be executed in any number of counterparts, each of
which shall constitute an original and all of which taken together
shall constitute one and the same instrument, and this agreement shall
be effective as of the latest date on which any counterpart is shown
to have been executed. Delivery hereof and of any counterpart to any
party may be effected by facsimile transmission made to that party.
IN WITNESS WHEREOF this amending agreement has been executed
by the parties as of the 2nd day of March, 1997.
IMPARK INVESTMENTS INC. FIRST UNION REAL ESTATE EQUITY AND
MORTGAGE INVESTMENTS
by /s/ Authorized Signer by
---------------------------- -----------------------------
IMPARK INVESTMENTS INC., /s/ Paul T.C. Clough
as agent and attorney for each of the -------------------------------
Management Vendors pursuant to Paul T.C. Clough
Section 12.1 of the Amended Share /s/ Charles S. Vosmik
Purchase Agreement -------------------------------
Charles S. Vosmik
by /s/ Authorized Signer
----------------------------------------
- ------------------------------------------
The undersigned acknowledges and consents
to the foregoing as of the 2nd day of
March, 1997.
ONEX CORPORATION
by /s/ Authorized Signer
--------------------------------------------
<PAGE> 71
ESCROW AMENDING AGREEMENT
REFERENCE is made to the escrow agreement made as of the 26th day of
February, 1997 (the "Escrow Agreement") between Impark Investments Inc.
("Investco"), First Union Real Estate Equity and Mortgage Investments (the
"Purchaser") and Kelly Affleck Greene (the "Escrow Agent")
IN CONSIDERATION of the premises and the respective covenants set forth
below, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties hereto,
the parties hereby agree as follows:
1. The Escrow Agreement is hereby amended as follows:
(a) deleting the date "March 7, 1997" from Section 3.2(a) each time it
appears therein and substituting therefor in each case the date
"March 7, 1997";
(b) deleting the ";and" from the end of Section 3.2(a) and substituting a
period therefor;
(c) deleting therefrom Section 3.2(b); and
(d) deleting the term "Final Termination Time" from Section 3.3 and
substituting therefor the term "Early Termination Time".
2. The Escrow Agreement remains in full force and effect, unamended except as
specifically provided for in paragraph 1 above.
3. This agreement may be executed in any number of counterparts, each of which
shall constitute an original and all of which taken together shall
constitute one and the same instrument, and this agreement shall be
effective as of the latest date on which any counterpart is shown to have
been executed. Delivery hereof and of any counterpart to any party may be
effected by facsimile transmission made to that party.
IN WITNESS WHEREOF this amending agreement has been executed by the
parties as of the 2nd day of March, 1997.
IMPARK INVESTMENTS INC. FIRST UNION REAL ESTATE EQUITY
AND MORTGAGE INVESTMENTS
by /s/ Authorized Signer by /s/ Authorized Signer
---------------------------- ---------------------------
KELLY AFFLECK GREENE
by /s/ Authorized Signer
---------------------------
Name:
<PAGE> 72
SHARE PURCHASE THIRD AMENDING AGREEMENT
REFERENCE is made to the share purchase agreement made the
18th day of February, 1997 (the "Share Purchase Agreement") between Impark
Investments Inc. ("Investco") and First Union Real Estate Equity and Mortgage
Investments (the "Purchaser"), to which the following persons (the "Management
Vendors") became parties in accordance therewith pursuant to instruments of
adhesion dated February 21, 1997: Paul T.C. Clough, Charles S. Vosmik, J. Bruce
Newsome (and Laurentian Bank of Canada in trust for account no. V002679, a
registered retirement savings plan trust of which J. Bruce Newsome is the sole
beneficiary), Douglas I. Poirier (and RBC Dominion Securities Inc. in trust for
account no. 496-81890-11, a registered retirement savings plan trust of which
Douglas I. Poirier is the sole beneficiary), J. Robin Bateman (and Gundyco in
trust for account no. 590-90333-17, a registered retirement savings plan trust
of which J. Robin Batemen is the sole beneficiary), James MacKay, Michael T.
Menzies, Robert L. Noiles (and Gundyco in trust for account no. 590-77616-12, a
registered retirement savings plan trust of which Robert L. Noiles is the sole
beneficiary), Harry J. Renaud (and Midland Walwyn Capital Inc. in trust for
account no. 8RABNQS, a registered retirement savings plan trust of which Harry
J. Renaud is the sole beneficiary), Stuart M. MacKenzie (and Gundyco in trust
for account no. 590-90254-12, a registered retirement savings plan trust of
which Stuart M. MacKenzie is the sole beneficiary), Daniel Sawchuk, Vernon
Schwartz and Jonas Prince.
WHEREAS the Share Purchase Agreement was amended by a share
purchase amending agreement made as of the 26th day of February, 1997 (the
"First Amending Agreement") and a share purchase amending agreement made as of
the 2nd day of March, 1997 (the "Second Amending Agreement") (the Share Purchase
Agreement as so amended being referred to herein as the "Amended Share Purchase
Agreement");
NOW THEREFORE in consideration of the premises and the
respective covenants set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
each of the parties hereto, the parties hereby agree as follows:
1. Capitalized terms that are used herein without other
definition and that are defined in the Amended Share Purchase
Agreement shall have the respective meanings herein that are
ascribed thereto in the Amended Share Purchase Agreement, unless
the context otherwise requires. References herein to Sections mean
Sections of the Amended Share Purchase Agreement.
2. The Amended Share Purchase Agreement is hereby amended as follows:
(a) Section 1.1(lll) is amended by deleting the date "March 3,
1997" therein and substituting therefore the date "March 2,
1997";
(b) Section 10.4 is amended by:
<PAGE> 73
- 2 -
(i) deleting the time "9:00 a.m." where it appears therein and
substituting therefore the time "12:00 p.m.";
(ii) deleting the time "3:00 p.m." where it appears therein and
substituting therefore the time "12:00 p.m."; and
(iii) deleting the date "March 7, 1997" where it appears therein
and substituting therefor the date "March 11, 1997".
3. Section 5 of the First Amending Agreement is hereby deleted.
4. The Amended Share Purchase Agreement remains in full force and effect,
unamended except as specifically provided for in paragraph 2 above. The
First Amending Agreement remains in full force and effect, unamended
except as specifically provided for in the Second Amending Agreement
and in paragraphs 2 and 3 above.
5. This agreement may be executed in any number of counterparts, each of
which shall constitute an original and all of which taken together
shall constitute one and the same instrument, and this agreement shall
be effective as of the latest date on which any counterpart is shown
to have been executed. Delivery hereof and of any counterpart to any
party may be effected by facsimile transmission made to that party.
IN WITNESS WHEREOF this amending agreement has been executed
by the parties as of the 7th day of March, 1997.
IMPARK INVESTMENTS INC. FIRST UNION REAL ESTATE EQUITY AND
MORTGAGE INVESTMENTS
by /s/ Authorized Signer by /s/ Authorized Signer
---------------------------- -----------------------------
IMPARK INVESTMENTS INC.,
as agent and attorney for each of the
Management Vendors pursuant to
Section 12.1 of the Amended Share
Purchase Agreement
by /s/ Authorized Signer
----------------------------
- --------------------------------
<PAGE> 74
-3-
The undersigned acknowledges and consents to
the foregoing as of the 7th day of March, 1997.
ONEX CORPORATION
by /s/ Authorized Signer
__________________________
<PAGE> 75
ESCROW AMENDING AGREEMENT
REFERENCE is made to the escrow agreement made as of the 26th day of
February, 1997 between Impark Investments Inc. ("Investco"), First Union Real
Estate Equity and Mortgage Investments (the "Purchaser") and Kelly Affleck
Greene (the "Escrow Agent"), as amended by an agreement made by such parties as
of March 2, 1997 (as so amended, the "Escrow Agreement").
IN CONSIDERATION of the premises and the respective covenants set forth
below, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties hereto,
the parties hereby agree as follows:
1. The Escrow Agreement is hereby amended as follows:
(a) deleting the date "March 7, 1997" from Section 3.2(a) each time it
appears therein and substituting therefore in each case the date
"March 11, 1997"; and
(b) deleting the time "5:00 p.m." in the first line of Section 3.2(a) and
substituting therefor the time "12:00 p.m. (Toronto time)".
2. The Escrow Agreement remains in full force and effect, unamended except as
specifically provided for in paragraph 1 above.
3. This agreement may be executed in any number of counterparts, each of which
shall constitute an original and all of which taken together shall
constitute one and the same instrument, and this agreement shall be
effective as of the latest date on which any counterpart is shown to have
been executed. Delivery hereof and of any counterpart to any party may be
effected by facsimile transmission made to that party.
IN WITNESS WHEREOF this amending agreement has been executed by the
parties as of the 7th day of March, 1997.
IMPARK INVESTMENTS INC. FIRST UNION REAL ESTATE EQUITY
AND MORTGAGE INVESTMENTS
by /s/ Authorized Signer by /s/ Authorized Signer
---------------------------- ---------------------------
KELLY AFFLECK GREENE
by /s/ Authorized Signer
---------------------------
Name:
<PAGE> 76
SHARE PURCHASE FOURTH AMENDING AGREEMENT
REFERENCE is made to the share purchase agreement made the
18th day of February, 1997 between Impark Investments Inc. ("Investco") and
First Union Real Estate Equity and Mortgage Investments (the "Purchaser"), to
which the following persons (the "Management Vendors") became parties in
accordance therewith pursuant to instruments of adhesion dated February 21,
1997: Paul T.C. Clough, Charles S. Vosmik, J. Bruce Newsome (and Laurentian
Bank of Canada in trust for account no. V002679, a registered retirement
savings plan trust of which J. Bruce Newsome is the sole beneficiary), Douglas
I. Poirier (and RBC Dominion Securities Inc. in trust for account no.
496-81890-11, a registered retirement savings plan trust of which Douglas I.
Poirier is the sole beneficiary), J. Robin Bateman (and Gundyco in trust for
account no. 590-90333-17, a registered retirement savings plan trust of which
J. Robin Batemen is the sole beneficiary), James MacKay, Michael T. Menzies,
Robert L. Noiles (and Gundyco in trust for account no. 590-77616-12, a
registered retirement savings plan trust of which Robert L. Noiles is the sole
beneficiary), Harry J. Renaud (and Midland Walwyn Capital Inc. in trust for
account no. 8RABNQS, a registered retirement savings plan trust of which Harry
J. Renaud is the sole beneficiary), Stuart M. MacKenzie (and Gundyco in trust
for account no. 590-90254-12, a registered retirement savings plan trust of
which Stuart M. MacKenzie is the sole beneficiary), Daniel Sawchuk, Vernon
Schwartz and Jonas Prince, as amended by an amending agreement (the "First
Amending Agreement") made as of February 26, 1997 by the foregoing parties and
by further amending agreements made as of March 2, 1997 and as of March 7, 1997
between the Purchaser and Investco (both in its own capacity and as agent and
attorney for the Management Vendors (such agreement, as so amended, being
hereinafter referred to as the "Share Purchase Agreement").
WHEREAS the parties to the Share Purchase Agreement wish to
amend such agreement on the terms set out herein;
NOW THEREFORE in consideration of the premises and the
respective covenants set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
each of the parties hereto, the parties hereby agree as follows:
1. DEFINED TERMS AND REFERENCES. Capitalized terms that are used herein
without other definition and that are defined in the Share Purchase Agreement
shall have the respective meanings herein that are ascribed thereto in the Share
Purchase Agreement, unless the context otherwise requires. References herein to
Sections mean Sections of the Share Purchase Agreement.
2. AMENDMENTS TO SECTION 1.1. Section 1.1 of the Share Purchase Agreement
is hereby amended as follows:
(a) by adding immediately after paragraph (f) the following:
"(f.1) 'Canadian Dollar Equivalent' means, with respect to any
amount of United States dollars, the amount of Canadian
dollars that would be received upon the purchase by the holder
of such United States dollars of Canadian dollars at an
<PAGE> 77
- 2 -
exchange rate equal to the noon (12:00 p.m.) United
States/Canadian dollar exchange rate quoted by the Bank of
Canada on the Business Day prior to the Closing Date;
(f.2) 'Canco 1' has the meaning ascribed thereto in Section
2.7 and includes the successors of such corporation;";
(b) by adding immediately after paragraph (g) the following:
"(g.1) 'Class A Common Shares' means Class A Non-Voting Common
Shares in the capital of Canco 1 or any successor;
(g.2) 'Class A Preferred Shares' means Class A Preferred
Shares in the capital of Canco 1 or any successor; ";
(c) by deleting paragraph (i) and substituting therefor the
following:
"(i) 'Closing Date' means the date on which all the
conditions set out in Sections 8 and 9 are satisfied or
waived in writing by the Vendors or the Purchaser, as the
case may be, but in any event not later than April 11, 1997,
except that if the Purchaser determines in good faith and so
notifies Investco in writing prior to 11:00 a.m. (Toronto
time) on April 11, 1997 that it does not have reasonable
assurance that a wire transfer of funds can be commenced on
April 11, 1997 from an account in the United States and
completed to an account in Canada of a different entity
before 11:00 a.m. (Toronto time) on April 11, 1997, then the
latest date by which the conditions set out in Sections 8 and
9 are to be satisfied shall be April 15, 1997;"
(d) by amending paragraph (j) by adding the following
immediately after the word "less" in the fifth line thereof:
"(i) $250,000 and (ii)";
(e) by adding immediately after paragraph (l) the following:
"(l.1) 'Common Share Allocation Amount' means the Canadian
Dollar Equivalent of U.S. $11.6 million;";
(f) by adding immediately after paragraph (tt) the following:
"(tt.1) 'Onex Vendor' means an Onex Associate that has
executed and delivered a notice substantially in the form of
Schedule 10.6(b) in accordance with Section 10.6 during the
time limit specified for such notice by such section;
<PAGE> 78
- 3 -
(tt.2) 'Opco Subsidiaries' means, collectively, City
Collection Company Ltd., Impark Management Ltd., Inner-Tec
Security Consultants Ltd., Compupark Systems Corporation and
Park-Ur-Self (Canada) Ltd.;";
(g) by deleting paragraph (zz) and substituting the following
therefor:
"(zz) 'Pro Rata Share' means, at any time in
respect of any Vendor, the percentage obtained by
multiplying by 100 the quotient obtained by dividing
the number of common shares of Holdco held by such
Vendor by the total number of common shares of Holdco
issued and outstanding at such time; provided that
for the purpose of determining, at any time, the Pro
Rata Share of Investco, Investco shall be deemed to
hold all common shares of Holdco other than those
held by the Management Vendors and the Onex Vendors
and further provided that, for all purposes of
Article 11, (i) the Pro Rata Share of Investco shall
be determined on the basis that Investco is deemed to
hold all common shares of Holdco other than those
held by the Management Vendors and (ii) at and after
the Time of Closing, the Pro Rata Share of any Vendor
shall be that Vendor's Pro Rata Share as at the Time
of Closing, determined as aforesaid;" and
(h) by inserting the following immediately following the term
"Management Vendors" where it appears in paragraph
(jjj):
", the Onex Vendors (if any)".
3. AMENDMENTS TO SECTION 2.3. Section 2.3 of the Share Purchase Agreement
is hereby amended by deleting that portion of Section 2.3 that follows Section
2.3(a) and substituting the following therefor:
"(b) the issuance and delivery to each Vendor by Canco 1 of Class A
Common Shares on the basis that each Vendor shall be entitled
to one Class A Common Share for each $1.00 of such Vendor's
Pro Rata Share of the Common Share Allocation Amount; and
(c) the delivery to or to the order of each Vendor by the
Purchaser of a certified cheque or bank draft, in either case
drawn on a Canadian chartered bank in immediately available
funds, payable to the order of such Vendor (or, in the case of
Investco, by the wire transfer of immediately available funds
to such account as may be specified by Investco) in the amount
of such Vendor's Pro Rata Share of the excess of the Purchase
Price over the aggregate of (i) the Escrow Amount and (ii) the
Common Share Allocation Amount (subject, in the case of
Vendors that are non-residents of Canada within the meaning of
the Tax Act and who have not delivered to the
<PAGE> 79
-4-
Purchaser a certificate meeting the requirements of Section
8.12, to any withholdings required to be made under the Tax
Act),
against delivery to the Purchaser of a certificate or certificates
representing the Purchased Shares, duly endorsed for transfer to the
Purchaser or as it may direct.
(d) Notwithstanding the foregoing provisions of this Section 2.3,
the Purchaser may, by notice in writing delivered to each
Management Vendor not less than ten Business Days prior to the
Closing Date, offer to satisfy all or any specified portion of
the amount otherwise payable to such Management Vendor
pursuant to Section 2.3(c) (the "Cash Portion") by
the delivery to such Management Vendor of Class A Common
Shares, Class B Voting Common Shares or Class A Preferred
Shares (each of which shall satisfy $1.00 of the Cash Portion)
on the basis described in such notice. Each Management Vendor
electing to accept such offer shall do so by notice in writing
delivered to the Purchaser and to Investco not less than three
Business Days prior to the Closing Date; such notice shall
specify that amount of the Cash Portion which such Management
Vendor has agreed shall be satisfied by the issuance of Class
A Common Shares, Class B Voting Common Shares or Class A
Preferred Shares. Furthermore, the Purchaser shall have the
right, by notice in writing delivered to any one or more of
the Management Vendors not less than three Business Days prior
to the Closing Date, to satisfy the obligation to deliver
Class A Common Shares to any such Management Vendor pursuant
to Section 2.3(b) by the delivery at the Time of Closing of
cash in lieu thereof.
(e) Notwithstanding the foregoing provisions of Section 2.3 or any
other provision of this Agreement, the Purchaser shall have
the right, by notice in writing delivered to Investco and the
Management Vendors not less than three Business Days prior to
the Closing Date, to reduce the portion of the Purchase Price
to be paid pursuant to Section 2.3(b) to such extent as may be
determined by Purchaser in its sole and absolute discretion
and to pay cash at the Time of Closing in lieu thereof. The
Purchaser agrees to exercise reasonable efforts to identify
structuring opportunities that may enable it to exercise its
discretion pursuant to the foregoing provisions of this
Section 2.3(e) and, in the event of the identification of
opportunities that it determines to be practical and
appropriate under the circumstances, to exercise its
discretion to so cause such a reduction."
4. FURTHER AMENDMENTS TO SECTION 2. Section 2 of the Share Purchase
Agreement is hereby further amended by adding the following Sections
immediately following Section 2.5:
"2.6 ACTIONS IN CONTEMPLATION OF CLOSING. Each party agrees to
execute all such documents and do all such other acts and things
(to the extent lawful and within its power), all in full
cooperation with the other parties, as may be necessary to effect
and implement:
<PAGE> 80
-5-
(a) prior to the Time of Closing the steps and transactions set out in
Sections 2.7 and 2.8 below in a manner that will permit the
consummation in accordance herewith of the purchase and sale of the
Purchased Shares provided for in Section 2.1. Each party shall consider
in good faith any changes or modifications to the steps and
transactions set out in Sections 2.7 and 2.8 and Sections 2.11 and 2.12
that are proposed by any other party.
2.7 CAPITALIZATION OF CANCO 1. The Purchaser shall cause to be
capitalized a company ("Canco 1") existing under the Canada
Business Corporations Act, of which all the voting shares are held,
directly or indirectly, by First Union Management, Inc. ("FUMI"),
such that Canco 1 (if it is to be the assignee of the
Purchaser in accordance with Section 12.7(c)) has cash at the Time of
Closing in an amount not less than the Canadian Dollar Equivalent of
U.S. $39.6 million together with such other cash amount as may be
necessary for Canco 1 in that circumstance to make the payments
described in Section 2.3(c). The authorized share capital of Canco 1
shall include Class A Common Shares, Class B Voting Common Shares and
Class A Preferred Shares with the respective attributes set forth with
respect thereto in Schedule 2.7
2.8 CONTINUANCE UNDER CBCA. The Vendors shall use their best efforts to
cause the Company, Robbins Parking Service Ltd. and Impark Properties
Ltd. to be continued as soon as practicable under the laws of Canada
pursuant the export and import continuance provisions of the Company
Act (British Columbia) and the Canada Business Corporations Act,
respectively.
2.9 PUT AND CALL AGREEMENT. First Union Real Estate Equity and Mortgage
Investments ("FUR") and Investco shall enter into at the
Time of Closing, and perform the respective obligations then to be
performed by them under, a put-call agreement, a security trust
indenture and a depositary agreement relating to Investco's Class A
Common Shares substantially on the terms and conditions described in
Schedule 2.9.
2.10 AMALGAMATIONS INVOLVING CANCO 1. The Purchaser shall ensure that,
so long as Investco (or a permitted assign other than FUR or FUMI) is a
holder of Class A Common Shares, any amalgamation involving Canco 1 and
any other corporation, including any amalgamation of Canco 1 and
Imperial Parking Limited, shall be accomplished as a short form
vertical amalgamation under the Canada Business Corporations Act, with
Canco 1 as the holding corporation in each case. For greater certainty,
the Purchaser shall ensure that all rights and obligations of Canco 1
shall be rights and obligations of the corporation continuing following
any such amalgamation without the requirement of any assignment or
assumption agreement or other formality.
2.11 554506 ALBERTA LTD. The Purchaser may at any time prior to the
Closing Date request by written notice to Investco that the Vendors use
their reasonable best efforts to cause the Company to purchase, on
terms and conditions acceptable to Investco and the Purchaser, acting
reasonably, on or before the Closing Date all the outstanding shares of
<PAGE> 81
-6-
554506 Alberta Ltd. not currently owned, directly or indirectly, by the
Company. Any such purchase shall be completed by the Company by drawing
down under its credit facilities with Canadian Imperial Bank of
Commerce an amount sufficient to pay the full amount of the purchase
price for such shares; provided, however, that any indebtedness
incurred by the Company in connection with such acquisition shall not
be taken into account in any calculation of the Closing Debt.
2.12 NO BREACH FOR IMPLEMENTING PRE-CLOSING STEPS. The parties hereby
agree that to the extent that any inaccuracy in any representation and
warranty made by any party in the Share Purchase Agreement results
solely from any action taken by that party in good faith compliance
with its obligations which are required to be fulfilled at or prior to
the Time of Closing under Sections 2.8 and 2.11, the intention to take
which action such party has disclosed to the Purchaser (if such party
is a Vendor) or to Investco (if such party is the Purchaser) prior to
taking the same, the same shall be deemed not to cause, result in or
give rise to any breach of warranty or misrepresentation (or any
non-satisfaction of a condition to closing related thereto) by such
party under the Share Purchase Agreement or in any other agreement,
instrument or other document delivered in connection with the
transactions contemplated hereby. The taking of any action by any party
in good faith compliance with any of its obligations which are required
to be fulfilled at or prior to the Time of Closing under Sections 2.8
and 2.11, the intention to take which action such party has disclosed
to the Purchaser (if such party is a Vendor) or to Investco (if such
party is the Purchaser) prior to taking the same, shall be deemed not
to cause, result in or give rise to any breach by such party of any
covenant or agreement (or any non-satisfaction of a condition to
closing related thereto) contained in the Share Purchase Agreement,
including the covenants and agreements of the Vendors contained in
Section 7.4, or in any other agreement, instrument or other document
delivered in connection with the transactions contemplated hereby.
2.13 CONSENT TO POST-CLOSING TRANSACTIONS. The Vendors hereby consent
to, and agree that they will suffer no adverse consequences as a
result of, any of the following transactions to be completed at or
following the Time of Closing:
(a) the direct or indirect sale by the Company of the
Opco Subsidiaries;
(b) any amalgamation made in accordance with Section
2.10; and
(c) the sale of the Real Property (or the real property
owned by 554506 Alberta Ltd.) by any owner thereof
from time to time.
2.14 TAX ELECTION. If any Vendor who is not exempt from tax
under Part I of the Tax Act has received Class A Common Shares pursuant
to Section 2.3(b) and so elects by giving written notice to Canco 1 on
the Closing Date, the Purchaser shall cause Canco 1 to elect jointly
with such Vendor under subsection 85(1) of the Tax Act (or any
successor provision thereto of similar effect) and under the equivalent
provision of any provincial tax
<PAGE> 82
-7-
legislation, in prescribed form, and shall therein agree that the
elected amount in respect of such Vendor's Purchased Shares shall be an
amount not less than (a) that Vendor's Pro Rata Share of the Purchase
Price, less (b) that Vendor's Pro Rata share of the Common Share
Allocation Amount, subject to the limitations prescribed by the
relevant legislation. The Vendor and Canco 1 shall file such election
as required by the relevant legislation and the administrative
practices of Revenue Canada so that it shall have full force and effect
for purposes of the relevant legislation.
5. AMENDMENT TO SECTION 3. Section 3 of the Share Purchase Agreement is
hereby amended by adding the following new Section 3.3 immediately following
Section 3.2:
"3.3 REPRESENTATIONS RE EXTRAORDINARY BONUSES. Each of the Management
Vendors represents and warrants to the Purchaser that he has not
received any extraordinary bonus or other compensation from Onex or any
of its Affiliates or Associates during the 18 months preceding the date
hereof except as disclosed in writing to the Purchaser and is not
entitled to receive any such extraordinary bonus or other compensation
under any commitment or agreement from Onex or any of its Affiliates or
Associates. The Purchaser agrees that the information referred to above
in this Section 3.3, including the information contained in such
written disclosure, shall be subject to the February 7, 1997
confidentiality agreement referred to in Section 1.5."
6. AMENDMENTS TO SECTION 8. Section 8 of the Share Purchase Agreement is
hereby amended by adding the following Section immediately following Section 8.
12, renumbering the present Section 8.13 to Section 8.14 and replacing the
reference to "8.12" in the first line of the present Section 8.13 with a
reference to "8.13":
"8.13 DEPOSITARY EXECUTION OF DEPOSITARY AGREEMENT. A depositary
satisfactory to the Purchaser and Investco, each acting reasonably,
shall have executed and delivered a depositary agreement containing
substantially the terms set out with respect to such agreement in
Schedule 2.9."
7. AMENDMENTS TO SECTION 9. Section 9 of the Share Purchase Agreement is
hereby amended by adding the following Section immediately following Section 9.
6 and renumbering the present Section 9.7 to Section 9.8 and replacing the
reference to "9.6" in the first line of the present Section 9.7 with a
reference to "9.7":
"9.7 TRUSTEE EXECUTION OF SECURITY TRUST INDENTURE. A trustee
satisfactory to the Purchaser and Investco, each acting reasonably,
shall have executed and delivered a security trust indenture containing
substantially the terms set out with respect to such indenture in
Schedule 2.9."
8. AMENDMENTS TO SECTION 10. Section 10 of the Share Purchase Agreement is
hereby amended as follows:
<PAGE> 83
-8-
(a) by deleting Section 10.4 and substituting the following therefor:
"10.4 The Purchaser may, by written notice delivered to the Vendors at
or prior to 8:00 p.m. (Toronto time) on March 19, 1997, terminate the
obligations of all parties under this Agreement (other than those set
forth in Sections 12.2, 12.3, 12.4 and 12.5) by reason of the failure
of the Purchaser and the Management Vendors to agree in principle on a
reasonable basis to the terms of the Management Vendors'
investment in the Company (or its Affiliates or successors, including
Canco 1) to be made at or after the Time of Closing. The termination of
such obligations pursuant to this Section 10.4 shall relieve all
parties of all liabilities relating hereto, other than those set forth
in Sections 12.2, 12.3, 12.4 and 12.5 and in the confidentiality
agreements referred to in Section 1.5 and other than those provisions
of the Escrow Agreement relating to the disposition of the funds then
held by the Escrow Agent"; and
(b) by adding the following sentences to the end of Section 10.6:
"Alternatively, Investco and any one or more Onex Associates may elect,
by notice in writing given in substantially the form of Schedule
10.6(b) given to the Purchaser not less than three Business Days prior
to the Closing Date, that such Onex Associate or Onex Associates will
sell the Purchased Shares held by it or them to the Purchaser in
accordance with this Agreement. In such case, each Onex Associate shall
be considered an Onex Vendor for all purposes of this Agreement. No
such notice shall affect Investco's 'Pro Rata Share' for the purposes
of Article 11. Sections 3.1(a), 3.2(b) and 12.9 shall be deemed to be
amended in accordance with the foregoing. The binding of any Onex
Associate as an Onex Vendor by the giving of a notice as aforesaid
shall constitute compliance by Investco with its obligations relating
to such Onex Associate under the penultimate sentence of
Section 11.13."
9. SCHEDULES. Schedules 2.7, 2.9 and 10.6(b) attached hereto are deemed to
be incorporated in and to form part of the Share Purchase Agreement and the
list of Schedules set out in Section 1.15 is hereby deemed to be amended
accordingly.
10. AMENDMENTS TO FIRST AMENDING AGREEMENT. The date "March 15, 1997"
is deleted where it appears in Section 6 of the First Amending Agreement, and
the date "March 19, 1997" is substituted therefor.
11. CONFIRMATION OF SHARE PURCHASE AGREEMENT. The Share Purchase Agreement
remains in full force and effect, unamended except as specifically provided in
paragraphs 2 to 9, inclusive, above. For greater certainty, each party hereto
hereby acknowledges and agrees that, notwithstanding any contrary act or
omission or any execution and delivery of any document at any time prior to
the execution and delivery of this amending agreement, all of the obligations
of the parties set out in the Share Purchase Agreement are and remain in full
force and effect as aforesaid and shall for all purposes be deemed to have
<PAGE> 84
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continuously been in such force and effect from February 18, 1997 to and
including the date hereof, as amended on the respective date of each amending
agreement referred to above.
12. COUNTERPARTS. This agreement may be executed in any number of
counterparts, each of which shall constitute an original and all of which taken
together shall constitute one and the same instrument, and this agreement shall
be effective as of the latest date on which any counterpart is shown to have
been executed. Delivery hereof and of any counterpart to any party may be
effected by facsimile transmission made to that party. Failure of any
Management Vendor to execute this Agreement shall not relieve any party who has
executed this Agreement from its obligations hereunder.
IN WITNESS WHEREOF this amending agreement has been executed
by the parties as of the 17th day of March, 1997.
IMPARK INVESTMENTS INC. FIRST UNION REAL ESTATE EQUITY AND
MORTGAGE INVESTMENTS
by by
--------------------------- ---------------------------
/s/ Paul T. C. Clough /s/ Charles S. Vosmik
- ------------------------------ ------------------------------
Paul T. C. Clough Charles S. Vosmik
/s/ J. Bruce Newsome /s/ Douglas I. Poirier
- ------------------------------ ------------------------------
J. Bruce Newsome Douglas I. Poirier
(for himself and as sole beneficiary (for himself and as sole beneficiary
of RRSP trust account no. V002679 of RRSP trust account no. 496-81890-11
with Laurentian Bank of Canada) with RBC Dominion Securities Inc.)
/s/ J. Robin Bateman /s/ Robert L. Noiles
- ------------------------------ ------------------------------
J. Robin Bateman Robert L. Noiles
(for himself and as sole beneficiary (for himself and as sole beneficiary
of RRSP trust account no. 590-90333-17 of RRSP trust account no. 590-77616-12
with Gundyco) with Gundyco)
/s/ James MacKay /s/ Michael T. Menzies
- ------------------------------ ------------------------------
James MacKay Michael T. Menzies
<PAGE> 85
-10-
/s/ Harry J. Renaud /s/ Stuart M. MacKenzie
- ------------------------------ ------------------------------
Harry J. Renaud Stuart M. MacKenzie
(for himself and as sole beneficiary (for himself and as sole beneficiary
of RRSP trust account no. 8RABNQS of RRSP trust account no. 590-90254-12
with Midland Walwyn Capital Inc.) with Gundyco)
/s/ Daniel Sawchuk /s/ Vernon Schwartz
- ------------------------------ ------------------------------
Daniel Sawchuk Vernon Schwartz
/s/ Jonas Prince
- ------------------------------
Jonas Prince
-----------------------------
The undersigned acknowledges and consents to
the foregoing as of the 17th day of March, 1997
ONEX CORPORATION
By /s/ Authorized Signor
-----------------------------
<PAGE> 86
SCHEDULE 2.7 (1)
TERM SHEET
CANCO 1
CLASS A NON-VOTING COMMON SHARES
------------------------------------------------------------------------------
ISSUER: Canco 1 (the "Company").
ISSUE: Class A Non-Voting Common Shares (the "Shares")
AUTHORIZED NUMBER: The Company will be authorized to issue
up to 15,000,000 Shares.
DIVIDENDS: Each Share will entitle the holder thereof to
dividends if, as and when declared by the
Company, subject to the rights of holders of
classes of shares ranking equally with or ahead
of the Shares.
PRIORITY: The Shares will rank equally with the Class B
Voting Common Shares of the Company and behind
any other class of shares in the capital of the
Company from time to time, if the provisions of
such other class so provide, with respect to the
payment of dividends and the repayment of capital
or other distributions to be made on the
liquidation, dissolution or winding-up of the
Company.
RIGHTS ON LIQUIDATION: Subject to the rights of holders of shares
having a preference over the Shares, in the
event of the liquidation, dissolution or
winding-up of the Company or any other
distribution of the assets of the Company to its
shareholders for the purpose of winding up its
affairs, the holders of the Shares and of the
Class B Voting Common Shares then outstanding
shall be entitled to receive the remaining net
assets of the Company, pro rata to the number of
Shares and Class B Voting Common Shares then
held.
CURRENCY: All amounts payable by way of dividends or
distributions upon the liquidation, dissolution
or winding-up of the Company shall be paid in the
lawful money of Canada.
NOTICE RIGHTS: Except as provided by law or as described
in this paragraph, holders of the Shares shall
not be entitled as such to receive notice of any
meeting of holders of any other class of shares
of the Company.
The Company shall provide 60 days' prior
notice to its shareholders
<PAGE> 87
-2-
before it may (a) issue in any period of twelve
consecutive months ending on or prior to March
31, 2002 more than 1,000,000 Class B Voting
Common Shares or more than 1,000,000 Class A
Common Shares, excluding shares issued for per
share consideration equal to or exceeding $1.00
per share, or (b) subdivide on or prior to March
31, 2002 any outstanding Class B Voting Common
Shares.
The Company shall provide 180 days' notice to
its shareholders prior to taking any corporate
action that would diminish or remove the
limitation on liability of shareholders provided
for under subsection 45(1) of the Canada Business
Corporations Act.
VOTING RIGHTS: Except as provided by law, holders of the
Shares shall not be entitled as such to vote.
The approval of the holders of the Shares with
respect to any matter that requires their
approval may be given by special resolution
either in writing by the holders of two-thirds of
the Shares then outstanding or passed by
two-thirds of the votes cast on such matter at a
special meeting called and held for the purpose
of considering the same at which one or more
holders of not less than 25% of the Shares then
outstanding are present in person or represented
by proxy. Each Share shall entitle the holder
thereof to one vote on those matters on which
such holders are entitled as such to vote.
SCHEDULE 2.7 (2)
TERM SHEET
CANCO 1
CLASS B VOTING COMMON SHARES
------------------------------------------------------------------------------
ISSUER: Canco 1 (the "Company").
ISSUE: Class B Voting Common Shares (the "Shares").
AUTHORIZED NUMBER: The Company will be authorized to issue
an unlimited number of Shares.
<PAGE> 88
-3-
DIVIDENDS: Each Share will entitle the holder thereof to
dividends if, as and when declared by the
Company, subject to the rights of holders of
classes of shares ranking equally with or ahead
of the Shares.
PRIORITY: The Shares will rank equally with the Class A
Non-Voting Common Shares of the Company and
behind any other class of shares in the capital
of the Company from time to time, if the
provisions of such other class so provide, with
respect to the payment of dividends and the
repayment of capital or other distributions to be
made on the liquidation, dissolution or
winding-up of the Company.
RIGHTS Subject to the rights of holders of shares having
ON LIQUIDATION: a preference over the Shares, in the event of the
liquidation, dissolution or winding-up of the
Company or any other distribution of the assets
of the Company to its shareholders for the
purpose of winding up its affairs, the holders of
the Shares and of the Class A Non-Voting Common
Shares then outstanding shall be entitled to
receive the remaining net assets of the Company,
pro rata to the number of Shares and Class A
Non-Voting Common Shares then held.
NOTICE RIGHTS: The Company shall provide 60 days' prior
notice to its shareholders before it may (a)
issue in any period of twelve consecutive months
ending on or prior to March 31, 2002 more than
1,000,000 Class B Voting Common Shares, excluding
shares issued for per share consideration equal
to or exceeding $1.00 per share, or (b)
subdivide on or prior to March 31, 2002 any
outstanding Class B Voting Common Shares.
The Company shall provide 180 days equal to or
prior notice to its shareholders of any meeting
of shareholders called to consider any proposed
corporate action that would diminish or remove
the limitation on liability of shareholders
provided for under subsection 45(1) of the
Canada Business Corporations Act.
CURRENCY: All amounts payable by way of dividends or
distributions upon the liquidation, dissolution
or winding-up of the Company shall be paid in the
lawful money of Canada.
VOTING RIGHTS: Holders of the Shares shall be entitled
as such to receive notice of and to vote at any
meeting of shareholders of the Company, subject
to the rights of holders of any other class of
shares of the Company (whether at law or as set
out in the share provisions relating to such
class of shares) to vote
<PAGE> 89
-4-
as a class on certain matters. Each Share shall
entitle the holder thereof to one vote on those
matters on which such holders are entitled as
such to vote.
SCHEDULE 2.7 (3)
TERM SHEET
CANCO 1
CLASS A PREFERRED SHARES
------------------------------------------------------------------------------
ISSUER: Canco 1 ("the Company").
ISSUE: Class A $1.00 Redeemable Preferred Shares (the
"Shares").
AUTHORIZED NUMBER: The Company will be authorized to issue up to
2,000,000 Shares.
REDEMPTION: Redeemable at any time after March 31, 2002 at
the option of the Company on one day's notice to
the holders at $1.00 per Share plus declared but
unpaid dividends.
DIVIDENDS: Each Share will entitle the holder thereof to
cumulative dividends, subject to the rights of
holders of classes of shares ranking equally with
or ahead of the Shares.
PRIORITY: The Shares will rank in priority to every other
class of shares in the capital of the Company
from time to time with respect to the payment of
dividends and the repayment of capital (including
by way of redemption or purchase for
cancellation) or other distributions to be made
on the liquidation, dissolution or winding-up of
the Company, to the extent of the $1.00
preference amount per Share plus declared but
unpaid dividends.
RIGHTS ON In the event of the liquidation, dissolution or
LIQUIDATION: winding-up of the Company or any other
distribution of the assets of the Company to its
shareholders for the purpose of winding up its
affairs, the holders of the Shares then
outstanding shall be entitled to receive $1.00
per Share plus declared but unpaid dividends from
the remaining net assets of the Company in
preference to holders of shares of every other
class.
<PAGE> 90
-5-
CURRENCY: All amounts payable by way of dividends,
redemption price or distributions upon the
liquidation, dissolution or winding-up of the
Company shall be paid in the lawful money of
Canada.
VOTING RIGHTS: Except as provided by law, holders of the
Shares shall not be entitled as such to receive
notice of or to vote at any meeting of the
holders of shares of the Company.
<PAGE> 91
SCHEDULE 2.9 (1)
TERM SHEET
PUT-CALL AGREEMENT
------------------------------------------------------------------------------
PARTIES: First Union Real Estate Equity and Mortgage
Investments, a business trust existing under the
laws of the State of Ohio ("FUR").
Impark Investments Inc. ("Investco")
and the Onex Associates holding Shares at or
immediately prior to the Time of Closing
SUBJECT SHARES: Class A Non-Voting Common Shares in the
capital of Canco 1 acquired by Investco and the
Onex Associates from Canco 1 at the Time of
Closing pursuant to the Share Purchase Agreement
(the "Shares").
CURRENCY: Unless otherwise specified, all dollar amounts
set out herein are expressed in United States
dollars.
CONSIDERATION: Investco and the Onex Associates shall pay their
respective pro rata shares (based on the
proportion that the number of Shares held by each
such party bears to the total number of Shares
held by Investco and the Onex Associates) of Cdn.
$250,000 to FUR and grant to FUR the call rights
described below in consideration for the grant by
FUR of the put rights described below.
DEPOSIT OF ELIGIBLE Prior to the closing of the transactions
SECURITIES: contemplated by the Holdings Share Purchase
Agreement, FUR will execute and deliver the
Security Trust Indenture and will deliver to and
deposit with the Trustee Eligible Securities
having an aggregate face value (or in the case of
Eligible Securities denominated in U.S. dollars,
the Canadian Dollar Equivalent thereof) at least
equal to the aggregate issue price of the Shares
to be issued to Investco and the Onex Associates
at the closing. Such Eligible Securities will
secure the obligations of FUR under the Put-Call
Agreement and under the Security Trust Indenture.
PARTIAL PUT If, at the end of any calendar quarter ending
RIGHT: on or after September 30, 1998, the Total Asset
Value of FUR equals or exceeds $750 million for
the first time after the date of the Put-Call
Agreement but does not exceed
<PAGE> 92
-2-
$1 billion, then Investco and the Onex Associates
will be entitled to put to FUR one-half (but not
less or more than one-half) of the Shares held by
them as at the end of such calendar quarter, at
the put price prevailing as at the date of
closing such put transaction, as indicated in
Appendix A hereto.
TRIGGER EVENT Investco and the Onex Associates will have the
PUT RIGHT: right following the occurrence of the Trigger
Event (as defined below) to sell all but not less
than all of the outstanding Shares held by them
to FUR at the put price prevailing as at the date
of closing such put transaction, as indicated in
Appendix A hereto.
TRIGGER EVENT: The first to occur of the following events and
circumstances shall be the "Trigger Event":
1. The Total Asset Value of FUR equalling
or exceeding $1.0 billion at the end of
any calendar quarter ending on or after
September 30, 1998.
2. The effective date (as determined by
the enacting or issuing governmental
body) on which (i) section 856(c)(5)(B)
of the U.S. Internal Revenue Code of
1986, as amended, insofar as such
section requires that a real estate
investment trust's total assets "be
limited in respect of any one issuer to
an amount not greater in value than 5%
of the value of the total assets of the
[REIT]", is repealed by the U.S.
Congress, provided that no successor
statute or U.S. Federal administrative
rule is enacted or issued before or
contemporaneously with such repeal, or
(ii) the reference in the above-quoted
language to "5%" is amended by act of
the U.S. Congress or U.S. Federal
administrative rule to provide for a
percentage equal to or exceeding "10%".
3. First Union Management Inc. ("FUMI")
and its affiliates ceasing to own 90% of
the outstanding voting and equity shares
of Canco 1 or its successors (excluding
the Shares and shares issued to the
Management Vendors or under management
incentive and compensation
arrangements), or FUR selling
subordinated debt securities issued by
Canco 1 or its successors (unless at the
time of the sale the Total Asset Value
of FUR is less than $600 million).
4. The giving prior to March 31, 2002 of
notice by Canco 1 or its
<PAGE> 93
-3-
successor as issuer of the Shares, where
such notice is required to be given
under the articles of Canco 1, that it
(a) intends to issue more than 1,000,000
Class B Voting Common Shares in any
period of 12 consecutive months at a per
share consideration equal to or
exceeding $1 per share, (b) intends to
subdivide any outstanding Class B Voting
Common Shares or (c) intends to take any
corporate action that would diminish or
remove the limitation on liability of
shareholders provided for under
subsection 45(1) of the Canada Business
Corporations Act.
5. Any event or series of events by which
(i) any "person" or "group" (as such
terms are used in Sections 13(d) and
14(d)(2) of the United States Securities
Exchange Act of 1934 (the "Exchange
Act")) becomes, whether by means of any
issuance or direct or indirect transfer
of securities, merger, consolidation,
liquidation, dissolution or otherwise,
the "beneficial owner" (as such term is
used in Rule 13d-3 under the Exchange
Act, except that a person shall be
deemed to be a "beneficial owner" of all
securities that any such person has the
right to acquire, whether such right is
exercisable immediately or only after
the passage of time), directly or
indirectly through one or more
intermediaries, of more than 35% of the
total voting rights attaching to the
then-outstanding voting securities of
FUR or FUMI, or (ii) during any period
of two consecutive years, individuals
who at the beginning of such period
constituted FUR's board of trustees or
FUMI's board of directors (together with
any new trustees or new directors whose
election by the FUR's board of trustees
or FUMI's board of directors (as the
case may be) or whose nomination for
election by FUR's or FUMI's
stockholders, as applicable, was
approved by a vote of 66 2/3% of FUR's
trustees or FUMI's directors (as
applicable) then still in office who
were either trustees or directors (as
applicable) at the beginning of such
period or whose election or nomination
for election was previously so approved)
cease for any reason to constitute a
majority of FUR's trustees or FUMI's
directors (as applicable) then still in
office.
6. Any default under the Put-Call
Agreement or the Security Trust
Indenture (subject to a five business
day cure period following notice with
respect to defaults other than those
relating to obligations to make
payments, deposit Eligible Securities or
perfect the Trustee's security interest
in the Eligible Securities),
<PAGE> 94
-4-
or any event of default or other
circumstance under any agreement to
which FUR is a party that automatically
or otherwise results in an acceleration
of the time for payment of any monetary
obligation of FUR in an amount exceeding
$5.0 million, unless the same has been
remedied or waived within five business
days after arising.
7. The occurrence of the day that falls 30
months after the Issue Date.
IMMEDIATE PUT: All the outstanding Shares held by Investco
and the Onex Associates may be put to FUR
immediately, without further notice, act or
formality, upon Investco providing notice to FUR
to that effect following the earliest to occur
of:
- any voluntary or involuntary act of
bankruptcy or insolvency of FUR or Canco
1 or their successors after, with
respect to involuntary acts of
bankruptcy, such cure periods as are
permitted under the principal credit
facility of FUR;
- any voluntary or involuntary step in the
dissolution, liquidation or winding-up
of FUR or Canco 1 or their successors
after, with respect to involuntary acts
of bankruptcy, such cure periods as are
permitted under the principal credit
facility of FUR; or
- the commencement on behalf of FUR in any
court of competent jurisdiction of any
action to challenge, or the inclusion in
pleadings filed on behalf of FUR with
any court of competent jurisdiction of a
request for relief that challenges, the
validity of the Put-Call Agreement or
the Security Trust Indenture.
The transfer of title to the Shares in this
situation will be deemed to occur immediately
upon delivery of such notice, with the put price
being held by FUR in trust for Investco and the
Onex Associates beginning upon such delivery, to
be released upon surrender of the Share
certificates. Provided that such exercise notice
is duly delivered, the immediate put will so
occur notwithstanding whether any other notice of
exercise of a put or call right, or notice of an
election to delay the closing of a put
transaction, has previously been given. The
provisions of this section override the other
provisions of this term sheet relating to
exercise periods and closing periods. The put
price shall be that prevailing on the date of
delivery of such notice, as indicated in Appendix
A hereto.
<PAGE> 95
-5-
FUR CALL RIGHTS: FUR will have the right during a
30-day period following the first anniversary of
the occurrence of the Trigger Event to acquire
all of the outstanding Shares from Investco and
the Onex Associates at the call price prevailing
as at the date of closing such call transaction,
as indicated in Appendix A hereto.
FUR will have an additional call right during a
30-day period following the second anniversary of
the occurrence of the Trigger Event to acquire
all of the outstanding Shares from Investco and
the Onex Associates at the call price prevailing
as at the date of closing such call transaction,
as indicated in Appendix A hereto.
FUR EXTENSION RIGHT: If:
- the Trigger Event occurs on the day that
falls 30 months after the Issue Date
(without the occurrence at such time of
any condition described in paragraphs 3
to 6 of the definition of "Trigger
Event"), and Investco's and the Onex
Associates' put rights are exercised by
them;
- during the period between the exercise
date and the closing, FUR elects by
notice in writing given to the Trustee
and Investco to delay the closing until
the day that falls 36 months after the
Issue Date; and
- such notice is accompanied by a payment
to Investco and the Onex Associates
equal to 3% of the initial issue price
of the Shares then held by such parties;
then the closing of the put transaction will
occur on the day that falls 36 months after the
Issue Date and at the put price prevailing as at
the date of closing such put transaction, as
indicated in Appendix A hereto; PROVIDED THAT
should any of the events or circumstances
described in paragraphs 3 to 6 of the definition
of "Trigger Event" occur or arise after such
election is made, then the closing of the put
transaction will be governed by the provisions
under "Exercise of Put/Call Rights and Closing
Periods". The occurrence of such events or
circumstances shall be for such purpose the date
of exercise of the put option.
<PAGE> 96
-6-
EXERCISE OF Investco will be able to exercise, on behalf of
PUT/CALL RIGHTS itself and behalf of each of the Onex Associates,
AND CLOSING any put right hereunder by notice in writing
PERIODS: given to FUR at any time following the
satisfaction of any condition to the exercise of
such right until the 30th day following the
giving of notice by FUR of such event. As an
exception to that, Investco may not exercise any
put right during the final 15 days of any
calendar quarter. For greater certainty, each
Onex Associate shall be bound by the exercise of
any put right by Investco and shall not be
entitled to exercise any put right independently
of Investco.
The closing of any put transaction will occur 30
days after the exercise of the put right, except
that if a put right is exercised between 30 and
16 days (inclusive) prior to the end of a
calendar quarter, then the closing of the
corresponding put transaction will occur 5 days
prior to the last day of such calendar quarter.
In each case, closing will be effected by the
tendering of the put price against delivery of
the relevant Share certificates.
FUR's call rights can be exercised on 30 days'
notice and the closing of the purchase and sale
transaction will occur 30 days after the giving
of such notice, with closing being effected by
the tendering of the call price against delivery
of the Share certificates.
ADJUSTMENTS TO With respect to any put or call right that
PUT/CALL PRICE: results in the determination of the put or call
price on or as of a date falling between two
dates set out in Appendix A, the price per share
will be calculated by dividing (a) the amount by
which the put or call price on the later of such
dates exceeds the price on the former date by (b)
the number of days between such dates and (c)
multiplying the result by the number of days from
but not including the former date to and
including the date of closing.
TITLE TO SHARES: At the time of the closing of any put
or call, Investco and the Onex Associates shall
represent and warrant to FUR that they have good
and marketable title to the Shares being
transferred, free and clear of any lien, charge,
pledge, encumbrance, security interest, call,
option or adverse claim, except pursuant to the
provisions of the Put-Call Agreement and the
Depositary Agreement.
<PAGE> 97
-7-
ADDITIONAL FUR shall be required every six months to
ELIGIBLE purchase additional Eligible Securities having an
SECURITIES: aggregate cost, excluding commissions, fees and
expenses of acquisition, at least equal to the
aggregate amount of increase over such six months
in the aggregate put price of the Shares held by
Investco and the Onex Associates. In the event of
the exercise of a partial put right, the Eligible
Securities may be reduced so that those remaining
have an aggregate cost, as calculated above, at
least equal to the aggregate put price of the
remaining Shares held by Investco and the Onex
Associates. FUR shall also be required every six
months to purchase additional Eligible Securities
as necessary to offset any diminution in the
Canadian dollar equivalent value of the Eligible
Securities then held by the Trustee below the
then prevailing put and call price to the extent
caused by the effect on U.S. dollar denominated
Eligible Securities of any reduction in the value
of the U.S. dollar against the Canadian dollar.
These additional Eligible Securities shall be
delivered to and deposited with the Trustee to be
held as security for the obligations of FUR under
the Put-Call Agreement and under the Security
Trust Indenture. FUR may hedge the foreign
exchange risk in some other manner with the prior
written consent of Investco, not to be
unreasonably withheld.
TRANSFER OF Prior to the expiry of FUR's call rights
SHARES: hereunder, Investco may transfer Shares
only to its affiliates, to employees, officers
and directors of Onex Corporation, to
corporations pursuant to which such individuals
participate in Onex's management investment plan,
to FUR and to FUMI and the Onex Associates may
transfer Shares only to, in the case of an Onex
Associate that is a corporation, an affiliate or
shareholder of such corporation or to any
corporation that is an affiliate of Onex
Corporation or, in the case of any other Onex
Associate, to a corporation controlled, directly
or indirectly, by such Onex Associate or
Associates of such Onex Associate or to any
corporation that is an affiliate of Onex
Corporation, to FUR and to FUMI provided that in
each case the transferee agrees in the prescribed
form to be bound by the provisions of the
Put-Call Agreement and the Depositary Agreement
and to retain the status which permitted it to be
a transferee. FUR will use its best efforts to
secure any Canco 1 corporate or shareholder
approval of any transfer of Shares permitted by
the Put-Call Agreement or resulting from the
exercise of any put or call right. If at any time
Canco 1 has ceased to be a "private company"
within the meaning of the Securities Act
(Ontario), FUR will pay any fee charged by any
securities regulatory authority in connection
with a put or call transaction hereunder. The
Shares will be held in accordance with a
depositary agreement both pending and following
any
<PAGE> 98
-8-
permitted transfer. Nothing herein shall
prevent Investco from acquiring any Class A
Common Shares held by Management Vendors provided
that such Class A Common Shares shall not
constitute Shares for the purposes of the
Put-Call Agreement.
RECOURSE: Notwithstanding any failure of FUR to fulfill its
obligations under the Put-Call Agreement or the
Security Trust Indenture, Investco and the Onex
Associates shall have recourse in executing any
judgment against FUR to all the property and
assets of FUR other than:
(a) property directly or indirectly
acquired by Canco 1 on the Closing Date
in connection with the acquisition of the
Purchased Shares (including the Real
Property);
(b) property, the fair market value of
which is wholly or partly attributable to
the property referred to in (a);
(c) property, the fair market value of
which is determinable primarily by
reference to the fair market value of,
or any proceeds of disposition of, the
property referred to in (a);
(d) an interest in, or indebtedness of,
any corporation, partnership, trust or
other person that directly capitalizes
Canco 1 in whole or in part; and
(e) substitutions for any property,
interest or indebtedness referred to in
(a), (b), (c) or (d) above;
provided that in no event shall recourse not be
available to those assets subject to the Security
Trust Indenture.
AMENDMENTS: Any amendments to the Put-Call Agreement may be
made by agreement in writing between FUR and
Investco and the provisions of such agreement may
be waived by such of those two parties as is the
beneficiary thereof. Any such amendment to the
Put-Call Agreement shall be binding upon the Onex
Associates without any further act or formality
on their part.
FUR RIGHTS FUR and its affiliates will agree not to exercise
RELATING any class voting rights associated with Shares
TO SHARES: held by them prior to March 31, 2002.
<PAGE> 99
-9-
PROTECTIVE The Put-Call Agreement will contain
PROVISIONS: provisions providing that the put and call rights
thereunder relate to all securities into which
the Shares may be converted, exchanged,
consolidated or subdivided upon any
reorganization of the capital of Canco 1 or its
successors, or any arrangement or amalgamation or
other like transaction relating to such persons,
with corresponding changes to the put and call
prices.
NOTICES: FUR will be required to provide timely notice to
Investco of the occurrence of any event or
circumstance giving rise to the ability to
exercise any put rights hereunder. FUR shall
provide to Investco on request any additional
information reasonably necessary to permit
Investco to determine whether such an event or
circumstance may occur or whether it has occurred
at any time. FUR shall provide to Investco on a
quarterly basis a certificate of the nature
described in the definition of "Total Asset
Value" below.
ASSIGNMENT: The benefit of this agreement can be assigned
only to the persons and in the manner that Shares
can be transferred hereunder. References to
Investco, the Onex Associates and Canco 1 include
their successors and, in the case of Investco and
the Onex Associates, their permitted assigns.
GOVERNING LAW: Province of Ontario.
DEFINITIONS: "CANADIAN DOLLAR EQUIVALENT" has the meaning
given to it in the Holdings Share Purchase
Agreement.
"ELIGIBLE SECURITIES" means United States
Government or Government of Canada debt
securities denominated in U.S. or Canadian
dollars and having a term to maturity at the time
of purchase by FUR or by the Trustee of not more
than one year.
"TOTAL ASSET VALUE" means at any time the "value
of the total assets" of FUR determined at such
time within the meaning of section 856(c)(5) of
the United States Internal Revenue Code,
expressed in United States dollars, as certified
with supporting calculations and information by
two senior officers of FUR in accordance with the
Put-Call Agreement.
"HOLDINGS SHARE PURCHASE AGREEMENT" means the
share purchase agreement made as of February 18,
1997, as amended to and including March 11, 1997,
relating to the purchase and sale of the
outstanding
<PAGE> 100
-10-
shares of Imperial Holdings No. 2 Inc.
"ISSUE DATE" means the date on which the Shares
are first issued.
"TRUSTEE" means Trust Company, a trust
company existing under the laws of Canada or of a
province of Canada, as trustee for Investco and
the Onex Associates.
APPENDIX A
TO SCHEDULE 2.9 (1)
<TABLE>
<CAPTION>
DATE OF CLOSING OF
PUT/CALL TRANSACTION PURCHASE PRICE(1)
- ------------------------------------------------------------------------------------
<S> <C>
September 30, 1997 Issue Price(2) x 1.04
- ------------------------------------------------------------------------------------
March 31, 1998 September 30, 1997 Price x 1.045
- ------------------------------------------------------------------------------------
September 30, 1998 March 31, 1998 Price x 1.05
- ------------------------------------------------------------------------------------
March 31, 1999 September 30, 1998 Price x 1.055
- ------------------------------------------------------------------------------------
September 30, 1999 March 31, 1999 Price x 1.06
- ------------------------------------------------------------------------------------
March 31, 2000 September 30, 1999 Price x 1.065
- ------------------------------------------------------------------------------------
September 30, 2000 March 31, 2000 Price x 1.07
- ------------------------------------------------------------------------------------
March 31, 2001 September 30, 2000 Price x 1.075
- ------------------------------------------------------------------------------------
September 30, 2001 March 31, 2001 Price x 1.08
- ------------------------------------------------------------------------------------
March 31, 2002 September 30, 2001 Price x 1.085
- ------------------------------------------------------------------------------------
</TABLE>
- --------
(1) The per Share price is this amount divided by the number of Shares
originally issued in accordance with the Share Purchase Agreement.
(2) Issue Price equates to the Common Share Allocation Amount in the Share
Purchase Agreement (in Canadian dollars).
<PAGE> 101
SCHEDULE 2.9 (2)
TERM SHEET
SECURITY TRUST INDENTURE
- --------------------------------------------------------------------------------
PARTIES: First Union Real Estate Equity and Mortgage
Investments, a business trust existing under the
laws of the State of Ohio ("FUR").
Trust Company (the
"Trustee"), a trust company existing under
the laws of Canada or of a province of Canada,
as trustee for Investco and the permitted
transferees of its Class A Non-Voting Common
Shares in the capital of Canco 1 (the "Shares").
"Investco" herein means Investco or any
permitted transferee of its Shares.
Impark Investments Inc. ("Investco") and its
permitted assigns under the Share Purchase
Agreement and permitted transferees of the Shares.
DEPOSIT OF Eligible Securities will be deposited with the
ELIGIBLE Trustee on the Issue Date and from time to time
SECURITIES: thereafter to secure the obligations of FUR under
the Put-Call Agreement and under the Security
Trust Indenture. The Trustee will reinvest
Eligible Securities that mature, and any
distributions on or proceeds of Eligible
Securities, into new Eligible Securities until
distribution or realization in accordance with the
indenture.
RIGHTS AND Upon the occurrence of any event of default under
REMEDIES: the Put-Call Agreement or under the Security Trust
Indenture (subject to a five business day cure
period with respect to defaults other than those
relating to obligations to make payments, deposit
Eligible Securities or perfect the Trustee's
security interest in the Eligible Securities),
the Trustee will be entitled to realize on the
trust assets and to exercise its remedies at law
and in equity. Other than with respect to the
failure of FUR to pay any amount owing upon an
immediate put of the Shares (in which case the
Trustee shall be required to exercise its
remedies), the Trustee will take enforcement
action only upon the direction of Investco. In
other respects, the Security Trust Indenture will
include customary enforcement rights and remedies.
ALLOCATION All income earned on the Eligible Securities
OF INCOME: held at any time shall be solely for the account
of FUR. All such amounts shall automatically be
deposited with and held by the Trustee as
additional collateral under the Security Trust
Indenture, and the Trustee shall invest or
reinvest
<PAGE> 102
- 2 -
the same in Eligible Securities
TRUSTEE Investco may direct the Trustee to do any act or
DIRECTIONS: thing in accordance with the Security Trust
Indenture, except that prior to any default, FUR
may direct the Trustee as to the manner in which
the Trustee may comply with its obligations to
reinvest in accordance with the Security Trust
Indenture any distributions or proceeds received
on or from Eligible Securities.
TRUSTEE FEES: The fees and expenses of the Trustee shall be paid
by FUR.
TRUSTEE The Trustee shall retain all evidences of
PROVISIONS: ownership of the Eligible Securities until they
are sold, returned to FUR or otherwise dealt with
in accordance with the Security Trust Indenture.
The Trustee shall not be required to do any act or
thing except as specifically provided for in the
Security Trust Indenture or pursuant to a
direction properly given in accordance with the
Security Trust Indenture. The Trustee shall be
entitled to retain legal advice with respect to
any ambiguity in its obligations under the
Security Trust Indenture.
INDEMNITY: FUR shall indemnify the Trustee against any loss
or claim relating to any act or omission under the
Security Trust Indenture, excluding gross
negligence and wilful misconduct.
RESIGNATION AND The Trustee may resign on six months' notice,
REPLACEMENT: such resignation to be effective upon the
appointment of a replacement trustee, and any
party may apply on notice to the other parties to
the Ontario Court (General Division) for an order
appointing a replacement trustee if the parties
have failed to do so within such six-month period.
Investco may, by direction, replace the Trustee
with another trust company (incorporated under the
laws of Canada or of a province of Canada) that is
acceptable to FUR, acting reasonably.
AMENDMENTS: The Security Trust Indenture may be amended from
time to time by agreement in writing between FUR
and Investco, except that any amendment affecting
the scope of responsibility or the indemnity of
the Trustee shall require the consent of the
Trustee.
NOTICES: The Trustee will be entitled to receive the same
notices that Investco is entitled to receive under
the Put-Call Agreement.
TERMINATION AND The obligations of FUR under the Security Trust
DISCHARGE: Indenture shall terminate
<PAGE> 103
- 3 -
when FUR's obligations to Investco under the
Put-Call Agreement and the Security Trust
Indenture have been performed in full and the
Put-Call Agreement has terminated in accordance
with its terms. At such time, the Trustee shall
release all remaining trust assets (net of the
Trustee's fees and expenses) to FUR and discharge
any security interests against them.
GOVERNING LAW: Province of Ontario.
DEFINITIONS: "ELIGIBLE SECURITIES" means United States
Government or Government of Canada debt
securities denominated in U.S. or Canadian dollars
and having a term to maturity at the time of
purchase by FUR or by the Trustee of not more than
one year.
<PAGE> 104
SCHEDULE 2.9 (3)
TERM SHEET
DEPOSITARY AGREEMENT
- ------------------------------------------------------------------------------
PARTIES: First Union Real Estate Equity and Mortgage
Investments, a business trust existing under the
laws of the State of Ohio ("FUR").
Investco (which shall include the permitted
transferees of it Class A Non-Voting Common Shares
(the "Shares") in the capital of Canco 1).
(the "Depositary").
DEPOSIT OF SHARES: Upon the issuance of the Shares, the certificates
representing the same shall be deposited with and
held by the Depositary to be dealt with in
accordance with this agreement. All non-cash
distributions resulting from a share split or
extraordinary distribution on the Shares that
reduces the capital of Canco 1, which
distributions represent ownership or equity
interests in Canco 1, shall be held by the
Depositary in the same manner as the Shares are
held.
<PAGE> 105
- 2 -
DEALING WITH SHARES: The Depositary shall deal with the Shares as
follows:
1. At all times and in all
circumstances, the Depositary shall
deal with the Shares as directed in
writing by FUR and Investco acting
jointly.
2. In the event the Depositary
believes, after obtaining legal
advice, that its obligations with
respect to the Shares is subject to
ambiguity, the Depositary may apply
for and comply with the directions
of a court of competent
jurisdiction.
3. At any time, the Depositary shall
permit the certificates
representing the Shares to be
registered in the name of any
corporation that an officer of
Investco swears in an affidavit is
an affiliate of Investco and a
permitted transferee of such Shares
pursuant to the provisions of the
put-call agreement (provided that
the Depositary shall not release
the Shares to such corporation).
4. At any time when the Depositary is
directed by Investco to deliver the
Shares to FUR in connection with the
exercise of Investco's put right,
the Depositary shall do so.
5. At any time when the Depositary is
directed by FUR to deliver the
Shares to FUR in connection with
the exercise of FUR's call right,
the Depositary shall do so upon
receipt of funds in the amount
determined by reference to the
put/call payment table (which will
be in the form annexed to the
put-call agreement).
6. On October 31, 2001, the Depositary
shall deliver to Investco any
Shares then held by the Depositary.
DIVIDENDS: All dividends and distributions, other than those
that are to be held by the Depositary as provided
above, shall be paid by the Depositary to
Investco.
NATURE OF DEPOSITARY Investco will retain ownership of the Shares
INTEREST: until it disposes of them in accordance with its
obligations, and all income earned on the Shares
at any time shall be solely for the account of
Investco.
DEPOSITARY FEES: The fees and expenses of the Depositary shall be
paid by FUR.
DEPOSITARY The Depositary shall retain all evidences of
PROVISIONS: ownership of the Shares until
<PAGE> 106
- 3 -
they are dealt with in accordance with this
agreement. The Depositary shall not be required to
do any act or thing except as specifically
provided for in this agreement or pursuant to a
direction properly given in accordance with this
agreement. The Depositary shall be entitled to
retain legal advice with respect to any ambiguity
in its obligations under this agreement.
INDEMNITY: FUR shall indemnify the Depositary against any
loss or claim relating to any act or omission
under this agreement, excluding gross negligence
and wilful misconduct.
RESIGNATION AND The Depositary may resign on six months' notice,
REPLACEMENT: such resignation to be effective upon the
appointment of a replacement depositary, and any
party may apply to the Ontario Court (General
Division) for an order appointing a replacement
depositary if the parties have failed to do so
within such six-month period.
FUR may, by direction, replace the Depositary with
another depositary that is acceptable to Investco,
acting reasonably.
AMENDMENTS: This agreement may be amended from time to time by
agreement in writing between FUR and Investco,
except that any amendment affecting the scope of
responsibility or the indemnity of the Depositary
shall require the consent of the Depositary.
TERMINATION AND The obligations of the Depositary shall terminate
DISCHARGE: when all of the Shares have been dealt with in
accordance with the agreement.
GOVERNING LAW: Province of Ontario.
<PAGE> 107
SCHEDULE 10.6(b)
----------------
ONEX VENDOR NOTICE
------------------
TO: FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
REFERENCE is made to the share purchase agreement made the 18th
day of February, 1997 between Impark Investments Inc. ("Investco") and First
Union Real Estate Equity and Mortgage Investments (the "Purchaser"), to which
the following persons (the "Management Vendors") became parties in accordance
therewith pursuant to instruments of adhesion dated February 21, 1997:
Paul T.C. Clough, Charles S. Vosmik, J. Bruce Newsome (and Laurentian Bank of
Canada in trust for account no. V002679, a registered retirement savings plan
trust of which J. Bruce Newsome is the sole beneficiary), Douglas I. Poirier
(and RBC Dominion Securities Inc. in trust for account no. 496-81890-11, a
registered retirement savings plan trust of which Douglas I. Poirier is the
sole beneficiary), J. Robin Bateman (and Gundyco in trust for account no.
590-90333-17, a registered retirement savings plan trust of which
J. Robin Batemen is the sole beneficiary), James MacKay, Michael T. Menzies,
Robert L. Noiles (and Gundyco in trust for account no. 590-77616-12, a
registered retirement savings plan trust of which Robert L. Noiles is the sole
beneficiary), Harry J. Renaud (and Midland Walwyn Capital Inc. in trust for
account no. 8RABNQS, a registered retirement savings plan trust of which Harry
J. Renaud is the sole beneficiary), Stuart M. MacKenzie (and Gundyco in trust
for account no. 590-90254-12, a registered retirement savings plan trust of
which Stuart M. MacKenzie is the sole beneficiary), Daniel Sawchuk, Vernon
Schwartz and Jonas Prince, as amended by an amending agreement (the "First
Amending Agreement") made as of February 26, 1997 by the foregoing parties and
by further amending agreements made as of March 2, 1997 and as of March 7, 1997
between the Purchaser and Investco (both in its own capacity and as agent and
attorney for the Management Vendors and as of March 17, 1997 between the
parties thereto (such agreement, as so amended, being hereinafter referred to
as the "Share Purchase Agreement"). Capitalized terms used without other
definition herein and that are defined in the Share Purchase Agreement have
the respective meanings herein as are ascribed to them in the Share Purchase
Agreement.
WHEREAS is an Onex Associate and is the registered and
beneficial holder of common shares in the capital of Holdco and whereas
is the optionee under an option granted by Impark Holdings Inc. on
November 11, 1996 in respect of common shares in the capital of Holdco
(for purposes of this instrument, each of and is an "Onex
Vendor" and the common shares held by either Onex Vendor or that either Onex
Vendor has the right to acquire under option are herein referred to as the
"Sale Shares");
NOW THEREFORE for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the parties, the parties
agree as follows:
<PAGE> 108
- 2 -
1. Notwithstanding section 4 of the acknowledgement executed and delivered
by the Onex Vendors in accordance with Section 10.6 of the Share
Purchase Agreement, the Onex Vendors shall sell all of the Sale Shares
to the Purchaser at the Time of Closing in accordance with the Share
Purchase Agreement and on the terms and subject to the conditions
therein set forth. Except as provided for herein, such acknowledgement
remains in full force and effect.
2. The Onex Vendors are [ ] are not [ ] NON-RESIDENTS of Canada within the
meaning of the Income Tax Act (Canada). If the Onex Vendors are
non-residents of Canada as so defined, the Onex Vendors will apply for
certificates under section 116 of the Income Tax Act (Canada) as
contemplated by Section 8.12 of the Share Purchase Agreement.
3. Investco shall not be required to purchase the Sale Shares or to sell
them to the Purchaser under the Share Purchase Agreement.
4. The Purchaser shall be required to purchase the Sale Shares in
accordance with the Share Purchase Agreement and on the terms and
subject to the conditions therein set forth.
DATED as of this _____ day of ________________, 1997.
SIGNED, SEALED AND DELIVERED )
in the presence of )
)
)
) ---------------------------------
) [NAME OF INDIVIDUAL ONEX VENDOR]
)
IMPARK INVESTMENTS INC. [NAME OF CORPORATE
ONEX VENDOR]
by by
---------------------------- -----------------------------
<PAGE> 109
- 3 -
Acknowledged and agreed to as of the
date set forth above.
FIRST UNION REAL ESTATE EQUITY
AND MORTGAGE INVESTMENTS
by
----------------------------
<PAGE> 110
SHARE PURCHASE FIFTH AMENDING AGREEMENT
REFERENCE is made to the share purchase agreement made the
18th day of February, 1997 between Impark Investments Inc. ("Investco") and
First Union Real Estate Equity and Mortgage Investments ("FUR"), to which the
following persons (the "Management Vendors") became parties in accordance
therewith pursuant to instruments of adhesion dated February 21, 1997: Paul T.C.
Clough, Charles S. Vosmik, J. Bruce Newsome (and Laurentian Bank of Canada in
trust for account no. V002679, a registered retirement savings plan trust of
which J. Bruce Newsome is the sole beneficiary), Douglas I. Poirier (and RBC
Dominion Securities Inc. in trust for account no. 496-81890-11, a registered
retirement savings plan trust of which Douglas I. Poirier is the sole
beneficiary), J. Robin Bateman (and Gundyco in trust for account no.
590-90333-17, a registered retirement savings plan trust of which J. Robin
Batemen is the sole beneficiary), James MacKay, Michael T. Menzies, Robert L.
Noiles (and Gundyco in trust for account no. 590-77616-12, a registered
retirement savings plan trust of which Robert L. Noiles is the sole
beneficiary), Harry J. Renaud (and Midland Walwyn Capital Inc. in trust for
account no. 8RABNQS, a registered retirement savings plan trust of which Harry
J. Renaud is the sole beneficiary), Stuart M. MacKenzie (and Gundyco in trust
for account no. 590-90254-12, a registered retirement savings plan trust of
which Stuart M. MacKenzie is the sole beneficiary), Daniel Sawchuk, Vernon
Schwartz and Jonas Prince, as amended by an amending agreement (the "First
Amending Agreement") made as of February 26, 1997 by the foregoing parties and
by further amending agreements made as of March 2, 1997 and as of March 7, 1997
between the Purchaser and Investco (both in its own capacity and as agent and
attorney for the Management Vendors and by a further amending agreement made as
of March 17, 1997 made between the parties to the First Amending Agreement (such
agreement, as so amended, being hereinafter referred to as the "Share Purchase
Agreement").
WHEREAS FUR has assigned its rights and benefits under the
Share Purchase Agreement to First Union Management, Inc. (the "Purchaser");
AND WHEREAS the parties to the Share Purchase Agreement wish
to amend such agreement on the terms set out herein;
NOW THEREFORE in consideration of the premises and the
respective covenants set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
each of the parties hereto, the parties hereby agree as follows:
1. DEFINED TERMS AND REFERENCES. Capitalized terms that are
used herein without other definition and that are defined in the Share
Purchase Agreement shall have the respective meanings herein that are
ascribed thereto in the Share Purchase Agreement, unless the context
otherwise requires. References herein to Sections mean Sections of the
Share Purchase Agreement.
2. CLOSING DATE. Notwithstanding Section 1.1(i), the undersigned
agree that the Closing Date shall be April 17, 1997.
3. CLOSING DEBT. Notwithstanding Section 1.1(j), the undersigned
agree that the Closing Debt shall be $36,366,847.
<PAGE> 111
- 2 -
4. COMMON SHARE ALLOCATION AMOUNT. Notwithstanding Section
1.1(l.1), the undersigned agree that the Common Share Allocation Amount
shall be $16,222,600.
5. ALLOCATION OF PORTION OF PURCHASE PRICE. Notwithstanding
Section 2.3, the aggregate Purchase Price payable under Section 2.2 on
the Closing Date to Investco and the Onex Vendors shall be allocated as
provided for in Schedule 1 hereto.
6. CONFIRMATION OF SHARE PURCHASE AGREEMENT. The Share Purchase
Agreement remains in full force and effect, unamended except as
specifically provided in paragraphs 2 to 5, inclusive, above.
7. COUNTERPARTS. This agreement may be executed in any number
of counterparts, each of which shall constitute an original and all of
which taken together shall constitute one and the same instrument, and
this agreement shall be effective as of the latest date on which any
counterpart is shown to have been executed. Delivery hereof and of any
counterpart to any party may be effected by facsimile transmission made
to that party.
IN WITNESS WHEREOF this amending agreement has been executed
by the parties as of the 15th day of April, 1997.
IMPARK INVESTMENTS INC. FIRST UNION REAL ESTATE EQUITY AND
MORTGAGE INVESTMENTS
by /s/ Authorized Signer by /s/ Authorized Signer
--------------------------- ---------------------------
FIRST UNION MANAGEMENT, INC.
by /s/ Authorized Signer
---------------------------
-----------------------------
The undersigned acknowledges and consents to
the foregoing as of the 17th day of April, 1997
ONEX CORPORATION
by /s/ Authorized Signer
--------------------------
<PAGE> 112
- 3 -
SCHEDULE 1
TO THE SHARE PURCHASE FIFTH AMENDING AGREEMENT
<TABLE>
<CAPTION>
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Vendor Section 2.3(a) Allocation Section 2.3(b) Allocation Section 2.3(c) Allocation
of Escrow Amount of Class A Common Shares of Remaining Cash
- ------------------------------ ---------------------------- --------------------------- ----------------------------
<S> <C> <C> <C>
Investco $1,813,169.55 14,006,307 $43,437,178.69
- ------------------------------ ---------------------------- --------------------------- ----------------------------
1170821 Ontario Inc. nil 52,243 53,046.81
- ------------------------------ ---------------------------- --------------------------- ----------------------------
1170809 Ontario Inc. nil 43,993 44,669.68
- ------------------------------ ---------------------------- --------------------------- ----------------------------
1170810 Ontario Inc. nil 49,491 50,253.52
- ------------------------------ ---------------------------- --------------------------- ----------------------------
1170812 Ontario Inc. nil 49,491 50,253.52
- ------------------------------ ---------------------------- --------------------------- ----------------------------
1170697 Ontario Inc. nil 8,250 8,377.12
- ------------------------------ ---------------------------- --------------------------- ----------------------------
1170819 Ontario Inc. nil 8,250 8,377.12
- ------------------------------ ---------------------------- --------------------------- ----------------------------
1170698 Ontario Inc. nil 13,735 13,968.22
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Anthony R. Melman nil 78,255 368,555.88
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Ewout R. Heersink nil 65,899 310,362.57
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Anthony Munk nil 74,138 349,157.01
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Mark L. Hilson nil 74,138 349,157.01
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Thomas P. Dea nil 12,356 58,193.32
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Andrew J. Sheiner nil 12,356 58,193.32
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Donald W. Lewtas nil 20,606 96,975.96
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Eric J. Rosen nil 123,629 399,410.53
- ------------------------------ ---------------------------- --------------------------- ----------------------------
TOTAL $1,813,169.55(1) 14,693,137(2) $45,656,130.28(3)
- ------------------------------ ---------------------------- --------------------------- ----------------------------
</TABLE>
Notes:
- --------
[FN]
1. Proportionate share of Investco and Onex Vendors of $2,001,909 Escrow Amount.
Investco and the Onex Vendors hold an aggregate of 31,390,000 Purchased Shares,
out of a total of 34,657,500, or 90.572026256%.
2. The Common Share Allocation Amount is U.S. $11,600,000 x 1.3985, or Cdn.
$16,222,600. Each Class A Common Share that is issued satisfies $1.00 of that
amount. At 90.572026256%, Investco and the Onex Vendors in aggregate are
entitled to 14,693,137 Class A Common Shares.
3. The total cash payable is $105,000,000, less Closing Debt ($38,444,347 +
$1,000,000 + $1,077,500) = $68,633,153, less the Common Share Allocation Amount
of $16,222,600 = $52,410,553, less the Escrow Amount of $2,001,909 =
$50,408,644. At 90.572026256%, the aggregate share of these Vendors is
$45,656,130.28.
<PAGE> 1
Exhibit 10d
PUT-CALL AGREEMENT
THIS AGREEMENT made the 17th day of April, 1997,
B E T W E E N:
IMPARK INVESTMENTS INC.,
a corporation existing under the laws
of the Province of Ontario,
(hereinafter referred to as "Investco"),
OF THE FIRST PART,
- and -
THE SHAREHOLDERS OF 3357392 CANADA
INC. LISTED ON SCHEDULE A HERETO,
(hereinafter referred to as the "Onex Associates")
OF THE SECOND PART,
- and -
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE
INVESTMENTS, a business trust existing under the laws
of the State of Ohio,
(hereinafter referred to as "FUR"),
OF THE THIRD PART.
WHEREAS pursuant to the Share Purchase Agreement (as
hereinafter defined), Investco and the Onex Associates have sold to 3357392
Canada Inc. (subject to further definition below, the "Corporation") all the
shares of Imperial Holdings No. 2 Inc. beneficially owned by them;
AND WHEREAS the Corporation has issued to Investco and the
Onex Associates Class A Non-Voting Common Shares of the Corporation in partial
payment of the purchase price for such shares of Imperial Holdings No. 2 Inc.;
AND WHEREAS the Share Purchase Agreement contemplates that
FUR, Investco and the Onex Associates shall enter into an agreement providing
for certain put rights in favour of
<PAGE> 2
-2-
Investco and the Onex Associates and certain call rights in favour of FUR
relating to the Class A Non-Voting Common Shares of the Corporation beneficially
owned by Investco and the Onex Associates;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration
of the respective covenants, agreements, representations, warranties and
indemnities of the parties hereinafter contained and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged by
each party), the parties hereby agree as follows:
1. INTERPRETATION
1.1 DEFINED TERMS. For the purposes of this Agreement, unless the
context otherwise requires, the following terms shall have the meanings set out
below and grammatical variations of such terms shall have corresponding
meanings:
(1) "AFFILIATE" has the meaning given to such term in the CBCA;
(2) "AGGREGATE PURCHASE PRICE" has the meaning given to such term in
Section 4.3(a)(i);
(3) "ASSOCIATE" has the meaning given to such term in the CBCA;
(4) "BUSINESS DAY" means any day, other than Saturday or Sunday, on
which banks are generally open for business in Toronto, Ontario;
(5) "CALL NOTICE" has the meaning given to such term in Section 3.4;
(6) "CALL RIGHT" has the meaning given to such term in Section 3.4;
(7) "CANADIAN DOLLAR EQUIVALENT" has the meaning given to such term in
the Share Purchase Agreement;
(8) "CBCA" means the Canada Business Corporations Act, as in effect on
the date hereof;
(9) "CLASS A NON-VOTING COMMON SHARES" means the Class A Non-Voting
Common Shares in the capital of the Corporation and includes any shares
or other securities
<PAGE> 3
-3-
into which such shares may be converted, exchanged, reclassified,
redesignated, subdivided, consolidated or otherwise changed from time
to time and any securities of any successor or continuing corporation
to the Corporation into which any of the foregoing securities may be
changed as a result of any amalgamation, merger, consolidation,
statutory arrangement or other form of reorganization, statutory or
otherwise;
(10) "CLOSING DATE" means:
(1) with respect to the closing of any purchase and sale of Shares
hereunder upon the exercise of any Put Right (other than the Immediate
Put Right) or the Call Right, the day which is the 30th day following
the receipt (or deemed receipt) by FUR or Investco, as the case may be,
of the applicable Put Notice or Call Notice; provided, however, that if
a Delayed Closing Notice has been effectively delivered by FUR to
Investco pursuant to Section 4.6 (subject to the proviso contained
therein), the Closing Date shall be April 15, 2000; and provided
further that if any such Put Right is exercised between 30 and 16 days
(inclusive) prior to the end of any calendar quarter, the applicable
Closing Date shall be the day that is five days prior to the last day
of such calendar quarter; and
(2) with respect the closing of any purchase and sale of Shares
hereunder upon the exercise of the Immediate Put Right, the day
specified as the closing date in the Immediate Put Notice;
(11) "CORPORATION" means 3357392 Canada Inc. and its successors;
(12) "DELAYED CLOSING NOTICE" has the meaning given to such term in
Section 4.6;
(13) "DEPOSIT AGREEMENT" means the agreement made as of the date hereof
between FUR, Investco, the Onex Associates and Montreal Trust Company,
as depositary, pursuant to which, among other things, certificates
representing the Shares have been deposited with such depositary;
<PAGE> 4
-4-
(14) "DEPOSITARY" means Montreal Trust Company in its capacity as
depositary under the Deposit Agreement;
(15) "ELIGIBLE SECURITIES" means bonds, debentures or other evidences
of indebtedness of or fully guaranteed as to the payment of principal
and interest by the full faith and credit of the Government of the
United States of America or the Government of Canada, provided the same
are denominated in United States dollars or Canadian dollars and have a
term to maturity at the time of deposit by FUR with the Trustee or at
the time of purchase by the Trustee, as the case may be, of not more
than one year;
(16) "EQUITY SHARES" means the Class A Non-Voting Common Shares, the
Class B Voting Common Shares and any other shares in the capital of the
Corporation which carry a residual right to participate in the earnings
of the Corporation and in the property and assets of the Corporation in
the event of liquidation, winding-up or dissolution;
(17) "EVENT OF DEFAULT" means any of:
(1) a default or breach by FUR of any of its covenants and obligations
under this Agreement, the Security Trust Indenture or the Deposit
Agreement arising upon or otherwise relating to the failure by FUR to
(A) make any payment required to be made by it pursuant to any
provision of this Agreement, the Security Trust Indenture or the
Deposit Agreement, (B) deposit with the Trustee any Eligible Securities
required to be so deposited pursuant to this Agreement or the Security
Trust Indenture or (C) file any financing statement, financing change
statement or any other document or to do any other act or thing
necessary or advisable, in the reasonable opinion of counsel to
Investco, to perfect or to maintain the perfection of the Pledge or to
ensure that for so long as the Security Trust Indenture remains in
effect the Pledge constitutes a first priority Security Interest in the
Collateral (the terms "Pledge", "Security Interest" and "Collateral"
having the respective meanings given to them in the Security Trust
Indenture);
(2) a default or breach by FUR of any of its covenants and obligations
under this Agreement or the Security
<PAGE> 5
-5-
Trust Indenture other than a default or breach described in paragraph
(q)(i) above; or
(3) an inaccuracy or breach in any representation and warranty made by
FUR herein or in the Security Trust Indenture;
(18) "FUMI" means First Union Management, Inc. and its successors;
(19) "IMMEDIATE PUT EVENT" means the occurrence of any of the
following:
(1) either of the Corporation or FUR (1) taking any action for the
termination, winding-up, liquidation or dissolution of the Corporation
or FUR, or ceasing to carry on business, or ceasing to pay its current
obligations in the ordinary course of business as they generally become
due, (2) making a general assignment for the benefit of creditors or
becoming insolvent or unable to meet its obligations as they generally
become due, (3) filing a petition in voluntary liquidation or
bankruptcy, (4) filing a petition or answer or consent seeking the
reorganization of the Corporation or FUR, as the case may be, or the
readjustment of any of the indebtedness of the Corporation or FUR, as
the case may be, (5) commencing any case or proceeding in respect of
the Corporation or FUR under applicable insolvency or bankruptcy laws
now or hereafter existing (including the Companies' Creditors
Arrangement Act), (6) consenting to the appointment of any receiver,
receiver-manager, administrator, custodian, liquidator or trustee of
all or any part of its assets or property (provided that the mere grant
by the Corporation or FUR of security interests over all or part of
their respective assets or property to a trustee, other than to a
trustee-in-bankruptcy, in accordance with the provisions of normal
course security arrangements shall not of itself constitute an
Immediate Put Event), (7) taking any corporate or other organizational
action for the purpose of effecting any of the foregoing, including by
(A) convening any meeting of the Corporation or FUR for the purpose of
considering any resolution for (or to petition for) its winding-up,
liquidation or dissolution or (B) the passing by shareholders of the
Corporation of a resolution for its winding-up or by the security
holders of FUR of a resolution for its winding-up, liquidation or
dissolution, or (8) being adjudicated as bankrupt or insolvent;
<PAGE> 6
-6-
(2) if any petition for any proceedings in bankruptcy or liquidation or
for the winding-up, reorganization or readjustment of indebtedness of
the Corporation or FUR shall be filed, or any case or proceeding shall
be commenced, under any applicable bankruptcy or insolvency laws now or
hereafter existing (including the Companies' Creditors Arrangement
Act), against the Corporation or FUR, or any receiver,
receiver-manager, administrator, custodian, liquidator or trustee shall
be appointed for the Corporation or FUR or for all or any part of the
Corporation's or FUR's assets or property, or any order for relief or
for the winding-up, dissolution or liquidation shall be entered in a
proceeding with respect to the Corporation or FUR under the provisions
of the United States Bankruptcy Code, the CBCA, the Bankruptcy and
Insolvency Act (Canada), the Companies' Creditors Arrangement Act
(Canada) or any other applicable or similar bankruptcy or insolvency
laws, in each case, as amended, and such proceeding or appointment
shall not be dismissed or discharged, as the case may be, within 45
days after the filing thereof or such appointment;
(3) the commencement by or on behalf of FUR in any court of competent
jurisdiction of any action or proceeding to challenge, or the inclusion
in pleadings filed by or on behalf of FUR with any court of competent
jurisdiction of a request for relief that challenges, the validity of
this Agreement or the Security Trust Indenture;
(20) "IMMEDIATE PUT NOTICE" has the meaning given to such term in
Section 3.3;
(21) "IMMEDIATE PUT RIGHT" has the meaning given to such term in
Section 3.3;
(22) "INVESTCO" means, notwithstanding any prior definition in this
Agreement, Impark Investments Inc. or, if Impark Investments Inc.
should transfer all of its remaining Shares at any time to any
Permitted Transferee in accordance with Section 6.2, it shall
thereafter mean such Permitted Transferee, and it shall include any
successor of Impark Investments Inc. or such Permitted Transferee;
(23) "MANAGEMENT VENDORS" has the meaning given to such term in the
Share Purchase Agreement;
<PAGE> 7
-7-
(24) "ONEX" means Onex Corporation and its successors;
(25) "ONEX ASSOCIATES" means , notwithstanding any prior definition in
this Agreement, the shareholders of 3357392 Canada Inc. listed on
Schedule A hereto or, if any such shareholder should transfer all of
its remaining Shares at any time to any Permitted Transferee in
accordance with Section 6.2, such Permitted Transferee shall thereafter
be substituted for such shareholder as the Onex Associate, and the term
"Onex Associate" shall include any successor of any such shareholder or
such Permitted Transferee;
(26) "PARTIAL PUT RIGHT" has the meaning given to such term in Section
3.1;
(27) "PERMITTED TRANSFEREE" means:
(1) with respect to Investco, any Affiliate of Investco, any employee,
officer or director of Onex or any corporation pursuant to which any
such individual participates in the management investment plan of Onex;
and
(2) with respect to the Onex Associates, in the case of any Onex
Associate that is a corporation, any Affiliate or shareholder of such
corporation or any corporation that is an Affiliate of Onex or, in the
case of any other Onex Associate, to a corporation controlled, directly
or indirectly, by such Onex Associate or Associates of such Onex
Associate or any corporation that is an Affiliate of Onex;
(28) "PERSON" means an individual, a firm, a corporation, a syndicate,
a partnership, an association, a joint venture, a trust, a government
or governmental agency and every other legal or business entity
whatsoever;
(29) "PURCHASE PRICE" means, with respect to any purchase and sale of
Shares upon the exercise of any Put Right or the Call Right hereunder,
the price per Share as set out in Schedule B applicable on the Closing
Date for such purchase and sale; provided, however, that in the case of
the exercise of the Immediate Put Right it shall mean the price per
Share as so set out applicable on the date of
<PAGE> 8
-8-
the delivery of the Immediate Put Notice, and further provided that (i)
if the relevant Closing Date occurs prior to September 30, 1997, the
Purchase Price shall be that set forth for September 30, 1997, (ii) if
the relevant Closing Date falls between any two dates set out in
Schedule B, the Purchase Price shall be calculated by dividing (A) the
amount by which the Purchase Price specified for the date set out in
Schedule B that next follows such Closing Date exceeds the Purchase
Price specified for the immediately preceding date set out in Schedule
B by (B) the number of days between such dates, and (C) multiplying the
quotient thus obtained by the number of days from but not including
such earlier date to and including the Closing Date, and (D) adding
such product to the Purchase Price specified for the earlier of such
dates, and (iii) if the relevant date occurs after March 31, 2002, the
Purchase Price shall be that set forth for March 31, 2002;
(30) "PUT NOTICE" means any notice given by Investco to FUR pursuant to
Section 3.1, 3.2 or 3.3;
(31) "PUT RIGHTS" means, collectively, the Partial Put Right, the
Trigger Event Put Right and the Immediate Put Right;
(32) "QUARTERLY REPORT" has the meaning given to such term in Section
9.1;
(33) "SECURITY TRUST INDENTURE" means the agreement dated as of the
date hereof among FUR, Investco, the Onex Associates and Montreal Trust
Company of Canada;
(34) "SHARE PURCHASE AGREEMENT" means the share purchase agreement made
as of February 18, 1997, as amended to and including April 15, 1997,
between FUR, Investco and the Management Vendors relating to the
purchase and sale of the outstanding shares of Imperial Holdings No. 2
Inc.;
(35) "SHARES" means the Class A Non-Voting Common Shares held as of the
date hereof by Investco and the Onex Associates, as set out in Schedule
A;
(36) "TAX ACT" means the Income Tax Act (Canada), as amended from time
to time;
<PAGE> 9
-9-
(37) "TOTAL ASSET VALUE" means at any time the "value of the total
assets" of FUR determined at such time within the meaning of section
856(c)(5) of the United States Internal Revenue Code, expressed in
United States dollars, as certified in the most recently delivered
Quarterly Report;
(38) "TRANSFER" means, in respect of any Share, any sale, exchange,
transfer, assignment, gift, pledge, encumbrance, hypothecation,
alienation or other transaction, whether voluntary, involuntary or by
operation of law, by which the legal or beneficial ownership of, or any
security interest or other interest in, such Share passes from one
person to another person, whether or not for value;
(39) "TRIGGER EVENT" means the first to occur of any of the following:
(1) the Total Asset Value of FUR equalling or exceeding $1.0 billion at
the end of any calendar quarter ending on or after September 30, 1998;
(2) the effective date (as determined by the enacting or issuing
governmental body) on which (i) section 856(c)(5)(B) of the U.S.
Internal Revenue Code of 1986, as amended, insofar as such section
requires that a real estate investment trust's total assets "be limited
in respect of any one issuer to an amount not greater in value than 5%
of the value of the total assets of the [REIT]", is repealed by the
U.S. Congress, provided that no successor statute or U.S. Federal
administrative rule is enacted or issued before or contemporaneously
with such repeal, or (ii) the reference in the above-quoted language to
"5%" is amended by act of the U.S. Congress or U.S. Federal
administrative rule to provide for a percentage equal to or exceeding
"10%";
(3) FUMI and its Affiliates ceasing to own shares of the Corporation
carrying at least 90% of the votes attaching to all the outstanding
voting shares of the Corporation and 90% of the outstanding Equity
Shares (in each case excluding the Shares and any shares issued to the
Management Vendors or under management incentive and compensation
arrangements), or FUR selling subordinated debt securities issued by
the Corporation (unless at the
<PAGE> 10
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time of the sale the Total Asset Value of FUR is less than $600
million);
(4) the giving prior to March 31, 2002 of notice by the Corporation,
where such notice is required to be given under the articles of the
Corporation, that it (a) intends to issue more than 1,000,000 Class B
Voting Common Shares in any period of 12 consecutive months at a per
share consideration of less than $1.00, (b) intends to subdivide the
outstanding Class B Voting Common Shares or (c) intends to take any
corporate action that would diminish or remove the limitation on
liability of shareholders provided for under subsection 45(1) of the
CBCA;
(5) any event or series of events by which (i) any "person" or "group"
(as such terms are used in Sections 13(d) and 14(d)(2) of the United
States Securities Exchange Act of 1934 (the "Exchange Act")) becomes,
whether by means of any issuance or direct or indirect transfer of
securities, merger, consolidation, liquidation, dissolution or
otherwise, the "beneficial owner" (as such term is used in Rule 13d-3
under the Exchange Act, except that a person shall be deemed to be a
"beneficial owner" of all securities that any such person has the right
to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly through one or more
intermediaries, of more than 35% of the total voting rights attaching
to the then-outstanding voting securities of FUR or FUMI, or (ii)
during any period of two consecutive years, individuals who at the
beginning of such period constituted FUR's board of trustees or FUMI's
board of directors (together with any new trustees or new directors
whose election by the FUR's board of trustees or FUMI's board of
directors (as the case may be) or whose nomination for election by
FUR's or FUMI's stockholders, as applicable, was approved by a vote of
66 2/3% of FUR's trustees or FUMI's directors (as applicable) then
still in office who were either trustees or directors (as applicable)
at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason (other than
death or disability) to constitute a majority of FUR's trustees or
FUMI's directors (as applicable) then still in office;
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(6) any Event of Default, except that (A) if such Event of Default is
one described in Section 1.1(q)(ii), it shall not be deemed to give
rise to a Trigger Event if it is cured within 15 business days after
written notice of the same has been given to FUR, and (B) if such Event
of Default is one described in Section 1.1(q)(iii), it shall not be
deemed to give rise to a Trigger Event if it is cured within five
business days after written notice of the same has been given to FUR;
(7) any event of default or other circumstance under any agreement to
which FUR is a party (other than this Agreement or the Security Trust
Indenture) that automatically or otherwise results in an acceleration
of the time for payment of any monetary obligation of FUR in an amount
exceeding $5.0 million, unless the same has been remedied or waived
within five business days after arising; and
(8) the occurrence of the day that falls 30 months after the date of
this Agreement;
(40) "TRIGGER EVENT PUT NOTICE" has the meaning given to such term in
Section 3.2;
(41) "TRIGGER EVENT PUT RIGHT" has the meaning given to such term in
Section 3.2; and
(42) "TRUSTEE" means Montreal Trust Company of Canada, acting in its
capacity as collateral agent under the Security Trust Indenture.
1.2 HEADINGS. The division of this Agreement into sections,
paragraphs and clauses and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement. The terms "this Agreement", "hereof", "herein", "hereunder" and
similar expressions refer to this Agreement and not to any particular section or
other portion hereof and include any agreement or instrument supplemental or
ancillary hereto.
1.3 CURRENCY. Unless otherwise indicated, all dollars amounts
referred to in this Agreement are expressed in United States funds.
<PAGE> 12
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1.4 GOVERNING LAW. This Agreement shall be construed and
interpreted in accordance with the laws of the Province of Ontario and the
federal laws of Canada applicable therein. Each of the parties hereby
irrevocably attorns to the non-exclusive jurisdiction of the courts of the
Province of Ontario.
1.5 SEVERABILITY. If any provision contained herein is
determined to be void or unenforceable in whole or in part, it shall not be
deemed to affect or impair the validity of any other provision herein and each
such provision is deemed to be separate and distinct.
1.6 ENTIRE AGREEMENT. This Agreement, the Security Trust
Indenture and the Deposit Agreement constitute the entire agreement between the
parties with respect to the subject matter hereof.
1.7 BUSINESS DAYS. Any action or payment required or permitted
to be taken or made hereunder on a day that is not a business day may be taken
or made on the next succeeding business day.
1.8 NUMBER AND GENDER. Words importing the singular number
only shall include the plural and vice versa and words importing the use of any
gender shall include all genders.
2. PUT OPTION PRICE
2.1 PUT OPTION PRICE. In consideration of the grant by FUR to
Investco and the Onex Associates of the Put Rights and the other covenants and
agreements of FUR contained in this Agreement, Investco and the Onex Associates
hereby agree, in their respective pro rata shares (based on the proportion that
the number of Shares held by each such party bears to the total number of Shares
held by Investco and the Onex Associates), to pay to FUR Cdn. $250,000 (the "Put
Option Price") and to grant to FUR the Call Right.
2.2 SATISFACTION OF PUT OPTION PRICE. Investco and each of the
Onex Associates hereby agree to deliver to FUR, upon the execution and delivery
of this Agreement by FUR, in full payment and satisfaction of the Put Option
Price, one or more certified cheques or bank drafts in immediately available
funds in the aggregate amount of the Put Option Price, made payable to or to the
order of FUR.
3. PUT AND CALL RIGHTS
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3.1 PARTIAL PUT RIGHT. If, at the end of any calendar quarter
ending on or after September 30, 1998, the Total Asset Value of FUR (as shown in
any Quarterly Report) equals or exceeds $750 million for the first time after
the date of this Agreement, but does not exceed $1 billion, Investco shall have
the right (the "Partial Put Right"), exercisable by notice in writing delivered
to FUR, the Trustee and the Depositary at any time following the quarter-end at
which the Total Asset Value of FUR first equals or exceeds $750 million (without
then exceeding $1 billion) until the 30th day following the delivery to Investco
of the Quarterly Report relating to such quarter, to require FUR to purchase
one-half (1/2), but not less than one-half (1/2), of the Shares owned by
Investco and the Onex Associates as at the end of such calendar quarter at the
applicable Purchase Price.
3.2 TRIGGER EVENT PUT RIGHT. Upon the occurrence of the
Trigger Event, Investco shall have the right (the "Trigger Event Put Right"),
exercisable by notice (the "Trigger Event Put Notice") in writing delivered to
FUR, the Trustee and the Depositary at any time following the occurrence of the
Trigger Event until the 30th day following the giving of notice by FUR to
Investco of the Trigger Event, to require FUR to purchase all but not less than
all of the Shares owned by Investco and the Onex Associates on the applicable
Closing Date, which purchase is to be made at the applicable Purchase Price.
3.3 IMMEDIATE PUT RIGHT. Upon the occurrence of any Immediate
Put Event, Investco shall have the right (the "Immediate Put Right"),
exercisable by notice (the "Immediate Put Notice") in writing delivered to FUR
at any time following the occurrence of the Immediate Put Event until the fifth
day following the giving of notice by FUR to Investco of such Immediate Put
Event, to require FUR to purchase all but not less than all of the Shares owned
by Investco and the Onex Associates on the applicable Closing Date, which
purchase is to be made at the applicable Purchase Price. A copy of the Immediate
Put Notice shall be provided to the Trustee and the Depositary as soon as
reasonably practicable after being given to FUR. The Immediate Put Notice shall
set out the Closing Date for the purchase and sale of such Shares, which date
(i) shall not be more than 10 days, and (ii) if the Immediate Put Notice relates
to one or more Immediate Put Events described in Sections 1.1(s)(i) or (ii) that
relate to the Corporation but none of which relates to FUR, shall not be less
than two days, following the date of delivery to FUR of the Immediate Put
Notice. The due delivery of an Immediate Put Notice shall override any other Put
Notice or any Call Notice theretofore or thereafter given, and the closing of
the purchase and sale transaction effected
<PAGE> 14
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by the giving of the Immediate Put Notice shall occur in accordance with such
Immediate Put Notice notwithstanding the giving of any Delayed Closing Notice or
any other provision hereof to the contrary.
3.4 CALL RIGHTS OF FUR. At any time during either (i) the
period commencing on the date of the first anniversary of the occurrence of the
Trigger Event and ending on the 30th day following such date or (ii) the period
commencing on the date of the second anniversary of the occurrence of the
Trigger Event and ending on the 30th day following such date, FUR shall have the
right (the "Call Right"), exercisable by notice (a "Call Notice") in writing
delivered to Investco at any time during either such period, to require Investco
and the Onex Associates to sell all but not less than all of the Shares owned by
Investco and the Onex Associates on the applicable Closing Date, which purchase
is to be made at the applicable Purchase Price.
3.5 LIMITATIONS ON EXERCISE PERIOD. Notwithstanding the
periods for exercise of the Partial Put Right and the Trigger Event Put Right
set out in Sections 3.1 and 3.2, the written notice by which either such Put
Right is exercised may not be given during the final 15 days of any calendar
quarter.
3.6 PURCHASE AND SALE UPON EXERCISE. Upon the exercise of any
Put Right or the Call Right, Investco and the Onex Associates shall sell, and
FUR shall purchase, such number of Shares as are required to be so purchased and
sold pursuant to the terms of this Section 3. Any such purchase and sale of
Shares shall be completed on such other terms and conditions as are set out in
Section 4.
4. CLOSING ARRANGEMENTS
4.1 DEFINITIONS. In this Section 4, the term "Purchased
Shares" means the Shares to be purchased from Investco and the Onex Associates
by FUR pursuant to Section 3.1, 3.2, 3.3 or 3.4, and the term "Vendor" means the
applicable vendor (being Investco or the relevant Onex Associate) of any such
Shares.
4.2 PLACE AND TIME OF CLOSING.
(1) Unless otherwise provided in this Agreement, the closing of the
purchase and sale of the Purchased Shares shall take place at the offices of
Fasken Campbell Godfrey at 10:00 a.m. (Toronto time) on the applicable Closing
Date, or at such other place and time as FUR and Investco may mutually
determine, the
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actual time of closing on such Closing Date being hereinafter referred to as the
"Time of Closing".
(2) Notwithstanding the actual Closing Date with respect to any
purchase and sale of Shares upon the exercise of the Immediate Put Right, and
notwithstanding anything else contained in this Agreement, such purchase and
sale shall be deemed to have taken place immediately upon the delivery of the
Immediate Put Notice and the effective date of such transfer of the Shares shall
for all purposes be deemed to be the date of such delivery.
4.3 CLOSING DELIVERIES.
(1) At the Time of Closing:
(1) FUR shall pay the aggregate Purchase Price (the
"Aggregate Purchase Price") for the Purchased Shares
by delivery to Investco on behalf of the Vendors of a
certified cheque or bank draft in immediately
available Canadian funds in the amount of the
Aggregate Purchase Price; and
(2) each Vendor shall deliver to FUR:
(1) an acknowledgement in writing of the receipt by Investco of any payment
made pursuant to Section 4.3(a)(i) and that such delivery to Investco
constitutes good delivery to such Vendor of the Purchase Price for the
Purchased Shares being sold by such Vendor;
(2) a representation and warranty in writing from such Vendor that the
Vendor is then the registered and beneficial owner of the Purchased
Shares to be sold by it at the Time of Closing, free and clear of any
lien, charge, pledge, encumbrance, security interest, call, option or
adverse claim, except to the extent the same exists pursuant to the
provisions of this Agreement or the Deposit Agreement; and
(3) a representation and warranty in writing from such Vendor that it is
not a non-resident of Canada within the meaning of the Tax Act or, in
lieu thereof, (I) a certificate obtained under section 116 of the Tax
Act with a "certificate limit" not less than the Purchase Price of the
Purchased Shares being sold by such Vendor or (II) a direction in
writing by such Vendor to FUR to withhold from such Purchase Price
any amount required to be withheld under the Tax Act and any
applicable provincial
<PAGE> 16
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tax statute in respect of the sale of the Purchased Shares by such
Vendor;
(3) at the time that each Vendor is required to deliver to FUR
an acknowledgement in writing as described in Section
4.3(a)(ii)(A), Investco shall deliver to the Depositary (with
an original executed copy being delivered to FUR) either:
(1) confirmation in writing that Investco has received the Aggregate
Purchase Price for the Purchased Shares; or
(2) an irrevocable direction to the Depositary to the effect that the
Depositary shall thereafter hold the Purchased Shares solely for and on
behalf of FUR; and
(4) at the time that each Vendor is required to deliver to FUR
an acknowledgement in writing as described in Section
4.3(a)(ii)(A), if at that time the conditions to the automatic
termination of this Agreement as set out in Section 10.8(b)
have been satisfied, Investco shall deliver to the Trustee
(with an original executed copy being delivered to FUR)
written notice to the effect that this Agreement has been
terminated in accordance with its terms.
(2) From and after the date of the delivery of such Immediate Put
Notice, and even though the certificates representing the Purchased Shares may
not have been delivered to FUR, the purchase and sale of the Purchased Shares
shall be deemed to have been completed and all right, title, benefit and
interest in and to the Purchased Shares shall be conclusively deemed to have
been transferred and assigned to and become vested in FUR, in each case as at
the date of the Immediate Put Event, and all right, title, benefit and interest
of each Vendor or of any pledgee, transferee or other person claiming any
interest therein or thereto through any Vendor shall cease, except that the
Vendors shall retain a security interest in the Purchased Shares until the
receipt by Investco of the full amount of the Aggregate Purchase Price.
4.4 TENDER PROCESS.
(1) If any Vendor is not present or otherwise represented by counsel or
a representative of Investco at the Time of Closing or is present or so
represented but fails for any reason to deliver to FUR any document referred to
in Section 4.3(a)(ii), FUR may deposit the portion of the Aggregate Purchase
Price
<PAGE> 17
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allocable to the Purchased Shares to be sold by such Vendor into a special
account at the main branch in Toronto, Ontario of any Canadian chartered bank in
the joint names of FUR and the Vendor. Forthwith after the making of such
deposit, FUR shall give such Vendor written notice thereof, which notice shall
specify the date of deposit, the name and address of the bank branch at which
the deposit was made and the account number. Such deposit shall constitute valid
payment and satisfaction of the portion of the Aggregate Purchase Price
allocable to the Purchased Shares to be sold by such Vendor. If a Vendor
described in the foregoing provisions of this Section 4.4(a) is a non-resident
of Canada within the meaning of the Tax Act, such Vendor shall indemnify FUR for
all loss, liability or expense resulting from any failure of such Vendor to
deliver the documents referred to in Section 4.3(a)(ii)(C) on a timely basis.
Upon presentation by the relevant Vendor to FUR of the documents referred to in
Section 4.3(a)(ii), the Vendor shall, subject to the provisions of Section
4.4(b), be entitled to be paid the monies so deposited with such bank, together
with all interest accrued thereon.
(2) If Investco fails for any reason to deliver to the Depositary
either document referred to in Section 4.3(a)(iii), FUR may deposit the
Aggregate Purchase Price into a special account at the main branch in Toronto,
Ontario of any Canadian chartered bank in the joint names of FUR and Investco.
Forthwith after the making of such deposit, FUR shall give Investco written
notice thereof, which notice shall specify the date of deposit, the name and
address of the bank branch at which the deposit was made and the account number.
Such deposit shall constitute valid payment and satisfaction of the portion of
the Aggregate Purchase Price allocable to the Purchased Shares to be sold by
each Vendor. Upon delivery by Investco to the Depositary of either document
referred to in Section 4.3(a)(iii), Investco and the Vendors shall, subject to
the provisions of Section 4.4(a), be entitled to be paid the monies so deposited
with such bank, together with all interest accrued thereon.
4.5 TRANSFER OF TITLE.
(1) If the deliveries provided for in Section 4.3(a) are completed at
the Time of Closing in respect of any Purchased Shares, the purchase and sale of
such Purchased Shares shall be deemed to have been completed and all right,
title, benefit and interest in and to such Purchased Shares shall conclusively
be deemed to have been transferred and assigned to and become vested in FUR, in
each case as at the Time of Closing, and all right, title, benefit and interest
of the Vendor or of any pledgee,
<PAGE> 18
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transferee or other person claiming any interest therein or thereto through the
Vendor shall cease.
(2) If, pursuant to Section 4.4, the Aggregate Purchase Price or some
portion of it is deposited with a Canadian chartered bank in the joint names of
FUR and either Investco or the relevant Vendor, from and after the date of such
deposit, and even though the certificates representing the Purchased Shares may
not have been delivered to FUR, the purchase and sale of the Purchased Shares in
respect of which certain deliveries required by Section 4.3(a)(ii) and/or (iii)
have not been made shall be deemed to have been completed and all right, title,
benefit and interest in and to such Purchased Shares shall be conclusively
deemed to have been transferred and assigned to and become vested in FUR, in
each case as at the Time of Closing, and all right, title, benefit and interest
of the Vendor or of any pledgee, transferee or other person claiming any
interest therein or thereto through the Vendor shall cease; provided, however,
that the relevant Vendor or Vendors shall be entitled to receive the Purchase
Price so deposited, together with all interest accrued interest thereon, upon
delivery to FUR and, if applicable, the Depositary, of the documents required to
be delivered by the relevant Vendor or Vendors pursuant to Section 4.3(a)(ii) or
by Investco pursuant to Section 4.3(a)(iii).
4.6 FUR EXTENSION RIGHT.
(1) Notwithstanding the foregoing provisions of this Section 4 (other
than Section 4.3(b)), should the Trigger Event occur on the day that falls 30
months after the date of this Agreement (without the occurrence at such time of
any event or circumstance described in Section 1.1(mm)(iii), (iv), (v), (vi) or
(vii)), FUR shall have the right to elect, by notice (a "Delayed Closing
Notice") in writing given to the Trustee and Investco at any time during the
period commencing on the date of the receipt by FUR of a Trigger Event Put
Notice and ending on the applicable Closing Date, to delay the closing until
April 15, 2000; provided, however, that should any event or circumstance
described in Section 1.1(mm) (iii), (iv), (v), (vi) or (vii) occur or arise
after such election is made, then the completion of such purchase and sale shall
be governed by Section 3 and the foregoing provisions of Section 4, and the date
of the giving of the applicable Put Notice shall for the purposes thereof be
deemed to be the date of the occurrence of such event or circumstance.
<PAGE> 19
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(2) No Delayed Closing Notice delivered in accordance with Section
4.6(a) shall be effective unless accompanied by certified cheques or bank drafts
in immediately available funds payable to Investco and each of the Onex
Associates in an amount equal to Cdn. $0.03 for each Share then registered on
the books of the Corporation in the name of each such party.
5. REPRESENTATIONS AND WARRANTIES.
5.1 REPRESENTATIONS AND WARRANTIES RELATING TO INVESTCO AND
THE ONEX ASSOCIATES. Investco and each of the Onex Associates represents and
warrants to FUR in respect of itself as follows and acknowledges that FUR is
relying on such representations and warranties in connection with the matters
contemplated hereby:
(1) unless it is a natural person, it is a corporation validly
existing under the laws of the Province of Ontario and has all
necessary corporate power and authority to enter into this
Agreement and the Deposit Agreement and to perform its
obligations hereunder and thereunder;
(2) unless it is a natural person, all necessary corporate
action has been taken to authorize it to enter into this
Agreement and the Deposit Agreement and to perform its
obligations hereunder and thereunder;
(3) the execution and delivery of this Agreement and the
Deposit Agreement by it and the consummation of the
transactions contemplated hereby and thereby will not, with or
without the giving of notice, lapse of time or both, breach or
violate any of the provisions of, constitute a default under,
or conflict with or cause the acceleration of any obligation
of such person under (A) any agreement to which it is a party
or by which it is bound, (B) any judgment, decree, order or
award of any court, governmental body or arbitrator having
jurisdiction over such person, (C) any applicable law,
statute, ordinance, regulation or rule, or (D), unless it is a
natural person, its articles or by-laws or any resolution of
its directors or shareholders;
(4) each of this Agreement and the Deposit Agreement has been
duly executed and delivered by it and is a legal, valid and
binding obligation, enforceable against it by FUR in
accordance with its terms;
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(5) except as indicated in Schedule A, it is not a
non-resident of Canada within the meaning of the Tax Act;
(6) there is no requirement for it to make any filing with,
give any notice to or obtain any licence, permit, certificate,
registration, authorization, consent or approval of, any
government or regulatory authority nor is the consent or
approval of any other third party required as a condition to
the lawful consummation by it of the transactions contemplated
by this Agreement or the Deposit Agreement;
(7) it is the registered and beneficial owner of that number
of Shares as is set out opposite its name in Schedule A and it
has good and marketable title thereto, free and clear of all
liens, charges, pledges, encumbrances, security interests,
calls, options or adverse claims except to the extent the same
exists pursuant to the provisions of this Agreement or the
Deposit Agreement; and
(8) no person (other than FUR) has any agreement, contract,
lease, licence, option or instrument or any right or privilege
(whether by law, pre-emptive or contractual) capable of
becoming such an agreement, contract, lease, licence, option
or instrument for the purchase or the acquisition of any of
the Shares held by it.
5.2 REPRESENTATIONS AND WARRANTIES BY FUR. FUR represents and
warrants to Investco and the Onex Associates as follows and acknowledges and
confirms that they are relying on such representations and warranties in
connection with the transactions contemplated hereby:
(1) FUR is a business trust duly formed and validly existing
under the laws of the State of Ohio and has all necessary
power and authority to own or lease its property, to enter
into this Agreement, the Security Trust Indenture and the
Deposit Agreement and to perform its obligations hereunder and
thereunder;
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(2) all necessary proceedings have been taken (including, as
necessary, the obtaining of any security holder approvals) by
FUR to enable it to enter into this Agreement, the Security
Trust Indenture and the Deposit Agreement and to perform its
obligations hereunder and thereunder;
(3) the execution and delivery of this Agreement, the Security
Trust Indenture and the Deposit Agreement by FUR and the
consummation of the transactions contemplated hereby and
thereby will not, with or without the giving of notice, lapse
of time or both, breach or violate any of the provisions of,
constitute a default under, conflict with or cause the
acceleration of any obligation of FUR under (A) the
Declaration of Trust, as amended, of FUR or any exercise of
authority by the security holders thereunder or any resolution
of the board of trustees (or any committee thereof) of FUR,
(B) any agreement to which FUR is a party or by which it is
bound, (C) any judgment, decree, order or award of any court,
governmental body or arbitrator having jurisdiction over FUR,
or (D) any applicable law, statute, ordinance, regulation or
rule;
(4) each of this Agreement, the Security Trust Indenture and
the Deposit Agreement has been duly executed and delivered by
FUR and is a legal, valid and binding obligation of FUR,
enforceable against FUR by Investco and the Onex Associates in
accordance with its terms;
(5) there is no requirement for FUR to make any filing with,
give any notice to or obtain any licence, permit, certificate,
registration, authorization, consent or approval of, any
government or regulatory authority nor is the consent or
approval of any other third party required as a condition to
the lawful consummation by FUR of the transactions
contemplated by this Agreement, the Security Trust Indenture
or the Deposit Agreement;
(6) all necessary corporate action has been taken by the
Corporation and its shareholders to authorize or consent to
any Transfer of the Shares to FUR pursuant to an exercise of
the Put Rights and the Call Rights as contemplated hereby; and
(7) it has delivered to and deposited with the Trustee in
accordance with the terms of the Security Trust
<PAGE> 22
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Indenture Eligible Securities having an aggregate face value
(calculated by reference to the Canadian Dollar Equivalent of
the face value of any Eligible Securities denominated in
United States dollars) at least equal to Cdn. $14,693,137.
6. TRANSFER RESTRICTIONS.
6.1 GENERAL PROHIBITION. Except as specifically permitted by
this Agreement, neither Investco nor any Onex Associate shall Transfer any
Shares now or hereafter held or owned beneficially by it unless the restrictions
set out in this Section 6 have been waived in writing by FUR and any conditions
specified in any such waiver have been satisfied. Any purported Transfer in
violation of this Agreement shall be invalid and shall not be registered on the
books of the Corporation or otherwise recognized for any purpose.
6.2 PERMITTED TRANSFERS. Investco or any Onex Associate may
Transfer any Shares beneficially owned by such person to any Permitted
Transferee; provided, however, that the transferor and any such Permitted
Transferee shall execute and deliver to FUR an agreement in the form attached
hereto as Schedule C.
6.3 PLEDGES. Investco or any Onex Associate may pledge or
otherwise grant a security interest in any Shares now or hereafter held by it to
secure any bona fide indebtedness of the pledgor to a Canadian chartered bank, a
United States commercial bank or any trust company incorporated or existing
under the laws of Canada or the United States or any political subdivision
thereof, provided that (i) the relevant Shares remain deposited with the
Depositary and subject to the provisions of the Deposit Agreement and (ii) the
relevant pledgee executes and delivers to FUR a counterpart to this Agreement
pursuant to which the relevant pledgee agrees (A) to be bound by the terms and
conditions hereof in respect of such pledged Shares and (B) to release all
rights and interests in the pledged Shares to FUR upon payment of the Purchase
Price therefor in accordance with the provisions of this Agreement.
6.4 TRANSFER ON DEATH. The provisions of Section 6.1 shall not
apply to the Transfer of any Shares from a deceased Onex Associate to his estate
or to any Associate of such deceased Onex Associate, provided that (i) the
estate or such Associate shall be bound by the provisions of this Agreement and
(ii) the legal representative(s) of the deceased Onex Associate (on behalf of
his estate) or such Associate, as the case may be, executes and
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delivers a counterpart in substance having the same effect as Schedule C
pursuant to which such person(s) agrees to be bound by the terms and conditions
hereof in respect of such Shares.
6.5 OTHER PERMITTED TRANSFERS. The restrictions on Transfer
contained in this Section 6 shall not apply to any Transfer of Shares by
Investco or any Onex Associate to FUR or to FUMI nor shall any such restriction
operate to prevent the acquisition by Investco of any Class A Non-Voting Common
Shares of the Corporation held by the Management Vendors (provided that such
Class A Non-Voting Common Shares shall not constitute Shares for the purposes of
this Agreement). In addition, nothing herein shall prevent the acquisition by
Investco and/or any or all Onex Associates of the Class A Non-Voting Common
Shares held as at the date hereof by Charles Vosmik, and upon any such
acquisition, such shares shall automatically become Shares for all purposes
hereof.
7. PROTECTIVE PROVISIONS.
(1) If and whenever at any time after the date hereof, the Corporation
shall (i) subdivide or redivide the outstanding Class A Non-Voting Common Shares
into a greater number of Class A Non-Voting Common Shares or (ii) consolidate,
combine or reduce the outstanding Class A Non-Voting Common Shares into a lesser
number of Class A Non-Voting Common Shares, then, in each such event, the
Purchase Price will, on the effective date of or the record date for such event,
be adjusted by multiplying the Purchase Price in effect immediately prior to
such date by a fraction, of which the numerator shall be total number of Class A
Non-Voting Common Shares outstanding on such date before giving effect to such
event, and of which the denominator shall be the total number of Class A
Non-Voting Common Shares on such date after giving effect to such event. Such
adjustment will be made successively whenever any such event shall occur.
(2) For greater certainty, but without limitation, if at any time after
the date hereof there shall occur any of the following:
(1) any reclassification or redesignation of the Class A
Non-Voting Common Shares or any conversion, exchange or other
change of Class A Non-Voting Common Shares into other shares
or securities or any other capital reorganization; or
<PAGE> 24
-24-
(2) any consolidation, amalgamation, merger, plan of
arrangement or other form of reorganization involving the
Corporation (other than a consolidation, amalgamation, plan of
arrangement or other form of reorganization which does not
result in any reclassification or redesignation of Class A
Non-Voting Common Shares or conversion, exchange or other
change of Class A Non-Voting Common Shares into other shares
or securities),
any of such events being called a "Capital Reorganization", the Aggregate
Purchase Price that FUR shall be required to pay to Investco and the Onex
Associates who thereafter sell any Shares hereunder to FUR shall be the
Aggregate Purchase Price for the Shares (or the predecessor securities of the
Shares) which would otherwise have been paid by FUR to Investco or the relevant
Onex Associate if such Capital Reorganization had not occurred.
(3) Upon the occurrence of any such Capital Reorganization, the parties
hereto shall enter into an agreement supplemental hereto which shall provide for
the amendment of this Agreement on such terms and conditions as may be necessary
to protect the rights of FUR, Investco and the Onex Associates hereunder.
8. RECOURSE.
In addition to the rights of Investco and the Onex Associates
pursuant to the Security Trust Indenture, upon the occurrence of any Event of
Default, Investco and the Onex Associates shall have recourse in executing any
judgment against FUR to all the property and assets of FUR other than the
following:
(1) property directly or indirectly acquired by the
Corporation on the date hereof in connection with the closing
of the transactions contemplated by the Share Purchase
Agreement, including without limitation the Real Property (as
defined in the Share Purchase Agreement);
(2) property, the fair market value of which is wholly or
partly attributable to the property referred to in (a);
(3) property, the fair market value of which is determinable
primarily by reference to the fair market value of, or any
proceeds of disposition of, the property referred to in (a);
<PAGE> 25
-25-
(4) an interest in, or indebtedness of, any corporation,
partnership, trust or other person that directly capitalizes
the Corporation in whole or in part; and
(5) substitutions for any property, interest or indebtedness
referred to in paragraphs (a), (b), (c) or (d) above or this
paragraph (e);
provided that in no event shall recourse not be available to those assets
subject to the Security Trust Indenture.
9. ADDITIONAL COVENANTS.
---------------------
9.1 QUARTERLY REPORTS. FUR shall deliver to Investco as soon
as practicable following the end of each calendar quarter (but in any event not
more than 45 days thereafter), a report (a "Quarterly Report") certified by any
two senior officers of FUR setting out the Total Asset Value for FUR and
accompanied by all supporting calculations and further information as may be
reasonably necessary to permit Investco to verify the Total Asset Value as set
out therein.
9.2 REQUIRED NOTIFICATIONS AND COOPERATION.
(1) FUR shall deliver to Investco written notice of the
occurrence of the Trigger Event or Immediate Put Event as soon as reasonably
practicable thereafter. Such notice shall contain a brief description of the
event or circumstance giving rise to such Trigger Event or Immediate Put Event
and shall set out the date of such occurrence. Upon any written request by
Investco, FUR shall provide to Investco any additional information as may be
reasonably necessary to permit Investco to verify the occurrence of such event.
(2) Investco shall have the right at any time and from time
to time to require by notice in writing delivered to FUR that FUR provide or
cause to be provided to it such information relating to FUR, FUMI or the
Corporation as may be reasonably necessary to permit Investco to assess the
likelihood of the prospective occurrence of an Immediate Put Event or a Trigger
Event or to verify that such an event has occurred.
9.3 EXERCISE OF CLASS VOTING RIGHTS. FUR hereby covenants and
agrees that it shall not, and that it shall not permit any of its Affiliates to,
exercise any class voting rights attaching to or associated with any Shares held
by them until the
<PAGE> 26
-26-
earlier of March 31, 2002 and the date on which Investco and the Onex Associates
cease to hold any Shares.
9.4 REGULATORY FEES. At any time the Corporation ceases to be a
"private company" (as defined in the Securities Act (Ontario)), FUR shall pay
any and all fees charged by any securities regulatory authority in connection
with any purchase by FUR of Shares hereunder.
9.5 DEPOSIT OF ADDITIONAL ELIGIBLE SECURITIES.
(1) On October 7, 1997, FUR shall deliver to and deposit with the
Trustee, to be held by the Trustee in accordance with the Security Trust
Indenture, Eligible Securities having an aggregate cost (not including
commissions, fees and expenses of acquisition) at least equal to the increase
between (i) Cdn. $14,693,137 and (ii) the Aggregate Purchase Price as at
September 30, 1997 for all of the Shares then held by Investco and the Onex
Associates. On the 15th day of the month following the end of every sixth
calendar month following September 30, 1997, FUR shall deliver to and deposit
with the Trustee, to be held by the Trustee in accordance with the Security
Trust Indenture, Eligible Securities having an aggregate cost (not including
commissions, fees and expenses of acquisition) at least equal to the increase
between the Aggregate Purchase Price of all of the Shares held by Investco and
the Onex Associates as at the end of the preceding six-month period (or since
September 30, 1997 with respect to the first such period) and as at the end of
such six-month period.
(2) In the event that as at September 30, 1997 the sum in Canadian
dollars (using the Canadian Dollar Equivalent at that date of any Eligible
Securities denominated and any costs incurred in United States dollars) (the
"Six Month End Value") of (i) the aggregate value of all Eligible Securities
then held by the Trustee under the Security Trust Indenture, and (ii) the
aggregate cost of the additional Eligible Securities to be deposited by FUR on
or before October 15, 1997 pursuant to Section 9.5(a), is less than the
Aggregate Purchase Price as at September 30, 1997 of all of the Shares then held
by Investco and the Onex Associates as a result of the diminution of the
Canadian Dollar Equivalent (calculated as at September 30, 1997) value of any
Eligible Securities then held by the Trustee that are denominated in United
States dollars, then FUR shall, on or before October 15, 1997, deliver to and
deposit with the Trustee, to be held by the Trustee in accordance with the
Security Trust Indenture, Eligible Securities having an aggregate cost (not
including commissions, fees and expenses of acquisition)
<PAGE> 27
-27-
at least equal to the difference between the Six Month End Value as at September
30, 1997 and the Aggregate Purchase Price as at that date. A similar calculation
shall be performed as at the end of every sixth calender month following
September 30, 1997 and if the Six Month End Value as at any such date is less
than the Aggregate Purchase Price as at such date of all of the Shares then held
by Investco and the Onex Associates as a result of the diminution of the
Canadian Dollar Equivalent (calculated as at such date) value of any Eligible
Securities then held by the Trustee that are denominated in United States
dollars, then FUR shall, on or before the 15th day of the month following such
date, deliver to and deposit with the Trustee, to be held by the Trustee in
accordance with the Security Trust Indenture, Eligible Securities having an
aggregate cost (not including commissions, fees and expenses of acquisition) at
least equal to the difference between the Six Month End Value as at such date
and the Aggregate Purchase Price as at such date. If FUR shall hedge the foreign
exchange risk relating to the deposit with the Trustee of Eligible Securities
denominated other than in Canadian dollars in a manner other than as set forth
in this Section 9.5(b) but with similar effect, then it may request Investco's
consent to the waiver of the provisions of this Section 9.5(b), which consent is
not to be unreasonably withheld.
9.6 CONFIDENTIALITY. Investco and the Onex Associates shall treat
all information received in their capacity as shareholders of the Corporation or
pursuant to the provisions of this Agreement (including without limitation any
financial statements of the Corporation and any information provided by FUR
pursuant to Sections 9.1 and 9.2) as confidential and shall not use or disclose
to any person (other than its directors, officers, agents, employees or
representatives and those of Onex (collectively, the "Representatives") who have
a need to know it), or permit any of its Representatives to use or disclose to
any person, directly or indirectly, any such information at any time hereafter,
provided however that nothing in this Section 9.6 shall preclude Investco, Onex
or any Onex Associate or Representative from using or disclosing any such
information (i) if such information is available to the public or in the public
domain at the time of such disclosure or use, without breach of this Agreement,
(ii) if disclosure is required to be made by any law, regulation, governmental
body or authority or stock exchange or dealer quotation system on which
securities of Investco or any of its Affiliates or any Onex Associate are listed
or quoted or by court order, or (iii) if disclosure is made to a court which is
determining the rights of the parties under this Agreement or if use or
disclosure otherwise may be reasonably necessary in connection with the rights,
remedies, obligations and liabilities of Investco or the Onex Associates under
this Agreement or any other agreement contemplated hereby or in connection with
any budgeting or treasury planning function of Investco, Onex or their
Affiliates or any valuation of the Shares for the corporate purposes of
Investco, Onex or their Affiliates. Investco and each Onex Associate
<PAGE> 28
-28-
acknowledges and agrees that the obligations under this Section 9.6 are to
remain in effect in perpetuity.
10. MISCELLANEOUS
10.1 AUTHORITY OF INVESTCO. Each of the Onex Associates hereby
irrevocably appoints Investco as such person's agent and attorney for the
purpose of executing and delivering any amendment, waiver, notice, direction,
receipt or other document or taking any other action required or permitted to be
taken by or on behalf of the Onex Associates pursuant to this Agreement or in
connection with the transactions contemplated hereby, including, without
limitation, for the purpose of giving any Put Notice and the exercise of any of
the rights granted to the Onex Associates pursuant to Sections 3.1, 3.2 and 3.3.
Any such amendment, waiver, notice, direction, receipt or other document or any
such other action shall be deemed to have been effectively given or taken on
behalf of the Onex Associates and shall be binding upon each of the Onex
Associates as if each of them had executed and delivered such document or taken
such other action, as the case may be. Without limiting the generality of the
foregoing, each Onex Associate appoints Investco or its agent to receive such
Onex Associate's pro rata share of the Aggregate Purchase Price pursuant to
Section 4.3(a)(i) and to deliver the confirmation or direction to the Depositary
contemplated by Section 4.3(a)(iii).
10.2 CORPORATE CONSENTS TO TRANSFERS. No party shall exercise
any rights as a shareholder of the Corporation to revoke, override, restrict,
limit or qualify any corporate or shareholder authorization or consent that has
been given on or prior to the date hereof in respect of any Transfer of Shares
contemplated hereby, and each party shall exercise its best efforts to ensure
that no such revocation, override, restriction, limitation or qualification is
effected. In addition, FUR shall exercise its best efforts to secure any
corporate or shareholder authorization or consent necessary in connection with
any Transfer of Shares made in accordance with the provisions hereof.
10.3 IMPLEMENTATION. Each of the parties hereto agrees to
execute and deliver all such instruments and other documents, to exercise all
voting rights attaching to the outstanding shares of the Corporation and to do
all such other acts and things as may be necessary or advisable from time to
time to give effect fully to the provisions and intent of this Agreement.
10.4 NOTICES.
<PAGE> 29
-29-
(1) Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be delivered
in person or transmitted by telecopy or similar means of
recorded electronic communication, addressed as follows:
<TABLE>
<S> <C>
(1) If to Investco or to
the Onex Associates: c/o Onex Corporation
161 Bay Street
49th Floor, P.O. Box 700
Toronto, Ontario
M5J 2S1
Attention: Mark L. Hilson or
Anthony Munk
Fax: (416) 362-5765
(2) If to FUR: First Union Real
Estate Equity and Mortgage Investments
55 Public Square
Suite 1910
Cleveland, Ohio 44113-1937
Attention: Senior Vice President,
General Counsel and Secretary
Fax: (216) 781-7364
with copies to: Fasken Campbell Godfrey
Box 20, Suite 3700
Toronto Dominion Bank Tower
Toronto-Dominion Centre
Toronto, Ontario
M5K 1N6
Attention: Walter J. Palmer
Fax: (416) 364-7813
</TABLE>
<PAGE> 30
-30-
<TABLE>
<S> <C>
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603-3441
Attention: J. Trent Anderson
Fax: (312) 706-8101
</TABLE>
(2) any such notice or other communication so delivered or
transmitted shall be deemed to have been given and received on
the day on which it was delivered personally or by reputable
overnight courier or transmitted by facsimile (or, if such day
is not a business day, on the next following business day);
and
(3) any party may at any time change its address for service
from time to time by giving notice to the other parties in
accordance with this Section 10.4, provided that in no event
shall the address for service to any Onex Associate be
different that the address for service to Investco.
10.5 ASSIGNMENT AND ENFORCEABILITY. This Agreement shall be
binding upon and enforceable by the parties and their respective successors and
permitted assigns. No party may assign any of its rights or benefits under this
Agreement, or delegate any of its duties or obligations under this Agreement, to
any person except as expressly permitted hereby. Investco and the Onex
Associates may assign all or any part of their rights under this Agreement to
any Permitted Transferee to which any of their respective Shares are Transferred
in accordance with Section 6, provided that such Permitted Transferee complies
with the requirements of Section 6.
10.6 TIME OF THE ESSENCE. Time shall be of the essence of this
Agreement.
10.7 AMENDMENTS AND WAIVER. This Agreement may be amended by
instrument in writing executed by FUR and Investco and not in any other manner.
The waiver of any covenant or agreement made in favour of any party may be
effected only by instrument in writing executed by such party (or by Investco if
such party is an Onex Associate), and no failure to exercise any right or remedy
or any delay in doing so, and no partial exercise of any such right or remedy
shall be construed as a waiver thereof, and no waiver in any one instance shall
be construed as a waiver in any subsequent or
<PAGE> 31
-31-
other instance unless the instrument in writing effecting the same expressly so
provides.
10.8 TERMINATION. This Agreement shall terminate only (a) by
agreement in writing made by Investco and FUR or (b) automatically at such time
(but without prejudice to the rights of the parties relating to any defaults
hereunder existing at such time) as all of the Shares at any time held by
Investco or the Onex Associates shall have been purchased by FUR pursuant to one
or more exercises of the Put Rights and/or the Call Rights and the Aggregate
Purchase Price in respect of all such Shares shall have been paid and satisfied
in full as provided for herein, including, without limitation, in Section 4.4
hereof.
10.9 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall constitute an original and all of which taken
together shall constitute one and the same instrument. Delivery of this
Agreement may be effected by facsimile transmission.
10.10 RESTRICTION ON LIABILITY. Notwithstanding anything
herein to the contrary contained, this Agreement is made and executed on behalf
of FUR, a business trust organized under the laws of the State of Ohio, by its
officers on behalf of the trustees thereof, and none of the trustees or any
additional or successor trustee hereafter appointed, or any beneficiary,
officer, employee or agent of FUR shall have any liability in his personal or
individual capacity but instead, all parties shall, subject to the provisions of
Section 8, look solely to the property and assets of FUR for satisfaction of
claims of any nature arising under or in connection with this Agreement.
IN WITNESS WHEREOF this Agreement has been executed by the parties.
<PAGE> 32
-32-
<TABLE>
<S> <C>
IMPARK INVESTMENTS INC. FIRST UNION REAL ESTATE EQUITY AND MORTGAGE
INVESTMENTS
by /s/ Authorized Signer
______________________________
by /s/ Authorized Signer
______________________________
_________________________________
1170821 ONTARIO INC. 1170809 ONTARIO INC.
by /s/ Authorized Signer by /s/ Authorized Signer
______________________________ ______________________________
1170810 ONTARIO INC. 1170812 ONTARIO INC.
by /s/ Authorized Signer by /s/ Authorized Signer
______________________________ ______________________________
1170697 ONTARIO INC. 1170819 ONTARIO INC.
by /s/ Authorized Signer by /s/ Authorized Signer
______________________________ ______________________________
1170698 ONTARIO INC.
by /s/ Authorized Signer
______________________________
</TABLE>
<PAGE> 33
-33-
<TABLE>
<S> <C>
SIGNED, SEALED AND DELIVERED )
the presence of )
) /s/ Authorized Signer
) ___________________________________
) Anthony R. Melman
)
) /s/ Ewout R. Heersink
) ___________________________________
) Ewout R. Heersink
)
) /s/ Anthony Munk
) ___________________________________
) Anthony Munk
)
) /s/ Mark L. Hilson
) ___________________________________
) Mark L. Hilson
)
) /s/ Thomas P. Dea
) ___________________________________
) Thomas P. Dea
)
) /s/ Andrew J. Sheiner
) ___________________________________
) Andrew J. Sheiner
)
) /s/ Donald W. Lewtas
) ___________________________________
) Donald W. Lewtas
)
) /s/ Eric J. Rosen
) ___________________________________
) Eric J. Rosen
)
</TABLE>
<PAGE> 34
SCHEDULE A
<TABLE>
<CAPTION>
ONEX ASSOCIATES THAT ARE
SHAREHOLDERS OF 3357392 CANADA INC. CLASS A NON-VOTING COMMON SHARES HELD
- ----------------------------------- -------------------------------------
<S> <C>
1170821 Ontario Inc. 52,243
1170809 Ontario Inc. 43,993
1170810 Ontario Inc. 49,491
1170812 Ontario Inc. 49,491
1170697 Ontario Inc. 8,250
1170819 Ontario Inc. 8,250
1170698 Ontario Inc. 13,735
Anthony R. Melman 78,255
Ewout R. Heersink 65,899
Anthony Munk 74,138
Mark L. Hilson 74,138
Thomas P. Dea 12,356
Andrew J. Sheiner 12,356
Donald W. Lewtas 20,606
Eric J. Rosen 123,629
CLASS A NON-VOTING COMMON SHARES HELD BY INVESTCO: 14,006,307
</TABLE>
<PAGE> 35
SCHEDULE B
<TABLE>
<CAPTION>
DATE OF CLOSING OF
PUT/CALL TRANSACTION PURCHASE PRICE
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
September 30, 1997 Cdn. $1.00 x 1.04
- ----------------------------------------------------------------------------------------------------------------
March 31, 1998 September 30, 1997 Price x 1.045
- ----------------------------------------------------------------------------------------------------------------
September 30, 1998 March 31, 1998 Price x 1.05
- ----------------------------------------------------------------------------------------------------------------
March 31, 1999 September 30, 1998 Price x 1.055
- ----------------------------------------------------------------------------------------------------------------
September 30, 1999 March 31, 1999 Price x 1.06
- ----------------------------------------------------------------------------------------------------------------
March 31, 2000 September 30, 1999 Price x 1.065
- ----------------------------------------------------------------------------------------------------------------
September 30, 2000 March 31, 2000 Price x 1.07
- ----------------------------------------------------------------------------------------------------------------
March 31, 2001 September 30, 2000 Price x 1.075
- ----------------------------------------------------------------------------------------------------------------
September 30, 2001 March 31, 2001 Price x 1.08
- ----------------------------------------------------------------------------------------------------------------
March 31, 2002 September 30, 2001 Price x 1.085
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 36
SCHEDULE C
NOTICE OF TRANSFER AND INSTRUMENT OF ADHESION
---------------------------------------------
TO: FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS ("FUR")
AND TO: THE OTHER PARTIES TO THE PUT-CALL AGREEMENT (as defined below)
REFERENCE is made to the put-call agreement made the 15th day
of April, 1997 between Impark Investments Inc., FUR and certain other parties
(the "Put-Call Agreement"). Capitalized terms used herein without being
otherwise defined, and that are defined in the Put-Call Agreement, shall have
the respective meanings herein as are ascribed thereto in the Put-Call
Agreement.
WHEREAS the undersigned _______________________________ (the
"Transferor") is a party to the Put-Call Agreement;
AND WHEREAS the Transferor intends to transfer to the
undersigned _______________________________ (the "Transferee") ________ Class A
Non-Voting Common Shares (the "Transferred Shares") in the capital of the
Corporation;
NOW THEREFORE, in consideration of the premises, the
undersigned hereby agree as follows:
1. The Transferor and the Transferee jointly and severally represent and
warrant that the Transferee is a Permitted Transferee of the
Transferor.
2. The Transferee agrees in favour of FUR and all other present and future
holders of Shares to be bound by the provisions of the Put-Call
Agreement and the Deposit Agreement, including, without limitation, all
amendments, supplements and additions thereto, deletions therefrom and
restatements thereof, as if the Transferee were an original party
thereto, and to deposit or leave deposited with the Depositary the
certificate or certificates representing the Transferred Shares in
accordance with the Deposit Agreement.
3. The Transferee represents and warrants that it is [ ] is not [ ] a
NON-RESIDENT of Canada within the meaning of the Income Tax Act
(Canada). If the Transferee is a non-resident of Canada as so defined,
the Transferee will comply with Section 4.3(a)(ii)(C) of the Put-Call
Agreement in connection with any sale to FUR of the Transferred Shares
pursuant to the exercise of the Put Rights or the Call Rights.
4. The Transferee agrees that it will exercise its reasonable best efforts
to maintain at all times while it remains a holder of Shares the status
that has qualified it as a Permitted Transferee
<PAGE> 37
-2-
of the Transferor, and if during such time any event shall occur that
would result in the Transferee no longer having such status, the
Transferee shall as soon as reasonably practicable thereafter give
written notice of such event to FUR and, if so requested in writing by
FUR, shall forthwith transfer the Transferred Shares to Investco or
another Onex Associate.
5. The Transferor acknowledges and agrees that, notwithstanding the
transfer of the Transferred Shares to the Transferee, the Transferor
shall not be released from any of its liabilities and obligations
pursuant to the Put-Call Agreement.
DATED as of the _____________ day of ____________________,
199_.
SIGNED, SEALED AND DELIVERED )
in the presence of )
) ___________________________________
) Name of Transferor:
)
) ___________________________________
) Name of Transferee:
<PAGE> 1
Exhibit 10e
3357392 CANADA INC.
Cdn. $55,000,000
Senior Subordinated Partial PIK Notes
due April 17, 2009
-------------------------
NOTE PURCHASE AGREEMENT
-------------------------
Dated April 17, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1. AUTHORIZATION OF NOTES 1
2. SALE AND PURCHASE OF NOTES 1
3. CLOSING 1
4. CONDITIONS TO CLOSING 2
4.1. Representations and Warranties 2
4.2. Performance; No Default 2
4.3. Compliance Certificates 2
4.4. Notes 3
4.5. Opinion of Counsel 3
4.6. Purchase Permitted By Applicable Law, etc. 3
4.7. Changes in Corporate Structure 4
4.8. Proceedings and Documents 4
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 4
5.1. Organization; Power and Authority 4
5.2. Authorization, etc. 4
5.3. Disclosure 5
5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates 5
5.5. Property 6
5.6. Compliance with Laws, Other Instruments, etc. 7
5.7. Governmental Authorizations, etc. 7
5.8. Litigation; Observance of Agreements, Statutes and Orders 8
5.9. Taxes 8
5.10. Title to Property; Leases. 8
5.11. Licenses, Permits, etc. 9
5.12. Pension Plans 9
5.13. Private Offering by the Company 9
5.14. Use of Proceeds; Margin Regulations 9
5.15. Existing Indebtedness, Future Liens 10
5.16. Foreign Assets Control Regulations, etc. 10
5.17. Status under Certain Statutes 10
5.18. Environmental Matters 11
5.19. Material Agreements 11
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
5.20. Books and Records 11
6. REPRESENTATIONS OF THE PURCHASER 12
6.1. Purchase for Investment 12
6.2. Source of Funds 12
7. INFORMATION AS TO COMPANY 12
7.1. Financial and Business Information 12
7.2. Officer's Certificate 17
7.3. Inspection 17
8. PAYMENT OF THE NOTES 18
8.1. Required Repayments 18
8.2. Optional Prepayments with Make-Whole Amount 18
8.3. Allocation of Partial Prepayments 19
8.4. Maturity; Surrender, etc. 19
8.5. Purchase of Notes 19
8.6. Make-Whole Amount 19
9. AFFIRMATIVE COVENANTS 21
9.1. Compliance with Law 21
9.2. Insurance 21
9.3. Maintenance of Properties 22
9.4. Payment of Taxes and Claims 22
9.5. Corporate Existence, etc. 22
9.6. Maintenance of Net Worth. 23
9.7. Maintenance of Consolidated Indebtedness to
Net Worth Ratio. 23
9.8. Maintenance of Interest Coverage Ratio. 23
9.9. Maintenance of Leverage Ratio. 23
9.10. Maintenance of Parking Contracts. 23
9.11. Further Assurances 23
10. NEGATIVE COVENANTS 24
10.1. Transactions with Affiliates 24
10.2. Merger, Consolidation, etc. 24
10.3. Indebtedness 25
10.4. Liens 25
10.5. Disposal of Assets Generally 25
10.6. Change in Business 25
10.7. Distributions 25
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
10.8. Investments 26
10.9. Lease-Backs 26
10.10. Subsidiaries 26
10.11. Maintenance and Ownership of Subsidiaries 26
10.12. Compromise of Accounts. 27
11. EVENTS OF DEFAULT 27
12. REMEDIES ON DEFAULT, ETC. 30
12.1. Acceleration 30
12.2. Other Remedies 31
12.3. Rescission 31
12.4. No Waivers or Election of Remedies, Expenses, etc. 32
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES. 32
13.1. Registration of Notes. 32
13.2. Transfer and Exchange of Notes. 32
13.3. Replacement of Notes. 33
14. SUBORDINATION 33
14.1. Notes Subordinated to Permitted Senior Indebtedness 33
14.2. Payment Over of Proceeds Upon Bankruptcy 34
14.3. Suspension of Payments When Permitted Senior Indebtedness in Default 35
14.4. Payment Permitted If No Default 36
14.5. Subrogation to Rights of Holders of Permitted Senior Indebtedness 36
14.6. Provisions Solely to Define Relative Rights 37
14.7. Payments Held in Trust 38
14.8. No Waiver of Subordination Provisions 38
14.9. Reliance on Judicial Order or Certificate of Liquidating Agent 38
15. PAYMENTS ON NOTES 39
15.1. Place of Payment. 39
15.2. Home Office Payment. 39
16. EXPENSES, ETC. 40
16.1. Transaction Expense. 40
16.2. Survival 40
17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C>
AGREEMENT 40
18. AMENDMENT AND WAIVER. 41
18.1. Requirements. 41
18.2. Solicitation of Holders of Notes 41
18.3. Binding Effect, etc. 42
18.4. Notes held by Company, etc. 42
19. NOTICES 42
20. REPRODUCTION OF DOCUMENTS 43
21. SUBSTITUTION OF PURCHASER 43
22. MISCELLANEOUS 44
22.1. Successors and Assigns 44
22.2. Payments Due on Non-Business Days. 44
22.3. Severability 44
22.4. Construction 44
22.5. Counterparts 44
22.6. Governing Law 45
SCHEDULES/EXHIBITS
Schedule A Information Relating to Purchasers
Schedule B Defined Terms
Schedule 5.4 Subsidiaries
Schedule 5.5 Property
Schedule 5.8 Litigation
Schedule 5.14 Use of Proceeds
Schedule 5.15 Existing Indebtedness
Schedule 5.19 Material Agreements
Exhibit 1 Form of Note
Exhibit 4.5 Form of Subsidiary Guaranty
Exhibit 11(e)-1 Form of Security Agreement
Exhibit 11(e)-2 Form of Opinion of Counsel to the Company
</TABLE>
<PAGE> 6
3357392 CANADA INC.
601 West Cordova Street, Suite 300
Vancouver, B.C.
V6B 1G1
Canada
Senior Subordinated Partial PIK Notes due April 17, 2009
April 17, 1997
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
3357392 Canada Inc., a corporation duly organized and validly existing
under the laws of the Province of Ontario (the "COMPANY"), agrees with you as
follows:
1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of Cdn. $55,000,000
aggregate original principal amount of its Senior Subordinated Partial PIK Notes
due April 17, 2009 (the "NOTES", such term to include any such notes issued in
substitution therefor pursuant to SECTION 13 of this Agreement (as hereinafter
defined) and Additional Notes issued in payment of interest thereon). The Notes
shall be substantially in the form set out in EXHIBIT 1, with such changes
therefrom, if any, as may be approved by you and the Company. Certain
capitalized terms used in this Agreement are defined in SCHEDULE B; references
to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule
or an Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will purchase from the Company, at the Closing
provided for in SECTION 3, Notes in the principal amount specified opposite your
name in SCHEDULE A at the purchase price of 100% of the principal amount
thereof.
<PAGE> 7
- 2 -
3. CLOSING.
The sale and purchase of the Notes to be purchased by you shall occur
at the offices of Fasken Campbell Godfrey, 42nd Floor, Toronto-Dominion Bank
Tower, Tower, Toronto, Ontario, Canada M5K 1N6, at 8:00 a.m., Toronto time, at a
closing (the "CLOSING") on April 17, 1997 or on such other Business Day
thereafter on or prior to May 30, 1997 as may be agreed upon by the Company and
you. At the Closing the Company will deliver to you the Notes to be purchased by
you in the form of a single Note (or such greater number of Notes in
denominations of at least Cdn. $1,000,000 as you may request) dated the date of
the Closing and registered in your name (or in the name of your nominee),
against delivery by you to the Company or its order of immediately available
funds in the amount of the purchase price therefor by wire transfer of
immediately available funds for the account of the Company to account number
45-81113 at Canadian Imperial Bank of Commerce. If at the Closing the Company
shall fail to tender such Notes to you as provided above in this SECTION 3, or
any of the conditions specified in SECTION 4 shall not have been fulfilled to
your satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you at
the Closing is subject to the fulfillment to your satisfaction, prior to or at
the Closing, of the following conditions:
4.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company in this Agreement
shall be correct when made and at the time of the Closing.
4.2. PERFORMANCE; NO DEFAULT.
The Company shall have performed and compiled with all agreements and
conditions contained in this Agreement required to be performed or compiled with
by it prior to or at the Closing and after giving effect to the issue and sale
of the Notes (and the application of the proceeds thereof as contemplated by
SCHEDULE 5.14) no Default or Event of Default shall have occurred and be
continuing.
<PAGE> 8
- 3 -
4.3. COMPLIANCE CERTIFICATES.
(a) OFFICER'S CERTIFICATE. The Company shall have delivered to you an
Officer's Certificate, dated the date of the Closing, certifying that the
conditions specified in SECTIONS 4.1 and 4.2 have been fulfilled.
(b) SECRETARY'S CERTIFICATES. The Company and each Guarantor shall have
delivered to you a certificate certifying as to (i) the charter and by-laws of
the Company and each Guarantor, (ii) the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Notes and the Note Documents, and (iii) the incumbency of the officers
authorized to sign the Notes and the Note Documents.
(c) GOOD STANDING CERTIFICATE. Each of the Company and the Guarantors
shall have delivered a certificate of status, compliance, good standing or like
certificate issued by the appropriate government officials of its jurisdiction
of incorporation.
4.4. NOTES.
The Company shall have delivered to you the Notes duly executed.
4.5. SUBSIDIARY GUARANTY.
You shall have received the duly executed Subsidiary Guaranty
substantially in the form of EXHIBIT 4.5.
4.6. PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the date of the Closing your purchase of Notes shall (i) be
permitted by the laws and regulations of each jurisdiction to which you are
subject, without recourse to provisions (such as Section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by insurance companies
without restriction as to the character of the particular investment, (ii) not
violate any applicable law or regulation (including, without limitation,
Regulation G, T or X of the Board of Governors of the Federal Reserve System)
and (iii) not subject you to any tax, penalty or liability under or pursuant to
any applicable law or regulation, which law or regulation was not in effect on
the date hereof. If requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may reasonably specify
to enable you to determine whether such purchase is so permitted.
<PAGE> 9
- 4 -
4.7. CHANGES IN CORPORATE STRUCTURE.
The Company shall not have changed its jurisdiction of incorporation or
been a party to any merger or consolidation and shall not have succeeded to all
or any substantial part of the liabilities of any other entity, at any time
following the date of the most recent financial statements provided to you.
4.8. PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be satisfactory to you and your special counsel, and you
and your special counsel shall have received all such counterpart originals or
certified or other copies of such documents as you or they may reasonably
request.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
5.1. ORGANIZATION; POWER AND AUTHORITY.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, and is duly
qualified as a foreign corporation and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company has the corporate power and authority to own or hold
under lease the properties it purports to own or hold under lease, to transact
the business it transacts and proposes to transact, to execute and deliver this
Agreement and the Notes and to perform the provisions hereof and thereof.
5.2. AUTHORIZATION, ETC.
(a) This Agreement and the Notes have been duly authorized by all
necessary corporate action on the part of the Company, and this Agreement
constitutes, and upon execution and delivery thereof each Note will constitute,
a legal, valid and binding obligation of the Company enforceable against the
Company in accordance with their respective terms, except as such
<PAGE> 10
- 5 -
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(b) The Subsidiary Guaranty and the Security Agreement have been duly
authorized by all necessary corporate action on the part of each Guarantor, and
upon execution and delivery thereof the Subsidiary Guaranty and the Security
Agreement will constitute, legal, valid and binding obligations of each
Guarantor enforceable against each Guarantor in accordance with their respective
terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
5.3. DISCLOSURE.
You have had the opportunity to conduct a review of the Company's
records and meet with representatives of the Company. The Company has responded
in all material respects to all requests for information and has accurately
answered all questions concerning the assets, properties, liabilities, financial
condition, business or prospects of the Company and its Subsidiaries. All
forecasts and projections supplied on behalf of the Company were prepared in
good faith, adequately disclosed all assumptions relevant thereto and are
reasonable estimates (at the date hereof) of the prospects for the business of
the Company and its Subsidiaries. This Agreement, the documents, certificates or
other writings delivered to you by or on behalf of the Company in connection
with the transactions contemplated hereby and the financial statements delivered
to you, taken as a whole, do not contain any untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made. Since the
date of the last financial statements delivered to you, there has been no change
in the financial condition, operations, business, properties or prospects of the
Company or any Subsidiary except changes that individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect. There is no
fact known to the Company that could reasonably be expected to have a Material
Adverse Effect that has not been set forth herein or in the other documents,
certificates and other writings delivered to you by or on behalf of the Company
specifically for use in connection with the transactions contemplated hereby.
<PAGE> 11
- 6 -
5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES.
(a) SCHEDULE 5.4 contains (except as noted therein) complete and
correct list of the Company's Subsidiaries as of the acquisition referenced on
SCHEDULE 5.14, showing, as to each Subsidiary, the correct name thereof, the
jurisdiction of its organization, and the percentage of shares of each class of
its capital stock or similar equity interests outstanding owned by the Company
and each other Subsidiary.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in SCHEDULE 5.4 as being owned by the Company
and its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Company or another Subsidiary free and clear of any Lien
(except as otherwise disclosed in SCHEDULE 5.4).
(c) Each Subsidiary identified in SCHEDULE 5.4 is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes to transact
and each Subsidiary which is a party to the Subsidiary Guaranty and the Security
Agreement has the power and authority to execute and deliver the Subsidiary
Guaranty and the Security Agreement and to perform the provisions thereof.
(d) No Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement (other than this Agreement, the agreements listed
on SCHEDULE 5.4 and customary limitations imposed by corporate law statutes)
restricting the ability of such Subsidiary to pay dividends out of profits or
make any other similar distributions of profits to the Company or any of its
Subsidiaries that owns outstanding shares of capital stock or similar equity
interests of such Subsidiary.
5.5. PROPERTY.
<PAGE> 12
- 7 -
There are no outstanding work orders requiring, in aggregate,
expenditures exceeding Cdn. $50,000 relating to the properties of the Company or
any Subsidiary from or required by any police or fire department, sanitation,
health, environmental or factory authorities or from any other federal,
provincial or municipal authority, nor are any matters relating to the
properties of the Company or any Subsidiary under discussion with any such
departments or authorities relating to work orders which could reasonably be
expected to result in expenditures exceeding Cdn. $50,000. As at the date
hereof, no part of the properties of the Company or any Subsidiary or the
buildings and fixtures located thereon has been taken or expropriated by any
federal, provincial, municipal or other competent authority nor has any written
notice or proceeding in respect thereof been delivered to the Company or any of
its Subsidiaries nor is the Company aware of any intent or proposal to give any
such notice or commence any proceedings. Except for Permitted Liens or as
specified in SCHEDULE 5.5, to the knowledge of the Company, the buildings and
fixtures are located entirely within the properties of the Company or any
Subsidiary in conformity with applicable set-back and coverage requirements and
no dwellings of abutting owners encroach upon the properties.
<PAGE> 13
- 8 -
5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
(a) The execution, delivery and performance by the Company of this
Agreement and the Note will not (i) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of the Company or any Subsidiary under, any indenture, mortgage,
deed or trust, loan purchase or credit agreement, lease, corporate charter or
by-laws, or any other agreement or instrument to which the Company or any
Subsidiary is bound or by which the Company or any Subsidiary or any of their
respective properties may be bound or affected, (ii) conflict with or result in
a breach of any of the terms, conditions or provisions of any order, judgment,
decree, or ruling of any court, arbitrator or Governmental Authority applicable
to the Company or any Subsidiary or (iii) violate any provision of any statute
or other rule or regulation of any Governmental Authority applicable to the
Company or any Subsidiary.
(b) The execution, delivery and performance by the Guarantors of the
Subsidiary Guaranty and the Security Agreement will not (i) contravene, result
in any breach of, or constitute a default under, or result in the creation of
any Lien in respect of any property of any of the Guarantors under, any
indenture, mortgage, deed or trust, loan purchase or credit agreement, lease,
corporate charter or by-laws, or any other agreement or instrument to which any
of the Guarantors is bound or by which any of the Guarantors or any of their
respective properties may be bound or affected, (ii) conflict with or result in
a breach of any of the terms, conditions or provisions of any order, judgment,
decree, or ruling of any court, arbitrator or Governmental Authority applicable
to any of the Guarantors or (iii) violate any provision of any statute or other
rule or regulation of any Governmental Authority applicable to any of the
Guarantors.
5.7. GOVERNMENTAL AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Company or any Guarantor of any Note
Document.
5.8. LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.
(a) Except as disclosed in SCHEDULE 5.8, there are no actions, suits or
proceedings pending or, to the knowledge of the Company, threatened against or
affecting the Company or any Subsidiary or any property of the
<PAGE> 14
- 9 -
Company or any Subsidiary in any court or before any arbitrator of any kind or
before or by any Governmental Authority that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under any term
of any agreement or instrument to which it is a party or by which it is bound,
or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance, rule
or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
5.9. TAXES.
The Company and its Subsidiaries have filed all tax returns that are
required to have been filed in any jurisdiction, and have paid all taxes shown
to be due and payable on such returns and all other taxes and assessments levied
upon them or their properties, assets, income or franchises, to the extent such
taxes and assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (i) the amount of which is not
individually or in the aggregate Material or (ii) the amount, applicability or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Company or a Subsidiary, as the case
may be, has established adequate reserves in accordance with GAAP. The Company
knows of no basis for any other tax or assessment that could reasonably be
expected to have a Material Adverse Effect. The charges, accruals and reserves
on the books of the Company and its Subsidiaries in respect of Federal, state,
province, foreign or other taxes for all fiscal periods are adequate.
5.10. TITLE TO PROPERTY; LEASES.
The Company and its Subsidiaries have good and sufficient title to
their respective properties that individually or in the aggregate are Material,
in each case free and clear of Liens prohibited by this Agreement. All leases
that individually or in the aggregate are Material, are valid and subsisting and
are in full force and effect in all material respects and all material amounts
owing thereunder have been paid by the Company or its Subsidiary.
5.11. LICENSES, PERMITS, ETC.
(a) The Company and its Subsidiaries own or possess all
<PAGE> 15
- 10 -
licenses, permits, franchises, authorizations, patents, copyrights, service
marks, trademarks and trade names, or rights thereto, that individually or in
the aggregate are Material, without known conflict with the rights of others;
(b) to the best knowledge of the Company, no product of the Company
infringes in any material respect any license, permit, franchise, authorization,
patent, copyright, service mark, trademark, trade name or other right owned by
any other Person; and
(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its Subsidiaries
with respect to any patent, copyright, service mark, trademark, trade name or
other right owned or used by the Company or any of its Subsidiaries.
5.12. PENSION PLANS.
Neither the Company nor any of its Subsidiaries has ever maintained or
contributed to any pension plans or beneficial plans including, without
limitation, (i) a multi-employer plan as defined under Section 3(37) of ERISA;
(ii) a defined benefit plan as defined under Section 3(35) of ERISA; or (iii) a
plan to which Section 302 of ERISA or Section 417 of the Internal Revenue Code
of the United States of America applies.
5.13. PRIVATE OFFERING BY THE COMPANY.
Neither the Company nor anyone acting on its behalf has offered the
Notes or any similar securities for sale to, or solicited any offer to buy any
of the same from, or otherwise approached or negotiated in respect thereof with,
any person other than you and not more than two other Institutional Investors,
each of which has been offered the Notes at a private sale for investment.
Neither the Company nor anyone acting on its behalf has taken, or will take, any
action that would subject the issuance or sale of the Notes to the registration
requirements under applicable securities laws.
5.14. USE OF PROCEEDS; MARGIN REGULATIONS.
The Company will apply the proceeds of the sale of the Notes solely as
set forth in SCHEDULE 5.14 and for no other purpose. No part of the proceeds
from the sale of the Notes hereunder will be used, directly or indirectly, for
the purpose of buying or carrying any margin stock within the meaning of
Regulation G of the Board of Governors of the Federal Reserve System (12 CFR
<PAGE> 16
- 11 -
207), or for the purpose of buying or carrying or trading in any securities
under such circumstances as to involve the Company in a violation of Regulation
X of said Board (12 CFR 224) or to involve any broker or dealer in a violation
of Regulation T of said Board (12 CFR 220). Margin stock does not constitute
more than 5% of the value of the consolidated assets of the Company and its
Subsidiaries and the Company does not have any present intention that margin
stock will constitute more than 5% of the value of such assets. As used in this
Section, the terms "MARGIN STOCK" and "PURPOSE OF BUYING OR CARRYING" shall have
the meanings assigned to them in said Regulation G.
<PAGE> 17
- 12 -
5.15. EXISTING INDEBTEDNESS, FUTURE LIENS.
(a) Except as described therein, SCHEDULE 5.15 sets forth a complete
and correct list of all outstanding Indebtedness of the Company and its
Subsidiaries as of the date hereof. Neither the Company nor any Subsidiary is in
default and no waiver of default is currently in effect, in the payment of any
principal or interest on any Indebtedness of the Company or such Subsidiary and
no event or condition exists with respect to any Indebtedness of the Company or
any Subsidiary that would permit (or that with notice or other lapse of time, or
both, would permit) one or more Persons to cause such Indebtedness to become due
and payable before its stated maturity or before its regularly scheduled dates
of payment.
(b) Except as disclosed in SCHEDULE 5.15, neither the Company nor any
Subsidiary has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether now owned
or hereafter acquired, to be subject to a Lien other than Permitted Liens.
5.16. FOREIGN ASSETS CONTROL REGULATIONS, ETC.
Neither the sale of the Notes by the Company hereunder nor its use of
the proceeds thereof will violate the Trading with the Enemy Act, as amended, or
any of the foreign asset control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.17. STATUS UNDER CERTAIN STATUTES.
Neither the Company nor any Subsidiary is subject to regulation under
the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, the Interstate Commerce Act, as amended, or the
Federal Power Act, as amended.
5.18. ENVIRONMENTAL MATTERS.
Neither the Company nor any Subsidiary has knowledge of any claim or
has received any notice of any claim, and no proceeding has been instituted
raising any claim against the Company or any of its Subsidiaries or any of their
respective real properties now or formerly owned, leased or operated by any of
them or other assets, alleging any damage to the environment or
<PAGE> 18
- 13 -
violation of the Environmental Laws, except, in each case, such as could not
reasonably be expected to result in a Material Adverse Effect. Except as
otherwise disclosed to you in writing,
(a) neither the Company nor any Subsidiary has knowledge of any facts
which would give rise to any claim, public or private, of violation of
Environmental Laws or damage to the environment emanating from, occurring on or
in any way related to real properties now or formerly owned, leased or operated
by any of them or to other assets or their use, except, in each case, such as
could not reasonably be expected to result in a Material Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has stored any
Hazardous Materials on real properties now or formerly owned, leased or operated
by any of them and has not disposed of any Hazardous Materials in a manner
contrary to any Environmental Laws in each case in any manner that could
reasonably be expected to result in a Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased or operated
by the Company or any of its Subsidiaries are in compliance with applicable
Environmental Laws, except where failure to comply could not reasonably be
expected to result in a Material Adverse Effect.
5.19. MATERIAL AGREEMENTS.
Neither the Company nor any of its Subsidiaries is a party or otherwise
subject to or bound or affected by any agreement or instrument which is material
to the business, operations, results of operations, assets, liabilities or
financial condition of the Company or any of its Subsidiaries taken as a whole
("MATERIAL AGREEMENT") except as set out in SCHEDULE 5.19. Except as set forth
in SCHEDULE 5.19, all such Material Agreements are in full force and effect,
unamended, and none of the Company or any such Subsidiary, or to the best of the
Company's knowledge, any other party to any Material Agreement is in material
default with respect thereto.
5.20. BOOKS AND RECORDS.
All books and records of the Company and its Subsidiaries have been
fully, properly and accurately kept and completed in accordance with GAAP and
there are no material inaccuracies or discrepancies of any kind contained or
reflected therein. The Company's and its Subsidiaries' records, systems,
controls, data or information are not recorded, stored, maintained, operated or
<PAGE> 19
- 14 -
otherwise wholly or partly dependent upon or held by any means (including any
electronic, mechanical or photographic process, whether computerized or not)
which (including all means of access thereto and therefrom) are not under the
direct control of the Company in all material respects.
<PAGE> 20
- 15 -
6. REPRESENTATIONS OF THE PURCHASER.
6.1. PURCHASE FOR INVESTMENT.
You represent that you are purchasing the Notes for your own account
and not with a view to the distribution thereof. You understand that the Notes
have not been registered under any securities acts and resale may be restricted
by applicable securities laws.
6.2. SOURCE OF FUNDS.
You represent that the source of funds to be used by you to pay the
purchase price of the Notes to be purchased by you hereunder does not include
assets of any employee benefit plan, other than a plan exempt from the coverage
of ERISA. As used in this SECTION 6.2, the terms "EMPLOYEE BENEFIT PLAN", shall
have the respective meanings assigned to such terms in Section 3 of ERISA.
7. INFORMATION AS TO COMPANY.
7.1. FINANCIAL AND BUSINESS INFORMATION.
The Company shall deliver to each holder of Notes that is an
Institutional Investor:
(a) QUARTERLY STATEMENTS -- within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the last
quarterly fiscal period of each such fiscal year), duplicate copies of,
(i) a consolidated balance sheet of the Company and its Consolidated
Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in shareholders' equity
and cash flows of the Company and its Consolidated Subsidiaries, for such
quarter and (in the case of the second and third quarters) for the portion of
the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in all material
<PAGE> 21
- 16 -
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments;
(b) ANNUAL STATEMENTS -- within 120 days after the end of each fiscal
year of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company and its Consolidated
Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in shareholder' equity
and cash flows of the Company and its Consolidated Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied
(A) by an opinion thereon of independent certified public accountants
of recognized national standing, which opinion shall state that such financial
statements present fairly, in all material respects, the financial position of
the companies being reported upon and their results of operations and cash flows
and have been prepared in conformity with GAAP, and that the examination of such
accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the circumstances, and
(B) a certificate of such accountants stating that they have reviewed
this Agreement and stating further whether, in making their audit, they have
become aware of any condition or event that then constitutes a Default or an
Event of Default, and, if they are aware that any such condition or event then
exists, specifying the nature and period of the existence thereof (it being
understood that such accountants shall not be liable, directly or indirectly,
for any failure to obtain knowledge of any Default or Event of Default unless
such accountants should have obtained knowledge thereof in making an audit in
accordance with generally accepted auditing standards or did not make such an
audit);
(c) FINANCIAL PROJECTIONS -- promptly upon their becoming available and
in any event 30 days prior to the end of each fiscal year of the
<PAGE> 22
- 17 -
Company, consolidated financial projections, including the balance sheet, income
statement and cash flow statements for each of the next 12 months of the next
fiscal year together with the detailed budget for such fiscal year providing
supplementary detailed schedules as necessary and required by the Required
Holders;
(d) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- promptly, and in any event
within five days after a Responsible Officer becoming aware of the existence of
any Default or Event of Default or that any Person has given any notice or taken
any action with respect to a claimed default hereunder or that any Person has
given any notice or taken any action with respect to a claimed default of the
type referred to in SECTION 11(H), a written notice specifying the nature and
period of existence thereof and what action the Company is taking or proposes to
take with respect thereto;
(e) ERISA MATTERS -- promptly, and in any event within ten days after a
Responsible Officer becoming aware of any of the following, a written notice
setting forth the nature thereof and the action, if any, that the Company or an
ERISA Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as defined in
section 4043(b) of ERISA and the regulations thereunder, for which notice
thereof has not been waived pursuant to such regulations as in effect on the
date hereof; or
(ii) the taking by the PBGC of steps to institute, or the threatening
by the PBGC of the institution of, proceedings under section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Plan, or
the receipt by the Company or any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan; or
(iii) any event, transaction or condition that could result in the
incurrence of any liability by the Company or any ERISA Affiliate pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans, or in the imposition of any Lien on any of
the rights, properties or assets of the Company or any ERISA Affiliate pursuant
to Title I or IV of ERISA or such penalty or excise tax provisions, if such
liability or Lien, taken together with any other such liabilities or Liens then
existing, could reasonably be expected to have a Material Adverse Effect;
<PAGE> 23
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(f) ENVIRONMENTAL REPORTING -- promptly, and in any event within 10
days of each occurrence, (i) a written notice of any proceeding or order before
any Governmental Authority requiring the Company or its Subsidiaries to comply
with or take action under any Environmental Laws where such compliance or action
requires expenditures in the amount of Cdn. $500,000 or more, the violation
thereof involves the possibility of the imposition of a fine or fines
aggregating Cdn. $500,000 or more, the violation thereof involves the
possibility of the imposition of a fine or fines aggregating Cdn. $500,000 or
more or the closing of any property owned or leased by the Company or any
Subsidiary for a period in excess of 48 hours where such closure would have a
Material Adverse Effect; and (ii) a written notice of any Material occurrence
relating to environmental matters that does not require notification under (i)
above, together with each delivery of financial statements pursuant to SECTION
7.1(a) and (b). Such Material occurrences shall include occurrences where any of
the Company or its Subsidiaries (iii) receives a written notice or claim to the
effect that the Company or any of its Subsidiaries is liable to any Person as a
result of the release or threatened release of any Hazardous Material into the
environment in, on, under or adjacent to any real estate owned or leased by the
Company or any Subsidiary; (iv) receives any written notice that the Company or
any of its Subsidiaries is subject to investigation by any Governmental
Authority evaluating whether any remedial action is needed to respond to the
release or threatened release of any Hazardous Material into the environment in,
on, under or adjacent to any real estate owned or leased by the Company or any
Subsidiary; (v) receives any written notice that all or any portion of the
properties owned or leased by the Company or any Subsidiary is subject to an
order or a security interest under or pursuant to any Environmental Law; (vi)
receives any written notice of a condition with respect to which might
reasonably result in a notice of violation by Company or any Subsidiary of any
Environmental Law; (vii) receives any written notice of the commencement of any
judicial or administrative proceeding alleging a violation by the Company or any
Subsidiary of any Environmental Law with respect to any property owned or leased
by the Company or any Subsidiary; or (viii) undertakes any activities as a
result of new or proposed changes to any existing Environmental Law that could
have a Material Adverse Effect on the condition of Company or any of its
Subsidiaries.
(g) ADDITIONAL REPORTING REQUIREMENTS -- promptly provide notice in
writing of (i) any default, or event, condition or occurrence which with notice
or lapse of time, or both, would constitute a default under any agreement in
respect of Indebtedness to which the Company or any of its Subsidiaries is a
party and under which the Company or any such Subsidiary owes (contingently or
otherwise) at least Cdn. $500,000 (or the equivalent amount in any other
<PAGE> 24
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currency); (ii) from time to time upon request of the Required Holders, evidence
of the maintenance of all insurance required to be maintained by SECTION 9.2,
including such originals or copies as the Required Holders may request of
policies, certificates of insurance, riders and endorsements relating to such
insurance and proof of premium payments; and (iii) promptly upon the issuance
thereof, copies of all notices, reports, press releases, circulars, offering
documents and other documents filed with, or delivered to, the British Columbia
Securities Commission or to a similar Governmental Authority in any other
jurisdiction with respect to the Company or any Subsidiary.
(h) NOTICES FROM GOVERNMENTAL AUTHORITY -- promptly, and in any event
within 30 days of receipt thereof, copies of any notice to the Company or any
Subsidiary from any Federal or state Governmental Authority relating to any
order, ruling, statute or other law or regulation that could reasonably be
expected to have a Material Adverse Effect; and
(i) REQUESTED INFORMATION -- with reasonable promptness, such other
data and information relating to the business, operations, affairs, financial
condition, assets or properties of the Company or any of its Subsidiaries or
relating to the ability of the Company to perform its obligations hereunder and
under the Notes as from time to time may be reasonably requested by any such
holder of Notes.
<PAGE> 25
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7.2. OFFICER'S CERTIFICATE.
Each set of financial statements delivered to a holder of Notes
pursuant to SECTION 7.1(a) or SECTION 7.1(b) hereof shall be accompanied by a
certificate of a Senior Financial Officer setting forth:
(a) COVENANT COMPLIANCE -- the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of SECTION 9.6 through SECTION 9.10 hereof,
inclusive, during the quarterly or annual period covered by the statements then
being furnished (including with respect to each such Section, where applicable,
the calculations of the maximum or minimum amount, ratio or percentage, as the
case may be, permissible under the terms of such Sections, and the calculation
of the amount, ratio or percentage then in existence); and
(b) EVENT OF DEFAULT -- a statement that such officer has reviewed the
relevant terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Company and its
Subsidiaries from the beginning of the quarterly or annual period covered by the
statements then being furnished to the date of the certificate and that such
review shall not have disclosed the existence during such period of any
condition or event that constitutes a Default or an Event of Default or, if any
such condition or event existed or exists (including, without limitation, any
such event or condition resulting from the failure of the Company or any
Subsidiary to comply with any Environmental Law), specifying the nature and
period of existence thereof and what action the Company shall have taken or
proposes to take with respect thereto.
7.3. INSPECTION.
The Company shall permit the representatives of each holder of Notes
that is an Institutional Investor:
(a) NO DEFAULT -- if no Default or Event of Default then exists, at the
expense of such holder and upon reasonable prior notice to the Company, to visit
the principal executive office of the Company, to discuss the affairs, finances
and accounts of the Company and its Subsidiaries with the Company's officers,
and with the consent of the Company, which consent will not be unreasonably
withheld) its independent public accountants, and (with the consent of the
Company, which consent will not be unreasonably withheld) to visit the other
offices and properties of the Company and each Subsidiary, all at
<PAGE> 26
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such reasonable times and as often as may be reasonably requested in writing;
and
(b) DEFAULT -- if a Default or Event of Default then exits, at the
expense of the Company to visit and inspect any of the offices or properties of
the Company or any Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
officers and independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries), all at such times and as often as may be
requested.
8. PAYMENT OF THE NOTES.
8.1. REQUIRED REPAYMENTS.
On April 17, 2007 the Company will repay the principal amount of the
Notes outstanding at par plus the accrued interest thereon.
8.2. OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT.
The Company may, at its opinion, upon notice as provided below, prepay
at any time all, or from time to time any part of, the Notes, in a minimum
principal amount of $500,000 or a higher integral multiple of $100,000 at 100%
of the principal amount so prepaid, plus the Make-Whole Amount determined for
the prepayment date with respect to such principal amount and accrued interest
on the amount being prepaid. The Company will give each holder of Notes written
notice of each optional prepayment under this SECTION 8.2 not less than 30 days
and not more than 60 days prior to the date fixed for such prepayment. Each such
notice shall specify such date, the aggregate principal amount of the Notes to
be prepaid on such date, the principal amount of each Note held by such holder
to be prepaid (determined in accordance with SECTION 8.3), and the interest to
be paid on the prepayment date with respect to such principal amount being
repaid, and shall be accompanied by a certificate of a Senior Financial Officer
as to the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation. Two Business Days prior to such
prepayment, the Company shall deliver to each holder of Notes a certificate of a
Senior Financial Officer specifying the calculation of such Make-Whole Amount as
of the specified prepayment date.
<PAGE> 27
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8.3. ALLOCATION OF PARTIAL PREPAYMENTS.
In the case of each partial prepayment of the Notes, the principal
amount of the Notes to be prepaid shall be allocated among all of the Notes at
the time outstanding in proportion, as nearly as practicable, to the respective
unpaid principal amounts thereof not theretofore called for prepayment.
<PAGE> 28
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8.4. MATURITY; SURRENDER, ETC.
In the case of each prepayment of Notes pursuant to this SECTION 8, the
principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and
Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and cancelled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.
8.5. PURCHASE OF NOTES.
The Company will not and will not permit any Affiliate to purchase,
redeem, prepay or otherwise acquire, directly or indirectly, any of the
outstanding Notes except upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes. The Company will
promptly cancel all Notes acquired by it or any Affiliate pursuant to any
payment, prepayment or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for any such
Notes.
8.6. MAKE-WHOLE AMOUNT.
The term "MAKE-WHOLE AMOUNT" means, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Remaining Scheduled
Payments with respect to the Called Principal of such Note over the amount of
such Called Principal, PROVIDED that the Make-Whole Amount may in no event be
less than zero. For the purposes of determining the Make-Whole Amount, the
following terms have the following meanings:
"CALLED PRINCIPAL" means, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to SECTION 8.2 or has become or is
declared to be immediately due and payable pursuant to SECTION 12.1, as the
context requires.
"DISCOUNTED VALUE" means, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments with
respect to such Called Principal from their respective scheduled
<PAGE> 29
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due dates to the Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount factor (applied on
the same periodic basis as that on which interest on the Notes is payable) equal
to the Reinvestment Yield with respect to such Called Principal.
"REINVESTMENT YIELD" means, with respect to the Called Principal of any
Note, the yield to maturity implied by (i) the yields reported, as of 10:00 A.M.
(New York City time) on the second Business Day preceding the Settlement Date
with respect to such Called Principal, on the display designated as "Page 678"
on the Telerate Access Service (or such other display as may replace Page 678 on
Telerate Access Service) for actively traded U.S. Treasury securities having a
maturity equal to the Remaining Average Life of such Called Principal as of such
Settlement Date, or (ii) if such yields are not reported as of such time or the
yields reported as of such time are not ascertainable, the Treasury Constant
Maturity Series Yields reported, for the latest day for which such yields have
been so reported as of the second Business Day preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve Statistical Release
H.15 (519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. Such implied yield
will be determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between (1) the actively traded U.S.
Treasury security with the duration closest to and greater than the Remaining
Average Life and (2) the actively traded U.S. Treasury security with the
duration closest to and less than the Remaining Average Life.
"REMAINING AVERAGE LIFE" means, with respect to any Called Principal,
the number of years (calculated to the nearest one-twelfth year) obtained by
dividing (i) such Called Principal into (ii) the sum of the products obtained by
multiplying (a) the principal component of each Remaining Scheduled Payment with
respect to such Called Principal by (b) the number of years (calculated to the
nearest one-twelfth year) that will elapse between the Settlement Date with
respect to such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such Called
Principal if no payment of such Called Principal were made prior to its
scheduled due date, PROVIDED that if such Settlement Date is not a date on which
interest payments
<PAGE> 30
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are due to be made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of interest
accrued to such Settlement Date and required to be paid on such Settlement Date
pursuant to SECTION 8.2 or 12.1.
"SETTLEMENT DATE" means, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
SECTION 8.2 or has become or is declared to be immediately due and payable
pursuant to SECTION 12.1, as the context requires.
<PAGE> 31
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9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
9.1. COMPLIANCE WITH LAW.
The Company will and will cause each of its Subsidiaries to comply with
all laws, ordinances or governmental rules or regulations to which each of them
is subject, including, without limitation, Environmental Laws, and will obtain
and maintain in effect all licenses, certificates, permits, franchises and other
governmental authorizations necessary to the ownership of their respective
properties or to the conduct of their respective businesses, in each case to the
extent necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect
such licenses, certificates, permits, franchises and other governmental
authorizations could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
9.2. INSURANCE.
The Company will and will cause each of its Subsidiaries to maintain,
with financially sound and reputable insurers, insurance with respect to their
respective properties and businesses against such casualties and contingencies,
of such types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are maintained with
respect thereto) as is customary in the case of entities of established
reputations engaged in the same or a similar business and similarly situated.
9.3. MAINTENANCE OF PROPERTIES.
The Company will and will cause each of its Subsidiaries to maintain
and keep, or cause to be maintained and kept, their respective properties in
good repair, working order and condition (other than ordinary wear and tear), so
that the business carried on in connection therewith may be properly conducted
at all times, PROVIDED that this Section shall not prevent the Company or any
Subsidiary from discontinuing the operation and the maintenance of any of its
properties if such discontinuance is desirable in the conduct of its business
and the Company has concluded that such discontinuance could not, individually
or in the aggregate, reasonably be
<PAGE> 32
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expected to have a Material Adverse Effect.
9.4. PAYMENT OF TAXES AND CLAIMS.
The Company will and will cause each of its Subsidiaries to file all
tax returns required to be filed in any jurisdiction and to pay and discharge
all taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Company or any Subsidiary, PROVIDED
that neither the Company nor any Subsidiary need pay any such tax or assessment
or claims if (i) the amount, applicability or validity thereof is contested by
the Company or such Subsidiary on a timely basis in good faith and in
appropriate proceedings, and the Company or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Company
or such Subsidiary or (ii) the nonpayment of all such taxes and assessments in
the aggregate could not reasonably be expected to have a Material Adverse
Effect.
9.5. CORPORATE EXISTENCE, ETC.
The Company will at all times preserve and keep in full force and
effect its corporate existence. Subject to SECTION 10.2, the Company will at all
times preserve and keep in full force and effect the corporate existence of each
of its Subsidiaries (unless merged into the Company or a Subsidiary) and all
rights and franchises of the Company and its Subsidiaries unless, in the good
faith judgment of the Company, the termination of or failure to preserve and
keep in full force and effect such corporate existence, right or franchise could
not, individually or in the aggregate, have a Material Adverse Effect.
9.6. MAINTENANCE OF NET WORTH.
Maintain, on the last day of each fiscal year, calculated as at such
day, Consolidated Net Worth of the Company and its Consolidated Subsidiaries of
at least an amount equal to Cdn. $39,000,000 determined in accordance with GAAP.
9.7. MAINTENANCE OF CONSOLIDATED INDEBTEDNESS TO NET WORTH RATIO.
<PAGE> 33
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Maintain, as at the last day of each fiscal quarter, a ratio,
calculated as at such day, of Consolidated Indebtedness to Consolidated Net
Worth of the Company and its Consolidated Subsidiaries of not more than 0.80:1
for each fiscal quarter.
9.8. MAINTENANCE OF INTEREST COVERAGE RATIO.
Maintain, as at the end of each fiscal quarter, a minimum Interest
Coverage Ratio of 2.70:1.
9.9. MAINTENANCE OF LEVERAGE RATIO.
Maintain, as at the end of each fiscal quarter, a Leverage Ratio of not
more than 5.50:1.
9.10. MAINTENANCE OF PARKING CONTRACTS.
Ensure the existence on a consolidated basis on the last day of each
fiscal quarter of an aggregate of at least 1,200 Consolidated Parking Contracts.
9.11. FURTHER ASSURANCES.
At its cost and expense, upon request of the Required Holders, duly
execute and deliver or cause to be duly executed and delivered to the Purchasers
such further instruments and do and cause to be done such further acts as may be
necessary or proper in the reasonable opinion of the Required Holders to carry
out more effectually the provisions and purposes of the Note Documents.
10. NEGATIVE COVENANTS.
The Company covenants that, without the consent of the Required
Holders, so long as any of the Notes are outstanding:
10.1. TRANSACTIONS WITH AFFILIATES.
The Company will not and will not permit any Subsidiary to enter into
directly or indirectly any transaction or Material group of related transactions
(including without limitation the purchase, lease, sale or exchange
<PAGE> 34
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of properties of any kind or the rendering of any service) with any Affiliate
(other than the Company or another Subsidiary), except in the ordinary course
and pursuant to the reasonable requirements of the Company's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Company or such Subsidiary than would be obtainable in a comparable
arm's-length transaction with a Person not an Affiliate.
10.2. MERGER, CONSOLIDATION, ETC.
The Company shall not consolidate with or merge with any other
corporation or convey, transfer or lease substantially all of its assets in a
single transaction or series of transactions to any Person unless:
(a) the successor formed by such consolidation or the survivor of such
merger or the Person that acquires by conveyance, transfer or lease
substantially all of the assets of the Company as an entirety, as the case may
be, shall be a solvent corporation organized and existing under the laws of
Canada, the United States or any Province or State thereof (including the
District of Columbia), and, if the Company is not such corporation, (i) such
corporation shall have executed and delivered to each holder of any Notes its
assumption of the due and punctual performance and observance of each covenant
and condition of this Agreement and the Notes and (ii) shall have caused to be
delivered to each holder of any Notes an opinion of nationally recognized
independent counsel, or other independent counsel reasonably satisfactory to the
Required Holders, to the effect that all agreements or instruments effecting
such assumption are enforceable in accordance with their terms and comply with
the terms hereof;
(b) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing. No such conveyance,
transfer or lease of substantially all of the assets of the Company shall have
the effect of releasing the Company or any successor corporation that shall
theretofore have become such in the manner prescribed in this SECTION 10.2 from
its liability under this Agreement or the Notes.
10.3. INDEBTEDNESS.
Create, incur, assume or suffer to exist or permit any of its
Subsidiaries to create, incur, assume or suffer to exist any Indebtedness other
than (i) Indebtedness to the Purchasers hereunder; (ii) the Permitted Senior
Indebtedness; (iii) Indebtedness incurred in respect of a Purchase Money
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Mortgage up to an aggregate outstanding amount, at any time, of Cdn. $1,000,000
(or the equivalent amount in any other currency); (iv) Indebtedness incurred
with respect to performance bonds posted in the ordinary course of business and
(v) Indebtedness listed on SCHEDULE 5.15.
10.4. LIENS.
Create, incur, assume or suffer to exist, or permit any of its
Subsidiaries to create, incur, assume or suffer to exist, any Liens on any of
their respective assets, other than Permitted Liens.
10.5. DISPOSAL OF ASSETS GENERALLY.
Sell, exchange, lease, release or abandon or otherwise dispose of, or
permit any of its Subsidiaries to sell, exchange, lease, release or abandon or
otherwise dispose of any assets to any Person other than (i) any bona fide
sales, exchanges, leases, abandonments or other dispositions in the ordinary
course of business, for the purpose of carrying on the business of the Company;
(ii) property or assets which have no material economic value in the business of
the Company or are obsolete; and (iii) assets having a fair market value of not
greater than Cdn. $100,000 in the aggregate in any fiscal year.
<PAGE> 36
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10.6. CHANGE IN BUSINESS.
Not, and not permit any of its Subsidiaries to engage in any line of
business other than the businesses engaged in by the Company and its
Subsidiaries as of the date hereof and business reasonably related thereto.
10.7. DISTRIBUTIONS.
Declare, make or pay, or permit any of its Subsidiaries to declare,
make or pay, any Distributions, except (i) directors' fee in an aggregate amount
not to exceed $30,000, (ii) performance bonuses paid by the Company or any of
its Subsidiaries in the ordinary course of business as part of remuneration for
services rendered at fair market value; (iii) Distributions by a Guarantor to
the Company or by the Company to a Guarantor; (iv) payments made under
management or employment agreements entered into by the Company or any of its
Subsidiaries with senior employees in the ordinary course of business; (v) loans
made to employees; (vi) non-cash dividend payments to Onex Corporation on the
preferred shares of the Company held by Onex Corporation made by way of the
issuance of additional preferred shares bearing the same characteristics as such
preferred shares held by Onex Corporation and (vii) payments on the Permitted
Senior Indebtedness.
10.8. INVESTMENTS.
Make any loans, incur any obligations (contingent or otherwise), or
make any investments in any Person or permit any of its Subsidiaries to do the
same, except for (i) foreign currency hedges, interest rate swaps or similar
interest rate and currency hedging obligations or agreements; (ii) indebtedness
and obligations incurred in the ordinary course of business and Indebtedness
permitted under SECTION 10.3; (iii) Permitted Marketable Securities; (iv) loans
permitted under SECTION 10.1; or (v) inter-company loans to or investments in
Subsidiaries.
10.9. LEASE-BACKS.
Enter into or permit any of its Subsidiaries to enter into any
arrangements, directly or indirectly, with any Person, whereby the Company or
such Subsidiary, as the case may be, shall sell or transfer any property,
whether now owned or hereafter acquired, used or useful in the business, in
connection with the rental or lease of the property so sold or transferred or of
other property for substantially the same purpose or purposes as the property so
sold or transferred.
<PAGE> 37
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10.10. SUBSIDIARIES.
(i) Incorporate or acquire, after the date hereof, any Subsidiaries or
commence to carry on business, otherwise than through the Company and its
Subsidiaries existing as of the date hereof, except for the incorporation or
acquisition of Subsidiaries in North America or such other jurisdictions as the
Required Holders may agree to, acting reasonably, where in each case, such
Subsidiary has executed and delivered a guarantee of all of the obligations of
the Company under this Agreement and/or the other Note Documents and accompanied
by opinions satisfactory to the Required Holders, in each case, acting
reasonably, prior to or contemporaneously with such Subsidiary having net asset
values or revenues, in either case, greater than Cdn. $50,000; or (ii) permit
any Subsidiary to exist after the date hereof having net asset values or
revenues, in either case, greater than Cdn. $50,000 unless such Subsidiary is a
Guarantor.
10.11. MAINTENANCE AND OWNERSHIP OF SUBSIDIARIES.
Except as permitted under SECTION 10.5, sell or otherwise dispose of
any shares of any of its Subsidiaries or permit any of such Subsidiaries to
issue, sell or otherwise dispose of the shares of any other Subsidiary, except
to the Company or a Guarantor.
10.12. COMPROMISE OF ACCOUNTS.
Compromise of Accounts. Compromise or adjust or permit any of its
Subsidiaries to compromise or adjust any material accounts receivable of the
Company or such Subsidiary (or extend the time for payment thereof) or grant any
discounts, allowances or credits thereon, in each case other than in the
ordinary course of business.
11. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or Make-Whole
Amount, if any, on any Note when the same becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise; or
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(b) the Company defaults in the payment of any interest on any
Note for more than five Business Days after the same becomes due and payable; or
(c) the Company defaults in the performance of or compliance with any
term contained in SECTION 5.14, SECTIONS 9.6 through 9.10, 10.2, 10.5, 10.7 or
10.10; or
(d) the Company defaults in the performance of or compliance with any
term contained herein (other than those referred to in paragraphs (a), (b) and
(c) of this SECTION 11) and such default is not remedied within 30 days after
the earlier of (i) a Responsible Officer obtaining actual knowledge of such
default and (ii) the Company receiving written notice of such default from any
holder of a Note (any such written notice to be identified as a "NOTICE OF
DEFAULT" and to refer specifically to this paragraph (d) of SECTION 11); or
(e) the Company fails to deliver the duly executed Security Agreement
substantially in the form of EXHIBIT 11(e)-1 within 5 Business Days of the
Closing, together with (i) evidence, reasonably satisfactory to you, that all
instruments and documents (including financing statements), necessary or
desirable to perfect and protect your Lien on the collateral granted under the
Security Agreement have been signed and delivered in appropriate form for filing
or recording, and (ii) an opinion of counsel substantially in the form of
EXHIBIT 11(e)-2; or
(f) any representation or warranty made in writing by or on behalf of
the Company or by any officer of the Company in this Agreement or in any writing
furnished in connection with the transactions contemplated hereby proves to have
been false or incorrect in any material respect on the date as of which made; or
(g) (i) the Company or any Subsidiary is in default (as principal or as
guarantor or other surety) in the payment of any principal of or premium or
make-whole amount or interest on any Indebtedness that is outstanding in an
aggregate principal amount of at least Cdn. $1,000,000 beyond any period of
grace provided with respect thereto, or (ii) the Company or any Subsidiary is in
default in the performance of or compliance with any term of any evidence of any
Indebtedness in an aggregate outstanding principal amount of at least Cdn.
$1,000,000 or of any mortgage, indenture or other agreement relating thereto or
any other condition exists, and as a consequence of such default or condition
such Indebtedness has become, or has been declared (or one or more Persons
<PAGE> 39
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are entitled to declare such Indebtedness to be), due and payable before its
stated maturity or before its regularly scheduled dates of payment, or (iii) as
a consequence of the occurrence or continuation of any event or condition (other
than the passage of time or the right of the holder of Indebtedness to convert
such Indebtedness into equity interests), (x) the Company or any Subsidiary has
become obligated to purchase or repay Indebtedness before its regular maturity
or before its regularly scheduled dates of payment in an aggregate outstanding
principal amount of at least Cdn. $1,000,000, or (y) one or more Persons have
the right to require the Company or any Subsidiary so to purchase or repay such
Indebtedness; or
(h) the Company or any Subsidiary (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become due, (ii)
files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing; or
(i) a court or governmental authority of competent jurisdiction enters
an order appointing, without consent by the Company or any of its Subsidiaries,
a custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, or constituting
an order for relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company or any of its Subsidiaries, or any such
petition shall be filed against the Company or any of its Subsidiaries and such
petition shall not be dismissed within 60 days; or
(j) a final judgment or judgments for the payment of money aggregating
in excess of Cdn. $5,000,000 are rendered against one or more of the Company and
its Subsidiaries and which judgments are not, within 60 days after entry
thereof, bonded, discharged or stayed pending appeal, or are not discharged
within 60 days after the expiration of such stay; or
(k) any Guarantor fails in any material respect to perform or
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observe any term, covenant or agreement in the Subsidiary Guaranty; or the
Subsidiary Guaranty is for any reason partially (including with respect to
future advances) or wholly revoked or invalidated, or otherwise ceases to be in
full force and effect; or any Guarantor, or any other Person by, through or on
behalf of any Guarantor, contests in any manner the validity or enforceability
of the Subsidiary Guaranty or denies that such Guarantor has any further
liability or obligation thereunder; or
(l) the Security Agreement shall cease to be in full force and effect;
or the Company, any Guarantor or any Person by, through or on behalf of the
Company or any Guarantor shall contest the validity or enforceability of the
Security Agreement; or
(m) if (i) any Plan shall fail to satisfy the minimum funding standards
of ERISA or the Code for any plan year or part thereof or a waiver of such
standards or extension of any amortization period is sought or granted under
section 412 of the Code, (ii) a notice of intent to terminate any Plan shall
have been or is reasonably expected to be filed with the PBGC or the PBGC shall
have instituted proceedings under ERISA section 4042 to terminate or appoint a
trustee to administer any Plan or the PBGC shall have notified the Company or
any ERISA Affiliate that a Plan may become a subject of any such proceedings,
(iii) the aggregate "amount of unfunded benefit liabilities" (within the meaning
of section 4001(a)(18) of ERISA) under all Plans, determined in accordance with
Title IV of ERISA, shall exceed Cdn. $500,000, (iv) the Company or any ERISA
Affiliate shall have incurred or is reasonably expected to incur any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans, (v) the Company or any ERISA
Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or any
Subsidiary establishes or amends any employee welfare benefit plan that provides
post-employment welfare benefits in a manner that would increase the liability
of the Company or any Subsidiary thereunder; and any such event or events
described in clauses (i) through (vi) above, either individually or together
with any other such event or events, could reasonably be expected to have a
Material Adverse Effect.
As used in SECTION 11(m), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE
WELFARE BENEFIT PLAN" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
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12.1. ACCELERATION.
(a) If an Event of Default with respect to the Company described in
paragraph (h) or (i) of SECTION 11 (other than an Event of Default described in
clause (i) of paragraph (h) or described in clause (vi) of paragraph (h) by
virtue of the fact that such clause encompasses clause (i) of paragraph (h)) has
occurred, all the Notes then outstanding shall automatically become immediately
due and payable.
(b) If any other Event of Default has occurred and is continuing, any
holder or holders of more than 25% in principal amount of the Notes at the time
outstanding may at any time at its or their option, by notice or notices to the
Company, declare all the Notes then outstanding to be immediately due and
payable.
(c) If any Event of Default described in paragraph (a) or (b) of
SECTION 11 has occurred and is continuing, any holder or holders of Notes at the
time outstanding affected by such Event of Default may at any time, at its or
their option, by notice or notices to the Company, declare all the Notes held by
it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this SECTION 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon and (y) the Make-Whole Amount determined in respect of
such principal amount (to the full extent permitted by applicable law), shall
all be immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
12.2. OTHER REMEDIES.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under SECTION 12.1, the holder of any Note at the
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time outstanding may proceed to protect and enforce the rights of such holder by
an action at law, suit in equity or other appropriate proceeding, whether for
the specific performance of any agreement contained herein or in any Note, or
for an injunction against a violation of any of the terms hereof or thereof, or
in aid of the exercise of any power granted hereby or thereby or by law or
otherwise.
12.3. RESCISSION.
At any time after any Notes have been declared due and payable pursuant
to clause (b) or (c) of SECTION 12.1, the holders of not less than 76% in
principal amount of the Notes then outstanding, by written notice to the
Company, may rescind and annul any such declaration and its consequences if (a)
the Company has paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid
other than by reason of such declaration, and all interest on such overdue
principal and Make-Whole Amount, if any, and (to the extent permitted by
applicable law) any overdue interest in respect of the Notes, at the Default
Rate, (b) all Events of Default and Defaults, other than non-payment of amounts
that have become due solely by reason of such declaration, have been cured or
have been waived pursuant to SECTION 17, and (c) no judgment or decree has been
entered for the payment of any monies due pursuant hereto or to the Notes. No
rescission and annulment under this SECTION 12.3 will extend to or affect any
subsequent Event of Default or Default or impair any right consequent thereon.
12.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.
No course of dealing and no delay on the part of any holder of any Note
in exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Company under SECTION 15, the Company
will pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all costs and expenses of such holder incurred in any
enforcement or collection under this SECTION 12, including, without limitation,
reasonable attorneys' fees, expenses and disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1. REGISTRATION OF NOTES.
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The Company shall keep at its principal executive office a register for
the registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address
of each transferee of one or more Notes shall be registered in such register.
Prior to due presentment for registration of transfer, the Person in whose name
any Note shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give to any holder of a
Note that is an Institutional Investor promptly upon request therefor, a
complete and correct copy of the names and addresses of all registered holders
of Notes.
13.2. TRANSFER AND EXCHANGE OF NOTES.
Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
his attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the Company's expense (except as provided below), one or
more new Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit 1. Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than Cdn. $500,000, PROVIDED that if
necessary to enable the registration of transfer by a holder of its entire
holding of Notes, one Note may be in a denomination of less than Cdn. $500,000.
Any transferee, by its acceptance of a Note registered in its name (or the name
of its nominee), shall be deemed to have made the representation set forth in
SECTION 6.2.
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13.3. REPLACEMENT OF NOTES.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (PROVIDED that if the holder of such Note is, or is a nominee
for, an original purchaser or another holder of a Note with a minimum net worth
of at least Cdn. $10,000,000, such Person's own unsecured agreement of indemnity
shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
14. SUBORDINATION.
14.1. NOTES SUBORDINATED TO PERMITTED SENIOR INDEBTEDNESS.
The Company covenants and agrees and you likewise covenant and agree
for the benefit of the holders of the Permitted Senior Indebtedness, that, to
the extent and in the manner hereinafter set forth in this SECTION 14, the
Obligations under the Notes are hereby expressly made subordinate and subject in
right of payment as provided in this SECTION 14 to the prior payment in full of
all Permitted Senior Indebtedness. This SECTION 14 shall constitute a continuing
offer to all persons who, in reliance upon such provisions, become holders of,
or continue to hold, Permitted Senior Indebtedness, and such provisions are made
for the benefit of the holders of Permitted Senior Indebtedness and such holders
are made obligees hereunder and they or each of them may enforce such
provisions.
14.2. PAYMENT OVER OF PROCEEDS UPON BANKRUPTCY.
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(a) In the event of (i) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relative to the Company or its
assets, (ii) any liquidation, dissolution or other winding up of the Company,
whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy, or (iii) any assignment for the benefit of creditors or any other
marshalling of assets or liabilities of the Company (the events described in the
foregoing clauses (i), (ii) and (iii) are referred to collectively as
"INSOLVENCY OR LIQUIDATION PROCEEDINGS"), then and in any such event the holders
of Permitted Senior Indebtedness shall be entitled to receive payment in full in
cash of all amounts due on or in respect of all Permitted Senior Indebtedness
(or payment thereof provided for to the satisfaction of the holders of Permitted
Senior Indebtedness), before the holder is entitled to receive any payment or
distribution of any kind or character (excluding Permitted Junior Payments) on
account of principal of, or premium (if any) or interest on, the Notes, and to
that end the holders of Permitted Senior Indebtedness shall be entitled to
receive, for application to the payment of such Permitted Senior Indebtedness,
any payment or distribution of assets of the Company of any kind or character
(excluding Permitted Junior Payments) that may be payable or deliverable in
respect of the Notes in connection with any such Insolvency or Liquidation
Proceeding.
(b) Any payment or distribution of assets of the Company of any kind or
character from any source, whether in cash, property or securities (excluding
Permitted Junior Securities), including by way of set-off or enforcement of any
guarantee or otherwise, which the holders would be entitled to receive but for
the provisions of this Article shall be paid by the liquidating trustee or agent
or other person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise, directly to the
holders of Permitted Senior Indebtedness or the representative or
representatives or to the trustee or trustees under any indenture under which
any instruments evidencing any of such Permitted Senior Indebtedness may have
been issued, rateably according to the aggregate amounts remaining unpaid on
account of the Permitted Senior Indebtedness held or represented by each, to the
extent necessary to make payment in full in cash of all Permitted Senior
Indebtedness after giving effect to any concurrent payment or distribution, or
provision therefor to the satisfaction of the holders of the Permitted Senior
Indebtedness.
(c) In the event that, notwithstanding the foregoing provisions of
SECTION 14.2(b), any holder of the Notes shall have received, after the
commencement of any Insolvency or Liquidation Proceeding, any payment or
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distribution of assets of the Company of any kind or character in respect of the
Obligations under the Notes whether in cash, property or securities including by
way of set off or enforcement of any guarantee or otherwise before all Permitted
Senior Indebtedness is paid in full or payment thereof provided for to the
satisfaction of the holders of Permitted Senior Indebtedness, then such payment
or distribution (excluding Permitted Junior Payments) shall be paid over or
delivered forthwith therefor to the holders of the Permitted Senior Indebtedness
or the trustee in bankruptcy, receiver, liquidating trustee, custodian,
assignee, agent or other Person making payment or distribution of assets of the
Company for application to the payment of all Permitted Senior Indebtedness
remaining unpaid, to the extent necessary to pay all Permitted Senior
Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Permitted Senior Indebtedness.
14.3. SUSPENSION OF PAYMENTS WHEN PERMITTED SENIOR INDEBTEDNESS IN DEFAULT.
(a) Unless SECTION 14.2 shall be applicable, upon (i) the occurrence of
a default in the payment when due (whether at maturity or upon acceleration,
mandatory prepayment or otherwise) of any principal of or interest or premium
(if any) or interest on any unreimbursed amounts under drawn letters of credit
on any Permitted Senior Indebtedness that is continuing after the expiration of
any grace period applicable thereto (a "PAYMENT DEFAULT"), and (ii) either the
Company or such holder of Permitted Senior Indebtedness sending to the holders
of the Notes written notice of such Payment Default, then no payment or
distribution of any assets of the Company or any Subsidiary of any kind or
character (excluding Permitted Junior Payments) shall be made by the Company
including by way of set off or enforcement of guaranty or otherwise on account
of principal of, or premium (if any) or interest on, the Notes or on account of
the purchase or redemption or other acquisition of the Notes unless and until
either (x) such Payment Default shall have been cured or waived, or shall have
ceased to exist, (y) such defaulted Permitted Senior Indebtedness shall have
been discharged or (z) the benefits of this provision shall have been waived by
the holders of such defaulted Permitted Senior Indebtedness, after which the
Company shall resume making any and all required payments in respect of the
Notes, including any payments in arrears.
(b) Unless SECTION 14.2 shall be applicable, upon (i) the occurrence of
any default or event of default under any Permitted Senior Indebtedness if the
effect of such default or event of default is to permit such Permitted Senior
Indebtedness to become due and payable prior to its stated
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maturity (a "COVENANT DEFAULT"), and (ii) the holder of such Permitted Senior
Indebtedness or the Company sending to the holders of the Notes written notice
of such Covenant Default, then no payment or distribution of any assets of the
Company of any kind or character (excluding Permitted Junior Payments) shall be
made by the Company including by way of set-off or enforcement of guaranty or
otherwise on account of principal of, or premium (if any) or interest on, the
Notes or on account of the purchase or redemption or other acquisition of the
Notes for a period (a "PAYMENT BLOCKAGE PERIOD") commencing on the date of
receipt of such written notice by the holders of the Notes and continuing until
(subject to any blockage of payments that may then be in effect under SECTION
14.3(A)) the first to occur of (x) more than 179 days shall have elapsed since
receipt of such written notice by the holders of the Notes (provided that the
obligations under the applicable Permitted Senior Indebtedness shall not
theretofore have been accelerated), (y) such Covenant Default shall have been
cured or waived or shall have ceased to exist or the Permitted Senior
Indebtedness shall have been discharged, or (z) such Payment Blockage Period
shall have been terminated by written notice to the Company and the holders of
the Notes given by the holder of such Permitted Senior Indebtedness. After the
first to occur of the events described in the foregoing clauses (x), (y) and
(z), the Company shall resume making any and all required payments in respect of
the Notes, including any payments in arrears. In no event will a Payment
Blockage Period extend beyond 179 days from the date of the receipt by the
holders of the Notes of the notice initiating such Payment Blockage Period (such
179-day period referred to as the "INITIAL PERIOD"). Any number of notices of
events of default may be given during the Initial Period; PROVIDED that during
any period of 365 consecutive days there must be a period of 186 consecutive
days in which no Payment Blockage Period is in effect. No Covenant Default with
respect to the Permitted Senior Indebtedness that existed or was continuing on
the date of the commencement of any Payment Blockage Period will be, or can be,
made the basis for the commencement of a second Payment Blockage Period, whether
or not within a period of 365 consecutive days, unless such Covenant Default has
been cured or waived for a period of not less than 90 consecutive days.
(c) In the event that, notwithstanding the foregoing, the Company shall
make any payment to any holder of any Note prohibited by the foregoing
provisions of this SECTION 14.3, then and in such event such payments shall be
paid over and delivered forthwith to the holders of the Permitted Senior
Indebtedness or their representative.
14.4. PAYMENT PERMITTED IF NO DEFAULT.
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Nothing contained in this SECTION 14 or elsewhere in this Agreement or
in the Notes shall prevent the Company, at any time except in the circumstances
described in SECTION 14.2 or under the conditions described in SECTION 14.3,
from making payments at any time of principal of, or premium (if any) or
interest on, the Notes to the extent permitted by the terms of Permitted Senior
Indebtedness as in effect from time to time.
14.5. SUBROGATION TO RIGHTS OF HOLDERS OF PERMITTED SENIOR INDEBTEDNESS.
Subject to the payment in full of all Permitted Senior Indebtedness,
the holders of the Notes shall be subrogated (equally and ratably with the
holders of all Indebtedness of the Company that by its express terms is
subordinated to Permitted Senior Indebtedness to the same extent as the Notes
are so subordinated and is entitled to like rights of subrogation) to the rights
of the holders of Permitted Senior Indebtedness to receive payments and
distributions of cash, property and securities applicable to the Permitted
Senior Indebtedness to the extent that payment of Permitted Senior Indebtedness
has been made from amounts otherwise payable to the holders of the Notes until
the Notes and all other amounts payable under this Agreement shall be paid in
full. For purposes of such subrogation, no payments or distributions to the
holders of the Permitted Senior Indebtedness of any cash, property or securities
to which the holders of the Notes would be entitled except for the provisions of
this SECTION 14, and no payments over pursuant to the provisions of this SECTION
14 to the holders of Permitted Senior Indebtedness by the holders of the Notes,
shall, as among the Company, its creditors other than holders of the Permitted
Senior Indebtedness and the holders of the Notes, be deemed to be a payment or
distribution by the Company to or on account of the Permitted Senior
Indebtedness. In the event that any Permitted Senior Indebtedness becomes
due and payable, whether by acceleration, maturity or otherwise, no distribution
shall thereafter be made on account of the Notes until all Permitted Senior
Indebtedness shall be paid in full.
14.6. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The provisions of this SECTION 14 are and are intended solely for the
purpose of defining the relative rights of the holders of the Notes, on the one
hand, and the holders of Permitted Senior Indebtedness, on the other hand.
Nothing contained in this SECTION 14 or elsewhere in this Agreement or in the
Notes is intended to or shall (a) impair, as among the Company and its creditors
other than holders of Permitted Senior Indebtedness and the holders of the
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Notes, the obligation of the Company, which is absolute and unconditional, to
pay to the holders of the Notes the principal of, and premium (if any) and
interest on, the Notes and all other amounts payable under this Agreement as and
when the same shall become due and payable, all in accordance with the terms
hereof and of the Notes; (b) affect the relative rights against the Company of
the holders of the Notes and creditors of the Company other than the holders of
Permitted Senior Indebtedness, it being expressly understood that the Notes, the
indebtedness represented thereby and the payment of the principal of, and
premium (if any) and interest on, the Notes and of all other amounts payable
under this Agreement in all respects shall rank equally with, or prior to, all
existing and future unsecured Indebtedness of the Company that is not Permitted
Senior Indebtedness; (c) prevent the holders of the Notes from exercising all
remedies otherwise permitted by applicable law upon default under this
Agreement, subject to the rights, if any, under this SECTION 14 of the holders
of Permitted Senior Indebtedness (i) in any Insolvency or Liquidation Proceeding
to receive, pursuant to and in accordance with SECTION 14.2, cash, property and
securities otherwise payable or deliverable to the holders or the Notes, or (ii)
under the conditions specified in SECTION 14.3 to prevent any payment prohibited
by such SECTION 14.3; or (d) limit the rights of the holders of the Notes to
take any action to accelerate the maturity of the Notes pursuant to SECTION 11
or to pursue any rights or remedies hereunder or under applicable law.
14.7. PAYMENTS HELD IN TRUST.
Should any distribution or the proceeds thereof in respect of principal
of, or premium (if any) or interest on, the Notes be collected or received by
the holders of Notes at a time when the holders of Notes are not permitted to
receive any such distribution or proceeds thereof, including if the same is
collected or received when there is or would be after giving effect to such
payment an Event of Default under any Permitted Senior Indebtedness, then the
holders of Notes will forthwith deliver, or cause to be delivered, the same to
the holders of Permitted Senior Indebtedness in precisely the form held by the
holders of Notes (except for any necessary endorsement) and until so delivered,
the same shall be held in trust by the holders of Notes as property of the
holders of Permitted Senior Indebtedness and shall not be commingled with other
property of the holders of Notes.
14.8. NO WAIVER OF SUBORDINATION PROVISIONS.
(a) No right of any present or future holder of any Permitted Senior
Indebtedness to enforce subordination as herein provided shall at any
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time in any way be prejudiced or impaired by any act or failure to act on the
part of the Company or by any act or failure to act by any such holder, or by
any noncompliance by the Company with the terms, provisions and covenants of
this Agreement, regardless of any knowledge thereof that any such holder may
have or be otherwise charged with.
(b) Without in any way limiting the generality of SECTION 14.8(A), the
holders of Permitted Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the holders of the Notes, without incurring
responsibility to the holders of the Notes and without impairing or releasing
the subordination provided in this SECTION 14 or the obligations hereunder of
the holders of the Notes to the holders of Permitted Senior Indebtedness, do any
one or more of the following: (1) change the manner, place or terms of payment
or extend the time of payment of, or renew or alter, any Permitted Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Permitted Senior Indebtedness is outstanding (including any increase in the
aggregate principal amount of any indebtedness thereunder); (2) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing any Permitted Senior Indebtedness; (3) release any Person liable in any
manner for the collection of any Permitted Senior Indebtedness; and (4) exercise
or refrain from exercising any rights against the Company and any other Person.
14.9. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT.
Upon any payment or distribution of assets of the Company referred to
in this SECTION 14, the holders of the Notes shall be entitled to rely upon any
order or decree entered by any court of competent jurisdiction in which such
insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution,
winding up or similar case or proceeding is pending, or a certificate of the
trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for
the benefit of creditors, agent or other Person making such payment or
distribution, delivered to the holders of the Notes for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Permitted Senior Indebtedness and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this SECTION 14 provided that such court, trustee, assignee or other person
has been apprised of, or the order or certificate makes reference to the
provisions of this Article.
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14.10 FURTHER ASSURANCES
Upon receipt of written notice by a holder of Permitted Senior
Indebtedness, the Company shall, from time to time, for and on behalf of all
present and future holders of the Notes, execute and deliver deeds of
subordination in favour of the person or persons forwarding such notice to the
Company providing that such person or persons are entitled to all the rights and
benefits of this Article as a holder of Permitted Senior Indebtedness. An
executed counterpart of each such deed shall be delivered by the Company.
Nothing contained in this provision shall impair the rights of any holders of
Permitted Senior Indebtedness in whose favour such a deed of subordination has
not been so executed and delivered.
15. PAYMENTS ON NOTES.
15.1. PLACE OF PAYMENT.
Subject to SECTION 15.2, payments of principal, Make-Whole Amount, if
any, and interest becoming due and payable on the Notes shall be made in
Toronto, Ontario at the principal office of the Company in such jurisdiction.
The Company may at any time, by notice to each holder of a Note, change the
place of payment of the Notes so long as such place of payment shall be either
the principal office of the Company in such jurisdiction or the principal office
of a bank or trust company in such jurisdiction.
15.2. HOME OFFICE PAYMENT.
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in SECTION 14.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below your name in SCHEDULE A, or by such other
method or at such other address as you shall have from time to time specified to
the Company in writing for such purpose, without the presentation or surrender
of such Note or the making of any notation thereon, except that upon written
request of the Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by the Company pursuant to SECTION 14.1. Prior to any sale or other disposition
of any Note held by you or your nominee you will, at your election,
<PAGE> 52
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either endorse thereon the amount of principal paid thereon and the last date to
which interest has been paid thereon or surrender such Note to the Company in
exchange for a new Note or Notes pursuant to SECTION 13.2. The Company will
afford the benefits of this SECTION 15.2 to any Institutional Investor that is
the direct or indirect transferee of any Note purchased by you under this
Agreement and that has made the same agreement relating to such Note as you have
made in this SECTION 15.2.
16. EXPENSES, ETC.
16.1. TRANSACTION EXPENSE.
Whether or not the transactions contemplated hereby are consummated,
the Company will pay all costs and expenses (including reasonable attorneys'
fees of a special counsel and, if reasonably required, local or other counsel)
incurred by you or holder of a Note in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of this
Agreement or the Notes (whether or not such amendment, waiver or consent becomes
effective), including, without limitation: (a) the costs and expenses incurred
in enforcing or defending (or determining whether or how to enforce or defend)
any rights under this Agreement or the Notes or in responding to any subpoena or
other legal process or informal investigative demand issued in connection with
this Agreement or the Notes, or by reason of being a holder of any Note, and (b)
the costs and expenses, including financial advisors' fees, incurred in
connection with the insolvency or bankruptcy of the Company or any Subsidiary or
in connection with any work-out or restructuring of the transactions
contemplated hereby and by the Notes. The Company will pay, and will save you
and each other holder of a Note harmless from, all claims in respect of any
fees, costs or expenses, if any, of brokers and finders (other than those
retained by you).
16.2. SURVIVAL.
The obligations of the Company under this SECTION 16 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes, and the termination of this Agreement.
17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT.
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All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any subsequent holder of a Note, regardless of
any investigation made at any time by or on behalf of you or any other holder of
a Note. All statements contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant to this Agreement shall be
deemed representations and warranties of the Company under this Agreement.
Subject to the preceding sentence, this Agreement and the Notes embody the
entire agreement and understanding between you and the Company and supersede all
prior agreements and understandings relating to the subject matter hereof.
18. AMENDMENT AND WAIVER.
18.1. REQUIREMENTS.
This Agreement and the Notes may be amended, and the observance of any
term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Company and the
Required Holders, except that no amendment or waiver may, without the written
consent of the holder of each Note at the time outstanding affected thereby, (i)
subject to the provisions of SECTION 12 relating to acceleration or rescission,
change the amount or time of any prepayment or payment of principal of, or
reduce the rate or change the time of payment or method of computation of
interest or of the Make-Whole Amount on, the Notes, (ii) change the percentage
of the principal amount of the Notes the holders of which are required to
consent to any such amendment or waiver, or (iii) amend any of SECTIONS 8,
11(a), 11(b), 12, 14, or 18.1 hereof.
18.2. SOLICITATION OF HOLDERS OF NOTES.
(a) The Company will provide each holder of the Notes (irrespective of
the amount of Notes then owned by it) with sufficient information, sufficiently
far in advance of the date a decision is required, to enable such holder to make
an informed and considered decision with respect to any proposed amendment,
waiver or consent in respect of any of the provisions hereof or of the Notes.
The Company will deliver executed or true and correct copies of each amendment,
waiver or consent effected pursuant to the provisions of this SECTION 18 to each
holder of outstanding Notes promptly following the date on which it is executed
and delivered by, or receives the consent or approval
<PAGE> 54
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of, the requisite holders of Notes.
(b) The Company will not directly or indirectly pay or cause to be paid
any remuneration, whether by way of supplemental or additional interest, fee or
otherwise, or grant any security, to any holder of Notes as consideration for or
as an inducement to the entering into by any holder of Notes or any waiver or
amendment of any of the terms and provisions hereof unless such remuneration is
concurrently paid, or security is concurrently granted, on the same terms,
ratably to each holder of Notes then outstanding even if such holder did not
consent to such waiver or amendment.
18.3. BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this SECTION 18
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon the Company without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note nor
any delay in exercising any rights hereunder or under any Note shall operate as
a waiver of any rights of any holder of such Note. As used herein, the term
"THIS AGREEMENT" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
18.4. NOTES HELD BY COMPANY, ETC.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.
19. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
<PAGE> 55
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confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address specified
for such communications in SCHEDULE A, or at such other address as you or it
shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such address
as such other holder shall have specified to the Company in writing, or
(iii) if to the Company, to the Company at its address set forth at the
beginning hereof to the attention of Paul T. Clough, or at such other address as
the Company shall have specified to the holder of each Note in writing.
Notices under this SECTION 19 will be deemed given only when actually received.
<PAGE> 56
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20. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This SECTION 20
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in SECTION 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this SECTION 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this SECTION
21), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder of the
Notes under this Agreement.
22. MISCELLANEOUS.
22.1. SUCCESSORS AND ASSIGNS.
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All covenants and other agreements contained in this Agreement by or on
behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.
22.2. PAYMENTS DUE ON NON-BUSINESS DAYS.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-Whole Amount or interest on
any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day without including the additional days elapsed in
the computation of the interest payable on such next succeeding Business Day.
22.3. SEVERABILITY.
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
22.4. CONSTRUCTION.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
22.5. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
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22.6. GOVERNING LAW.
This Agreement shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
* * * * *
<PAGE> 59
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If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly yours,
3357392 CANADA INC.
By: /s/ Authorized Signer
Name:
Title:
The foregoing is hereby agreed to as of the date thereof.
3006302 NOVA SCOTIA COMPANY
By: /s/ Authorized Signer
Name:
Title:
<PAGE> 60
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SCHEDULE A
----------
INFORMATION RELATING TO PURCHASERS
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
- ----------------------------- ----------------------
3006302 Nova Scotia Company, a Cdn.$55,000,000
Nova Scotia unlimited
liability company
(1) All payments by wire transfer of
Canadian Imperial Bank of Commerce
Acct. No. 45-8113
with sufficient information to identify the source and
application of such funds.
(2) All notices of payments and written confirmations
of such wire transfers:
3006302 Nova Scotia Company
c/o First Union Real Estate
Equity and Mortgage Investments
55 Public Square, Suite 1910
Cleveland, Ohio 44113-1937
Attn: Senior Vice President,
General Counsel and
Secretary
Fax: (216) 781-7364
(3) All other communications:
3006302 Nova Scotia Company
c/o First Union Real Estate
Equity and Mortgage Investments
55 Public Square, Suite 1910
Cleveland, Ohio 44113-1937
Attn: Senior Vice President,
General Counsel and
Secretary
Fax: (216) 781-7364
<PAGE> 61
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SCHEDULE B
----------
DEFINED TERMS
-------------
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"AFFILIATE" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person and (b) any Person beneficially owning or holding, directly or
indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "Affiliate"
is a reference to an Affiliate of the Company.
"AGREEMENT" means this Note Purchase Agreement between the Company and
the purchasers listed on SCHEDULE A, as it may from time to time be amended or
supplemented.
"ANNUALIZED CAPITAL EXPENDITURES" means for any relevant period
commencing with April 1, 1997, an amount equal to the aggregate amount of
capital expenditures for such period multiplied by a fraction, the numerator of
which is 12 and the denominator of which is the number of calendar months which
have elapsed since April 1, 1997.
"ANNUALIZED CONSOLIDATED EBITDA" means for any relevant period
commencing with April 1, 1997, an amount equal to Consolidated EBITDA for such
period multiplied by a fraction, the numerator of which is 12 and the
denominator of which is the number of calendar months which have elapsed since
April 1, 1997.
"ANNUALIZED CONSOLIDATED INTEREST CHARGES" means for any relevant
period commencing with April 1, 1997, an amount equal to Consolidated Interest
Charges for such period, multiplied by a fraction, the numerator of which is 12
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and the denominator of which is the number of calendar months which have elapsed
since April 1, 1997.
"BUSINESS DAY" means (a) for the purposes of SECTION 8.6 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York
City are required or authorized to be closed, and (b) for the purposes of any
other provision of this Agreement, any day other than a Saturday, a Sunday or a
day on which commercial banks in Toronto or New York are required or authorized
to be closed.
"CAPITAL LEASE" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"CLOSING" is defined in SECTION 3.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"COMPANY" means 3357392 Canada Inc., a corporation duly organized and
validly existing under the laws of the Province of Ontario.
"CONFIDENTIAL INFORMATION" is defined in SECTION 21.
"CONSOLIDATED CASH INTEREST CHARGES" means, for any period for the
Company and its Consolidated Subsidiaries, the total of (i) all items properly
classified as interest expense (whether expensed or capitalized) in accordance
with GAAP; and (ii) the imputed interest component for any element of
Consolidated Indebtedness (such as capital leases and deferred revenues) which
would not be classified as interest expense pursuant to GAAP, calculated using
an interest rate equal to the then prevailing Canadian Prime Rate, in each case
for such period, provided that, notwithstanding the foregoing, with respect to
the Notes only the current paid interest component, and not accrued interest,
will be included in this calculation.
"CONSOLIDATED DEPRECIATION AND AMORTIZATION EXPENSE" means, for any
period, the depreciation and amortization expense of the Company and its
Consolidated Subsidiaries, determined in accordance with GAAP.
"CONSOLIDATED EBITDA" means, for any period, the Consolidated Net
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Income of the Company and its Consolidated Subsidiaries (or with respect to the
definition of Target EBITDA, the relevant target entity mutatis mutandis)
increased by the sum of (i) Consolidated Cash Interest Charges; (ii)
Consolidated Income Tax Expense; and (iii) Consolidated Depreciation and
Amortization Expense, in each case, for such period and calculated prior to
extraordinary items and (iv) such out-of-pocket expenses incurred by such
entities on a one time basis and which can reasonably be solely attributed to
the acquisition referenced on SCHEDULE 5.14.
"CONSOLIDATED INCOME TAX EXPENSE" means, for any period, the aggregate
of all taxes (including deferred taxes) based on income of the Company and its
Consolidated Subsidiaries for such period determined in accordance with GAAP.
"CONSOLIDATED INDEBTEDNESS" means the aggregate of all Indebtedness for
borrowed money of the Company and its Consolidated Subsidiaries less (y) the
Notes and (z) such cash and Permitted Marketable Securities on the balance sheet
of the latest financial statements delivered pursuant to SECTION 7.
"CONSOLIDATED NET WORTH" means at any time, with respect to any Person
and its Consolidated Subsidiaries, the aggregate of (i) the total shareholders'
equity determined as of such time in accordance with GAAP; plus (ii) the Notes;
where shareholders equity for greater certainty and without duplication includes
any shares in the capital of such Person or its Subsidiaries which are
redeemable at the option of the holder in accordance with their terms.
"CONSOLIDATED PARKING CONTRACTS" means, at any time, with respect to
the Company and its Consolidated Subsidiaries, the aggregate of (i) the total
number of existing contracts and leases which are in full force and effect for
the management or operation of parking lots of parking garages; and (ii) the
number of parking lots of parking garages operated on properties owned by the
Company and its Consolidated Subsidiaries.
"CONSOLIDATED SUBSIDIARY" means, at any date, in respect of any person,
a Subsidiary of such Person which is or should be consolidated with such Person
in its consolidated financial statements prepared as of such date.
"DEFAULT" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
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"DEFAULT RATE" means that rate of interest that is 2% per annum above
the rate of interest stated in clause (a) of the first paragraph of the Notes.
"DISTRIBUTIONS" means (i) any dividend or other distribution on issued
shares of the Company or any of its Subsidiaries; (ii) the purchase, redemption
or retirement of any issued shares of the Company or any of its Subsidiaries
redeemed or purchased by the Company or any such Subsidiary, as the case may be,
or any payments made under any employee stock option agreement; (iii) any
consulting fee, management fee or management bonus paid or payable to any
director, officer, shareholder or Affiliate of the Company or any of its
Subsidiaries or any Person not dealing at arm's length with the Company or any
of its Subsidiaries or their respective directors, officers, shareholders or
Affiliates; or (iv) any payment on account of any principal and interest on any
loans or advances owing at any time by the Company or any of its Subsidiaries to
any of their respective directors, officers, shareholders or Affiliates.
"ENVIRONMENTAL LAWS" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.
"EVENT OF DEFAULT" is defined in SECTION 11.
"GAAP" means, at any time, accounting principles generally accepted in
Canada as recommended in the Handbook of the Canadian Institute of Chartered
Accountants at the relevant time applied on a consistent basis.
"GOVERNMENTAL AUTHORITY" means
(a) the government of
<PAGE> 65
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(i) the United States of America or Canada or any State or other
political subdivision thereof, or
(ii) any jurisdiction in which the Company or any Subsidiary conducts
all or any part of its business, or which asserts jurisdiction over any
properties of the Company or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial, regulatory
or administrative functions of, or pertaining to, any such government.
"GUARANTORS" mean Advanced Parking Systems Ltd., Imperial Parking
(U.S.), Inc., Imperial Parking, Inc., The Park-Ur-Self System, Inc., Robbins
Parking Service Ltd., 504463 N.B. Inc. and Imperial Parking (Asia) Limited.
"GUARANTY" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of such
indebtedness or obligation, or (ii) to maintain any working capital or other
balance sheet condition or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase or payment of such
indebtedness or obligation;
(c) to lease properties or to purchase properties or services primarily
for the purpose of assuring the owner of such indebtedness or obligation of the
ability of any other Person to make payment of the indebtedness or obligation;
or
(d) otherwise to assure the owner of such indebtedness or obligation
against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
<PAGE> 66
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"HAZARDOUS MATERIAL" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).
"HOLDER" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to SECTION
13.1.
"INDEBTEDNESS" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption obligations
in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the ordinary
course of business but including all liabilities created or arising under any
conditional sale or other title retention agreement with respect to any such
property);
(c) all liabilities appearing on its balance sheet in accordance with
GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien with respect
to any property owned by such Person (whether or not it has assumed or otherwise
become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or instruments
serving a similar function issued or accepted for its account by banks and other
financial institutions (whether or not representing obligations for borrowed
money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a type
described in any of clauses (a) through (f) hereof.
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Indebtedness of any Person shall include all obligations of such Person of the
character described in clauses (a) through (e) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.
"INSTITUTIONAL INVESTOR" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 25% of the aggregate principal amount
of the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"INTEREST COVERAGE RATIO" means (i) for the periods beginning on April
1, 1997 and ending on the last day of each fiscal quarter up to and including
the fiscal quarter ended March 31, 1998, the ratio of Annualized Consolidated
EBITDA less Annualized Capital Expenditures to Annualized Consolidated Cash
Interest Charges; and (ii) for any fiscal quarter after the fiscal quarter ended
March 31, 1998, the ratio of Consolidated EBITDA less capital expenditures to
Consolidated Cash Interest Charges for the twelve month period ending on the
least day of such fiscal quarter.
"LEVERAGE RATIO" means (i) for periods beginning on April 1, 1997 and
ending on the last day of each fiscal quarter up to and including the fiscal
quarter ended March 31, 1998, the ratio of Consolidated Indebtedness to
Annualized Consolidated EBITDA; and (ii) for any fiscal quarter thereafter, the
ratio of Consolidated Indebtedness to Consolidated EBITDA for the twelve month
period ending on the last day of such fiscal quarter.
"LIEN" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"MAKE-WHOLE AMOUNT" is defined in SECTION 8.6.
"MATERIAL" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Company
and its
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Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or (b) the ability of the Company
to perform its obligations under this Agreement and the Notes, or (c) the
validity or enforceability of this Agreement or the Notes.
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
"NOTE DOCUMENTS" mean the Notes, the Agreement, the Subsidiary Guaranty
and the Security Agreement.
"NOTES" is defined in SECTION 1.
"OBLIGATIONS" means any principal (including reimbursement obligations
and guarantees), premium, if any, interest (including interest accruing on or
after the filing of, or which would have occurred but for the filing of, any
petition in bankruptcy or for reorganization relating to the Company whether or
not a claim for post-filing interest is allowed in such proceedings) penalties,
fees, expenses, indemnifications, reimbursements, claims for recision, damages,
gross-up payments and all other amounts and other liabilities payable under the
Note Documents or otherwise.
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend to
the subject matter of such certificate.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"PERMITTED JUNIOR PAYMENTS" mean a payment or distribution in the form
of equity securities or subordinated securities of the Company or any successor
obligor with respect to the Notes provided for by a plan of reorganization or
readjustment that, in the case of any such subordinated securities, are
subordinate in right of payment to all Permitted Senior Indebtedness that may at
the time be outstanding to substantially the same or a greater extent than, the
Obligations are so subordinated as provided herein.
"PERMITTED LIENS" means any one or more of the following:
<PAGE> 69
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a. Liens for taxes, rates, assessments or governmental charges or levies not at
the time due and delinquent or the validity of which is being contested at the
time by the Company in good faith by proper legal proceedings;
b. Liens resulting from any judgment rendered or claim filed against the Company
which the Company shall be contesting in good faith by proper legal proceedings;
c. undetermined or inchoate Liens which have not at such time been filed or
registered pursuant to law against the Company or which relate to obligations
not due or delinquent;
d. Liens affecting real property which are (i) title defects or irregularities
of a minor nature; or (ii) restrictions, easements, rights-of-way, servitudes or
other similar rights in land (including, without restriction, rights-of-way and
servitudes for railways, sewers, drains, gas and oil pipelines, gas and water
mains, electric light and power and telephone or telegraph or cable television
conduits, poles, wires, cables or other incidental equipment) granted to or
reserved by other Persons; in each case where such Liens in the aggregate do not
materially impair the usefulness of the property for the purposes for which it
is held and mortgages of and other Liens against the said easements,
rights-of-way, servitudes or other similar rights in real property;
e. Liens or deposits in connection with bids, tenders, contracts or
expropriation proceedings of the Company or to secure workers' compensation,
unemployment insurance or other similar statutory assessments, or to secure
costs of litigation when required by law, and surety or appeal bonds in
connections with such litigation;
f. mechanic's, warehouseman's, carriers' or other similar common law liens or
privileges, where the action to enforce the same has not proceeded to final
judgment, is being defended in good faith by the Company and by appropriate
proceedings and in respect of which it shall have set aside on its books
reserves deemed by it to be adequate therefor;
g. any other liens or privileges or other title irregularities, encroachments or
encumbrances of a nature similar to the foregoing which are of a minor nature
and will not in the aggregate materially and adversely affect the use of the
property for the purpose for which it is held by the Company or any of its
Subsidiaries;
<PAGE> 70
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h. Liens in favour of the holders of the Permitted Senior Indebtedness;
i. Purchase Money Mortgages, securing Indebteness, in an aggregate amount not to
exceed Cdn. $1,000,000; and
j. other Liens in an aggregate amount not to exceed Cdn. $50,000.
"PERMITTED MARKETABLE SECURITIES" means any securities held by the
Company or any of its Subsidiaries which are publicly traded on a recognized
stock exchange and do not represent greater than 5% of the issued and
outstanding securities of the issuing corporation and any fixed income
securities for which a public market exists.
"PERMITTED SENIOR INDEBTEDNESS" means Indebtedness outstanding from
time to time pursuant to the Amended and Restated Credit Agreement dated as of
April 17, 1997 among the Company (by amalgamation with Imperial Parking
Limited), 504463 N.B. Inc., the financial institutions party thereto and BT Bank
of Canada, as agent, including all Accomodations (as defined in the Amended and
Restated Credit Agreement) and interest, fees, expenses and other amounts owed
pursuant thereto or contemplated thereby, as such amounts are reduced from time
to time.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"PLAN" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"PREFERRED STOCK" means any class of capital stock of a corporation
that is preferred over any other class of capital stock of such corporation as
to the payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"PROPERTY" or "PROPERTIES" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, choate
or inchoate.
<PAGE> 71
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"PURCHASE MONEY MORTGAGE" means any Lien charging property acquired by
the Company, which is or has been granted or assumed by the Company or which
arises by operation of law in favour of the transferor substantially
concurrently with and for the purpose of the acquisition of such property, in
each case where (i) the principal amount secured by such Lien is not in excess
of the cost to the Company of the property acquired; and (ii) such Lien extends
only to the property acquired.
"REQUIRED HOLDERS" means, at any time, the holders of at least 66-2/3%
in principal amount of the Notes at the time outstanding (exclusive of Notes
then owned by the Company or any of its Affiliates).
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time.
"SECURITY AGREEMENT" means the security agreement dated the date of
Closing issued by the Guarantors.
"SENIOR FINANCIAL OFFICER" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
"SUBSIDIARY" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
"SUBSIDIARY GUARANTY" means the guaranty dated the date of Closing
issued by the Guarantors.
<PAGE> 72
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"SWAPS" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"WHOLLY-OWNED SUBSIDIARY" means, at any time, any Subsidiary one
hundred percent (100%) of all of the equity interests (except directors'
qualifying shares) and voting interests of which are owned by any one or more of
the Company and the Company's other Wholly-Owned Subsidiaries at such time.
<PAGE> 73
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SCHEDULE 5.14
-------------
USE OF PROCEEDS
---------------
The Company shall use the proceeds of the Notes solely to acquire the
shares of Imperial Holdings No. 2 Inc. pursuant to that certain Share Purchase
Agreement dated as of February 18, 1997, as amended to and including April 15,
1997.
<PAGE> 74
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NOTE
3357392 CANADA INC.
SENIOR SUBORDINATED PARTIAL PIK NOTES DUE APRIL 17, 2009
No.1
Cdn. $55,000,000 April 17, 1997
FOR VALUE RECEIVED, the undersigned, 3357392 CANADA INC. (herein called
the "Company"), a corporation duly organized and validly existing under the laws
of the Province of Ontario hereby promises to pay to 3006302 NOVA SCOTIA
COMPANY, or registered assigns, the principal sum of FIFTY-FIVE MILLION DOLLARS
(Cdn.$55,000,000) on April 17, 2009, with interest (computed on the basis of a
360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the
rate of 12% per annum from the date hereof, payable quarterly, on March 31, June
30, September 30 and December 31 of each year, commencing with June 30, 1997,
payable in cash at a rate of 4% per annum and the balance of such interest
payable in additional Senior Subordinated Partial PIK Notes due April 17, 2009
("Additional Notes"), substantially in the form hereof, until the principal
hereof shall have become due and payable, and (b) to the extent permitted by law
on any overdue payment (including any overdue prepayment) of principal, any
overdue payment of interest and any overdue payment of any Make-Whole Amount (as
defined in the Note Purchase Agreements referred to below), payable quarterly as
aforesaid (or, at the option of the registered holder hereof, on demand), in
cash at a rate per annum from time to time equal to 14%.
Payments of principal of, interest (except for interest payable in
Additional Notes as herein provided) on and any Make-Whole Amount with respect
to this Note are to be made in lawful money of Canada at Toronto, Ontario or at
such other place as the Company shall have designated by written notice to the
holder of this Note as provided in the Note Purchase Agreements referred to
below.
This Note is one of a series of the Company's Senior Subordinated
Partial PIK Notes due April 17, 2009 (herein called the "Notes") issued pursuant
to one or more separate Note Purchase Agreements, dated as of April 17, 1997 (as
from time to time amended, the "Note Purchase Agreements"), between the Company
and the respective Purchasers named therein and is entitled to the benefits
thereof. Each holder of this
<PAGE> 75
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Note will be deemed, by its acceptance hereof, (i) to have agreed to the
subordination provisions set forth in SECTION 14 of the Note Purchase Agreements
and (ii) to have made the representation set forth in SECTION 2 of the Note
Purchase Agreements.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
This Note is subject to optional prepayment, in whole or from time to
time in part, at the times and on the terms specified in the Note Purchase
Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.
This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
3357392 CANADA INC.
By: /s/ Authorized Signer
Title:
<PAGE> 76
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EXHIBIT 11(e)-2
FORM OF OPINION OF SPECIAL COUNSEL
TO THE COMPANY
Matters To Be Covered In
Opinion of Special Counsel To the Company
- -----------------------------------------
1. Each of the Company and its Subsidiaries being duly incorporated,
validly existing and in good standing and having requisite corporate power and
authority to issue and sell the Notes and to execute and deliver the documents.
2. Each of the Company and its Subsidiaries being duly qualified and
in good standing as a foreign corporation in appropriate jurisdictions.
3. Due authorization and execution of the documents and such documents
being legal, valid, binding and enforceable.
4. No conflicts with charter documents, laws or other agreements.
5. All consents required to issue and sell the Notes and to execute
and deliver the documents having been obtained.
6. No litigation questioning validity of documents.
7. The Notes not requiring registration under the Securities Act of
1933, as amended; no need to qualify an indenture under the Trust Indenture Act
of 1939, as amended.
8. No violation of Regulations G, T or X of the Federal Reserve Board.
9. Company not an "investment company", or a company "controlled" by
an "investment company", under the Investment Company Act of 1940, as amended.
<PAGE> 1
Exhibit 10f
504463 N.B. INC.
Cdn. $9,166,666
Senior Subordinated Partial PIK Notes
due April 17, 2009
-------------------------
NOTE PURCHASE AGREEMENT
-------------------------
Dated April 17, 1997
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
1. AUTHORIZATION OF NOTES 1
2. SALE AND PURCHASE OF NOTES 1
3. CLOSING 1
4. CONDITIONS TO CLOSING 2
4.1. Representations and Warranties 2
4.2. Performance; No Default 2
4.3. Compliance Certificates 2
4.4. Notes 3
4.5. Opinion of Counsel 3
4.6. Purchase Permitted By Applicable Law, etc. 3
4.7. Changes in Corporate Structure 4
4.8. Proceedings and Documents 4
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 4
5.1. Organization; Power and Authority 4
5.2. Authorization, etc. 4
5.3. Disclosure 5
5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates 5
5.5. Property 6
5.6. Compliance with Laws, Other Instruments, etc. 7
5.7. Governmental Authorizations, etc. 7
5.8. Litigation; Observance of Agreements, Statutes and Orders 8
5.9. Taxes 8
5.10. Title to Property; Leases. 8
5.11. Licenses, Permits, etc. 9
5.12. Pension Plans 9
5.13. Private Offering by the Company 9
5.14. Use of Proceeds; Margin Regulations 9
5.15. Existing Indebtedness, Future Liens 10
5.16. Foreign Assets Control Regulations, etc. 10
5.17. Status under Certain Statutes 10
5.18. Environmental Matters 11
5.19. Material Agreements 11
5.20. Books and Records 11
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
6. REPRESENTATIONS OF THE PURCHASER 12
6.1. Purchase for Investment 12
6.2. Source of Funds 12
7. INFORMATION AS TO COMPANY 12
7.1. Financial and Business Information 12
7.2. Officer's Certificate 17
7.3. Inspection 17
8. PAYMENT OF THE NOTES 18
8.1. Required Repayments 18
8.2. Optional Prepayments with Make-Whole Amount 18
8.3. Allocation of Partial Prepayments 19
8.4. Maturity; Surrender, etc. 19
8.5. Purchase of Notes 19
8.6. Make-Whole Amount 19
9. AFFIRMATIVE COVENANTS 21
9.1. Compliance with Law 21
9.2. Insurance 21
9.3. Maintenance of Properties 22
9.4. Payment of Taxes and Claims 22
9.5. Corporate Existence, etc. 22
9.6. Maintenance of Net Worth. 23
9.7. Maintenance of Consolidated Indebtedness to
Net Worth Ratio. 23
9.8. Maintenance of Interest Coverage Ratio. 23
9.9. Maintenance of Leverage Ratio. 23
9.10. Maintenance of Parking Contracts. 23
9.11. Further Assurances 23
10. NEGATIVE COVENANTS 24
10.1. Transactions with Affiliates 24
10.2. Merger, Consolidation, etc. 24
10.3. Indebtedness 25
10.4. Liens 25
10.5. Disposal of Assets Generally 25
10.6. Change in Business 25
10.7. Distributions 25
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
10.8. Investments 26
10.9. Lease-Backs 26
10.10. Subsidiaries 26
10.11. Maintenance and Ownership of Subsidiaries 26
10.12. Compromise of Accounts. 27
11. EVENTS OF DEFAULT 27
12. REMEDIES ON DEFAULT, ETC. 30
12.1. Acceleration 30
12.2. Other Remedies 31
12.3. Rescission 31
12.4. No Waivers or Election of Remedies, Expenses, etc. 32
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES. 32
13.1. Registration of Notes. 32
13.2. Transfer and Exchange of Notes. 32
13.3. Replacement of Notes. 33
14. SUBORDINATION 33
14.1. Notes Subordinated to Permitted Senior Indebtedness 33
14.2. Payment Over of Proceeds Upon Bankruptcy 34
14.3. Suspension of Payments When Permitted Senior Indebtedness in Default 35
14.4. Payment Permitted If No Default 36
14.5. Subrogation to Rights of Holders of Permitted Senior Indebtedness 36
14.6. Provisions Solely to Define Relative Rights 37
14.7. Payments Held in Trust 38
14.8. No Waiver of Subordination Provisions 38
14.9. Reliance on Judicial Order or Certificate of Liquidating Agent 38
15. PAYMENTS ON NOTES 39
15.1. Place of Payment. 39
15.2. Home Office Payment. 39
16. EXPENSES, ETC. 40
16.1. Transaction Expense. 40
16.2. Survival 40
17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT 40
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C>
18. AMENDMENT AND WAIVER. 41
18.1. Requirements. 41
18.2. Solicitation of Holders of Notes 41
18.3. Binding Effect, etc. 42
18.4. Notes held by Company, etc. 42
19. NOTICES 42
20. REPRODUCTION OF DOCUMENTS 43
21. SUBSTITUTION OF PURCHASER 43
22. MISCELLANEOUS 44
22.1. Successors and Assigns 44
22.2. Payments Due on Non-Business Days. 44
22.3. Severability 44
22.4. Construction 44
22.5. Counterparts 44
22.6. Governing Law 45
SCHEDULES/EXHIBITS
Schedule A Information Relating to Purchasers
Schedule B Defined Terms
Schedule 5.4 Subsidiaries
Schedule 5.5 Property
Schedule 5.8 Litigation
Schedule 5.14 Use of Proceeds
Schedule 5.15 Existing Indebtedness
Schedule 5.19 Material Agreements
Exhibit 1 Form of Note
Exhibit 4.5 Form of Subsidiary Guaranty
Exhibit 11(e)-1 Form of Security Agreement
Exhibit 11(e)-2 Form of Opinion of Counsel to the Company
</TABLE>
<PAGE> 6
504463 N.B. INC.
601 West Cordova Street, Suite 300
Vancouver, B.C.
V6B 1G1
Canada
Senior Subordinated Partial PIK Notes due April 17, 2009
April 17, 1997
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED Schedule A:
Ladies and Gentlemen:
504463 N.B. Inc., a corporation duly organized and validly existing
under the laws of the Province of New Brunswick (the "Company"), agrees
with you as follows:
1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of Cdn. $9,166,666 aggregate
original principal amount of its Senior Subordinated Partial PIK Notes due April
17, 2009 (the "Notes", such term to include any such notes issued in
substitution therefor pursuant to SECTION 13 of this Agreement (as hereinafter
defined) and Additional Notes issued in payment of interest thereon). The Notes
shall be substantially in the form set out in EXHIBIT 1, with such changes
therefrom, if any, as may be approved by you and the Company. Certain
capitalized terms used in this Agreement are defined in SCHEDULE B; references
to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule
or an Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will purchase from the Company, at the Closing
provided for in SECTION 3, Notes in the principal amount specified opposite your
name in SCHEDULE A at the purchase price of 100% of the principal amount
thereof.
<PAGE> 7
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3. CLOSING.
The sale and purchase of the Notes to be purchased by you shall occur at
the offices of Fasken Campbell Godfrey, 42nd Floor, Toronto-Dominion Bank Tower,
Tower, Toronto, Ontario, Canada M5K 1N6, at 8:00 a.m., Toronto time, at a
closing (the "Closing") on April 17, 1997 or on such other Business Day
thereafter on or prior to May 30, 1997 as may be agreed upon by the Company and
you. At the Closing the Company will deliver to you the Notes to be purchased by
you in the form of a single Note (or such greater number of Notes in
denominations of at least Cdn. $1,000,000 as you may request) dated the date of
the Closing and registered in your name (or in the name of your nominee),
against delivery by you to the Company or its order of immediately available
funds in the amount of the purchase price therefor by wire transfer of
immediately available funds for the account of the Company to account number
45-81113 at Canadian Imperial Bank of Commerce. If at the Closing the Company
shall fail to tender such Notes to you as provided above in this SECTION 3, or
any of the conditions specified in SECTION 4 shall not have been fulfilled to
your satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you at the
Closing is subject to the fulfillment to your satisfaction, prior to or at the
Closing, of the following conditions:
4.1. Representations and Warranties.
The representations and warranties of the Company in this Agreement shall
be correct when made and at the time of the Closing.
4.2. Performance; No Default.
The Company shall have performed and compiled with all agreements and
conditions contained in this Agreement required to be performed or compiled with
by it prior to or at the Closing and after giving effect to the issue and sale
of the Notes (and the application of the proceeds thereof as contemplated by
SCHEDULE 5.14) no Default or Event of Default shall have occurred and be
continuing.
4.3. Compliance Certificates.
<PAGE> 8
- 3 -
(a) OFFICER'S CERTIFICATE. The Company shall have delivered to you an
Officer's Certificate, dated the date of the Closing, certifying that the
conditions specified in Sections 4.1 and 4.2 have been fulfilled.
(b) SECRETARY'S CERTIFICATES. The Company and each Guarantor shall have
delivered to you a certificate certifying as to (i) the charter and by-laws of
the Company and each Guarantor, (ii) the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Notes and the Note Documents, and (iii) the incumbency of the officers
authorized to sign the Notes and the Note Documents.
(c) GOOD STANDING CERTIFICATE. Each of the Company and the Guarantors
shall have delivered a certificate of status, compliance, good standing or like
certificate issued by the appropriate government officials of its jurisdiction
of incorporation.
4.4. Notes.
The Company shall have delivered to you the Notes duly executed.
4.5. Subsidiary Guaranty.
You shall have received the duly executed Subsidiary Guaranty
substantially in the form of EXHIBIT 4.5.
4.6. Purchase Permitted By Applicable Law, etc.
On the date of the Closing your purchase of Notes shall (i) be permitted
by the laws and regulations of each jurisdiction to which you are subject,
without recourse to provisions (such as Section 1405(a)(8) of the New York
Insurance Law) permitting limited investments by insurance companies without
restriction as to the character of the particular investment, (ii) not violate
any applicable law or regulation (including, without limitation, Regulation G, T
or X of the Board of Governors of the Federal Reserve System) and (iii) not
subject you to any tax, penalty or liability under or pursuant to any applicable
law or regulation, which law or regulation was not in effect on the date hereof.
If requested by you, you shall have received an Officer's Certificate certifying
as to such matters of fact as you may reasonably specify to enable you to
determine whether such purchase is so permitted.
4.7. Changes in Corporate Structure.
The Company shall not have changed its jurisdiction of incorporation or
been a party to any merger or consolidation and shall not have succeeded to all
or any substantial part of the liabilities
<PAGE> 9
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of any other entity, at any time following the date of the most recent financial
statements provided to you.
4.8. Proceedings and Documents.
All corporate and other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be satisfactory to you and your special counsel, and you
and your special counsel shall have received all such counterpart originals or
certified or other copies of such documents as you or they may reasonably
request.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
5.1. Organization; Power and Authority.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and is duly
qualified as a foreign corporation and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company has the corporate power and authority to own or hold
under lease the properties it purports to own or hold under lease, to transact
the business it transacts and proposes to transact, to execute and deliver this
Agreement and the Notes and to perform the provisions hereof and thereof.
5.2. Authorization, etc.
(a) This Agreement and the Notes have been duly authorized by all
necessary corporate action on the part of the Company, and this Agreement
constitutes, and upon execution and delivery thereof each Note will constitute,
a legal, valid and binding obligation of the Company enforceable against the
Company in accordance with their respective terms, except as such enforceability
may be limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(b) The Subsidiary Guaranty and the Security Agreement have been duly
authorized by all necessary corporate action on the part of each Guarantor, and
upon execution and delivery thereof the Subsidiary Guaranty and the Security
Agreement will constitute, legal, valid and binding obligations of each
Guarantor enforceable against each Guarantor in accordance with their respective
terms, except as such enforceability may be limited by (i) applicable
bankruptcy,
<PAGE> 10
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insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
5.3. Disclosure.
You have had the opportunity to conduct a review of the Company's records
and meet with representatives of the Company. The Company has responded in all
material respects to all requests for information and has accurately answered
all questions concerning the assets, properties, liabilities, financial
condition, business or prospects of the Company and its Subsidiaries. All
forecasts and projections supplied on behalf of the Company were prepared in
good faith, adequately disclosed all assumptions relevant thereto and are
reasonable estimates (at the date hereof) of the prospects for the business of
the Company and its Subsidiaries. This Agreement, the documents, certificates or
other writings delivered to you by or on behalf of the Company in connection
with the transactions contemplated hereby and the financial statements delivered
to you, taken as a whole, do not contain any untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made. Since the
date of the last financial statements delivered to you, there has been no change
in the financial condition, operations, business, properties or prospects of the
Company or any Subsidiary except changes that individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect. There is no
fact known to the Company that could reasonably be expected to have a Material
Adverse Effect that has not been set forth herein or in the other documents,
certificates and other writings delivered to you by or on behalf of the Company
specifically for use in connection with the transactions contemplated hereby.
5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates.
(a) SCHEDULE 5.4 contains (except as noted therein) complete and correct
list of the Company's Subsidiaries as of the acquisition referenced on SCHEDULE
5.14, showing, as to each Subsidiary, the correct name thereof, the jurisdiction
of its organization, and the percentage of shares of each class of its capital
stock or similar equity interests outstanding owned by the Company and each
other Subsidiary.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in SCHEDULE 5.4 as being owned by the Company
and its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Company or another Subsidiary free and clear of any Lien
(except as otherwise disclosed in SCHEDULE 5.4).
(c) Each Subsidiary identified in SCHEDULE 5.4 is a corporation or other
legal entity duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each
<PAGE> 11
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jurisdiction in which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good standing
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Each such Subsidiary has the corporate or other power
and authority to own or hold under lease the properties it purports to own or
hold under lease and to transact the business it transacts and proposes to
transact and each Subsidiary which is a party to the Subsidiary Guaranty and the
Security Agreement has the power and authority to execute and deliver the
Subsidiary Guaranty and the Security Agreement and to perform the provisions
thereof.
(d) No Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement (other than this Agreement, the agreements listed
on SCHEDULE 5.4 and customary limitations imposed by corporate law statutes)
restricting the ability of such Subsidiary to pay dividends out of profits or
make any other similar distributions of profits to the Company or any of its
Subsidiaries that owns outstanding shares of capital stock or similar equity
interests of such Subsidiary.
5.5. Property.
There are no outstanding work orders requiring, in aggregate, expenditures
exceeding Cdn. $50,000 relating to the properties of the Company or any
Subsidiary from or required by any police or fire department, sanitation,
health, environmental or factory authorities or from any other federal,
provincial or municipal authority, nor are any matters relating to the
properties of the Company or any Subsidiary under discussion with any such
departments or authorities relating to work orders which could reasonably be
expected to result in expenditures exceeding Cdn. $50,000. As at the date
hereof, no part of the properties of the Company or any Subsidiary or the
buildings and fixtures located thereon has been taken or expropriated by any
federal, provincial, municipal or other competent authority nor has any written
notice or proceeding in respect thereof been delivered to the Company or any of
its Subsidiaries nor is the Company aware of any intent or proposal to give any
such notice or commence any proceedings. Except for Permitted Liens or as
specified in SCHEDULE 5.5, to the knowledge of the Company, the buildings and
fixtures are located entirely within the properties of the Company or any
Subsidiary in conformity with applicable set-back and coverage requirements and
no dwellings of abutting owners encroach upon the properties.
5.6. Compliance with Laws, Other Instruments, etc.
(a) The execution, delivery and performance by the Company of this
Agreement and the Note will not (i) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of the Company or any Subsidiary under, any indenture, mortgage,
deed or trust, loan purchase or credit agreement, lease, corporate charter or
by-laws, or any other agreement or instrument to which the Company or any
Subsidiary is bound or by which the Company or any Subsidiary or any of their
respective properties may be bound or
<PAGE> 12
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affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to the Company or any Subsidiary
or (iii) violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to the Company or any Subsidiary.
(b) The execution, delivery and performance by the Guarantors of the
Subsidiary Guaranty and the Security Agreement will not (i) contravene, result
in any breach of, or constitute a default under, or result in the creation of
any Lien in respect of any property of any of the Guarantors under, any
indenture, mortgage, deed or trust, loan purchase or credit agreement, lease,
corporate charter or by-laws, or any other agreement or instrument to which any
of the Guarantors is bound or by which any of the Guarantors or any of their
respective properties may be bound or affected, (ii) conflict with or result in
a breach of any of the terms, conditions or provisions of any order, judgment,
decree, or ruling of any court, arbitrator or Governmental Authority applicable
to any of the Guarantors or (iii) violate any provision of any statute or other
rule or regulation of any Governmental Authority applicable to any of the
Guarantors.
5.7. Governmental Authorizations, etc.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Company or any Guarantor of any Note
Document.
5.8. Litigation; Observance of Agreements, Statutes and Orders.
(a) Except as disclosed in SCHEDULE 5.8, there are no actions, suits or
proceedings pending or, to the knowledge of the Company, threatened against or
affecting the Company or any Subsidiary or any property of the Company or any
Subsidiary in any court or before any arbitrator of any kind or before or by any
Governmental Authority that, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under any term of
any agreement or instrument to which it is a party or by which it is bound, or
any order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance, rule or
regulation (including without limitation Environmental Laws) of any Governmental
Authority, which default or violation, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
5.9. Taxes.
The Company and its Subsidiaries have filed all tax returns that are
required to have been filed in any jurisdiction, and have paid all taxes shown
to be due and payable on such returns and all
<PAGE> 13
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other taxes and assessments levied upon them or their properties, assets, income
or franchises, to the extent such taxes and assessments have become due and
payable and before they have become delinquent, except for any taxes and
assessments (i) the amount of which is not individually or in the aggregate
Material or (ii) the amount, applicability or validity of which is currently
being contested in good faith by appropriate proceedings and with respect to
which the Company or a Subsidiary, as the case may be, has established adequate
reserves in accordance with GAAP. The Company knows of no basis for any other
tax or assessment that could reasonably be expected to have a Material Adverse
Effect. The charges, accruals and reserves on the books of the Company and its
Subsidiaries in respect of Federal, state, province, foreign or other taxes for
all fiscal periods are adequate.
5.10. Title to Property; Leases.
The Company and its Subsidiaries have good and sufficient title to their
respective properties that individually or in the aggregate are Material, in
each case free and clear of Liens prohibited by this Agreement. All leases that
individually or in the aggregate are Material, are valid and subsisting and are
in full force and effect in all material respects and all material amounts owing
thereunder have been paid by the Company or its Subsidiary.
5.11. Licenses, Permits, etc.
(a) The Company and its Subsidiaries own or possess all licenses, permits,
franchises, authorizations, patents, copyrights, service marks, trademarks and
trade names, or rights thereto, that individually or in the aggregate are
Material, without known conflict with the rights of others;
(b) to the best knowledge of the Company, no product of the Company
infringes in any material respect any license, permit, franchise, authorization,
patent, copyright, service mark, trademark, trade name or other right owned by
any other Person; and
(c) to the best knowledge of the Company, there is no Material violation
by any Person of any right of the Company or any of its Subsidiaries with
respect to any patent, copyright, service mark, trademark, trade name or other
right owned or used by the Company or any of its Subsidiaries.
5.12. Pension Plans.
Neither the Company nor any of its Subsidiaries has ever maintained or
contributed to any pension plans or beneficial plans including, without
limitation, (i) a multi-employer plan as defined under Section 3(37) of ERISA;
(ii) a defined benefit plan as defined under Section 3(35) of ERISA; or (iii) a
plan to which Section 302 of ERISA or Section 417 of the Internal Revenue Code
of the United States of America applies.
<PAGE> 14
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5.13. Private Offering by the Company.
Neither the Company nor anyone acting on its behalf has offered the Notes
or any similar securities for sale to, or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect thereof with, any
person other than you and not more than two other Institutional Investors, each
of which has been offered the Notes at a private sale for investment. Neither
the Company nor anyone acting on its behalf has taken, or will take, any action
that would subject the issuance or sale of the Notes to the registration
requirements under applicable securities laws.
5.14. Use of Proceeds; Margin Regulations.
The Company will apply the proceeds of the sale of the Notes solely as set
forth in SCHEDULE 5.14 and for no other purpose. No part of the proceeds from
the sale of the Notes hereunder will be used, directly or indirectly, for the
purpose of buying or carrying any margin stock within the meaning of Regulation
G of the Board of Governors of the Federal Reserve System (12 CFR 207), or for
the purpose of buying or carrying or trading in any securities under such
circumstances as to involve the Company in a violation of Regulation X of said
Board (12 CFR 224) or to involve any broker or dealer in a violation of
Regulation T of said Board (12 CFR 220). Margin stock does not constitute more
than 5% of the value of the consolidated assets of the Company and its
Subsidiaries and the Company does not have any present intention that margin
stock will constitute more than 5% of the value of such assets. As used in this
Section, the terms "margin stock" and "purpose of buying or carrying" shall have
the meanings assigned to them in said Regulation G.
5.15. Existing Indebtedness, Future Liens.
(a) Except as described therein, SCHEDULE 5.15 sets forth a complete and
correct list of all outstanding Indebtedness of the Company and its Subsidiaries
as of the date hereof. Neither the Company nor any Subsidiary is in default and
no waiver of default is currently in effect, in the payment of any principal or
interest on any Indebtedness of the Company or such Subsidiary and no event or
condition exists with respect to any Indebtedness of the Company or any
Subsidiary that would permit (or that with notice or other lapse of time, or
both, would permit) one or more Persons to cause such Indebtedness to become due
and payable before its stated maturity or before its regularly scheduled dates
of payment.
(b) Except as disclosed in SCHEDULE 5.15, neither the Company nor any
Subsidiary has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether now owned
or hereafter acquired, to be subject to a Lien other than Permitted Liens.
<PAGE> 15
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5.16. Foreign Assets Control Regulations, etc.
Neither the sale of the Notes by the Company hereunder nor its use of the
proceeds thereof will violate the Trading with the Enemy Act, as amended, or any
of the foreign asset control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.17. Status under Certain Statutes.
Neither the Company nor any Subsidiary is subject to regulation under the
Investment Company Act of 1940, as amended, the Public Utility Holding Company
Act of 1935, as amended, the Interstate Commerce Act, as amended, or the Federal
Power Act, as amended.
5.18. Environmental Matters.
Neither the Company nor any Subsidiary has knowledge of any claim or has
received any notice of any claim, and no proceeding has been instituted raising
any claim against the Company or any of its Subsidiaries or any of their
respective real properties now or formerly owned, leased or operated by any of
them or other assets, alleging any damage to the environment or violation of the
Environmental Laws, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect. Except as otherwise disclosed
to you in writing,
(a) neither the Company nor any Subsidiary has knowledge of any facts
which would give rise to any claim, public or private, of violation of
Environmental Laws or damage to the environment emanating from, occurring on or
in any way related to real properties now or formerly owned, leased or operated
by any of them or to other assets or their use, except, in each case, such as
could not reasonably be expected to result in a Material Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has stored any
Hazardous Materials on real properties now or formerly owned, leased or operated
by any of them and has not disposed of any Hazardous Materials in a manner
contrary to any Environmental Laws in each case in any manner that could
reasonably be expected to result in a Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased or operated by
the Company or any of its Subsidiaries are in compliance with applicable
Environmental Laws, except where failure to comply could not reasonably be
expected to result in a Material Adverse Effect.
5.19. Material Agreements.
Neither the Company nor any of its Subsidiaries is a party or otherwise
subject to or bound or affected by any agreement or instrument which is material
to the business, operations, results of
<PAGE> 16
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operations, assets, liabilities or financial condition of the Company or any of
its Subsidiaries taken as a whole ("Material Agreement") except as set out in
SCHEDULE 5.19. Except as set forth in SCHEDULE 5.19, all such Material
Agreements are in full force and effect, unamended, and none of the Company or
any such Subsidiary, or to the best of the Company's knowledge, any other party
to any Material Agreement is in material default with respect thereto.
5.20. Books and Records.
All books and records of the Company and its Subsidiaries have been fully,
properly and accurately kept and completed in accordance with GAAP and there are
no material inaccuracies or discrepancies of any kind contained or reflected
therein. The Company's and its Subsidiaries' records, systems, controls, data or
information are not recorded, stored, maintained, operated or otherwise wholly
or partly dependent upon or held by any means (including any electronic,
mechanical or photographic process, whether computerized or not) which
(including all means of access thereto and therefrom) are not under the direct
control of the Company in all material respects.
6. REPRESENTATIONS OF THE PURCHASER.
6.1. Purchase for Investment.
You represent that you are purchasing the Notes for your own account and
not with a view to the distribution thereof. You understand that the Notes have
not been registered under any securities acts and resale may be restricted by
applicable securities laws.
6.2. Source of Funds.
You represent that the source of funds to be used by you to pay the
purchase price of the Notes to be purchased by you hereunder does not include
assets of any employee benefit plan, other than a plan exempt from the coverage
of ERISA. As used in this Section 6.2, the terms "employee benefit plan", shall
have the respective meanings assigned to such terms in Section 3 of ERISA.
7. INFORMATION AS TO COMPANY.
7.1. Financial and Business Information.
The Company shall deliver to each holder of Notes that is an Institutional
Investor:
(a) QUARTERLY STATEMENTS -- within 60 days after the end of each quarterly
fiscal period in each fiscal year of the Company (other than the last quarterly
fiscal period of each such fiscal year), duplicate copies of,
<PAGE> 17
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(i) a consolidated balance sheet of the Company and its Consolidated
Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in shareholders' equity
and cash flows of the Company and its Consolidated Subsidiaries, for such
quarter and (in the case of the second and third quarters) for the portion of
the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments;
(b) ANNUAL STATEMENTS -- within 120 days after the end of each fiscal
year of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company and its Consolidated
Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in shareholder' equity
and cash flows of the Company and its Consolidated Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied
(A) by an opinion thereon of independent certified public accountants of
recognized national standing, which opinion shall state that such financial
statements present fairly, in all material respects, the financial position of
the companies being reported upon and their results of operations and cash flows
and have been prepared in conformity with GAAP, and that the examination of such
accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the circumstances, and
(B) a certificate of such accountants stating that they have reviewed this
Agreement and stating further whether, in making their audit, they have become
aware of any condition or event that then constitutes a Default or an Event of
Default, and, if they are aware that any such condition or event then exists,
specifying the nature and period of the existence thereof (it being understood
that such accountants shall not be liable, directly or indirectly, for any
failure to obtain knowledge of any Default or Event of Default unless such
accountants should have obtained knowledge thereof
<PAGE> 18
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in making an audit in accordance with generally accepted auditing standards or
did not make such an audit);
(c) FINANCIAL PROJECTIONS -- promptly upon their becoming available and in
any event 30 days prior to the end of each fiscal year of the Company,
consolidated financial projections, including the balance sheet, income
statement and cash flow statements for each of the next 12 months of the next
fiscal year together with the detailed budget for such fiscal year providing
supplementary detailed schedules as necessary and required by the Required
Holders;
(d) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- promptly, and in any event
within five days after a Responsible Officer becoming aware of the existence of
any Default or Event of Default or that any Person has given any notice or taken
any action with respect to a claimed default hereunder or that any Person has
given any notice or taken any action with respect to a claimed default of the
type referred to in SECTION 11(h), a written notice specifying the nature and
period of existence thereof and what action the Company is taking or proposes to
take with respect thereto;
(e) ERISA MATTERS -- promptly, and in any event within ten days after a
Responsible Officer becoming aware of any of the following, a written notice
setting forth the nature thereof and the action, if any, that the Company or an
ERISA Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as defined in section
4043(b) of ERISA and the regulations thereunder, for which notice thereof has
not been waived pursuant to such regulations as in effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the threatening by
the PBGC of the institution of, proceedings under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer
Plan that such action has been taken by the PBGC with respect to such
Multiemployer Plan; or
(iii) any event, transaction or condition that could result in the
incurrence of any liability by the Company or any ERISA Affiliate pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans, or in the imposition of any Lien on any of
the rights, properties or assets of the Company or any ERISA Affiliate pursuant
to Title I or IV of ERISA or such penalty or excise tax provisions, if such
liability or Lien, taken together with any other such liabilities or Liens then
existing, could reasonably be expected to have a Material Adverse Effect;
(f) ENVIRONMENTAL REPORTING -- promptly, and in any event within 10 days
of each occurrence, (i) a written notice of any proceeding or order before any
Governmental Authority requiring the Company or its Subsidiaries to comply with
or take action under any Environmental
<PAGE> 19
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Laws where such compliance or action requires expenditures in the amount of Cdn.
$500,000 or more, the violation thereof involves the possibility of the
imposition of a fine or fines aggregating Cdn. $500,000 or more, the violation
thereof involves the possibility of the imposition of a fine or fines
aggregating Cdn. $500,000 or more or the closing of any property owned or leased
by the Company or any Subsidiary for a period in excess of 48 hours where such
closure would have a Material Adverse Effect; and (ii) a written notice of any
Material occurrence relating to environmental matters that does not require
notification under (i) above, together with each delivery of financial
statements pursuant to SECTION 7.1(a) and (b). Such Material occurrences shall
include occurrences where any of the Company or its Subsidiaries (iii) receives
a written notice or claim to the effect that the Company or any of its
Subsidiaries is liable to any Person as a result of the release or threatened
release of any Hazardous Material into the environment in, on, under or adjacent
to any real estate owned or leased by the Company or any Subsidiary; (iv)
receives any written notice that the Company or any of its Subsidiaries is
subject to investigation by any Governmental Authority evaluating whether any
remedial action is needed to respond to the release or threatened release of any
Hazardous Material into the environment in, on, under or adjacent to any real
estate owned or leased by the Company or any Subsidiary; (v) receives any
written notice that all or any portion of the properties owned or leased by the
Company or any Subsidiary is subject to an order or a security interest under or
pursuant to any Environmental Law; (vi) receives any written notice of a
condition with respect to which might reasonably result in a notice of violation
by Company or any Subsidiary of any Environmental Law; (vii) receives any
written notice of the commencement of any judicial or administrative proceeding
alleging a violation by the Company or any Subsidiary of any Environmental Law
with respect to any property owned or leased by the Company or any Subsidiary;
or (viii) undertakes any activities as a result of new or proposed changes to
any existing Environmental Law that could have a Material Adverse Effect on the
condition of Company or any of its Subsidiaries.
(g) ADDITIONAL REPORTING REQUIREMENTS -- promptly provide notice in
writing of (i) any default, or event, condition or occurrence which with notice
or lapse of time, or both, would constitute a default under any agreement in
respect of Indebtedness to which the Company or any of its Subsidiaries is a
party and under which the Company or any such Subsidiary owes (contingently or
otherwise) at least Cdn. $500,000 (or the equivalent amount in any other
currency); (ii) from time to time upon request of the Required Holders, evidence
of the maintenance of all insurance required to be maintained by SECTION 9.2,
including such originals or copies as the Required Holders may request of
policies, certificates of insurance, riders and endorsements relating to such
insurance and proof of premium payments; and (iii) promptly upon the issuance
thereof, copies of all notices, reports, press releases, circulars, offering
documents and other documents filed with, or delivered to, the British Columbia
Securities Commission or to a similar Governmental Authority in any other
jurisdiction with respect to the Company or any Subsidiary.
(h) NOTICES FROM GOVERNMENTAL AUTHORITY -- promptly, and in any event
within 30 days of receipt thereof, copies of any notice to the Company or any
Subsidiary from any Federal or state
<PAGE> 20
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Governmental Authority relating to any order, ruling, statute or other law or
regulation that could reasonably be expected to have a Material Adverse Effect;
and
(i) REQUESTED INFORMATION -- with reasonable promptness, such other data
and information relating to the business, operations, affairs, financial
condition, assets or properties of the Company or any of its Subsidiaries or
relating to the ability of the Company to perform its obligations hereunder and
under the Notes as from time to time may be reasonably requested by any such
holder of Notes.
7.2. Officer's Certificate.
Each set of financial statements delivered to a holder of Notes pursuant
to SECTION 7.1(a) or SECTION 7.1(b) hereof shall be accompanied by a certificate
of a Senior Financial Officer setting forth:
(a) COVENANT COMPLIANCE -- the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of SECTION 9.6 through SECTION 9.10 hereof,
inclusive, during the quarterly or annual period covered by the statements then
being furnished (including with respect to each such Section, where applicable,
the calculations of the maximum or minimum amount, ratio or percentage, as the
case may be, permissible under the terms of such Sections, and the calculation
of the amount, ratio or percentage then in existence); and
(b) EVENT OF DEFAULT -- a statement that such officer has reviewed the
relevant terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Company and its
Subsidiaries from the beginning of the quarterly or annual period covered by the
statements then being furnished to the date of the certificate and that such
review shall not have disclosed the existence during such period of any
condition or event that constitutes a Default or an Event of Default or, if any
such condition or event existed or exists (including, without limitation, any
such event or condition resulting from the failure of the Company or any
Subsidiary to comply with any Environmental Law), specifying the nature and
period of existence thereof and what action the Company shall have taken or
proposes to take with respect thereto.
7.3. Inspection.
The Company shall permit the representatives of each holder of Notes that
is an Institutional Investor:
(a) NO DEFAULT -- if no Default or Event of Default then exists, at the
expense of such holder and upon reasonable prior notice to the Company, to visit
the principal executive office of
<PAGE> 21
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the Company, to discuss the affairs, finances and accounts of the Company and
its Subsidiaries with the Company's officers, and with the consent of the
Company, which consent will not be unreasonably withheld) its independent public
accountants, and (with the consent of the Company, which consent will not be
unreasonably withheld) to visit the other offices and properties of the Company
and each Subsidiary, all at such reasonable times and as often as may be
reasonably requested in writing; and
(b) DEFAULT -- if a Default or Event of Default then exits, at the expense
of the Company to visit and inspect any of the offices or properties of the
Company or any Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
officers and independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries), all at such times and as often as may be
requested.
8. PAYMENT OF THE NOTES.
8.1. Required Repayments.
On April 17, 2007 the Company will repay the principal amount of the Notes
outstanding at par plus the accrued interest thereon.
8.2. Optional Prepayments with Make-Whole Amount.
The Company may, at its opinion, upon notice as provided below, prepay at
any time all, or from time to time any part of, the Notes, in a minimum
principal amount of $500,000 or a higher integral multiple of $100,000 at 100%
of the principal amount so prepaid, plus the Make-Whole Amount determined for
the prepayment date with respect to such principal amount and accrued interest
on the amount being prepaid. The Company will give each holder of Notes written
notice of each optional prepayment under this SECTION 8.2 not less than 30 days
and not more than 60 days prior to the date fixed for such prepayment. Each such
notice shall specify such date, the aggregate principal amount of the Notes to
be prepaid on such date, the principal amount of each Note held by such holder
to be prepaid (determined in accordance with SECTION 8.3), and the interest to
be paid on the prepayment date with respect to such principal amount being
repaid, and shall be accompanied by a certificate of a Senior Financial Officer
as to the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation. Two Business Days prior to such
prepayment, the Company shall deliver to each holder of Notes a certificate of a
Senior Financial Officer specifying the calculation of such Make-Whole Amount as
of the specified prepayment date.
<PAGE> 22
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8.3. Allocation of Partial Prepayments.
In the case of each partial prepayment of the Notes, the principal amount
of the Notes to be prepaid shall be allocated among all of the Notes at the time
outstanding in proportion, as nearly as practicable, to the respective unpaid
principal amounts thereof not theretofore called for prepayment.
8.4. Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to this SECTION 8, the
principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and
Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and cancelled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.
8.5. Purchase of Notes.
The Company will not and will not permit any Affiliate to purchase,
redeem, prepay or otherwise acquire, directly or indirectly, any of the
outstanding Notes except upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes. The Company will
promptly cancel all Notes acquired by it or any Affiliate pursuant to any
payment, prepayment or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for any such
Notes.
8.6. Make-Whole Amount.
The term "Make-Whole Amount" means, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Remaining Scheduled
Payments with respect to the Called Principal of such Note over the amount of
such Called Principal, PROVIDED that the Make-Whole Amount may in no event be
less than zero. For the purposes of determining the Make-Whole Amount, the
following terms have the following meanings:
"Called Principal" means, with respect to any Note, the principal of such
Note that is to be prepaid pursuant to SECTION 8.2 or has become or is declared
to be immediately due and payable pursuant to SECTION 12.1, as the context
requires.
"Discounted Value" means, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments with
respect to such Called Principal
<PAGE> 23
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from their respective scheduled due dates to the Settlement Date with respect to
such Called Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which interest on
the Notes is payable) equal to the Reinvestment Yield with respect to such
Called Principal.
"Reinvestment Yield" means, with respect to the Called Principal of any
Note, the yield to maturity implied by (i) the yields reported, as of 10:00 A.M.
(New York City time) on the second Business Day preceding the Settlement Date
with respect to such Called Principal, on the display designated as "Page 678"
on the Telerate Access Service (or such other display as may replace Page 678 on
Telerate Access Service) for actively traded U.S. Treasury securities having a
maturity equal to the Remaining Average Life of such Called Principal as of such
Settlement Date, or (ii) if such yields are not reported as of such time or the
yields reported as of such time are not ascertainable, the Treasury Constant
Maturity Series Yields reported, for the latest day for which such yields have
been so reported as of the second Business Day preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve Statistical Release
H.15 (519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. Such implied yield
will be determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between (1) the actively traded U.S.
Treasury security with the duration closest to and greater than the Remaining
Average Life and (2) the actively traded U.S. Treasury security with the
duration closest to and less than the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called Principal, the
number of years (calculated to the nearest one-twelfth year) obtained by
dividing (i) such Called Principal into (ii) the sum of the products obtained by
multiplying (a) the principal component of each Remaining Scheduled Payment with
respect to such Called Principal by (b) the number of years (calculated to the
nearest one-twelfth year) that will elapse between the Settlement Date with
respect to such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the Called Principal
of any Note, all payments of such Called Principal and interest thereon that
would be due after the Settlement Date with respect to such Called Principal if
no payment of such Called Principal were made prior to its scheduled due date,
PROVIDED that if such Settlement Date is not a date on which interest payments
are due to be made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of interest
accrued to such Settlement Date and required to be paid on such Settlement Date
pursuant to SECTION 8.2 or 12.1.
"Settlement Date" means, with respect to the Called Principal of any Note,
the date on which such Called Principal is to be prepaid pursuant to SECTION 8.2
or has become or is declared to be immediately due and payable pursuant to
SECTION 12.1, as the context requires.
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9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
9.1. Compliance with Law.
The Company will and will cause each of its Subsidiaries to comply with
all laws, ordinances or governmental rules or regulations to which each of them
is subject, including, without limitation, Environmental Laws, and will obtain
and maintain in effect all licenses, certificates, permits, franchises and other
governmental authorizations necessary to the ownership of their respective
properties or to the conduct of their respective businesses, in each case to the
extent necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect
such licenses, certificates, permits, franchises and other governmental
authorizations could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
9.2. Insurance.
The Company will and will cause each of its Subsidiaries to maintain, with
financially sound and reputable insurers, insurance with respect to their
respective properties and businesses against such casualties and contingencies,
of such types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are maintained with
respect thereto) as is customary in the case of entities of established
reputations engaged in the same or a similar business and similarly situated.
9.3. Maintenance of Properties.
The Company will and will cause each of its Subsidiaries to maintain and
keep, or cause to be maintained and kept, their respective properties in good
repair, working order and condition (other than ordinary wear and tear), so that
the business carried on in connection therewith may be properly conducted at all
times, PROVIDED that this Section shall not prevent the Company or any
Subsidiary from discontinuing the operation and the maintenance of any of its
properties if such discontinuance is desirable in the conduct of its business
and the Company has concluded that such discontinuance could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
9.4. Payment of Taxes and Claims.
The Company will and will cause each of its Subsidiaries to file all tax
returns required to be filed in any jurisdiction and to pay and discharge all
taxes shown to be due and payable on such
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returns and all other taxes, assessments, governmental charges, or levies
imposed on them or any of their properties, assets, income or franchises, to the
extent such taxes and assessments have become due and payable and before they
have become delinquent and all claims for which sums have become due and payable
that have or might become a Lien on properties or assets of the Company or any
Subsidiary, PROVIDED that neither the Company nor any Subsidiary need pay any
such tax or assessment or claims if (i) the amount, applicability or validity
thereof is contested by the Company or such Subsidiary on a timely basis in good
faith and in appropriate proceedings, and the Company or a Subsidiary has
established adequate reserves therefor in accordance with GAAP on the books of
the Company or such Subsidiary or (ii) the nonpayment of all such taxes and
assessments in the aggregate could not reasonably be expected to have a Material
Adverse Effect.
9.5. Corporate Existence, etc.
The Company will at all times preserve and keep in full force and effect
its corporate existence. Subject to SECTION 10.2, the Company will at all times
preserve and keep in full force and effect the corporate existence of each of
its Subsidiaries (unless merged into the Company or a Subsidiary) and all rights
and franchises of the Company and its Subsidiaries unless, in the good faith
judgment of the Company, the termination of or failure to preserve and keep in
full force and effect such corporate existence, right or franchise could not,
individually or in the aggregate, have a Material Adverse Effect.
<PAGE> 26
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9.6. Maintenance of Net Worth.
Maintain, on the last day of each fiscal year, calculated as at such day,
Consolidated Net Worth of the Company and its Consolidated Subsidiaries of at
least an amount equal to Cdn. $11,000,000 determined in accordance with GAAP.
9.7. Maintenance of Consolidated Indebtedness to Net Worth Ratio.
Maintain, as at the last day of each fiscal quarter, a ratio, calculated
as at such day, of Consolidated Indebtedness to Consolidated Net Worth of the
Company and its Consolidated Subsidiaries of not more than 0.80:1 for each
fiscal quarter.
9.8. Maintenance of Interest Coverage Ratio.
Maintain, as at the end of each fiscal quarter, a minimum Interest
Coverage Ratio of 2.70:1.
9.9. Maintenance of Leverage Ratio.
Maintain, as at the end of each fiscal quarter, a Leverage Ratio of not
more than 5.50:1.
9.10. Further Assurances.
At its cost and expense, upon request of the Required Holders, duly
execute and deliver or cause to be duly executed and delivered to the Purchasers
such further instruments and do and cause to be done such further acts as may be
necessary or proper in the reasonable opinion of the Required Holders to carry
out more effectually the provisions and purposes of the Note Documents.
10. NEGATIVE COVENANTS.
The Company covenants that, without the consent of the Required Holders,
so long as any of the Notes are outstanding:
10.1. Transactions with Affiliates.
The Company will not and will not permit any Subsidiary to enter into
directly or indirectly any transaction or Material group of related transactions
(including without limitation the purchase, lease, sale or exchange of
properties of any kind or the rendering of any service) with any Affiliate
(other than the Company or another Subsidiary), except in the ordinary course
and pursuant to the reasonable requirements of the Company's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Company or such Subsidiary than would be obtainable in a comparable
arm's-length transaction with a Person not an Affiliate.
<PAGE> 27
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10.2. Merger, Consolidation, etc.
The Company shall not consolidate with or merge with any other
corporation or convey, transfer or lease substantially all of its assets in a
single transaction or series of transactions to any Person unless:
(a) the successor formed by such consolidation or the survivor of such
merger or the Person that acquires by conveyance, transfer or lease
substantially all of the assets of the Company as an entirety, as the case may
be, shall be a solvent corporation organized and existing under the laws of
Canada, the United States or any Province or State thereof (including the
District of Columbia), and, if the Company is not such corporation, (i) such
corporation shall have executed and delivered to each holder of any Notes its
assumption of the due and punctual performance and observance of each covenant
and condition of this Agreement and the Notes and (ii) shall have caused to be
delivered to each holder of any Notes an opinion of nationally recognized
independent counsel, or other independent counsel reasonably satisfactory to the
Required Holders, to the effect that all agreements or instruments effecting
such assumption are enforceable in accordance with their terms and comply with
the terms hereof;
(b) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing. No such conveyance,
transfer or lease of substantially all of the assets of the Company shall have
the effect of releasing the Company or any successor corporation that shall
theretofore have become such in the manner prescribed in this SECTION 10.2 from
its liability under this Agreement or the Notes.
10.3. Indebtedness.
Create, incur, assume or suffer to exist or permit any of its
Subsidiaries to create, incur, assume or suffer to exist any Indebtedness other
than (i) Indebtedness to the Purchasers hereunder; (ii) the Permitted Senior
Indebtedness; (iii) Indebtedness incurred in respect of a Purchase Money
Mortgage up to an aggregate outstanding amount, at any time, of Cdn. $1,000,000
(or the equivalent amount in any other currency); (iv) Indebtedness incurred
with respect to performance bonds posted in the ordinary course of business and
(v) Indebtedness listed on SCHEDULE 5.15.
10.4. Liens.
Create, incur, assume or suffer to exist, or permit any of its
Subsidiaries to create, incur, assume or suffer to exist, any Liens on any of
their respective assets, other than Permitted Liens.
10.5. Disposal of Assets Generally.
<PAGE> 28
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Sell, exchange, lease, release or abandon or otherwise dispose of, or
permit any of its Subsidiaries to sell, exchange, lease, release or abandon or
otherwise dispose of any assets to any Person other than (i) any bona fide
sales, exchanges, leases, abandonments or other dispositions in the ordinary
course of business, for the purpose of carrying on the business of the Company;
(ii) property or assets which have no material economic value in the business of
the Company or are obsolete; and (iii) assets having a fair market value of not
greater than Cdn. $100,000 in the aggregate in any fiscal year.
10.6. Change in Business.
Not, and not permit any of its Subsidiaries to engage in any line of
business other than the businesses engaged in by the Company and its
Subsidiaries as of the date hereof and business reasonably related thereto.
10.7. Distributions.
Declare, make or pay, or permit any of its Subsidiaries to declare,
make or pay, any Distributions, except (i) directors' fee in an aggregate amount
not to exceed $30,000, (ii) performance bonuses paid by the Company or any of
its Subsidiaries in the ordinary course of business as part of remuneration for
services rendered at fair market value; (iii) Distributions by a Guarantor to
the Company or by the Company to a Guarantor; (iv) payments made under
management or employment agreements entered into by the Company or any of its
Subsidiaries with senior employees in the ordinary course of business; (v) loans
made to employees; (vi) non-cash dividend payments to Onex Corporation on the
preferred shares of the Company held by Onex Corporation made by way of the
issuance of additional preferred shares bearing the same characteristics as such
preferred shares held by Onex Corporation and (vii) payments on the Permitted
Senior Indebtedness.
10.8. Investments.
Make any loans, incur any obligations (contingent or otherwise), or
make any investments in any Person or permit any of its Subsidiaries to do the
same, except for (i) foreign currency hedges, interest rate swaps or similar
interest rate and currency hedging obligations or agreements; (ii) indebtedness
and obligations incurred in the ordinary course of business and Indebtedness
permitted under SECTION 10.3; (iii) Permitted Marketable Securities; (iv) loans
permitted under SECTION 10.1; or (v) inter-company loans to or investments in
Subsidiaries.
10.9. Lease-Backs.
Enter into or permit any of its Subsidiaries to enter into any
arrangements, directly or indirectly, with any Person, whereby the Company or
such Subsidiary, as the case may be, shall sell or transfer
<PAGE> 29
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any property, whether now owned or hereafter acquired, used or useful in the
business, in connection with the rental or lease of the property so sold or
transferred or of other property for substantially the same purpose or purposes
as the property so sold or transferred.
10.10. Subsidiaries.
(i) Incorporate or acquire, after the date hereof, any Subsidiaries or
commence to carry on business, otherwise than through the Company and its
Subsidiaries existing as of the date hereof, except for the incorporation or
acquisition of Subsidiaries in North America or such other jurisdictions as the
Required Holders may agree to, acting reasonably, where in each case, such
Subsidiary has executed and delivered a guarantee of all of the obligations of
the Company under this Agreement and/or the other Note Documents and accompanied
by opinions satisfactory to the Required Holders, in each case, acting
reasonably, prior to or contemporaneously with such Subsidiary having net asset
values or revenues, in either case, greater than Cdn. $50,000; or (ii) permit
any Subsidiary to exist after the date hereof having net asset values or
revenues, in either case, greater than Cdn. $50,000 unless such Subsidiary is a
Guarantor.
10.11. Maintenance and Ownership of Subsidiaries.
Except as permitted under SECTION 10.5, sell or otherwise dispose of
any shares of any of its Subsidiaries or permit any of such Subsidiaries to
issue, sell or otherwise dispose of the shares of any other Subsidiary, except
to the Company or a Guarantor.
10.12. Compromise of Accounts.
Compromise of Accounts. Compromise or adjust or permit any of its
Subsidiaries to compromise or adjust any material accounts receivable of the
Company or such Subsidiary (or extend the time for payment thereof) or grant any
discounts, allowances or credits thereon, in each case other than in the
ordinary course of business.
11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or Make-Whole
Amount, if any, on any Note when the same becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any Note for
more than five Business Days after the same becomes due and payable; or
<PAGE> 30
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(c) the Company defaults in the performance of or compliance with any
term contained in SECTION 5.14, SECTIONS 9.6 through 9.9, 10.2, 10.5, 10.7 or
10.10; or
(d) the Company defaults in the performance of or compliance with any
term contained herein (other than those referred to in paragraphs (a), (b) and
(c) of this SECTION 11) and such default is not remedied within 30 days after
the earlier of (i) a Responsible Officer obtaining actual knowledge of such
default and (ii) the Company receiving written notice of such default from any
holder of a Note (any such written notice to be identified as a "notice of
default" and to refer specifically to this paragraph (d) of SECTION 11); or
(e) the Company fails to deliver the duly executed Security Agreement
substantially in the form of EXHIBIT 11(e)-1 within 5 Business Days of the
Closing, together with (i) evidence, reasonably satisfactory to you, that all
instruments and documents (including financing statements), necessary or
desirable to perfect and protect your Lien on the collateral granted under the
Security Agreement have been signed and delivered in appropriate form for filing
or recording, and (ii) an opinion of counsel substantially in the form of
EXHIBIT 11(e)-2; or
(f) any representation or warranty made in writing by or on behalf of
the Company or by any officer of the Company in this Agreement or in any writing
furnished in connection with the transactions contemplated hereby proves to have
been false or incorrect in any material respect on the date as of which made; or
(g) (i) the Company or any Subsidiary is in default (as principal or as
guarantor or other surety) in the payment of any principal of or premium or
make-whole amount or interest on any Indebtedness that is outstanding in an
aggregate principal amount of at least Cdn. $1,000,000 beyond any period of
grace provided with respect thereto, or (ii) the Company or any Subsidiary is in
default in the performance of or compliance with any term of any evidence of any
Indebtedness in an aggregate outstanding principal amount of at least Cdn.
$1,000,000 or of any mortgage, indenture or other agreement relating thereto or
any other condition exists, and as a consequence of such default or condition
such Indebtedness has become, or has been declared (or one or more Persons are
entitled to declare such Indebtedness to be), due and payable before its stated
maturity or before its regularly scheduled dates of payment, or (iii) as a
consequence of the occurrence or continuation of any event or condition (other
than the passage of time or the right of the holder of Indebtedness to convert
such Indebtedness into equity interests), (x) the Company or any Subsidiary has
become obligated to purchase or repay Indebtedness before its regular maturity
or before its regularly scheduled dates of payment in an aggregate outstanding
principal amount of at least Cdn. $1,000,000, or (y) one or more Persons have
the right to require the Company or any Subsidiary so to purchase or repay such
Indebtedness; or
<PAGE> 31
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(h) the Company or any Subsidiary (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become due, (ii)
files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing; or
(i) a court or governmental authority of competent jurisdiction enters
an order appointing, without consent by the Company or any of its Subsidiaries,
a custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, or constituting
an order for relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company or any of its Subsidiaries, or any such
petition shall be filed against the Company or any of its Subsidiaries and such
petition shall not be dismissed within 60 days; or
(j) a final judgment or judgments for the payment of money aggregating
in excess of Cdn. $5,000,000 are rendered against one or more of the Company and
its Subsidiaries and which judgments are not, within 60 days after entry
thereof, bonded, discharged or stayed pending appeal, or are not discharged
within 60 days after the expiration of such stay; or
(k) any Guarantor fails in any material respect to perform or observe
any term, covenant or agreement in the Subsidiary Guaranty; or the Subsidiary
Guaranty is for any reason partially (including with respect to future advances)
or wholly revoked or invalidated, or otherwise ceases to be in full force and
effect; or any Guarantor, or any other Person by, through or on behalf of any
Guarantor, contests in any manner the validity or enforceability of the
Subsidiary Guaranty or denies that such Guarantor has any further liability or
obligation thereunder; or
(l) the Security Agreement shall cease to be in full force and effect;
or the Company, any Guarantor or any Person by, through or on behalf of the
Company or any Guarantor shall contest the validity or enforceability of the
Security Agreement; or
(m) if (i) any Plan shall fail to satisfy the minimum funding standards
of ERISA or the Code for any plan year or part thereof or a waiver of such
standards or extension of any amortization period is sought or granted under
section 412 of the Code, (ii) a notice of intent to terminate any Plan shall
have been or is reasonably expected to be filed with the PBGC or the PBGC shall
have instituted proceedings under ERISA section 4042 to terminate or appoint a
trustee to administer any Plan or the PBGC shall have notified the Company or
any ERISA Affiliate that a
<PAGE> 32
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Plan may become a subject of any such proceedings, (iii) the aggregate "amount
of unfunded benefit liabilities" (within the meaning of section 4001(a)(18) of
ERISA) under all Plans, determined in accordance with Title IV of ERISA, shall
exceed Cdn. $500,000, (iv) the Company or any ERISA Affiliate shall have
incurred or is reasonably expected to incur any liability pursuant to Title I or
IV of ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans, (v) the Company or any ERISA Affiliate withdraws from
any Multiemployer Plan, or (vi) the Company or any Subsidiary establishes or
amends any employee welfare benefit plan that provides post-employment welfare
benefits in a manner that would increase the liability of the Company or any
Subsidiary thereunder; and any such event or events described in clauses (i)
through (vi) above, either individually or together with any other such event or
events, could reasonably be expected to have a Material Adverse Effect.
As used in SECTION 11(m), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
12.1. Acceleration.
(a) If an Event of Default with respect to the Company described in
paragraph (h) or (i) of SECTION 11 (other than an Event of Default described in
clause (i) of paragraph (h) or described in clause (vi) of paragraph (h) by
virtue of the fact that such clause encompasses clause (i) of paragraph (h)) has
occurred, all the Notes then outstanding shall automatically become immediately
due and payable.
(b) If any other Event of Default has occurred and is continuing, any
holder or holders of more than 25% in principal amount of the Notes at the time
outstanding may at any time at its or their option, by notice or notices to the
Company, declare all the Notes then outstanding to be immediately due and
payable.
(c) If any Event of Default described in paragraph (a) or (b) of
SECTION 11 has occurred and is continuing, any holder or holders of Notes at the
time outstanding affected by such Event of Default may at any time, at its or
their option, by notice or notices to the Company, declare all the Notes held by
it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this SECTION 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon and (y) the Make-Whole Amount determined in respect of
such principal amount (to the full extent permitted by applicable law), shall
all be immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto
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agree, that each holder of a Note has the right to maintain its investment in
the Notes free from repayment by the Company (except as herein specifically
provided for) and that the provision for payment of a Make-Whole Amount by the
Company in the event that the Notes are prepaid or are accelerated as a result
of an Event of Default, is intended to provide compensation for the deprivation
of such right under such circumstances.
12.2. Other Remedies.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under SECTION 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
12.3. Rescission.
At any time after any Notes have been declared due and payable pursuant
to clause (b) or (c) of SECTION 12.1, the holders of not less than 76% in
principal amount of the Notes then outstanding, by written notice to the
Company, may rescind and annul any such declaration and its consequences if (a)
the Company has paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid
other than by reason of such declaration, and all interest on such overdue
principal and Make-Whole Amount, if any, and (to the extent permitted by
applicable law) any overdue interest in respect of the Notes, at the Default
Rate, (b) all Events of Default and Defaults, other than non-payment of amounts
that have become due solely by reason of such declaration, have been cured or
have been waived pursuant to SECTION 17, and (c) no judgment or decree has been
entered for the payment of any monies due pursuant hereto or to the Notes. No
rescission and annulment under this SECTION 12.3 will extend to or affect any
subsequent Event of Default or Default or impair any right consequent thereon.
12.4. No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any holder of any Note
in exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Company under SECTION 15, the Company
will pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all costs and expenses of such holder
<PAGE> 34
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incurred in any enforcement or collection under this SECTION 12, including,
without limitation, reasonable attorneys' fees, expenses and disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1. Registration of Notes.
The Company shall keep at its principal executive office a register for
the registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address
of each transferee of one or more Notes shall be registered in such register.
Prior to due presentment for registration of transfer, the Person in whose name
any Note shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give to any holder of a
Note that is an Institutional Investor promptly upon request therefor, a
complete and correct copy of the names and addresses of all registered holders
of Notes.
13.2. Transfer and Exchange of Notes.
Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
his attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the Company's expense (except as provided below), one or
more new Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit 1. Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than Cdn. $500,000, PROVIDED that if
necessary to enable the registration of transfer by a holder of its entire
holding of Notes, one Note may be in a denomination of less than Cdn. $500,000.
Any transferee, by its acceptance of a Note registered in its name (or the name
of its nominee), shall be deemed to have made the representation set forth in
SECTION 6.2.
13.3. Replacement of Notes.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an
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Institutional Investor, notice from such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (PROVIDED that if the holder of such Note is, or is a nominee
for, an original purchaser or another holder of a Note with a minimum net worth
of at least Cdn. $10,000,000, such Person's own unsecured agreement of indemnity
shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
14. SUBORDINATION.
14.1. Notes Subordinated to Permitted Senior Indebtedness.
The Company covenants and agrees and you likewise covenant and agree
for the benefit of the holders of the Permitted Senior Indebtedness, that, to
the extent and in the manner hereinafter set forth in this SECTION 14, the
Obligations under the Notes are hereby expressly made subordinate and subject in
right of payment as provided in this SECTION 14 to the prior payment in full of
all Permitted Senior Indebtedness. This SECTION 14 shall constitute a continuing
offer to all persons who, in reliance upon such provisions, become holders of,
or continue to hold, Permitted Senior Indebtedness, and such provisions are made
for the benefit of the holders of Permitted Senior Indebtedness and such holders
are made obligees hereunder and they or each of them may enforce such
provisions.
14.2. Payment Over of Proceeds Upon Bankruptcy.
(a) In the event of (i) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relative to the Company or its
assets, (ii) any liquidation, dissolution or other winding up of the Company,
whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy, or (iii) any assignment for the benefit of creditors or any other
marshalling of assets or liabilities of the Company (the events described in the
foregoing clauses (i), (ii) and (iii) are referred to collectively as
"Insolvency or Liquidation Proceedings"), then and in any such event the holders
of Permitted Senior Indebtedness shall be entitled to receive payment in full in
cash of all amounts due on or in respect of all Permitted Senior Indebtedness
(or payment thereof provided for to the
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satisfaction of the holders of Permitted Senior Indebtedness), before the holder
is entitled to receive any payment or distribution of any kind or character
(excluding Permitted Junior Payments) on account of principal of, or premium (if
any) or interest on, the Notes, and to that end the holders of Permitted Senior
Indebtedness shall be entitled to receive, for application to the payment of
such Permitted Senior Indebtedness, any payment or distribution of assets of the
Company of any kind or character (excluding Permitted Junior Payments) that may
be payable or deliverable in respect of the Notes in connection with any such
Insolvency or Liquidation Proceeding.
(b) Any payment or distribution of assets of the Company of any kind or
character from any source, whether in cash, property or securities (excluding
Permitted Junior Securities), including by way of set-off or enforcement of any
guarantee or otherwise, which the holders would be entitled to receive but for
the provisions of this Article shall be paid by the liquidating trustee or agent
or other person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise, directly to the
holders of Permitted Senior Indebtedness or the representative or
representatives or to the trustee or trustees under any indenture under which
any instruments evidencing any of such Permitted Senior Indebtedness may have
been issued, rateably according to the aggregate amounts remaining unpaid on
account of the Permitted Senior Indebtedness held or represented by each, to the
extent necessary to make payment in full in cash of all Permitted Senior
Indebtedness after giving effect to any concurrent payment or distribution, or
provision therefor to the satisfaction of the holders of the Permitted Senior
Indebtedness.
(c) In the event that, notwithstanding the foregoing provisions of
SECTION 14.2(b), any holder of the Notes shall have received, after the
commencement of any Insolvency or Liquidation Proceeding, any payment or
distribution of assets of the Company of any kind or character in respect of the
Obligations under the Notes whether in cash, property or securities including by
way of set off or enforcement of any guarantee or otherwise before all Permitted
Senior Indebtedness is paid in full or payment thereof provided for to the
satisfaction of the holders of Permitted Senior Indebtedness, then such payment
or distribution (excluding Permitted Junior Payments) shall be paid over or
delivered forthwith therefor to the holders of the Permitted Senior Indebtedness
or the trustee in bankruptcy, receiver, liquidating trustee, custodian,
assignee, agent or other Person making payment or distribution of assets of the
Company for application to the payment of all Permitted Senior Indebtedness
remaining unpaid, to the extent necessary to pay all Permitted Senior
Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Permitted Senior Indebtedness.
14.3. Suspension of Payments When Permitted Senior Indebtedness in Default.
(a) Unless SECTION 14.2 shall be applicable, upon (i) the occurrence of
a default in the payment when due (whether at maturity or upon acceleration,
mandatory prepayment or otherwise) of any principal of or interest or premium
(if any) or interest on any unreimbursed amounts under drawn letters of credit
on any Permitted Senior Indebtedness that is continuing after the expiration
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of any grace period applicable thereto (a "Payment Default"), and (ii) either
the Company or such holder of Permitted Senior Indebtedness sending to the
holders of the Notes written notice of such Payment Default, then no payment or
distribution of any assets of the Company or any Subsidiary of any kind or
character (excluding Permitted Junior Payments) shall be made by the Company
including by way of set off or enforcement of guaranty or otherwise on account
of principal of, or premium (if any) or interest on, the Notes or on account of
the purchase or redemption or other acquisition of the Notes unless and until
either (x) such Payment Default shall have been cured or waived, or shall have
ceased to exist, (y) such defaulted Permitted Senior Indebtedness shall have
been discharged or (z) the benefits of this provision shall have been waived by
the holders of such defaulted Permitted Senior Indebtedness, after which the
Company shall resume making any and all required payments in respect of the
Notes, including any payments in arrears.
(b) Unless SECTION 14.2 shall be applicable, upon (i) the occurrence of
any default or event of default under any Permitted Senior Indebtedness if the
effect of such default or event of default is to permit such Permitted Senior
Indebtedness to become due and payable prior to its stated maturity (a "Covenant
Default"), and (ii) the holder of such Permitted Senior Indebtedness or the
Company sending to the holders of the Notes written notice of such Covenant
Default, then no payment or distribution of any assets of the Company of any
kind or character (excluding Permitted Junior Payments) shall be made by the
Company including by way of set-off or enforcement of guaranty or otherwise on
account of principal of, or premium (if any) or interest on, the Notes or on
account of the purchase or redemption or other acquisition of the Notes for a
period (a "Payment Blockage Period") commencing on the date of receipt of such
written notice by the holders of the Notes and continuing until (subject to any
blockage of payments that may then be in effect under SECTION 14.3(a)) the first
to occur of (x) more than 179 days shall have elapsed since receipt of such
written notice by the holders of the Notes (provided that the obligations under
the applicable Permitted Senior Indebtedness shall not theretofore have been
accelerated), (y) such Covenant Default shall have been cured or waived or shall
have ceased to exist or the Permitted Senior Indebtedness shall have been
discharged, or (z) such Payment Blockage Period shall have been terminated by
written notice to the Company and the holders of the Notes given by the holder
of such Permitted Senior Indebtedness. After the first to occur of the events
described in the foregoing clauses (x), (y) and (z), the Company shall resume
making any and all required payments in respect of the Notes, including any
payments in arrears. In no event will a Payment Blockage Period extend beyond
179 days from the date of the receipt by the holders of the Notes of the notice
initiating such Payment Blockage Period (such 179-day period referred to as the
"Initial Period"). Any number of notices of events of default may be given
during the Initial Period; PROVIDED that during any period of 365 consecutive
days there must be a period of 186 consecutive days in which no Payment Blockage
Period is in effect. No Covenant Default with respect to the Permitted Senior
Indebtedness that existed or was continuing on the date of the commencement of
any Payment Blockage Period will be, or can be, made the basis for the
commencement of a second Payment Blockage Period, whether or not within a period
of 365 consecutive days, unless such Covenant Default has been cured or waived
for a period of not less than 90 consecutive days.
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(c) In the event that, notwithstanding the foregoing, the Company shall
make any payment to any holder of any Note prohibited by the foregoing
provisions of this SECTION 14.3, then and in such event such payments shall be
paid over and delivered forthwith to the holders of the Permitted Senior
Indebtedness or their representative.
14.4. Payment Permitted If No Default.
Nothing contained in this SECTION 14 or elsewhere in this Agreement or
in the Notes shall prevent the Company, at any time except in the circumstances
described in SECTION 14.2 or under the conditions described in SECTION 14.3,
from making payments at any time of principal of, or premium (if any) or
interest on, the Notes to the extent permitted by the terms of Permitted Senior
Indebtedness as in effect from time to time.
14.5. Subrogation to Rights of Holders of Permitted Senior Indebtedness.
Subject to the payment in full of all Permitted Senior Indebtedness,
the holders of the Notes shall be subrogated (equally and ratably with the
holders of all Indebtedness of the Company that by its express terms is
subordinated to Permitted Senior Indebtedness to the same extent as the Notes
are so subordinated and is entitled to like rights of subrogation) to the rights
of the holders of Permitted Senior Indebtedness to receive payments and
distributions of cash, property and securities applicable to the Permitted
Senior Indebtedness to the extent that payment of Permitted Senior Indebtedness
has been made from amounts otherwise payable to the holders of the Notes until
the Notes and all other amounts payable under this Agreement shall be paid in
full. For purposes of such subrogation, no payments or distributions to the
holders of the Permitted Senior Indebtedness of any cash, property or securities
to which the holders of the Notes would be entitled except for the provisions of
this SECTION 14, and no payments over pursuant to the provisions of this SECTION
14 to the holders of Permitted Senior Indebtedness by the holders of the Notes,
shall, as among the Company, its creditors other than holders of the Permitted
Senior Indebtedness and the holders of the Notes, be deemed to be a payment or
distribution by the Company to or on account of the Permitted Senior
Indebtedness. In the event that any Permitted Senior Indebtedness becomes due
and payable, whether by acceleration, maturity or otherwise, no distribution
shall thereafter be made on account of the Notes until all Permitted Senior
Indebtedness shall be paid in full.
14.6. Provisions Solely to Define Relative Rights.
The provisions of this SECTION 14 are and are intended solely for the
purpose of defining the relative rights of the holders of the Notes, on the one
hand, and the holders of Permitted Senior Indebtedness, on the other hand.
Nothing contained in this SECTION 14 or elsewhere in this Agreement or in the
Notes is intended to or shall (a) impair, as among the Company and its creditors
other than holders of Permitted Senior Indebtedness and the holders of the
Notes, the
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obligation of the Company, which is absolute and unconditional, to pay to the
holders of the Notes the principal of, and premium (if any) and interest on, the
Notes and all other amounts payable under this Agreement as and when the same
shall become due and payable, all in accordance with the terms hereof and of the
Notes; (b) affect the relative rights against the Company of the holders of the
Notes and creditors of the Company other than the holders of Permitted Senior
Indebtedness, it being expressly understood that the Notes, the indebtedness
represented thereby and the payment of the principal of, and premium (if any)
and interest on, the Notes and of all other amounts payable under this Agreement
in all respects shall rank equally with, or prior to, all existing and future
unsecured Indebtedness of the Company that is not Permitted Senior Indebtedness;
(c) prevent the holders of the Notes from exercising all remedies otherwise
permitted by applicable law upon default under this Agreement, subject to the
rights, if any, under this SECTION 14 of the holders of Permitted Senior
Indebtedness (i) in any Insolvency or Liquidation Proceeding to receive,
pursuant to and in accordance with SECTION 14.2, cash, property and securities
otherwise payable or deliverable to the holders or the Notes, or (ii) under the
conditions specified in SECTION 14.3 to prevent any payment prohibited by such
SECTION 14.3; or (d) limit the rights of the holders of the Notes to take any
action to accelerate the maturity of the Notes pursuant to SECTION 11 or to
pursue any rights or remedies hereunder or under applicable law.
14.7. Payments Held in Trust.
Should any distribution or the proceeds thereof in respect of principal
of, or premium (if any) or interest on, the Notes be collected or received by
the holders of Notes at a time when the holders of Notes are not permitted to
receive any such distribution or proceeds thereof, including if the same is
collected or received when there is or would be after giving effect to such
payment an Event of Default under any Permitted Senior Indebtedness, then the
holders of Notes will forthwith deliver, or cause to be delivered, the same to
the holders of Permitted Senior Indebtedness in precisely the form held by the
holders of Notes (except for any necessary endorsement) and until so delivered,
the same shall be held in trust by the holders of Notes as property of the
holders of Permitted Senior Indebtedness and shall not be commingled with other
property of the holders of Notes.
14.8. No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any Permitted Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Agreement, regardless of any knowledge thereof that any such holder may have or
be otherwise charged with.
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(b) Without in any way limiting the generality of SECTION 14.8(a), the
holders of Permitted Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the holders of the Notes, without incurring
responsibility to the holders of the Notes and without impairing or releasing
the subordination provided in this SECTION 14 or the obligations hereunder of
the holders of the Notes to the holders of Permitted Senior Indebtedness, do any
one or more of the following: (1) change the manner, place or terms of payment
or extend the time of payment of, or renew or alter, any Permitted Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Permitted Senior Indebtedness is outstanding (including any increase in the
aggregate principal amount of any indebtedness thereunder); (2) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing any Permitted Senior Indebtedness; (3) release any Person liable in any
manner for the collection of any Permitted Senior Indebtedness; and (4) exercise
or refrain from exercising any rights against the Company and any other Person.
14.9. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company referred to
in this SECTION 14, the holders of the Notes shall be entitled to rely upon any
order or decree entered by any court of competent jurisdiction in which such
insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution,
winding up or similar case or proceeding is pending, or a certificate of the
trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for
the benefit of creditors, agent or other Person making such payment or
distribution, delivered to the holders of the Notes for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Permitted Senior Indebtedness and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this SECTION 14 provided that such court, trustee, assignee or other person
has been apprised of, or the order or certificate makes reference to the
provisions of this Article.
14.10 Further Assurances
Upon receipt of written notice by a holder of Permitted Senior
Indebtedness, the Company shall, from time to time, for and on behalf of all
present and future holders of the Notes, execute and deliver deeds of
subordination in favour of the person or persons forwarding such notice to the
Company providing that such person or persons are entitled to all the rights and
benefits of this Article as a holder of Permitted Senior Indebtedness. An
executed counterpart of each such deed shall be delivered by the Company.
Nothing contained in this provision shall impair the rights of any holders of
Permitted Senior Indebtedness in whose favour such a deed of subordination has
not been so executed and delivered.
15. PAYMENTS ON NOTES.
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15.1. Place of Payment.
Subject to SECTION 15.2, payments of principal, Make-Whole Amount, if
any, and interest becoming due and payable on the Notes shall be made in
Vancouver, British Columbia at the principal office of the Company in such
jurisdiction. The Company may at any time, by notice to each holder of a Note,
change the place of payment of the Notes so long as such place of payment shall
be either the principal office of the Company in such jurisdiction or the
principal office of a bank or trust company in such jurisdiction.
15.2. Home Office Payment.
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in SECTION 14.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below your name in SCHEDULE A, or by such other
method or at such other address as you shall have from time to time specified to
the Company in writing for such purpose, without the presentation or surrender
of such Note or the making of any notation thereon, except that upon written
request of the Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by the Company pursuant to SECTION 14.1. Prior to any sale or other disposition
of any Note held by you or your nominee you will, at your election, either
endorse thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Company in exchange
for a new Note or Notes pursuant to SECTION 13.2. The Company will afford the
benefits of this SECTION 15.2 to any Institutional Investor that is the direct
or indirect transferee of any Note purchased by you under this Agreement and
that has made the same agreement relating to such Note as you have made in this
SECTION 15.2.
16. EXPENSES, ETC.
16.1. Transaction Expense.
Whether or not the transactions contemplated hereby are consummated,
the Company will pay all costs and expenses (including reasonable attorneys'
fees of a special counsel and, if reasonably required, local or other counsel)
incurred by you or holder of a Note in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of this
Agreement or the Notes (whether or not such amendment, waiver or consent becomes
effective), including, without limitation: (a) the costs and expenses incurred
in enforcing or defending (or determining whether or how to enforce or defend)
any rights under this Agreement or the Notes or
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in responding to any subpoena or other legal process or informal investigative
demand issued in connection with this Agreement or the Notes, or by reason of
being a holder of any Note, and (b) the costs and expenses, including financial
advisors' fees, incurred in connection with the insolvency or bankruptcy of the
Company or any Subsidiary or in connection with any work-out or restructuring of
the transactions contemplated hereby and by the Notes. The Company will pay, and
will save you and each other holder of a Note harmless from, all claims in
respect of any fees, costs or expenses, if any, of brokers and finders (other
than those retained by you).
16.2. Survival.
The obligations of the Company under this SECTION 16 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes, and the termination of this Agreement.
17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any subsequent holder of a Note, regardless of
any investigation made at any time by or on behalf of you or any other holder of
a Note. All statements contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant to this Agreement shall be
deemed representations and warranties of the Company under this Agreement.
Subject to the preceding sentence, this Agreement and the Notes embody the
entire agreement and understanding between you and the Company and supersede all
prior agreements and understandings relating to the subject matter hereof.
18. AMENDMENT AND WAIVER.
18.1. Requirements.
This Agreement and the Notes may be amended, and the observance of any
term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Company and the
Required Holders, except that no amendment or waiver may, without the written
consent of the holder of each Note at the time outstanding affected thereby, (i)
subject to the provisions of SECTION 12 relating to acceleration or rescission,
change the amount or time of any prepayment or payment of principal of, or
reduce the rate or change the time of payment or method of computation of
interest or of the Make-Whole Amount on, the Notes, (ii) change the percentage
of the principal amount of the Notes the holders of which are required to
consent to any such amendment or waiver, or (iii) amend any of SECTIONS 8,
11(a), 11(b), 12, 14, or 18.1 hereof.
18.2. Solicitation of Holders of Notes.
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(a) The Company will provide each holder of the Notes (irrespective of
the amount of Notes then owned by it) with sufficient information, sufficiently
far in advance of the date a decision is required, to enable such holder to make
an informed and considered decision with respect to any proposed amendment,
waiver or consent in respect of any of the provisions hereof or of the Notes.
The Company will deliver executed or true and correct copies of each amendment,
waiver or consent effected pursuant to the provisions of this SECTION 18 to each
holder of outstanding Notes promptly following the date on which it is executed
and delivered by, or receives the consent or approval of, the requisite holders
of Notes.
(b) The Company will not directly or indirectly pay or cause to be paid
any remuneration, whether by way of supplemental or additional interest, fee or
otherwise, or grant any security, to any holder of Notes as consideration for or
as an inducement to the entering into by any holder of Notes or any waiver or
amendment of any of the terms and provisions hereof unless such remuneration is
concurrently paid, or security is concurrently granted, on the same terms,
ratably to each holder of Notes then outstanding even if such holder did not
consent to such waiver or amendment.
18.3. Binding Effect, etc.
Any amendment or waiver consented to as provided in this SECTION 18
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon the Company without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note nor
any delay in exercising any rights hereunder or under any Note shall operate as
a waiver of any rights of any holder of such Note. As used herein, the term
"this Agreement" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
18.4. Notes held by Company, etc.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.
19. NOTICES.
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All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address specified
for such communications in SCHEDULE A, or at such other address as you or it
shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such address
as such other holder shall have specified to the Company in writing, or
(iii) if to the Company, to the Company at its address set forth at the
beginning hereof to the attention of Paul T. Clough, or at such other address as
the Company shall have specified to the holder of each Note in writing.
Notices under this SECTION 19 will be deemed given only when actually received.
20. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This SECTION 20
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in SECTION 6. Upon receipt
of such notice, wherever the word
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"you" is used in this Agreement (other than in this SECTION 21), such word shall
be deemed to refer to such Affiliate in lieu of you. In the event that such
Affiliate is so substituted as a purchaser hereunder and such Affiliate
thereafter transfers to you all of the Notes then held by such Affiliate, upon
receipt by the Company of notice of such transfer, wherever the word "you" is
used in this Agreement (other than in this SECTION 21), such word shall no
longer be deemed to refer to such Affiliate, but shall refer to you, and you
shall have all the rights of an original holder of the Notes under this
Agreement.
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22. MISCELLANEOUS.
22.1. Successors and Assigns.
All covenants and other agreements contained in this Agreement by or on
behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.
22.2. Payments Due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-Whole Amount or interest on
any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day without including the additional days elapsed in
the computation of the interest payable on such next succeeding Business Day.
22.3. Severability.
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
22.4. Construction.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
22.5. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
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22.6. Governing Law.
This Agreement shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
* * * * *
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If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly yours,
504463 N.B. INC.
By: /s/ Authorized Signer
Name:
Title:
The foregoing is hereby agreed to as of the date thereof.
3006302 NOVA SCOTIA COMPANY
By: /s/ Authorized Signer
Name:
Title:
<PAGE> 49
-44-
SCHEDULE A
----------
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
- ----------------------------- ---------------------
<S> <C>
3006302 Nova Scotia Company, a Cdn.$9,166,666
Nova Scotia unlimited
liability company
(1) All payments by wire transfer of
immediately available funds to:
Canadian Imperial Bank of Commerce
Acct. No. 45-81113
with sufficient information to identify the source and application of
such funds.
(2) All notices of payments and written confirmations of such wire
transfers:
3006302 Nova Scotia Company
c/o First Union Real Estate
Equity and Mortgage Investments
55 Public Square, Suite 1910
Cleveland, Ohio 44113-1937
Attn: Senior Vice President,
General Counsel and
Secretary
Fax: (216) 781-7364
(3) All other communications:
3006302 Nova Scotia Company
c/o First Union Real Estate
Equity and Mortgage Investments
55 Public Square, Suite 1910
Cleveland, Ohio 44113-1937
Attn: Senior Vice President,
General Counsel and
Secretary
Fax: (216) 781-7364
</TABLE>
<PAGE> 50
-45-
SCHEDULE B
----------
DEFINED TERMS
-------------
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"Affiliate" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person and (b) any Person beneficially owning or holding, directly or
indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "Affiliate"
is a reference to an Affiliate of the Company.
"Agreement" means this Note Purchase Agreement between the Company and
the purchasers listed on SCHEDULE A, as it may from time to time be amended or
supplemented.
"Annualized Capital Expenditures" means for any relevant period
commencing with April 1, 1997, an amount equal to the aggregate amount of
capital expenditures for such period multiplied by a fraction, the numerator of
which is 12 and the denominator of which is the number of calendar months which
have elapsed since April 1, 1997.
"Annualized Consolidated EBITDA" means for any relevant period
commencing with April 1, 1997, an amount equal to Consolidated EBITDA for such
period multiplied by a fraction, the numerator of which is 12 and the
denominator of which is the number of calendar months which have elapsed since
April 1, 1997.
"Annualized Consolidated Interest Charges" means for any relevant
period commencing with April 1, 1997, an amount equal to Consolidated Interest
Charges for such period, multiplied by a fraction, the numerator of which is 12
and the denominator of which is the number of calendar months which have elapsed
since April 1, 1997.
"Business Day" means (a) for the purposes of SECTION 8.6 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York
City are required or authorized to be closed, and (b) for the purposes of any
other provision of this Agreement, any day
<PAGE> 51
-46-
other than a Saturday, a Sunday or a day on which commercial banks in Toronto or
New York are required or authorized to be closed.
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Closing" is defined in SECTION 3.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"Company" means 504463 N.B. Inc., a corporation duly organized and
validly existing under the laws of the Province of New Brunswick.
"Confidential Information" is defined in SECTION 21.
"Consolidated Cash Interest Charges" means, for any period for the
Company and its Consolidated Subsidiaries, the total of (i) all items properly
classified as interest expense (whether expensed or capitalized) in accordance
with GAAP; and (ii) the imputed interest component for any element of
Consolidated Indebtedness (such as capital leases and deferred revenues) which
would not be classified as interest expense pursuant to GAAP, calculated using
an interest rate equal to the then prevailing Canadian Prime Rate, in each case
for such period, provided that, notwithstanding the foregoing, with respect to
the Notes only the current paid interest component, and not accrued interest,
will be included in this calculation.
"Consolidated Depreciation and Amortization Expense" means, for any
period, the depreciation and amortization expense of the Company and its
Consolidated Subsidiaries, determined in accordance with GAAP.
"Consolidated EBITDA" means, for any period, the Consolidated Net
Income of the Company and its Consolidated Subsidiaries (or with respect to the
definition of Target EBITDA, the relevant target entity mutatis mutandis)
increased by the sum of (i) Consolidated Cash Interest Charges; (ii)
Consolidated Income Tax Expense; and (iii) Consolidated Depreciation and
Amortization Expense, in each case, for such period and calculated prior to
extraordinary items; and (iv) such out-of-pocket expenses incurred by such
entitites on a one time basis and which can reasonably be solely attributed to
the acquisition referenced in SCHEDULE 5.14.
"Consolidated Income Tax Expense" means, for any period, the aggregate
of all taxes (including deferred taxes) based on income of the Company and its
Consolidated Subsidiaries for such period determined in accordance with GAAP.
<PAGE> 52
-47-
"Consolidated Indebtedness" means the aggregate of all Indebtedness for
borrowed money of the Company and its Consolidated Subsidiaries less (y) the
Notes and (z) such cash and Permitted Marketable Securities on the balance sheet
of the latest financial statements delivered pursuant to SECTION 7.
"Consolidated Net Worth" means at any time, with respect to any Person
and its Consolidated Subsidiaries, the aggregate of (i) the total shareholders'
equity determined as of such time in accordance with GAAP; plus (ii) the Notes;
where shareholders equity for greater certainty and without duplication includes
any shares in the capital of such Person or its Subsidiaries which are
redeemable at the option of the holder in accordance with their terms.
"Consolidated Parking Contracts" means, at any time, with respect to
the Company and its Consolidated Subsidiaries, the aggregate of (i) the total
number of existing contracts and leases which are in full force and effect for
the management or operation of parking lots of parking garages; and (ii) the
number of parking lots of parking garages operated on properties owned by the
Company and its Consolidated Subsidiaries.
"Consolidated Subsidiary" means, at any date, in respect of any person,
a Subsidiary of such Person which is or should be consolidated with such Person
in its consolidated financial statements prepared as of such date.
"Default" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"Default Rate" means that rate of interest that is 2% per annum above
the rate of interest stated in clause (a) of the first paragraph of the Notes.
"Distributions" means (i) any dividend or other distribution on issued
shares of the Company or any of its Subsidiaries; (ii) the purchase, redemption
or retirement of any issued shares of the Company or any of its Subsidiaries
redeemed or purchased by the Company or any such Subsidiary, as the case may be,
or any payments made under any employee stock option agreement; (iii) any
consulting fee, management fee or management bonus paid or payable to any
director, officer, shareholder or Affiliate of the Company or any of its
Subsidiaries or any Person not dealing at arm's length with the Company or any
of its Subsidiaries or their respective directors, officers, shareholders or
Affiliates; or (iv) any payment on account of any principal and interest on any
loans or advances owing at any time by the Company or any of its Subsidiaries to
any of their respective directors, officers, shareholders or Affiliates.
"Environmental Laws" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises,
<PAGE> 53
-48-
licenses, agreements or governmental restrictions relating to pollution and the
protection of the environment or the release of any materials into the
environment, including but not limited to those related to hazardous substances
or wastes, air emissions and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.
"Event of Default" is defined in SECTION 11.
"GAAP" means, at any time, accounting principles generally accepted in
Canada as recommended in the Handbook of the Canadian Institute of Chartered
Accountants at the relevant time applied on a consistent basis.
"Governmental Authority" means
(a) the government of
(i) the United States of America or Canada or any State or other
political subdivision thereof, or
(ii) any jurisdiction in which the Company or any Subsidiary conducts
all or any part of its business, or which asserts jurisdiction over any
properties of the Company or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial, regulatory
or administrative functions of, or pertaining to, any such government.
"Guarantors" mean Inner Tec Security Consultants Ltd., Argus Guard &
Patrol Ltd., Inner Tec Security Consultants, Century Security Ltd., City
Collection Company Ltd., Compupark Systems Corporation and Impark Management
Ltd.
"Guaranty" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
<PAGE> 54
-49-
(b) to advance or supply funds (i) for the purchase or payment of such
indebtedness or obligation, or (ii) to maintain any working capital or other
balance sheet condition or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase or payment of such
indebtedness or obligation;
(c) to lease properties or to purchase properties or services primarily
for the purpose of assuring the owner of such indebtedness or obligation of the
ability of any other Person to make payment of the indebtedness or obligation;
or
(d) otherwise to assure the owner of such indebtedness or obligation
against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"Hazardous Material" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).
"holder" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to SECTION
13.1.
"Indebtedness" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption obligations
in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the ordinary
course of business but including all liabilities created or arising under any
conditional sale or other title retention agreement with respect to any such
property);
(c) all liabilities appearing on its balance sheet in accordance with
GAAP in respect of Capital Leases;
<PAGE> 55
-50-
(d) all liabilities for borrowed money secured by any Lien with respect
to any property owned by such Person (whether or not it has assumed or otherwise
become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or instruments
serving a similar function issued or accepted for its account by banks and other
financial institutions (whether or not representing obligations for borrowed
money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a type
described in any of clauses (a) through (f) hereof.
Indebtedness of any Person shall include all obligations of such Person of the
character described in clauses (a) through (e) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.
"Institutional Investor" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 25% of the aggregate principal amount
of the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"Interest Coverage Ratio" means (i) for the periods beginning on April
1, 1997 and ending on the last day of each fiscal quarter up to and including
the fiscal quarter ended March 31, 1998, the ratio of Annualized Consolidated
EBITDA less Annualized Capital Expenditures to Annualized Consolidated Cash
Interest Charges; and (ii) for any fiscal quarter after the fiscal quarter ended
March 31, 1998, the ratio of Consolidated EBITDA less capital expenditures to
Consolidated Cash Interest Charges for the twelve month period ending on the
least day of such fiscal quarter.
"Leverage Ratio" means (i) for periods beginning on April 1, 1997 and
ending on the last day of each fiscal quarter up to and including the fiscal
quarter ended March 31, 1998, the ratio of Consolidated Indebtedness to
Annualized Consolidated EBITDA; and (ii) for any fiscal quarter thereafter, the
ratio of Consolidated Indebtedness to Consolidated EBITDA for the twelve month
period ending on the last day of such fiscal quarter.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
<PAGE> 56
-51-
"Make-Whole Amount" is defined in SECTION 8.6.
"Material" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Company
and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or (b) the ability of the Company
to perform its obligations under this Agreement and the Notes, or (c) the
validity or enforceability of this Agreement or the Notes.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
"Note Documents" mean the Notes, the Agreement, the Subsidiary Guaranty
and the Security Agreement.
"Notes" is defined in SECTION 1.
"Obligations" means any principal (including reimbursement obligations
and guarantees), premium, if any, interest (including interest accruing on or
after the filing of, or which would have occurred but for the filing of, any
petition in bankruptcy or for reorganization relating to the Company whether or
not a claim for post-filing interest is allowed in such proceedings) penalties,
fees, expenses, indemnifications, reimbursements, claims for recision, damages,
gross-up payments and all other amounts and other liabilities payable under the
Note Documents or otherwise.
"Officer's Certificate" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend to
the subject matter of such certificate.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Permitted Junior Payments" mean a payment or distribution in the form
of equity securities or subordinated securities of the Company or any successor
obligor with respect to the Notes provided for by a plan of reorganization or
readjustment that, in the case of any such subordinated securities, are
subordinate in right of payment to all Permitted Senior Indebtedness that may at
the time be outstanding to substantially the same or a greater extent than, the
Obligations are so subordinated as provided herein.
"Permitted Liens" means any one or more of the following:
<PAGE> 57
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a. Liens for taxes, rates, assessments or governmental charges or levies not at
the time due and delinquent or the validity of which is being contested at the
time by the Company in good faith by proper legal proceedings;
b. Liens resulting from any judgment rendered or claim filed against the Company
which the Company shall be contesting in good faith by proper legal proceedings;
c. undetermined or inchoate Liens which have not at such time been filed or
registered pursuant to law against the Company or which relate to obligations
not due or delinquent;
d. Liens affecting real property which are (i) title defects or irregularities
of a minor nature; or (ii) restrictions, easements, rights-of-way, servitudes or
other similar rights in land (including, without restriction, rights-of-way and
servitudes for railways, sewers, drains, gas and oil pipelines, gas and water
mains, electric light and power and telephone or telegraph or cable television
conduits, poles, wires, cables or other incidental equipment) granted to or
reserved by other Persons; in each case where such Liens in the aggregate do not
materially impair the usefulness of the property for the purposes for which it
is held and mortgages of and other Liens against the said easements,
rights-of-way, servitudes or other similar rights in real property;
e. Liens or deposits in connection with bids, tenders, contracts or
expropriation proceedings of the Company or to secure workers' compensation,
unemployment insurance or other similar statutory assessments, or to secure
costs of litigation when required by law, and surety or appeal bonds in
connections with such litigation;
f. mechanic's, warehouseman's, carriers' or other similar common law liens or
privileges, where the action to enforce the same has not proceeded to final
judgment, is being defended in good faith by the Company and by appropriate
proceedings and in respect of which it shall have set aside on its books
reserves deemed by it to be adequate therefor;
g. any other liens or privileges or other title irregularities, encroachments or
encumbrances of a nature similar to the foregoing which are of a minor nature
and will not in the aggregate materially and adversely affect the use of the
property for the purpose for which it is held by the Company or any of its
Subsidiaries;
h. Liens in favor of the holders of the Permitted Senior Indebtedness;
i. Purchase Money Mortgages, securing Indebtedness, in an aggregate amount not
to exceed Cdn. $1,000,000; and
j. other Liens in an aggregate amount not to exceed Cdn. $50,000.
<PAGE> 58
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"Permitted Marketable Securities" means any securities held by the
Company or any of its Subsidiaries which are publicly traded on a recognized
stock exchange and do not represent greater than 5% of the issued and
outstanding securities of the issuing corporation and any fixed income
securities for which a public market exists.
"Permitted Senior Indebtedness" means the obligations pursuant to the
Guaranty issued by the Company and the Guarantors under the Amended and Restated
Credit Agreement dated as of April 17, 1997 among the Company, Imperial Parking
Limited, the financial institutions party thereto and BT Bank of Canada, as
agent.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"Preferred Stock" means any class of capital stock of a corporation
that is preferred over any other class of capital stock of such corporation as
to the payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"property" or "properties" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, choate
or inchoate.
"Purchase Money Mortgage" means any Lien charging property acquired by
the Company, which is or has been granted or assumed by the Company or which
arises by operation of law in favour of the transferor substantially
concurrently with and for the purpose of the acquisition of such property, in
each case where (i) the principal amount secured by such Lien is not in excess
of the cost to the Company of the property acquired; and (ii) such Lien extends
only to the property acquired.
"Required Holders" means, at any time, the holders of at least 66-2/3%
in principal amount of the Notes at the time outstanding (exclusive of Notes
then owned by the Company or any of its Affiliates).
"Responsible Officer" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this agreement.
<PAGE> 59
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"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Security Agreement" means the security agreement dated the date of
Closing issued by the Guarantors.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
"Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
"Subsidiary Guaranty" means the guaranty dated the date of Closing
issued by the Guarantors.
"Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"Wholly-Owned Subsidiary" means, at any time, any Subsidiary one
hundred percent (100%) of all of the equity interests (except directors'
qualifying shares) and voting interests of which are owned by any one or more of
the Company and the Company's other Wholly-Owned Subsidiaries at such time.
<PAGE> 60
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SCHEDULE 5.14
-------------
USE OF PROCEEDS
---------------
The Company shall use the proceeds of the Notes solely to acquire the
Purchased Shares as defined in and pursuant to that certain Share Purchase
Agreement dated as of April 17, 1997 between the Company and Imperial Parking
Limited.
<PAGE> 61
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NOTE
504463 N.B. INC.
SENIOR SUBORDINATED PARTIAL PIK NOTES DUE APRIL 17, 2009
No.1
Cdn. $9,166,666 April 17, 1997
FOR VALUE RECEIVED, the undersigned, 504463 N.B. INC. (herein called the
"Company"), a corporation duly organized and validly existing under the laws of
the Province of New Brunswick hereby promises to pay to 3006302 NOVA SCOTIA
COMPANY, or registered assigns, the principal sum of NINE MILLION ONE HUNDRED
SIXTY-SIX THOUSAND SIX HUNDRED SIXTY-SIX DOLLARS (Cdn.$9,166,666) on April 17,
2009, with interest (computed on the basis of a 360-day year of twelve 30-day
months) (a) on the unpaid balance thereof at the rate of 12% per annum from the
date hereof, payable quarterly, on March 31, June 30, September 30 and December
31 of each year, commencing with June 30, 1997, payable in cash at a rate of 4%
per annum and the balance of such interest payable in additional Senior
Subordinated Partial PIK Notes due April 17, 2009 ("Additional Notes"),
substantially in the form hereof, until the principal hereof shall have become
due and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreements referred to below), payable quarterly as aforesaid (or, at
the option of the registered holder hereof, on demand), in cash at a rate per
annum from time to time equal to 14%.
Payments of principal of, interest (except for interest payable in
Additional Notes as herein provided) on and any Make-Whole Amount with respect
to this Note are to be made in lawful money of Canada at Vancouver, British
Columbia or at such other place as the Company shall have designated by written
notice to the holder of this Note as provided in the Note Purchase Agreements
referred to below.
This Note is one of a series of the Company's Senior Subordinated Partial
PIK Notes due April 17, 2009 (herein called the "Notes") issued pursuant to one
or more separate Note Purchase Agreements, dated as of April 17, 1997 (as from
time to time amended, the "Note Purchase Agreements"), between the Company and
the respective Purchasers named therein and is entitled to the benefits thereof.
Each holder of this Note will be deemed, by its acceptance hereof, (i) to have
agreed to the
<PAGE> 62
-57-
subordination provisions set forth in SECTION 14 of the Note Purchase Agreements
and (ii) to have made the representation set forth in SECTION 6.2 of the Note
Purchase Agreements.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
This Note is subject to optional prepayment, in whole or from time to time
in part, at the times and on the terms specified in the Note Purchase Agreement,
but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreements, occurs
and is continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner, at the price (including any applicable
Make-Whole Amount) and with the effect provided in the Note Purchase Agreements.
This Note shall be construed and enforced in accordance with, and the rights
of the parties shall be governed by, the law of the State of New York excluding
choice-of-law principles of the law of such State that would require the
application of the laws of a jurisdiction other than such State.
504463 N.B. INC.
By: /s/ Authorized Signer
Title:
<PAGE> 63
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EXHIBIT 11(e)-2
FORM OF OPINION OF SPECIAL COUNSEL
TO THE COMPANY
Matters To Be Covered In
Opinion of Special Counsel To the Company
1. Each of the Company and its Subsidiaries being duly incorporated,
validly existing and in good standing and having requisite corporate power and
authority to issue and sell the Notes and to execute and deliver the documents.
2. Each of the Company and its Subsidiaries being duly qualified and in
good standing as a foreign corporation in appropriate jurisdictions.
3. Due authorization and execution of the documents and such documents
being legal, valid, binding and enforceable.
4. No conflicts with charter documents, laws or other agreements.
5. All consents required to issue and sell the Notes and to execute and
deliver the documents having been obtained.
6. No litigation questioning validity of documents.
7. The Notes not requiring registration under the Securities Act of
1933, as amended; no need to qualify an indenture under the Trust Indenture Act
of 1939, as amended.
8. No violation of Regulations G, T or X of the Federal Reserve Board.
9. Company not an "investment company", or a company "controlled" by an
"investment company", under the Investment Company Act of 1940, as amended.
<PAGE> 1
EXHIBIT (10g)
SHAREHOLDERS AGREEMENT
----------------------
MEMORANDUM OF AGREEMENT made as of the 17th day of April, 1997.
BETWEEN:
3357392 CANADA INC., a corporation incorporated pursuant to the
laws of Canada,
(hereinafter referred to as "CANCO 1"),
OF THE FIRST PART,
-and-
The individuals and trusts listed on Schedule A hereto, (subject
to the further definition below, such individuals and trusts being
hereinafter collectively referred to as "IMPARK MANAGEMENT" and
individually as a "MEMBER OF IMPARK MANAGEMENT"),
OF THE SECOND PART,
-and
3355489 CANADA INC.,
a corporation incorporated pursuant to the laws of Canada,
(hereinafter referred to as "FUMI HOLDINGS"),
OF THE THIRD PART.
WHEREAS the individuals listed in Schedule A are employed in the
management of Impark (as hereinafter defined);
AND WHEREAS those members of Impark Management listed in Schedule
A (the "Holdco Shareholders") are the holders of those shares and options to
purchase shares as listed in Schedule A of Imperial Holdings No. 2 Inc.
("Holdco"), which owns all of the shares of Imperial Parking Limited;
AND WHEREAS First Union Real Estate Equity and Mortgage
Investments ("FUR"), an Ohio business trust, has entered into a share purchase
<PAGE> 2
-2-
agreement dated February 18, 1997 as amended by amending agreements made as of
February 26, 1997, March 2, 1997, March 7, 1997, March 17, 1997 and April 15,
1997 (the "Share Purchase Agreement") with Impark Investments Inc., the Holdco
Shareholders and certain other individuals providing for the sale and purchase
of all of the shares of Holdco;
AND WHEREAS Canco 1 has arranged to obtain an assignment of all of
the rights of FUR under the Share Purchase Agreement;
AND WHEREAS, at the date hereof, Canco 1 is a wholly-owned
subsidiary of FUMI Holdings;
AND WHEREAS, as a result of the completion of the Share Purchase
Agreement, the Holdco Shareholders will become holders of shares of Canco 1;
AND WHEREAS the Holdco Shareholders wish to maximize the interest
in Canco 1 which they acquire as a result of the sale and purchase of shares
provided for under the Share Purchase Agreement;
AND WHEREAS the members of Impark Management who are not Holdco
Shareholders wish to become shareholders of Canco 1;
AND WHEREAS the parties to this agreement wish to establish their
respective rights and obligations in respect of the shares of Canco 1 which the
members of Impark Management will acquire;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of
the premises and of the respective covenants and agreements herein contained and
for other good and valuable consideration (the receipt and sufficiency of which
are hereby acknowledged by each of the parties), the parties covenant and agree
as follows:
ARTICLE 1
INTERPRETATION
--------------
1.1 CERTAIN DEFINITIONS. Where used in this agreement, unless there
is something in the context or the subject matter inconsistent therewith, the
following terms shall have the following meanings:
"ADDITIONAL PARKING FACILITIES" means any parking facilities
(other than the Cleveland Parking Facilities and the Transferred
Parking Facilities) which are acquired by FUR after April 17, 1997
whether by direct purchase or by acquisition of an entity owning
such parking facilities;
<PAGE> 3
-3-
"ADJUSTED OPERATING INCOME" for any period means the Facilities
Operating Income for such period minus the Facilities Return to
FUR for such period;
"AFFILIATE", in relation to an individual, means a corporation
that is controlled by such individual and all of the shares of
which are owned by such individual and/or such individual's spouse
and/or children or a trust of which such individual and/or such
individual's spouse and/or children are the sole beneficiaries;
"BASE INDEBTEDNESS" means the amount as of the close of business
on April 17, 1997 of the combined indebtedness (excluding
indebtedness incurred for normal working capital purposes
including without limitation operating lines of credit) of Canco
1, the Corporation, 504308 N.B. Inc. and 504463 N.B.
Inc., which is expected to be approximately $77,500,000;
"BOARD" means the board of directors of Canco 1;
"BUSINESS DAY" means any day which is not a Saturday, a Sunday or
a statutory holiday in Ontario or British Columbia;
"CLEVELAND PARKING FACILITIES" means the Huntington garage, the
West Third Street surface parking lot and the 55 Public Square
garage, all in the City of Cleveland, Ohio;
"CLASS A COMMON SHARES" means the Class A non-voting common shares
in the capital of Canco 1, any securities into which such common
shares may be converted, exchanged, reclassified, redesignated,
subdivided or otherwise changed from time to time and any
securities of any successor corporation or a corporation
continuing from Canco 1 into which such common shares or such
other securities may be changed as a result of any amalgamation,
merger, consolidation, plan of arrangement or reorganization,
statutory or otherwise;
"CLASS B COMMON SHARES" means the Class B voting common shares in
the capital of Canco 1, any securities into which such common
shares may be converted, exchanged, reclassified, redesignated,
subdivided or otherwise changed from time to time and any
securities of any successor corporation or a corporation
continuing from Canco 1 into which such common shares or such
other securities may be changed as a result of any amalgamation,
merger, consolidation, plan of arrangement or reorganization,
statutory or otherwise;
"COMMON SHARES" means Class A Common Shares and Class B Common
Shares;
<PAGE> 4
-4-
"CONSOLIDATED PERFORMANCE" for any period means the total of the
Impark EBITDA and the Adjusted Operating Income for such period;
"CORPORATION" means Imperial Parking Limited or any successor
thereto;
"DATE OF CLOSING" and "TIME OF CLOSING" have the respective
meanings ascribed thereto in Articles 5 and 6, as the case may be;
"DEPOSITARY" has the meaning ascribed thereto in section 9.1;
"DESIGNATED REPRESENTATIVE" means the Designated Representative as
determined at the relevant time in accordance with section 3.1;
"DISABILITY" means the inability of a member of Impark Management
to continue to perform his duties for Impark on a full-time basis
for a period of more than six (6) months as a result of physical
or mental disability, as determined by a qualified medical
practitioner;
"EFFECTIVE DATE" has the meaning ascribed thereto in sections 6.1,
6.2, 6.3 and 7.2;
"FACILITIES OPERATING INCOME" for a period means, without double
counting, the actual revenues realized by Impark during such
period from the operation of First Union Facilities less all
expenses associated with operating the First Union Facilities
(other than real estate taxes, utilities, ground rent and
insurance covering damage to the physical facility) incurred by
Impark during such period in operating the First Union Facilities
(but for greater certainty not deducting any amounts payable to
FUR pursuant to any lease or management agreement and not
deducting any interest expense);
"FACILITIES RETURN TO FUR" for any period means an amount of
imputed interest calculated at the rate of 11% per annum on the
amount of any outstanding FUR Capital Expenditure;
"FAIR VALUE PER SHARE" as at any date means:
(i) in the case of Preferred Shares, the Redemption Amount of a
Preferred Share as at such date determined in accordance
with the articles of Canco 1 but without regard to the fact
that the Preferred Shares are not redeemable prior to April
1, 2002; and
(ii) in the case of Common Shares, the amount determined by
dividing the Management Enterprise Equity Value as at the
end of the immediately preceding calendar year by
1,322,140;
<PAGE> 5
-5-
"FIRST UNION FACILITIES" means the Cleveland Parking Facilities,
the Transferred Parking Facilities and Additional Parking
Facilities which are leased to or managed by Impark;
"FUMI" mean First Union Management, Inc., a Delaware corporation;
"FUMI HOLDINGS PROPORTION" has the meaning ascribed thereto in
section 5.1;
"FUR CAPITAL EXPENDITURE" means the following:
(i) the amount of the gross acquisition cost to FUR (including
purchase price, fees, commissions and out-of-pocket
expenses of acquisition) of Additional Parking Facilities,
and such FUR Capital Expenditures shall be deemed to be
outstanding during any period while such Additional Parking
Facilities constitute First Union Facilities; and
(ii) the amount expended directly or indirectly by FUR to make
capital improvements to any First Union Facilities on
Impark's recommendation for the purpose of increasing the
Facilities Operating Income, and such FUR Capital
Expenditures shall be deemed to be outstanding from the
date any such amount is so expended and for so long as such
parking facilities constitute First Union Facilities;
"IMPARK" means collectively the Corporation and 504463 N.B. Inc.
and any direct or indirect subsidiaries of either of them;
"IMPARK EBITDA" for any period means the consolidated earnings of
Impark before interest expense (or interest income), income taxes,
depreciation and amortization, as calculated in accordance with
generally accepted accounting principles as used in the December
31, 1996 audited financial statements of the Corporation,
consistently applied, adjusted as follows:
(a) deducting any revenues or expenses of any type related to
First Union Facilities for such period; and
(b) deducting an amount on account of imputed interest
calculated at the rate of 8% per annum on any indebtedness
(excluding indebtedness incurred for normal working capital
purposes including without limitation operating lines of
credit) of Impark which is outstanding at any time during
such period in any amount in excess of the Base
Indebtedness;
"IMPARK MANAGEMENT" means the individuals listed on Schedule A
hereto and any other employee of Impark who hereafter becomes a
party to this agreement and any legal personal representative of
any such individual who
<PAGE> 6
-6-
dies or becomes mentally incapacitated (the foregoing being
"individual members"), and includes any Affiliate of any
individual member of Impark Management which holds Shares or to
which Shares are transferred or any successor or assign of such
Affiliate and also includes individuals to whom Shares are
transferred in accordance with the provisions of sections 4.3 and
4.5; and reference herein to the "members" or a "member" means
members or a member of Impark Management;
"MANAGEMENT ENTERPRISE EQUITY VALUE" as at the end of any calendar
year means the amount obtained by multiplying $5,555,556 by the
Proportionate Change as at such year end and deducting $4,233,416
from such product;
"PERFORMANCE SHORTFALL" for any period means the amount, if any,
by which the Performance Target for such period exceeds the
Consolidated Performance for such period, provided that if such
Consolidated Performance exceeds such Performance Target the
Performance Shortfall shall be zero;
"PERFORMANCE TARGET" means $13,146,105 for the 1997 calendar year,
$14,340,350 for the 1998 calendar year, $14,895,964 for the 1999
calendar year, and $15,473,803 for the 2000 calendar year, subject
in each case to the provisions of section 3.5;
"PERSON" includes an individual, a trust, a firm, a corporation, a
syndicate, a partnership, an association, a joint venture and
every other legal or business entity whatsoever;
"PREFERRED SHARES" means the Class A Preferred Shares in the
capital of Canco 1, any securities into which such Class A
Preferred Shares may be converted, exchanged, reclassified,
redesignated, subdivided or otherwise changed from time to time
and any securities of any successor corporation or a corporation
continuing from Canco 1 into which such Class A Preferred Shares
or such other securities may be changed as a result of any
amalgamation, merger, consolidation, plan of arrangement or
reorganization, statutory or otherwise;
"PROPORTIONATE CHANGE" as at the end of a calendar year means (i)
one as at the end of 1996, and (ii) other than as at the end of
1996, the Consolidated Performance for such calendar year divided
by the Performance Target for 1997;
"PURCHASE PRICE" means the purchase price for any Purchased Shares
pursuant to any transaction of purchase and sale of Shares
provided for in this agreement;
"PURCHASED SHARES" means, in the context of any provision hereof
pursuant to which a Vendor is selling Shares, such Shares;
<PAGE> 7
-7-
"PURCHASER" means, in the context of any provision hereof pursuant
to which a Vendor is selling Shares, the purchaser of such Shares;
"SHARE PURCHASE CLOSING" means the completion of the sale and
purchase of shares of Holdco pursuant to the Share Purchase
Agreement;
"SHARES" means Class A Common Shares, Class B Common Shares and
Preferred Shares;
"SPOUSE" has the meaning ascribed thereto in Part I of the Family
Law Act (Ontario);
"THIRD PARTY" means, as applicable to sections 5.1 and 6.4, a
person dealing at arm's length (within the meaning of the Income
Tax Act (Canada)) with Canco 1, and for greater certainty, in all
cases, neither (i) any individual who is a full time member of the
management of FUR or FUMI or any of their respective affiliates,
or any corporation wholly-owned, directly or indirectly, by any
such individual or a trust related to any such individual, nor
(ii) any person that is a firm, corporation, syndicate,
partnership, association, joint venture or other legal or business
entity whatsoever which is controlled by FUR or FUMI, shall be
deemed to be a Third Party;
"THIRD PARTY OFFER" has the meaning ascribed thereto in section
5.1; and
"TRANSFERRED PARKING FACILITIES" means 633 - 10th Avenue S.W.,
Calgary, Alberta; 1009 A, B and C - 9th Avenue S.W., Calgary,
Alberta; 10040 - 103 Street, Edmonton, Alberta; 10244 - 103
Street, Edmonton Alberta; 10239 - 107 Street, Edmonton, Alberta;
1709 Blanshard Street, Victoria, B.C.; 245 Graham Avenue and 257
Smith Street, Winnipeg, Manitoba; 168 Water Avenue, Winnipeg,
Manitoba; 336 Young Street, Winnipeg, Manitoba; 296, 298 and 304
Broadway, Winnipeg, Manitoba; 115 Donald Street, Winnipeg,
Manitoba; 178 Queen's Quay East, Toronto, Ontario; and 1724 Broad
Street, Regina, Saskatchewan; and
"VENDOR" means, in the context of any provision hereof pursuant to
which Shares are being sold, the shareholder selling such Shares.
1.2 OTHER RULES OF INTERPRETATION. All words used in this agreement shall be
read with such changes in gender and number as are required by the context.
Words importing the singular number shall include the plural and vice versa and
words importing gender shall include all genders. The terms "this agreement",
"hereof", "herein", "hereunder" and similar expressions refer to this agreement
and not to any particular Article, section or paragraph or other portion hereof
and
<PAGE> 8
-8-
include any agreement, schedule, amendment or other instrument supplementary or
ancillary hereto. Time is of the essence hereof.
1.3 CURRENCY. All dollar amounts stated herein are, unless otherwise indicated,
in Canadian dollars.
1.4 HEADINGS AND REFERENCES. The division of this agreement into Articles,
sections and paragraphs and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
agreement. Reference in this agreement to an Article, section or Schedule is to
the applicable Article, section or Schedule of this agreement unless the context
otherwise requires.
1.5 REFERENCE TO STATUTES. Reference in this agreement to a statute means such
statute as amended, re-enacted or replaced from time to time and includes all
regulations promulgated thereunder.
ARTICLE 2
SUBSCRIPTION AND SHARE PURCHASE CLOSING
---------------------------------------
2.1 EXERCISE OF OPTION. Each Holdco Shareholder already has exercised or shall,
prior to the Share Purchase Closing, exercise all options to purchase shares of
Holdco held by such Holdco Shareholder as set out in Schedule A so that, at the
time of the Share Purchase Closing, each Holdco Shareholder will be the holder
of that number of shares of Holdco indicated on Schedule B.
2.2 ALTERATION OF CONSIDERATION. Notwithstanding the provisions of section 2.3
of the Share Purchase Agreement, the portion of the purchase price for the
shares of Holdco to be received on the Share Purchase Closing by each Holdco
Shareholder shall be satisfied by the payment and delivery by Canco 1 of cash
and Shares as set out in Schedule B. Without limiting the generality of section
4.6, all certificates for Shares issued to Holdco Shareholders on the Share
Purchase Closing shall bear the legend provided for in section 4.6.
2.3 TAX ELECTIONS. Notwithstanding the provisions of section 2.14 of the Share
Purchase Agreement, if requested by a Holdco Shareholder, Canco 1 will file a
joint election pursuant to subsection 85(1) of the Income Tax Act (Canada) (the
"Tax Act") in the prescribed form and within the prescribed time so that the
proceeds of disposition of the shares of Holdco for the purposes of the Tax Act
shall be deemed to be the amount elected in such election, as determined by the
Holdco Shareholder, within the limits provided for in the Tax Act.
2.4 SUBSCRIPTION. Each person named in Schedule C hereby subscribes for and
agrees to take up the number and class of Shares set out opposite such person's
<PAGE> 9
-9-
name in such Schedule and to pay therefor the subscription price of $1.00 per
Share, such subscription to be made and to become effective immediately
following the proposed amalgamation of Canco 1 and the Corporation as referred
to in section 3.3. Canco 1 agrees to accept such subscription by each such
person.
2.5 REPRESENTATION REGARDING RRSP'S. Each of J. Bruce Newsome, Douglas I.
Poirier, J. Robin Bateman, Robert L. Noiles, Henry J. Renaud and Stuart M.
MacKenzie represents and warrants with respect to his respective Affiliate which
is a Holdco Shareholder that: (i) at the time of closing under the Share
Purchase Agreement, such Affiliate will be the registered owner of that number
of shares of Holdco as listed opposite the name of such Affiliate in Schedule A,
with good and marketable title thereto free and clear of all liens, charges and
encumbrances; (ii) except pursuant to the Share Purchase Agreement, no person
has any option, contract or agreement, or any right or privilege capable of
becoming an option, contract or agreement, for the purchase or acquisition of
any of the shares of Holdco or any Shares to be acquired pursuant hereto; (iii)
the trustee under such Affiliate has all necessary power and authority to enter
into this agreement and to perform its obligations hereunder; and (iv) this
agreement has been duly executed and delivered by such Affiliate and is a legal,
valid and binding obligation of such Affiliate, enforceable against such
Affiliate in accordance with its terms.
ARTICLE 3
VOTING, ORGANIZATION AND MANAGEMENT
-----------------------------------
3.1 DESIGNATED REPRESENTATIVE. The representative from time to time of the
members of Impark Management (the "Designated Representative") shall be the
Chief Executive Officer of the Corporation then in office who shall have the
irrevocable and full authority to give and receive all notices, communicate all
decisions and otherwise take all actions that are to be given, made or taken
pursuant to this agreement by Impark Management and the parties hereto shall be
entitled to rely upon the authority of the Designated Representative to bind
Impark Management in respect of all matters arising pursuant to this agreement.
3.2 ASSIGNMENT OF VOTING RIGHTS. Each member of Impark Management does hereby
irrevocably nominate, constitute and appoint the Designated Representative as
his true and lawful attorney with authority to vote any and all of the Shares
held from time to time by such member, and to execute resolutions in writing of
the shareholders of Canco 1 as holders of such Shares for and on behalf of and
in the name of such member, in such manner as may be determined by the
Designated Representative in his sole discretion, at all times and on all
matters that may come before the shareholders of Canco 1 or any class thereof
while this agreement remains in effect and to make, execute, seal and deliver
for and on behalf of and in the name of such member of Impark Management, one or
more proxies in respect of Shares held by such member of Impark Management from
time to time.
<PAGE> 10
-10-
The members of Impark Management shall each deliver to the current Designated
Representative, concurrently with the execution of this agreement and from time
to time thereafter upon request therefor, a continuing power of attorney in the
form attached hereto as Schedule D in favour of the Designated Representative
for the purposes of this section 3.2 and Article 8, which power of attorney
shall not be revocable by the member without the consent of FUMI Holdings and
which, being coupled with an interest, shall not be revoked by the insolvency,
bankruptcy or incapacity of the member or of any Affiliate of the member to
which Shares may be transferred in accordance with section 4.2. Each member of
Impark Management hereby ratifies and confirms and agrees to ratify and confirm
all that such attorney may lawfully do or cause to be done by virtue of the
authority hereby or thereby conferred. Upon any change in the Designated
Representative, the former Designated Representative and all members of Impark
Management shall forthwith agree to the revocation of all such powers of
attorney and new powers of attorney shall be forthwith provided in favour of the
new Designated Representative.
3.3 AMALGAMATION OF CANCO 1. Forthwith following the Share Purchase Closing,
Holdco shall be wound-up into Canco 1 and then Canco 1 and the Corporation shall
be amalgamated pursuant to a short form vertical amalgamation under the Canada
Business Corporations Act. Following such amalgamation, all references in this
agreement to Canco 1 and the Corporation shall be deemed to be references to the
continuing corporation formed as a result of the amalgamation of such two
corporations.
3.4 BOARD OF DIRECTORS. The Board shall consist of three members. One member of
the Board shall be the nominee of the Designated Representative and the other
two members of the Board shall be nominees of FUMI Holdings.
3.5 ADJUSTMENT OF PERFORMANCE TARGETS AND CONSOLIDATED ACHIEVEMENT.
Notwithstanding the definition of Performance Targets and the definition of
Consolidated Performance and the definitions related thereto, the amounts
otherwise provided for or determined in accordance with any of such definitions
shall be subject to adjustment in the discretion of the Board to be exercised in
good faith and after consultation with the Designated Representative and the
auditors of Canco 1 in the event of material asset dispositions or in the event
of unusual circumstances which would lead to anomalous or inappropriate results
and to offset the effect of any office rent paid by Impark to FUR on the First
Union Facilities.
3.6 PERFORMANCE ACHIEVEMENT PROGRAM. The Corporation shall establish and
implement a performance achievement program for the benefit of Impark Management
on the terms set forth in Schedule E.
3.7 PERFORMANCE BONUS PROGRAM. The Corporation shall establish and implement a
performance bonus program for the benefit of, inter alia, Impark Management on
the terms set forth in Schedule F.
<PAGE> 11
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3.8 ADDITIONAL ISSUANCE OF COMMON SHARES. If after the date hereof Canco 1
proposes to issue from treasury any additional Class A Common Shares or Class B
Common Shares, Canco 1 shall first offer such Common Shares to the parties
hereto (the "Eligible Shareholders") who then hold Common Shares of the class of
Common Shares proposed to be issued (the "Offered Class") by notice given to the
Eligible Shareholders of the intention of Canco 1 and the number and class of
additional Common Shares proposed to be issued. Each Eligible Shareholder shall
have the right to purchase his pro rata portion of the Common Shares so offered
with such pro rata portion to be determined based on the number of Common Shares
of the Offered Class owned by such Eligible Shareholder at the date such notice
is given relative to the total outstanding number of Common Shares of the
Offered Class as at such date. Each Eligible Shareholder shall have 20 Business
Days from the date such notice is given to agree to take up and pay for the
Common Shares so offered. Any Common Shares that the Eligible Shareholders have
not agreed to take up and pay for within such 20 Business Days may be issued at
any time within the ensuing 60 days to such persons as the Board in its
discretion determines on terms not more favourable to the purchaser than the
terms offered to the Eligible Shareholders.
ARTICLE 4
GENERAL RESTRICTIONS ON TRANSFERS
---------------------------------
4.1 GENERAL RESTRICTION. Except as specifically provided in sections 4.2, 4.3
and 4.4 and Articles 5, 6 and 7, no member of Impark Management may, except with
the prior written consent of FUMI Holdings, which consent may be withheld in its
sole discretion, sell, transfer (including by operation of law, by winding-up or
by amalgamation and whether or not for consideration), assign or otherwise
dispose of (any of the foregoing being a "sale") or mortgage, charge, encumber,
pledge, assign by way of security or grant a security interest in (any of the
foregoing being a "pledge") its rights, title or interest in, to or under any
Shares to any person other than FUMI Holdings. Any sale or pledge attempted to
be made which is not in accordance with this agreement shall be void and of no
effect and Canco 1 shall not accept any such sale or pledge or any transfer by
any person claiming rights through any such sale or pledge for registration on
its books of record.
4.2 TRANSFERS TO AFFILIATES. Subject to the provisions of the articles of Canco
1 and sections 4.5 and 4.6 and Article 6 of this agreement, nothing herein shall
prevent the transfer of any Shares or any interests therein by any of the
individual members of Impark Management to an Affiliate of such member or by an
Affiliate of such individual member to another Affiliate of such individual
member provided that: (i) the Affiliate executes and delivers a document
agreeing to be bound by the provisions hereof pursuant to section 4.5 and such
other instruments as FUMI Holdings may reasonably request to ensure that such
Affiliate continues to
<PAGE> 12
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qualify as an Affiliate of such member; (ii) each of the Affiliate and such
individual member agrees with Canco 1 and FUMI Holdings not to effect or agree
to effect any sale or pledge of any securities of such Affiliate without the
prior written consent of FUMI Holdings, such consent not to be unreasonably
withheld; and (iii) such individual member shall remain liable under this
agreement as a guarantor to ensure that the Affiliate, or any further Affiliate
to which such Shares may be transferred, abides by the terms of this agreement.
4.3 PERMITTED TRANSFERS. Any member of Impark Management may sell all or any
portion of such member's or such member's Affiliate's Shares to:
(i) with the prior written consent of the Designated Representative,
any other member of Impark Management or any person who has been
an employee of Impark continuously since April 17, 1997; or
(ii) with the prior written consent of FUMI Holdings, such consent not
to be unreasonably withheld, any other full-time employee of
Impark, provided that such purchaser shall, as a condition
precedent to such purchase and sale, execute an agreement as
required by section 4.5 and such purchaser shall thereupon become
a member of Impark Management for the purposes of this agreement.
4.4 PERMITTED PLEDGES. Any member of Impark Management may, with the prior
written consent of FUMI Holdings, such consent not to be unreasonably withheld,
pledge all or any portion of such member's or such member's Affiliate's Shares
to a recognized Canadian financial institution solely to secure bonafide
indebtedness or financial obligations of such member or Affiliate to such
financial institution for an amount not exceeding two-thirds (2/3) of the
original issue price of the Shares held by such member and such member's
Affiliate and solely for the purpose of such member or Affiliate acquiring such
Shares, provided that: (i) such financial institution acknowledges in writing,
on terms acceptable to FUMI Holdings, to be bound by the terms and provisions of
this agreement in dealing with such Shares to the same extent as if it were a
member of Impark Management; (ii) such financial institution agrees to notify
the Designated Representative and FUMI Holdings of any default by a member of
Impark Management with respect to such indebtedness or financial obligations and
to grant the Designated Representative and FUMI Holdings the option to purchase
such member's Shares in accordance with section 6.2; (iii) such financial
institution agrees, in the event of a sale, realization or other disposition of
all or any portion of such Shares, that the same shall only be dealt with
subject to and in accordance with the terms and provisions of this agreement;
and (iv) such financial institution agrees that upon repayment of such
indebtedness or financial obligations it will deliver the certificates
representing such member's Shares to the Depositary and not to such member.
<PAGE> 13
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4.5 AGREEMENT BINDING. If any Shares or any interests therein are transferred,
issued or sold to any person who is not an original party to this agreement, as
a condition precedent to being registered as a holder of Shares and to the
exercise or enjoyment by such acquiror of any rights attaching to such Shares,
the acquiror of such Shares shall execute and deliver an agreement, in form and
on terms satisfactory to FUMI Holdings, whereby such acquiror agrees to be bound
by the provisions hereof, with such amendments hereto and thereto as may be
required by FUMI Holdings, as if he were an original party hereto, and such
acquiror shall thereupon become a member of Impark Management (for purposes only
of this agreement but not for the purposes of the program described in Schedule
E) and shall have the same rights, and be subject to the same obligations and
restrictions, hereunder as the other members of Impark Management or the
original party hereto previously holding such Shares. In the case of a sale of
all of the Shares of an original party other than to an Affiliate thereof, the
obligations hereunder of such original party as a holder of Shares shall
thereupon cease to be effective and such member shall cease to be entitled to
any benefits hereunder in respect of such Shares arising after the time of such
sale, subject to the continuing liability under section 4.2 in respect of
transfers to Affiliates and provided that the foregoing shall not release or
affect any rights or obligations arising prior to such time hereunder in respect
of such Shares. For greater certainty, if such a transferee is already a member,
his rights and obligations as a member hereunder shall thereupon apply to the
Shares thus sold to him in the same manner as to his original Shares (provided
that such transferee shall not thereby acquire any additional rights for the
purposes of the program described in Schedule E).
4.6 LEGENDS ON SHARE CERTIFICATES. Any and all certificates representing Shares
now or hereafter issued to any person during the term of this agreement (whether
such certificates are issued at present or subsequently issued or sold) shall
have typed or otherwise written thereon a legend substantially to the following
effect:
"The shares represented by this certificate are subject to
certain restrictions on the right to transfer, sell, assign or
otherwise deal with them, pursuant to a shareholders'
agreement made as of the 17th day of April, 1997, and notice
of the terms and conditions of such agreement is hereby
given."
ARTICLE 5
THIRD PARTY OFFERS
------------------
5.1 DRAG ALONG. If at any time FUMI Holdings proposes to sell any of its Common
Shares pursuant to a bonafide offer by, or letter of intent of, a Third Party (a
"Third Party Offer"), FUMI Holdings shall deliver a notice in writing to the
<PAGE> 14
-14-
members of Impark Management setting out the price per Common Share of the Third
Party Offer (the "Offer Price") (which shall be the same for both Class A Common
Shares and Class B Common Shares) and the other relevant material terms and
conditions (the "Offer Terms") of the Third Party Offer and the number of Common
Shares that FUMI Holdings intends to sell pursuant to the Third Party Offer and
the proportion of the Common Shares held by FUMI Holdings that such number then
constitutes (the "FUMI Holdings Proportion"). FUMI Holdings may, at its option,
specify in such notice that the members of Impark Management shall be required
to sell to the Third Party, at the Offer Price and on the Offer Terms, that
proportion of their Common Shares that is equal to the FUMI Holdings Proportion,
and, if FUMI Holdings so states in such notice, the members of Impark Management
shall sell their Common Shares to the Third Party at the Offer Price and on the
Offer Terms.
5.2 TAG ALONG. If FUMI Holdings does not require the members of Impark
Management to sell their Common Shares pursuant to section 5.1, then each of the
members of Impark Management may, by notice in writing delivered to FUMI
Holdings at any time within ten (10) days following the delivery of the notice
by FUMI Holdings to such members pursuant to section 5.1, elect either of the
following alternatives:
(a) to sell that proportion of such member's Common Shares that is
equal to the FUMI Holdings Proportion at the Offer Price and
on the Offer Terms, in which case FUMI Holdings shall cause
the Third Party to purchase, and such member shall sell, such
member's Common Shares to the Third Party; or
(b) not to sell any Common Shares held by such member pursuant to
this section 5.2, in which case FUMI Holdings may proceed to
sell the Common Shares indicated in the FUMI Holdings' notice
described above in section 5.1 to the Third Party pursuant to
the Third Party Offer at the Offer Price and on the Offer
Terms.
5.3 PREFERRED SHARES. In the event that as a result of any Third Party Offer all
of the Common Shares held by any member of Impark Management are to be sold by
such member, FUMI Holdings shall cause all of the Preferred Shares held by such
member of Impark Management either to be redeemed by Canco 1 or to be acquired
by some other person for a price equal to the then current redemption price of
such Preferred Shares, in either event immediately prior to or contemporaneously
with the sale of the Common Shares.
5.4 REPRESENTATIONS AND WARRANTIES. In connection with any sale of Common Shares
in accordance with this Article 5, FUMI Holdings may require the members of
Impark Management to enter into agreements with FUMI Holdings and/or the Third
Party in which such members shall represent and warrant that,
<PAGE> 15
-15-
except as specifically disclosed to FUMI Holdings or the Third Party in writing,
such member at the time of closing of such sale does not have actual knowledge
that any warranty made by FUMI Holdings pursuant to a written sale agreement, a
copy of which was provided to such member, in connection with such sale was
untrue in any material respect as of the closing of such sale, provided that no
such member need make any independent enquiry or investigation in connection
with giving such representation and warranty. The liability of such member for
any inaccuracy in such representation and warranty shall be limited to the
amount which he receives from the sale of his Shares in connection with such
sale and shall be pro rata in accordance with the number of Shares sold by such
member in relation to the total number of shares sold to the Third Party.
5.5 CLOSING OF THIRD PARTY PURCHASES. Any purchase and sale of Common Shares
pursuant to this Article 5 shall be effected concurrently with the sale of
Common Shares by FUMI Holdings to the Third Party in accordance with the
provisions of Article 8 and shall be completed at the date and time (the "Date
of Closing" and "Time of Closing", respectively, for purposes of Article 8)
specified by FUMI Holdings or the Third Party by notice in writing delivered to
the member not later than ten (10) days following the date on which the
obligations of such member to sell Common Shares have arisen pursuant to this
Article 5, and in any event the Date of Closing shall be no later than ninety
(90) days following the date of the Third Party Offer.
ARTICLE 6
DEATH, DISABILITY,
TERMINATION, RESIGNATION AND DEFAULT
------------------------------------
6.1 OPTION TO PURCHASE. If at any time any individual member of Impark
Management has ceased to be employed by Impark or by an affiliate of Impark for
any reason (including, without limitation, by reason of voluntary resignation,
termination with or without cause, death or Disability), the following rights
shall arise with respect to the Shares held by such individual member of Impark
Management and by any Affiliate of such individual member (the "Subject
Shares"):
(a) the Designated Representative shall have the right, at his option,
to purchase for cash all but not less than all of the Subject
Shares, which option may be exercised by notice in writing to such
individual member of Impark Management or the executors or legal
personal representatives of an individual member who has died or
become mentally incapacitated or the permitted successors and
assigns of an Affiliate of that member (the "Selling Manager") and
to FUMI Holdings given at any time within 30 days following the
date (the Effective Date") which is the effective date of the
resignation, the date
<PAGE> 16
-16-
of giving of notice of termination or the date of death or
Disability, as the case may be;
(b) if the Designated Representative does not exercise his option as
set forth in subsection (a) above within 30 days following the
Effective Date or gives notice to the Selling Manager and FUMI
Holdings that he does not wish to exercise such option, FUMI
Holdings shall have the right, at its option, to purchase for cash
all but not less than all of the Subject Shares, which option may
be exercised by notice in writing to the Selling Manager given at
any time after 30 days following the Effective Date; and
(c) if the Designated Representatives does not exercise his option as
set forth in subsection (a) above and FUMI Holdings does not
exercise its option as set forth in subsection (b) above, the
Selling Manager shall have the right, at his option, to sell all
of his Common Shares to Canco 1 with the price therefor to be
payable by the issuance of additional Preferred Shares at $1 per
Preferred Share, which option may be exercised by the Selling
Manager giving notice to Canco 1 and FUMI Holdings at any time
after 40 days but before 60 days following the Effective Date and,
in the event of the exercise of such right, the Preferred Shares
issued as a result thereof shall become Subject Shares of such
Selling Manager.
6.2 SALE UPON DEFAULT ON INDEBTEDNESS. If a member of Impark Management defaults
on any indebtedness referred to in section 4.4 or commits any act of bankruptcy,
the Designated Representative and FUMI Holdings shall have the option,
exercisable in accordance with the provisions of subsections (a) and (b) of
section 6.1, mutatis mutandis, upon notice (the date of which shall be, for
these purposes, the "Effective Date") to such member at any time following a
default, to purchase all or any portion of the Shares held by such member.
6.3 FUMI HOLDINGS OPTION TO PURCHASE. By notice given to the members of Impark
Management at any time after April 17, 2001, FUMI Holdings shall have the right,
at its option exercisable from time to time, to purchase all or any portion of
the Shares held by any member or members of Impark Management. The date of the
giving of any such notice shall be the "Effective Date".
6.4 SALE OF PREFERRED SHARES. By written notice given to Canco 1 and FUMI
Holdings, at any time during the month of March in any year commencing with
March of 2004, any member of Impark Management who is not at such time employed
by any of FUR, FUMI or a subsidiary of any of them (the "Selling Manager") shall
have the right, at his option, to require Canco 1 to purchase all of the
Preferred Shares then owned by such Selling Manager unless such purchase by
Canco 1 would result in a breach or default under any agreement between Canco 1
<PAGE> 17
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and a Third Party or would otherwise be contrary to law. The date of the giving
of any such notice shall be the "Effective Date", subject to such condition.
6.5 PURCHASE PRICE. The purchase price per share for Shares transferred pursuant
to sections 6.1, 6.2, 6.3 and 6.4 shall be the Fair Value Per Share as of the
Effective Date.
6.6 CONFLICT WITH THIRD PARTY OFFER. If an Effective Date occurs with respect to
a member at any time following the delivery of a notice pursuant to section 5.1
setting out a Third Party Offer, the provisions of this Article 6 shall not
apply with respect to the Shares held by such member or Affiliate of such member
unless (i) FUMI Holdings has not required such member to sell his Shares
pursuant to section 5.1 and the member has elected not to sell any Shares held
by the member in accordance with alternative (b) of section 5.2, in which case
the provisions of this Article 6 shall apply, (ii) the purchase and sale
transaction with the Third Party pursuant to section 5.1 is not completed for
any reason other than the default of the member, in which case the provisions of
this Article 6 shall apply, or (iii) such member has become obligated to sell
less than all of his Shares to the Third Party, in which case the provisions of
this Article 6 shall apply to those Shares held by such member which he has not
become so obligated to sell.
6.7 COMPLETION. Subject as hereinafter provided, each transfer of Shares under
this Article 6 shall for all purposes be deemed to have been completed on the
Effective Date relating thereto and title to the Shares being transferred shall
pass to the transferee thereof on and as of such date. In the case of transfers
of Shares other than pursuant to section 6.4 and subsection (c) of section 6.1,
the party having the option to purchase shall, in the notice exercising such
option, notify the Selling Manager of a date and time (the "Date of Closing" and
"Time of Closing", respectively, for the purposes of Article 8) for the payment
of the purchase price for the Subject Shares, which date shall be not more than
sixty (60) days after the date of such notice and the closing shall be effected
in the manner provided for in Article 8. In the case of transfers to Canco 1 of
Common Shares pursuant to subsection (c) of section 6.1 and of Preferred Shares
pursuant to section 6.4, Canco 1 shall notify the Selling Manager of a date and
time (the "Date of Closing" and "Time of Closing", respectively, for the
purposes of Article 8) for the payment of the purchase price for the Subject
Shares, which date shall be not more than sixty (60) days after the date of such
notice and the closing shall be effected in the manner provided for in Article
8. Notwithstanding the foregoing, any transfer of Shares to Canco 1 provided for
in section 6.4 or in subsection (c) of section 6.1 shall be conditional upon all
of the members of Impark Management, other than the Selling Manager, consenting
to such transfer and waiving any rights they may have as a condition precedent
to or as a consequence of such transfer in their capacity as holders of
Preferred Shares and Common Shares (i) to the immediate payment of any accrued
but unpaid dividends on their Preferred Shares or (ii) to the contemporaneous
repurchase of any of their Shares. The members of Impark Management hereby
consent to any such transfer
<PAGE> 18
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and waive any such rights to the extent arising as a result of any such transfer
and hereby authorize and direct the Designated Representative to execute and
deliver on their behalf at the time of any such transfer a document confirming
such consent and waiver.
ARTICLE 7
FAMILY LAW
----------
7.1 PREVENTION OF TRANSFER ORDERS. Each member of Impark Management agrees to
use his best efforts to prevent or avoid any order or similar act being rendered
by any court of competent jurisdiction under the Family Law Act (Ontario), the
Divorce Act (Canada) or comparable laws or legislation of any other jurisdiction
that would have the effect of transferring beneficial ownership of the Shares
held by such member or any Affiliate of such member to any person (other than by
reason of that person being the individual's heir or legal personal
representative at the time of his or her death or mental incapacity) who was
not, immediately prior to the making of such order or similar act, a member of
Impark Management (any such act or order being a "Transfer Order"), except that
this section 7.1 shall not require any such member to obtain the execution by
his Spouse of any instrument binding such Spouse to the terms of this Article 7
prior to the time of any transfer of Shares or any beneficial interest therein
to his Spouse.
7.2 RIGHT OF FIRST REFUSAL ON TRANSFER. Each member of Impark Management agrees
that any amount that is required to be paid by the member to any Spouse of the
member by order of a court of competent jurisdiction shall, if reasonably
possible, be satisfied by the transfer to such Spouse of property of the member
other than the Shares. If a Transfer Order is made or if any transfer or sale of
Shares is required to satisfy a court order, the affected member of Impark
Management shall forthwith give written notice thereof to the Designated
Representative and FUMI Holdings (the date of the giving of such notice being
the "Effective Date") and the Designated Representative and FUMI Holdings shall
have first rights, in accordance with the provisions of subsections (a) and (b)
of section 6.1, mutatis mutandis, to acquire from such member or any transferee
such Shares as are subject to a Transfer Order or otherwise required to be sold,
at a price per Share (without interest) equal the Fair Value Per Share of such
Shares on the Effective Date.
ARTICLE 8
COMPLETION OF PURCHASE AND SALE OF SHARES
-----------------------------------------
8.1 OUTSTANDING INDEBTEDNESS. If any indebtedness of the Vendor to: (i) any
authorized pledgee pursuant to any financing in accordance with section 4.4;
(ii) the Corporation, Canco 1, FUMI Holdings, 504308 N.B. Inc. or any of their
affiliates; or
<PAGE> 19
-19-
(iii) the Purchaser; is outstanding upon the occurrence of any purchase and sale
of Shares hereunder, the Vendor hereby irrevocably authorizes and directs that a
portion of the Purchase Price for the Purchased Shares equal to such outstanding
indebtedness be applied in repayment of such indebtedness. The Purchased Shares
shall not be registered in the name of the Purchaser unless all such
indebtedness has been repaid to the extent of the Purchase Price.
8.2 DELIVERY OF SHARES AND PAYMENT. At the Time of Closing on the Date of
Closing in respect of any sale and purchase of Purchased Shares, the parties
shall attend at the offices where the closing is being held, the Vendor shall
deliver to the Purchaser certificates representing the Purchased Shares, duly
endorsed in blank for transfer (or, if the Depositary holds such certificates
pursuant to Article 9, an acknowledgement that the Depositary holds such
certificates for the Purchaser), and the Purchaser shall pay to the Vendor the
Purchase Price (or the balance thereof after the repayment of any indebtedness
referred to in section 8.1).
8.3 VENDOR DEFAULT. If the Vendor does not attend at the place of closing at the
Time of Closing, or fails for any reason whatsoever to produce and deliver to
the Purchaser the certificates representing the Purchased Shares duly endorsed
in blank for transfer (or, if the Depositary holds such certificates pursuant to
Article 9, an acknowledgement that the Depositary holds such certificates for
the Purchaser) at or prior to the time payment of the Purchase Price therefor is
required to be made, then the Purchase Price shall be deposited at the time
otherwise provided for its payment into a special account in the name of the
Vendor at the branch of the principal Canadian chartered bank (the "Bank")
primarily utilized by the Corporation. Such deposit shall constitute valid and
effective payment to the Vendor of the Purchase Price and shall result in title
to the Purchased Shares passing to the Purchaser, even if the Vendor has
voluntarily sold or pledged any of the Purchased Shares, and notwithstanding
that certificates representing any of the Purchased Shares may have been
delivered to an authorized pledgee, a transferee or other person. If any of the
Purchased Shares have been pledged to an authorized pledgee to secure
obligations or indebtedness of the Vendor, the Purchaser may, at its option, in
lieu of depositing the Purchase Price as aforesaid, pay all or any part of the
Purchase Price to the authorized pledgee to the extent required to discharge
such obligations or indebtedness and receive the certificates representing the
Purchased Shares from the authorized pledgee and deposit the remainder, if any,
of the Purchase Price as aforesaid.
8.4 TRANSFER OF TITLE. From and after the Date of Closing until the time
provided for the payment for the Purchased Shares, and thereafter if such
payment is then made or if a deposit and/or payment is then made in accordance
with section 8.3, and even though the certificates representing the Purchased
Shares may not have been delivered to the Purchaser, the purchase of the
Purchased Shares shall be deemed to have been fully completed and all right,
title, benefit and interest, both at law and in equity, in and to the Purchased
Shares (except as provided in section 8.5)
<PAGE> 20
-20-
shall be deemed to have been transferred and assigned to and become vested in
the Purchaser and all right, title, benefit and interest, both at law and in
equity, of the Vendor or of any transferee, pledgee or any other person having
any interest, legal or equitable, therein or thereto shall cease and determine.
8.5 PAYMENT OF DEFAULTING VENDOR. Subject to section 8.1, the Vendor shall be
entitled to receive the Purchase Price deposited with the Bank upon delivery to
the Purchaser of the certificates representing the Purchased Shares, duly
endorsed in blank for transfer (or, if the Depositary holds such certificates
pursuant to Article 9, an acknowledgement that the Depositary holds such
certificates for the Purchaser).
8.6 POWER OF ATTORNEY. The Vendor hereby irrevocably constitutes and appoints
the Designated Representative (and if the Designated Representative is the
Vendor he appoints each of the officers from time to time of FUMI Holdings) as a
true and lawful attorney-in-fact and agent for, in the name of and on behalf of,
the Vendor to execute and deliver in the name of the Vendor all such
assignments, transfers, deeds, receipts, directions and instruments as may be
necessary effectively to sell, transfer and assign the Purchased Shares, or any
part thereof, to the Purchaser on the books of Canco 1. Each member of Impark
Management shall deliver to the Designated Representative concurrently with the
execution of this agreement a continuing power of attorney for the purposes set
out in section 3.2 and this Article 8 in accordance with section 3.2 and shall
hereafter, upon request, provide such additional or replacement powers of
attorney for such purposes as may be required to fulfil the requirements of
applicable law for valid, effective and enforceable powers of attorney. Each
member of Impark Management hereby ratifies and confirms and agrees to ratify
and confirm all that the attorney appointed pursuant to this section 8.6 may
lawfully do or cause to be done by virtue of the authority hereby and thereby
conferred.
8.7 CONSENT. The Vendor hereby irrevocably consents to any sale or transfer of
the Purchased Shares made pursuant to the provisions hereof.
ARTICLE 9
DEPOSITARY ARRANGEMENTS
-----------------------
9.1 DEPOSIT OF SHARE CERTIFICATES. For so long as this agreement remains in
force, the certificates representing all of the Shares that are at any time held
by any member of Impark Management shall be held by FUMI Holdings or a person
designated by FUMI Holdings (the "Depositary") to be dealt with in accordance
with this agreement. Notwithstanding the foregoing, in the event that FUMI
Holdings consents to the pledge of any Shares pursuant to section 4.4, Shares
that are pledged as a result to any authorized pledgee shall, for so long as
they are held by such authorized pledgee pursuant to such pledge, not be
governed by this Article 9.
<PAGE> 21
-21-
9.2 DEPOSIT RECEIPT. The Depositary will issue in the name of and deliver to
each member of Impark Management who deposits with the Depositary a certificate
or certificates representing Shares, a receipt (the "Deposit Receipt") in
substantially the form annexed hereto as Schedule G to evidence such deposit,
which Deposit Receipt shall be non-transferable.
9.3 TRANSFER OF SHARES. If a transfer of Shares has been made in accordance with
the provisions of this agreement, upon delivery to the Depositary of (a) the
relevant Deposit Receipt and (b) written evidence satisfactory to the Depositary
that the transfer of Shares has been made in accordance with the provisions of
this agreement, the Depositary shall return the certificates representing such
Shares to Canco 1 for cancellation and Canco 1 shall cancel such Share
certificates and issue in the name of the transferee new Share certificates
evidencing the transferred Shares and, if less than all the Shares held by a
transferor have been transferred, issue in the name of the transferor new Share
certificates evidencing the Shares that were not transferred, which Share
certificates shall be delivered by Canco 1 to the Depositary to be dealt with in
accordance with the terms of this agreement. Upon receipt by the Depositary of
such new Share certificates, the Depositary shall issue in the name of and
deliver to such transferee a Deposit Receipt evidencing such transferee's rights
to the deposited Share certificates issued in the transferee's name subject to
the terms of this agreement, and, if applicable, shall issue in the name of and
deliver to such transferor a Deposit Receipt evidencing such transferor's rights
to the deposited Share certificates issued in the transferor's name subject to
the terms of this agreement.
9.4 RETURN OF SHARE CERTIFICATES. On the termination of this agreement, each
Deposit Receipt shall entitle the holder thereof, or his executors,
administrators, legal personal representatives or its successors or assigns, or
its or his or their attorney duly appointed by an instrument in writing in form
and execution satisfactory to the Depositary, as the case may be, to
certificates representing the number of Shares represented thereby on surrender
of such Deposit Receipt to the Depositary. Each party agrees that, except as
otherwise expressly provided herein, the Shares represented by certificates
deposited with the Depositary in accordance with the terms hereof shall not be
released by the Depositary except on termination of this agreement and that each
such party will not request nor be entitled to the release of certificates
except on such basis.
9.5 RIGHTS TO REMAIN WITH MEMBERS. FUMI Holdings hereby acknowledges and
confirms on behalf of itself and any designee of it that may at any time be the
Depositary that (a) the Depositary will hold the certificates representing
Shares subject to the provisions hereof, (b) the Depositary does not and will
not have any beneficial interest in the Shares in respect of which certificates
have been delivered to it pursuant to this Article 9 solely by reason of such
delivery, and (c) beneficial ownership of the Shares represented by certificates
deposited with the Depositary pursuant to this Article 9 and all other rights of
ownership with respect
<PAGE> 22
-22-
thereto shall remain with the members of Impark Management on behalf of whom the
same were deposited with the Depositary, subject to the powers of attorney
provided under sections 3.2 and 8.6.
9.6 LIMITATION OF DEPOSITARY LIABILITY. The Depositary shall be entitled to rely
as to all matters of fact conclusively upon documents and instruments in writing
signed by the members of Impark Management registered as holders of Shares or by
the Designated Representative as their lawful attorney. The Depositary shall not
be liable for relying in good faith on any such document required or permitted
to be given hereunder.
ARTICLE 10
MISCELLANEOUS
-------------
10.1 NOTICE. Any notice, document or thing required or permitted to be given or
delivered hereunder shall be deemed to be properly given or delivered to a party
if (a) delivered in person or by courier to the address set out below and
acknowledged by written receipt signed by the person receiving such notice, or
(b) sent by facsimile transmission and confirmed by prepaid registered letter
addressed to the party receiving such notice, at its respective address or fax
number set out below:
FUMI Holdings: c/o First Union Management, Inc.
Suite 1910
55 Public Square
Cleveland, Ohio
44113-1937
Attention: Paul F. Levin
Fax: (216) 781-7364
<PAGE> 23
-23-
Canco 1: c/o First Union Management, Inc.
Suite 1910
55 Public Square
Cleveland, Ohio
44113-1937
Attention: John Dee
Fax: (216) 781-7467
Impark Management: Designated Representative
c/o Imperial Parking Limited
Suite 300, The Station
601 West Cordova Street
Vancouver, British Columbia
V6B 1G1
Attention: Paul T. Clough
Fax: (604) 681-4098
Any notice or delivery given in accordance with the provisions of this section
10.1 shall be deemed to have been given and received, if delivered in person or
by courier, on the day of delivery in person or at the time of actual receipt
thereof, and if delivered by facsimile transmission on the date of receipt of
the facsimile transmission at the time of actual receipt thereof unless received
after business hours or on a day other than a Business Day and then on the next
Business Day.
10.2 CHANGE OF ADDRESS. Any party may from time to time by notice in writing
delivered in accordance with the provisions of this Article 10 change its
address for purposes hereof.
10.3 COUNTERPARTS. This agreement may be executed in any number of counterparts,
each of which shall constitute an original, and all of which collectively shall
constitute a single instrument.
10.4 SUCCESSORS AND ASSIGNS. This agreement shall enure to the benefit of and be
binding upon the parties hereto and their respective heirs, legal personal
representatives, successors and permitted assigns. FUMI Holdings may assign its
rights and obligations hereunder to FUMI or any corporation controlled by FUMI
without the consent of any other party hereto. No other party hereunder may
assign its rights or obligations hereunder without the prior written consent of
FUMI Holdings.
<PAGE> 24
-24-
10.5 GOVERNING LAW. This agreement shall be construed and interpreted in
accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein. Each of the parties hereby irrevocably attorns to the
non-exclusive jurisdiction of the courts of the Province of Ontario and all
courts competent to hear appeals therefrom.
10.6 SEVERABILITY. If any provision contained herein is determined to be void or
unenforceable in whole or in part, it shall not be deemed to affect or impair
the validity of any other provision herein and each such provision is deemed to
be separate and distinct.
10.7 ENTIRE AGREEMENT. This agreement constitutes the entire agreement between
the parties hereto pertaining to the respective obligations of Impark Management
and the other parties hereto in respect of the Shares, save and except for the
Share Purchase Agreement. There are not and shall not be any oral statements,
representations, warranties, undertakings or agreements between the parties with
respect to the subject matter hereof and this agreement may not be amended or
modified in any respect except by written instrument signed by the parties
hereto.
10.8 IMPLEMENTATION OF AGREEMENT. The parties hereto hereby covenant and agree
to do or cause to be done all acts and things, whether by the directors of the
Corporation or Canco 1 or otherwise, to execute and deliver or cause to be
executed and delivered all such instruments and to exercise or cause to be
exercised any and all voting rights attaching to the Shares held by each of them
in order that all provisions of this agreement shall be fully and effectively
carried out, implemented and given effect to in accordance with the terms
hereof. Canco 1 agrees not to take or approve any action that would contravene
any provision of this agreement and shall cause to be provided all necessary
approvals for any transfer of Shares that is effected in compliance with this
agreement.
<PAGE> 25
-25-
10.9 TERMINATION. This agreement shall terminate upon the agreement of
shareholders of Canco 1 who hold at least 90% of the voting rights attached to
all Class B Common Shares or, if earlier, at the option of FUMI Holdings
immediately upon the closing of a sale of 90% or more of the outstanding Common
Shares to a Third Party in accordance herewith.
IN WITNESS WHEREOF this agreement has been executed by the
parties hereto as of the date first above written.
SIGNED, SEALED AND DELIVERED )
in the presence of )
)
) /s/ Paul T. Clough
)-----------------------------
)Paul T. Clough
)
) /s/ J. Bruce Newsome
) -----------------------------
) J. Bruce Newsome
)
) /s/ Douglas I. Poirier
) -----------------------------
) Douglas I. Poirier
)
) /s/ J. Robin Bateman
) -----------------------------
) J. Robin Bateman
)
) /s/ James MacKay
) -----------------------------
) James MacKay
)
) /s/ Michael T. Menzies
) -----------------------------
) Michael T. Menzies
)
) /s/ Robert L. Noiles
) -----------------------------
) Robert L. Noiles
)
) /s/ Harry J. Renaud
) -----------------------------
) Harry J. Renaud
)
) /s/ Stuart M. MacKenzie
) -----------------------------
) Stuart M. MacKenzie
<PAGE> 26
-26-
)
)
)
) -----------------------------
) Daniel Sawchuck
)
LAURENTIAN BANK OF CANADA,
in trust for J.Bruce Newsome,
Accont No. VOO2679
by Authorized Signer
-----------------------------
RBC DOMINION SECURITIES INC.,
in trust for Douglas I. Poirier,
Account No. 496-81890-11
by Authorized Signer
-----------------------------
GUNDYCO,
in trust for J. Robin Bateman,
Account No. 590-90333-17
by Authorized Signer
-----------------------------
GUNDYCO,
in trust for Robert L. Noiles,
Account No. 590-77616-12
by Authorized Signer
-----------------------------
GUNDYCO,
in trust for Stuart M. MacKenzie,
Account No. 590-90254-12
by Authorized Signer
-----------------------------
<PAGE> 27
-27-
MIDLAND WALWYN CAPITAL INC.,
in trust for Henry J. Renaud,
Account No. 8RABNQS
by /S/ Authorized Signer
-------------------------------
3355489 CANADA INC.
by /S/ Authorized Signer
-------------------------------
3357392 CANADA INC.
by /S/ Authorized Signer
-------------------------------
<PAGE> 28
<TABLE>
SCHEDULE A
MEMBERS OF IMPARK MANAGEMENT
----------------------------
<CAPTION>
Number of Number of Common
Individual Common Shares Shares Under Option
- ---------- ------------- -------------------
<S> <C> <C>
Paul T. Clough 600,000 300,000
J. Bruce Newsome 125,000 112,500
Douglas I. Poirier 100,000 75,000
J. Robin Bateman 60,000 45,000
James MacKay 90,000 45,000
Michael T. Menzies 90,000 45,000
Robert L. Noiles 60,000 45,000
Harry J. Renaud - 45,000
Stuart M. MacKenzie - 22,500
Daniel Sawchuck 45,000 22,500
Trusts
- ------
Laurentian Bank of Canada, 100,000 -
in trust for account no. VOO2679,
a registered retirement savings plan
of which J. Bruce Newsome is the
sole beneficiary
RBC Dominion Securities Inc., 50,000 -
in trust for account no. 496-81890-11
a registered retirement savings plan
of which Douglas I. Poirier is the
sole beneficiary
</TABLE>
<PAGE> 29
<TABLE>
<S> <C> <C>
Gundyco, in trust for account 30,000 -
no. 590-90333-17, a registered
retirement savings plan of which
J. Robin Bateman is the sole
beneficiary
Gundyco, in trust for account 30,000 -
no. 590-77616-12, a registered
retirement savings plan of which
Robert L. Noiles is the sole
beneficiary
Midland Walwyn Capital Inc., 90,000 -
in trust for account no. 8RABNQS,
a registered retirement savings plan
of which Henry J. Renaud is the sole
beneficiary
Gundyco, in trust for account 45,000 -
no. 590-90254-12, a registered
retirement savings plan of which
Stuart M. MacKenzie is the sole
beneficiary
</TABLE>
<PAGE> 30
<TABLE>
<CAPTION>
SCHEDULE B
- -----------------------------------------------------------------------------------------------------------------------------------
Cash Received
Total Shares of (including from Class A Class B
Name Holdings at Closing Escrow Account) Common Shares Common Shares Preferred Shares
- ---- ------------------- --------------- ------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Paul T. Clough 900,000 833,560 348,585 96,169 503,956
Bruce Newsome 237,500 337,247 49,878 11,088 72,109
Laurentian Bank 100,000 396,060 - - -
(Newsome RRSP)
Doug Poirier 175,000 240,616 39,416 9,537 56,984
RBC Dominion Securities 50,000 198,030 - - -
(Poirier RRSP)
Rob Bateman 105,000 156,826 19,072 4,460 27,573
Gundyco (Bateman RRSP) 30,000 118,818 - - -
Jim MacKay 135,000 154,629 41,414 11,425 59,872
Mike Menzies 135,000 154,629 41,414 11,425 59,872
Rob Noiles 105,000 185,279 8,618 1,576 12,459
Gundyco (Noiles RRSP) 30,000 118,818 - - -
Harry Renaud 45,000 72,750 6,394 - 9,971
Midland Walwyn Capital 90,000 356,454 - - -
(Renaud RRSP)
Stuart MacKenzie 22,500 32,922 4,717 98 6,820
Gundyco (MacKenzie RRSP) 45,000 178,227 - - -
Dan Sawchuck 67,500 77,314 20,707 5,713 29,936
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 31
<TABLE>
SCHEDULE C
<CAPTION>
Shares of Canco 1 to be Acquired
------------------------------------------------------------------------
Subscribers Class A Common Class B Common Preferred Shares
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Laurentian Bank of Canada, in 71,780 22,476 103,774
trust for account no. VOO2679, a
registered retirement savings plan
of which J. Bruce Newsome is the
sole beneficiary
- -------------------------------------------------------------------------------------------------------------
RBC Dominion Securities Inc., 35,890 11,238 51,887
in trust for account no.
496-81890-11 a registered
retirement savings plan of
which Douglas I. Poirier is
the sole beneficiary
- -------------------------------------------------------------------------------------------------------------
Gundyco, in trust for account 21,534 6,743 31,132
no. 590-90333-17, a registered
retirement savings plan of
which J. Robin Bateman is the
sole beneficiary
- -------------------------------------------------------------------------------------------------------------
Gundyco, in trust for account 21,534 6,743 31,132
no. 590-77616-12, a registered
retirement savings plan of
which Robert L. Noiles is the
sole beneficiary
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 32
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Midland Walwyn Capital Inc., 64,602 20,229 93,396
in trust for account no.
8RABNQS, a registered
retirement savings plan of
which Harry J. Renaud is the
sole beneficiary
- -------------------------------------------------------------------------------------------------------------
Gundyco, in trust for account 32,301 10,114 46,698
no. 590-90254-12, a registered
retirement savings plan of
which Stuart M. MacKenzie is
the sole beneficiary
- -------------------------------------------------------------------------------------------------------------
Paul T. Clough 179,007 48,743 258,067
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 33
SCHEDULE D
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned hereby irrevocably
nominates, constitutes and appoints ________________________ (the "Attorney") ,
as the true and lawful attorney-in-fact and agent for the undersigned and in the
name, place and stead of the undersigned, in the capacity of the undersigned as
a shareholder of 3357392 Canada Inc. for the following purposes:
(i) to execute and deliver proxies and vote any and all shares of the
undersigned in 3357392 Canada Inc. on behalf of the undersigned in respect
of any matter on which the undersigned is entitled to vote in such manner
as may be determined by the Attorney in his sole discretion; and
(ii) to execute and deliver any and all assignments, transfers, deeds,
directions, receipts and other instruments as may be necessary effectively
to sell, transfer and assign any of such shares in accordance with the
provisions of the shareholders' agreement made as of April 17, 1997.
The execution of this document indicates the intention of the undersigned
that this document provides the Attorney with a continuing power of attorney for
property under the [SUBSTITUTE DECISIONS ACT (ONTARIO)] for the purposes set out
herein and that such appointment and power of attorney, being coupled with an
interest, shall not be revocable at the option of the undersigned and shall not
be revoked by the insolvency, bankruptcy or incapacity of the undersigned and
shall come into effect upon the date that this document is signed and witnessed.
The undersigned hereby ratifies and confirms and agrees to ratify and confirm
all that the Attorney may lawfully do or cause to be done by virtue of this
power of attorney.
DATED this day of , 199 .
- ------------------------------------ ---------------------------------
Name of Witness Name of Appointor
- ------------------------------------ ---------------------------------
Signature Signature
- ------------------------------------ ---------------------------------
Name of Witness
- ------------------------------------
Signature
<PAGE> 34
SCHEDULE E
PERFORMANCE ACHIEVEMENT PROGRAM
-------------------------------
1. DEFINITIONS. Capitalized terms which are defined in the shareholders
agreement entered into as of April 17, 1997 between 3355489 Canada Inc., 335392
Canada Inc. and certain employees of Impark have the meanings as provided for
therein. In addition, the following terms have the following meanings:
"PERFORMANCE ACHIEVEMENT" for any year means the Percentage Achievement for
such year of the Performance Bonus Base for such year;
"PERCENTAGE ACHIEVEMENT" means as follows:
(i) for 1997 and 1998, 100% minus the amount of any Shortfall Percentage
for the applicable year;
(ii) for 1999, 100% minus the product of 1.5 and any Shortfall Percentage
for 1999; and
(iii) for 2000, 100% minus the product of 3 and any Shortfall Percentage
for 2000;
"PERFORMANCE BONUS BASE" means as follows:
(i) for 1998, the Percentage Achievement for 1997 of $694,444;
(ii) for 1999, the Performance Achievement for 1998; and
(iii) for 2000, the Performance Achievement for 1999; and
"SHORTFALL PERCENTAGE" for any period means the percentage obtained by
multiplying 100% times the quotient of the Performance Shortfall for such
period divided by the Performance Target for such period.
2. PARTICIPANTS. Subject as hereinafter provided, the participants in the
Program (the "Participants") and the interest of each Participant (the
"Participant's Share") will be as follows:
<PAGE> 35
<TABLE>
<CAPTION>
Participant Participant's Share
----------- -------------------
<S> <C>
Paul T. Clough 52.35%
J. Bruce Newsome 12.08%
Douglas I. Poirier 7.47%
J. Robin Bateman 4.03%
James MacKay 4.11%
Michael T. Menzies 4.11%
Robert L. Noiles 3.00%
Harry J. Renaud 7.11%
Stuart M. MacKenzie 3.68%
Daniel Sawchuck 2.06%
</TABLE>
Notwithstanding the foregoing, in the event that individuals who are employed by
Impark as at April 17, 1997 become new members of Impark Management prior to
June 30, 1997, the Designated Representative shall have the right at any time
prior to such date to include any of such new members as Participants and to
designate the Participant's Share of each such new Participant provided that the
Participant's Share of Paul Clough shall be reduced by the aggregate of the
Participant's Shares of such new Participants. The inclusion and designation
provided for in the preceding sentence shall be made by written notice delivered
to the Corporation and FUMI Holdings on or before June 30, 1997.
3. PERFORMANCE ACHIEVEMENT AWARD. Each Participant will be conditionally
entitled to receive a bonus payment in respect of each of the calendar years
1998, 1999 and 2000. The amount to which a Participant will be conditionally
entitled in respect of any such year will be such Participant's Share of the
Performance Achievement for such year. The actual entitlement of such
Participant to such bonus will be dependant upon such Participant being
continuously employed by any of Impark, FUR or FUMI or a subsidiary of any of
them from April 17, 1997 through to the end of the third calendar year following
the year in respect of which such bonus was determined. If the Participant is so
continuously employed until the end of such third year, he will be paid the full
amount of such bonus on the last day of such third year. If such Participant
ceases to be so employed during such third year, he will be paid on or before
the last day of such third year a pro rata portion of such bonus based on the
number of days he was so employed during such third year relative to the total
number of days in such year.
<PAGE> 36
4. COORDINATION. The Program shall be coordinated with the comparable program to
be instituted by 504463 N.B. Inc. so as to ensure that each member of Impark
Management participates in one or the other of the programs without double
counting.
<PAGE> 37
SCHEDULE F
PERFORMANCE BONUS PROGRAM
-------------------------
1. DEFINITIONS. Capitalized terms which are defined in the shareholders
agreement entered into as of April 17, 1997 between 3355489 Canada Inc., 335392
Canada Inc. and certain employees of Impark have the meanings as provided for
therein.
2. PARTICIPANTS. The participants in the Program (the "Participants") will be
the employees from time to time of Impark and the interest of each Participant
(the "Participant's Share") will be determined from time to time by the
Designated Representative.
3. PERFORMANCE ACHIEVEMENT AWARD. In 1998, 1999, 2000 and 2001, each Participant
who is still employed by Impark will be entitled to receive a cash bonus payment
equal to such Participant's Share of the amount which is 5% of any amount by
which the Consolidated Performance for the immediately preceding calendar year
exceeds the Performance Target for such immediately preceding calendar year.
4. COORDINATION. The Program shall be coordinated with the comparable program to
be instituted by 504463 N.B. Inc. so as to ensure that each member of Impark
Management participates in one or the other of the programs without double
counting.
<PAGE> 38
SCHEDULE G
DEPOSIT RECEIPT
---------------
THE UNDERSIGNED, ____________________ (the "Depositary"), hereby confirms
that ______________________ (the "Holder") is the registered holder of the
following shares (the "Shares") in the capital of 3357392 Canada Inc.:
Class A Non-voting Common Shares _______________________
Class B Voting Common Shares _______________________
Class A Preferred Shares _______________________
The certificates in respect of such Shares are held by the Depositary
pursuant to the agreement (the "Shareholders Agreement") made as of the 17th day
of April, 1997 among 3357392 Canada Inc., 3355489 Canada Inc. and the
individuals and trusts listed on Schedule A thereto. This Deposit Receipt
evidences the ownership by the Holder of the Shares held by the Depositary in
accordance with the Shareholders Agreement. The Depositary is bound to hold the
Shares in accordance with the Shareholders Agreement and the rights of the
Holder with respect to the Shares are expressly subject to, governed by and may
be exercised only in accordance with, the terms and conditions set forth in the
Shareholders Agreement (as such agreement may be amended from time to time). By
acceptance of this Deposit Receipt, the Holder assents to such terms and
conditions.
This Deposit Receipt is not transferable.
IN WITNESS WHEREOF the Depositary has caused this Deposit Receipt to be
signed by its duly authorized signatory this ____ day of ________, _____.
____________________________
by _________________________
<PAGE> 1
Exhibit (10h)
SHAREHOLDERS AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 17th day of April,
1997.
BETWEEN:
504308 N.B. INC., a corporation incorporated pursuant
to the laws of New Brunswick,
(hereinafter referred to as "HOLDCO 2"),
OF THE FIRST PART,
-and-
The individuals listed on Schedule A hereto, (subject
to the further definition below, such individuals
being hereinafter collectively referred to as "IMPARK
MANAGEMENT" and individually as a "MEMBER OF IMPARK
MANAGEMENT"),
OF THE SECOND PART,
-and
FIRST UNION MANAGEMENT, INC.,
a corporation incorporated pursuant to the laws of
Delaware,
(hereinafter referred to as "FUMI"),
OF THE THIRD PART.
WHEREAS the individuals listed in Schedule A are employed in the management
of Impark (as hereinafter defined);
AND WHEREAS Holdco 2 has incorporated 504463 N.B. Inc. ("Canco 2") for the
purpose of acquiring all of the shares of certain corporations from Imperial
Parking Limited;
<PAGE> 2
-2-
AND WHEREAS, at the date hereof, FUMI holds 448,611 common shares of Holdco
2 being the only outstanding shares of Holdco 2;
AND WHEREAS the members of Impark Management wish to become shareholders of
Holdco 2;
AND WHEREAS the parties to this agreement wish to establish their
respective rights and obligations in respect of the shares of Holdco 2 which the
members of Impark Management will acquire;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and of the respective covenants and agreements herein contained and for
other good and valuable consideration (the receipt and sufficiency of which are
hereby acknowledged by each of the parties), the parties covenant and agree as
follows:
ARTICLE 1
INTERPRETATION
1.1 CERTAIN DEFINITIONS. Where used in this agreement, unless there is something
in the context or the subject matter inconsistent therewith, the following terms
shall have the following meanings:
"ADDITIONAL PARKING FACILITIES" means any parking facilities (other
than the Cleveland Parking Facilities and the Transferred Parking
Facilities) which are acquired by FUR after April 17, 1997 whether by
direct purchase or by acquisition of an entity owning such parking
facilities;
"ADJUSTED OPERATING INCOME" for any period means the Facilities
Operating Income for such period minus the Facilities Return to FUR for
such period;
"AFFILIATE", in relation to an individual, means a corporation that is
controlled by such individual and all of the shares of which are owned
by such individual and/or such individual's spouse and/or children or a
trust of which such individual and/or such individual's spouse and/or
children are the sole beneficiaries;
"BASE INDEBTEDNESS" means the amount as of the close of business on
April 17, 1997 of the combined indebtedness (excluding indebtedness
incurred for normal working capital purposes including without
limitation operating lines of credit) of Holdco 2, Canco 2, Canco 1 and
Imperial Parking, which is expected to be approximately $77,500,000;
<PAGE> 3
-3-
"BOARD" means the board of directors of Holdco 2;
"BUSINESS DAY" means any day which is not a Saturday, a Sunday or a
statutory holiday in Ontario or British Columbia;
"CANCO 1" means 3357392 Canada Inc. or any successor thereto;
"CLEVELAND PARKING FACILITIES" means the Huntington garage, the West
Third Street surface parking lot and the 55 Public Square garage, all
in the City of Cleveland, Ohio;
"COMMON SHARES" means the common shares in the capital of Holdco 2, any
securities into which such common shares may be converted, exchanged,
reclassified, redesignated, subdivided or otherwise changed from time
to time and any securities of any successor corporation or a
corporation continuing from Holdco 2 into which such common shares or
such other securities may be changed as a result of any amalgamation,
merger, consolidation, plan of arrangement or reorganization, statutory
or otherwise;
"CONSOLIDATED PERFORMANCE" for any period means the total of the Impark
EBITDA and the Adjusted Operating Income for such period;
"DATE OF CLOSING" and "TIME OF CLOSING" have the respective meanings
ascribed thereto in Articles 5 and 6, as the case may be;
"DEPOSITARY" has the meaning ascribed thereto in section 9.1;
"DESIGNATED REPRESENTATIVE" means the Designated Representative as
determined at the relevant time in accordance with section 3.1;
"DISABILITY" means the inability of a member of Impark Management to
continue to perform his duties for Impark on a full-time basis for a
period of more than six (6) months as a result of physical or mental
disability, as determined by a qualified medical practitioner;
"EFFECTIVE DATE" has the meaning ascribed thereto in sections 6.1, 6.2,
6.3 and 7.2;
"FACILITIES OPERATING INCOME" for a period means, without double
counting, the actual revenues realized by Impark during such period
from the operation of First Union Facilities less all expenses
associated with operating the First Union Facilities (other than real
estate taxes, utilities, ground rent and insurance
<PAGE> 4
-4-
covering damage to the physical facility) incurred by Impark during
such period in operating the First Union Facilities (but for greater
certainty not deducting any amounts payable to FUR pursuant to any
lease or management agreement and not deducting any interest expense);
"FACILITIES RETURN TO FUR" for any period means an amount of imputed
interest calculated at the rate of 11% per annum on the amount of any
outstanding FUR Capital Expenditure;
"FAIR VALUE PER SHARE" as at any date means:
(i) in the case of Preferred Shares, the Redemption Amount of a
Preferred Share as at such date determined in accordance with
the articles of Holdco 2 but without regard to the fact that
the Preferred Shares are not redeemable prior to April 1,
2002; and
(ii) in the case of Common Shares, the amount determined by
dividing the Management Enterprise Equity Value as at the end
of the immediately preceding calendar year by 1,322,140;
"FIRST UNION FACILITIES" means the Cleveland Parking Facilities, the
Transferred Parking Facilities and Additional Parking Facilities which
are leased to or managed by Impark;
"FUMI PROPORTION" has the meaning ascribed thereto in section 5.1;
"FUR" means First Union Real Estate Equity and Mortgage Investments, an
Ohio business trust;
"FUR CAPITAL EXPENDITURE" means the following:
(i) the amount of the gross acquisition cost to FUR (including
purchase price, fees, commissions and out-of-pocket expenses
of acquisition) of Additional Parking Facilities, and such FUR
Capital Expenditures shall be deemed to be outstanding during
any period while such Additional Parking Facilities constitute
First Union Facilities; and
(ii) the amount expended directly or indirectly by FUR to make
capital improvements to any First Union Facilities on Impark's
recommendation for the purpose of increasing the Facilities
Operating Income, and such FUR Capital Expenditures shall be
deemed to be outstanding from the
<PAGE> 5
-5-
date any such amount is so expended and for so long as such
parking facilities constitute First Union Facilities;
"IMPARK" means collectively Imperial Parking and Canco 2 and any direct
or indirect subsidiaries of either of them;
"IMPARK EBITDA" for any period means the consolidated earnings of
Impark before interest expense (or interest income), income taxes,
depreciation and amortization, as calculated in accordance with
generally accepted accounting principles as used in the December 31,
1996 audited financial statements of Imperial Parking, consistently
applied, adjusted as follows:
(a) deducting any revenues or expenses of any type related to
First Union Facilities for such period; and
(b) deducting an amount on account of imputed interest calculated
at the rate of 8% per annum on any indebtedness (excluding
indebtedness incurred for normal working capital purposes
including without limitation operating lines of credit) of
Impark which is outstanding at any time during such period in
any amount in excess of the Base Indebtedness;
"IMPARK MANAGEMENT" means the individuals listed on Schedule A hereto
and any other employee of Impark who hereafter becomes a party to this
agreement and any legal personal representative of any such individual
who dies or becomes mentally incapacitated (the foregoing being
"individual members"), and includes any Affiliate of any individual
member of Impark Management which holds Shares or to which Shares are
transferred or any successor or assign of such Affiliate and also
includes individuals to whom Shares are transferred in accordance with
the provisions of sections 4.3 and 4.5; and reference herein to the
"members" or a "member" means members or a member of Impark Management;
"IMPERIAL PARKING" means Imperial Parking Limited or any successor
thereto;
"MANAGEMENT ENTERPRISE EQUITY VALUE" as at the end of any calendar year
means the amount obtained by multiplying $5,555,556 by the
Proportionate Change as at such year end and deducting $4,233,416 from
such product;
"PERFORMANCE SHORTFALL" for any period means the amount, if any, by
which the Performance Target for such period exceeds the Consolidated
Performance for such period, provided that if such Consolidated
Performance exceeds such Performance Target the Performance Shortfall
shall be zero;
<PAGE> 6
-6-
"PERFORMANCE TARGET" means $13,146,105 for the 1997 calendar year,
$14,340,350 for the 1998 calendar year, $14,895,964 for the 1999
calendar year, and $15,473,803 for the 2000 calendar year, subject in
each case to the provisions of section 3.4;
"PERSON" includes an individual, a trust, a firm, a corporation, a
syndicate, a partnership, an association, a joint venture and every
other legal or business entity whatsoever;
"PREFERRED SHARES" means preferred shares in the capital of Holdco 2
having rights and attributes substantially the same as the Class A
Preferred Shares of Canco 1, any securities into which such preferred
shares may be converted, exchanged, reclassified, redesignated,
subdivided or otherwise changed from time to time and any securities of
any successor corporation or a corporation continuing from Holdco 2
into which such preferred shares or such other securities may be
changed as a result of any amalgamation, merger, consolidation, plan of
arrangement or reorganization, statutory or otherwise;
"PROPORTIONATE CHANGE" as at the end of a calendar year means (i) one
as at the end of 1996, and (ii) other than as at the end of 1996, the
Consolidated Performance for such calendar year divided by the
Performance Target for 1997;
"PURCHASE PRICE" means the purchase price for any Purchased Shares
pursuant to any transaction of purchase and sale of Shares provided for
in this agreement;
"PURCHASED SHARES" means, in the context of any provision hereof
pursuant to which a Vendor is selling Shares, such Shares;
"PURCHASER" means, in the context of any provision hereof pursuant to
which a Vendor is selling Shares, the purchaser of such Shares;
"SHARE PURCHASE CLOSING" means the completion of the sale and purchase
of shares of Holdco pursuant to the Share Purchase Agreement;
"SHARES" means Common Shares and Preferred Shares;
"SPOUSE" has the meaning ascribed thereto in Part I of the Family Law
Act (Ontario);
"THIRD PARTY" means, as applicable to sections 5.1 and 6.4, a person
dealing at arm's length (within the meaning of the Income Tax Act
(Canada)) with Holdco
<PAGE> 7
-7-
2, and for greater certainty, in all cases, neither (i) any individual
who is a full time member of the management of FUR or FUMI or any of
their respective affiliates, or any corporation wholly-owned, directly
or indirectly, by any such individual or a trust related to any such
individual, nor (ii) any person that is a firm, corporation, syndicate,
partnership, association, joint venture or other legal or business
entity whatsoever which is controlled by FUR or FUMI, shall be deemed
to be a Third Party;
"THIRD PARTY OFFER" has the meaning ascribed thereto in section 5.1;
and
"TRANSFERRED PARKING FACILITIES" means 633 - 10th Avenue S.W., Calgary,
Alberta; 1009 A, B and C - 9th Avenue S.W., Calgary, Alberta; 10040 -
103 Street, Edmonton, Alberta; 10244 - 103 Street, Edmonton Alberta;
10239 - 107 Street, Edmonton, Alberta; 1709 Blanshard Street, Victoria,
B.C.; 245 Graham Avenue and 257 Smith Street, Winnipeg, Manitoba; 168
Water Avenue, Winnipeg, Manitoba; 336 Young Street, Winnipeg, Manitoba;
296, 298 and 304 Broadway, Winnipeg, Manitoba; 115 Donald Street,
Winnipeg, Manitoba; 178 Queen's Quay East, Toronto, Ontario; and 1724
Broad Street, Regina, Saskatchewan; and
"VENDOR" means, in the context of any provision hereof pursuant to
which Shares are being sold, the shareholder selling such Shares.
1.2 OTHER RULES OF INTERPRETATION. All words used in this agreement shall be
read with such changes in gender and number as are required by the context.
Words importing the singular number shall include the plural and vice versa and
words importing gender shall include all genders. The terms "this agreement",
"hereof", "herein", "hereunder" and similar expressions refer to this agreement
and not to any particular Article, section or paragraph or other portion hereof
and include any agreement, schedule, amendment or other instrument supplementary
or ancillary hereto. Time is of the essence hereof.
1.3 CURRENCY. All dollar amounts stated herein are, unless otherwise indicated,
in Canadian dollars.
1.4 HEADINGS AND REFERENCES. The division of this agreement into Articles,
sections and paragraphs and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
agreement. Reference in this agreement to an Article, section or Schedule is to
the applicable Article, section or Schedule of this agreement unless the context
otherwise requires.
<PAGE> 8
-8-
1.5 REFERENCE TO STATUTES. Reference in this agreement to a statute means such
statute as amended, re-enacted or replaced from time to time and includes all
regulations promulgated thereunder.
ARTICLE 2
SUBSCRIPTION
2.1 SUBSCRIPTION. Each person named in Schedule A hereby subscribes for and
agrees to take up the number of Common Shares set out opposite such person's
name in such Schedule and to pay therefor the subscription price of $1.00 per
Common Share and, contemporaneously with the execution and delivery of this
Agreement, tenders the aggregate subscription price for such Common Shares.
Holdco 2 accepts such subscription by each such person.
ARTICLE 3
VOTING, ORGANIZATION AND MANAGEMENT
3.1 DESIGNATED REPRESENTATIVE. The representative from time to time of the
members of Impark Management (the "Designated Representative") shall be the
Chief Executive Officer of Imperial Parking then in office provided he is a
holder of Shares who shall have the irrevocable and full authority to give and
receive all notices, communicate all decisions and otherwise take all actions
that are to be given, made or taken pursuant to this agreement by Impark
Management and the parties hereto shall be entitled to rely upon the authority
of the Designated Representative to bind Impark Management in respect of all
matters arising pursuant to this agreement.
3.2 ASSIGNMENT OF VOTING RIGHTS. Each member of Impark Management does hereby
irrevocably nominate, constitute and appoint the Designated Representative as
his true and lawful attorney with authority to vote any and all of the Shares
held from time to time by such member, and to execute resolutions in writing of
the shareholders of Holdco 2 as holders of such Shares for and on behalf of and
in the name of such member, in such manner as may be determined by the
Designated Representative in his sole discretion, at all times and on all
matters that may come before the shareholders of Holdco 2 or any class thereof
while this agreement remains in effect and to make, execute, seal and deliver
for and on behalf of and in the name of such member of Impark Management, one or
more proxies in respect of Shares held by such member of Impark Management from
time to time. The members of Impark Management shall each deliver to the current
Designated Representative, concurrently with the execution of this agreement and
from time to time thereafter upon request therefor, a continuing power of
attorney in the form attached hereto as Schedule B in
<PAGE> 9
-9-
favour of the Designated Representative for the purposes of this section 3.2 and
Article 8, which power of attorney shall not be revocable by the member without
the consent of FUMI and which, being coupled with an interest, shall not be
revoked by the insolvency, bankruptcy or incapacity of the member or of any
Affiliate of the member to which Shares may be transferred in accordance with
section 4.2. Each member of Impark Management hereby ratifies and confirms and
agrees to ratify and confirm all that such attorney may lawfully do or cause to
be done by virtue of the authority hereby or thereby conferred. Upon any change
in the Designated Representative, the former Designated Representative and all
members of Impark Management shall forthwith agree to the revocation of all such
powers of attorney and new powers of attorney shall be forthwith provided in
favour of the new Designated Representative.
3.3 BOARD OF DIRECTORS. The Board shall consist of three members. One member of
the Board shall be the nominee of the Designated Representative and the other
two members of the Board shall be nominees of FUMI.
3.4 ADJUSTMENT OF PERFORMANCE TARGETS AND CONSOLIDATED ACHIEVEMENT.
Notwithstanding the definition of Performance Targets and the definition of
Consolidated Performance and the definitions related thereto, the amounts
otherwise provided for or determined in accordance with any of such definitions
shall be subject to adjustment in the discretion of the Board to be exercised in
good faith and after consultation with the Designated Representative and the
auditors of Holdco 2 in the event of material asset dispositions or in the event
of unusual circumstances which would lead to anomalous or inappropriate results
and to offset the effect of any office rent paid by Impark to FUR on the First
Union Facilities.
3.5 PERFORMANCE ACHIEVEMENT PROGRAM. Holdco 2 shall cause Canco 2 to establish
and implement a performance achievement program for the benefit of Impark
Management on the terms set forth in Schedule C.
3.6 PERFORMANCE BONUS PROGRAM. Holdco 2 shall cause Canco 2 to establish and
implement a performance bonus program for the benefit of, inter alia, Impark
Management on the terms set forth in Schedule D.
3.7 ADDITIONAL ISSUANCE OF COMMON SHARES. If after the date hereof Holdco 2
proposes to issue from treasury any additional Common Shares, Holdco 2 shall
first offer such Common Shares to the parties hereto (the "Eligible
Shareholders") who then hold Common Shares by notice given to the Eligible
Shareholders of the intention of Holdco 2 and the number of additional Common
Shares proposed to be issued. Each Eligible Shareholder shall have the right to
purchase his pro rata portion of the Common Shares so offered with such pro rata
portion to be determined based on the number of Common Shares owned by such
Eligible Shareholder at the date such notice
<PAGE> 10
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is given relative to the total outstanding number of Common Shares as at such
date. Each Eligible Shareholder shall have 20 Business Days from the date such
notice is given to agree to take up and pay for the Common Shares so offered.
Any Common Shares that the Eligible Shareholders have not agreed to take up and
pay for within such 20 Business Days may be issued at any time within the
ensuing 60 days to such persons as the Board in its discretion determines on
terms not more favourable to the purchaser than the terms offered to the
Eligible Shareholders.
ARTICLE 4
GENERAL RESTRICTIONS ON TRANSFERS
4.1 GENERAL RESTRICTION. Except as specifically provided in sections 4.2, 4.3
and 4.4 and Articles 5, 6 and 7, no member of Impark Management may, except with
the prior written consent of FUMI, which consent may be withheld in its sole
discretion, sell, transfer (including by operation of law, by winding-up or by
amalgamation and whether or not for consideration), assign or otherwise dispose
of (any of the foregoing being a "sale") or mortgage, charge, encumber, pledge,
assign by way of security or grant a security interest in (any of the foregoing
being a "pledge") its rights, title or interest in, to or under any Shares to
any person other than FUMI. Any sale or pledge attempted to be made which is not
in accordance with this agreement shall be void and of no effect and Holdco 2
shall not accept any such sale or pledge or any transfer by any person claiming
rights through any such sale or pledge for registration on its books of record.
4.2 TRANSFERS TO AFFILIATES. Subject to the provisions of the articles of Holdco
2 and sections 4.5 and 4.6 and Article 6 of this agreement, nothing herein shall
prevent the transfer of any Shares or any interests therein by any of the
individual members of Impark Management to an Affiliate of such member or by an
Affiliate of such individual member to another Affiliate of such individual
member provided that: (i) the Affiliate executes and delivers a document
agreeing to be bound by the provisions hereof pursuant to section 4.5 and such
other instruments as FUMI may reasonably request to ensure that such Affiliate
continues to qualify as an Affiliate of such member; (ii) each of the Affiliate
and such individual member agrees with Holdco 2 and FUMI not to effect or agree
to effect any sale or pledge of any securities of such Affiliate without the
prior written consent of FUMI, such consent not to be unreasonably withheld; and
(iii) such individual member shall remain liable under this agreement as a
guarantor to ensure that the Affiliate, or any further Affiliate to which such
Shares may be transferred, abides by the terms of this agreement.
4.3 PERMITTED TRANSFERS. Any member of Impark Management may sell all or
any portion of such member's or such member's Affiliate's Shares to:
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(i) with the prior written consent of the Designated
Representative, any other member of Impark Management or any
person who has been an employee of Impark continuously since
April 17, 1997; or
(ii) with the prior written consent of FUMI, such consent not to be
unreasonably withheld, any other full-time employee of Impark,
provided that such purchaser shall, as a condition precedent
to such purchase and sale, execute an agreement as required by
section 4.5 and such purchaser shall thereupon become a member
of Impark Management for the purposes of this agreement.
4.4 PERMITTED PLEDGES. Any member of Impark Management may, with the prior
written consent of FUMI, such consent not to be unreasonably withheld, pledge
all or any portion of such member's or such member's Affiliate's Shares to a
recognized Canadian financial institution solely to secure bonafide indebtedness
or financial obligations of such member or Affiliate to such financial
institution for an amount not exceeding two-thirds (2/3) of the original issue
price of the Shares held by such member and such member's Affiliate and solely
for the purpose of such member or Affiliate acquiring such Shares, provided
that: (i) such financial institution acknowledges in writing, on terms
acceptable to FUMI, to be bound by the terms and provisions of this agreement in
dealing with such Shares to the same extent as if it were a member of Impark
Management; (ii) such financial institution agrees to notify the Designated
Representative and FUMI of any default by a member of Impark Management with
respect to such indebtedness or financial obligations and to grant the
Designated Representative and FUMI the option to purchase such member's Shares
in accordance with section 6.2; (iii) such financial institution agrees, in the
event of a sale, realization or other disposition of all or any portion of such
Shares, that the same shall only be dealt with subject to and in accordance with
the terms and provisions of this agreement; and (iv) such financial institution
agrees that upon repayment of such indebtedness or financial obligations it will
deliver the certificates representing such member's Shares to the Depositary and
not to such member.
4.5 AGREEMENT BINDING. If any Shares or any interests therein are transferred,
issued or sold to any person who is not an original party to this agreement, as
a condition precedent to being registered as a holder of Shares and to the
exercise or enjoyment by such acquiror of any rights attaching to such Shares,
the acquiror of such Shares shall execute and deliver an agreement, in form and
on terms satisfactory to FUMI, whereby such acquiror agrees to be bound by the
provisions hereof, with such amendments hereto and thereto as may be required by
FUMI, as if he were an original party hereto, and such acquiror shall thereupon
become a member of Impark Management (for purposes only of this agreement but
not for the purposes of the
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program described in Schedule C) and shall have the same rights, and be subject
to the same obligations and restrictions, hereunder as the other members of
Impark Management or the original party hereto previously holding such Shares.
In the case of a sale of all of the Shares of an original party other than to an
Affiliate thereof, the obligations hereunder of such original party as a holder
of Shares shall thereupon cease to be effective and such member shall cease to
be entitled to any benefits hereunder in respect of such Shares arising after
the time of such sale, subject to the continuing liability under section 4.2 in
respect of transfers to Affiliates and provided that the foregoing shall not
release or affect any rights or obligations arising prior to such time hereunder
in respect of such Shares. For greater certainty, if such a transferee is
already a member, his rights and obligations as a member hereunder shall
thereupon apply to the Shares thus sold to him in the same manner as to his
original Shares (provided that such transferee shall not thereby acquire any
additional rights for the purposes of the program described in Schedule C).
4.6 LEGENDS ON SHARE CERTIFICATES. Any and all certificates representing Shares
now or hereafter issued to any person during the term of this agreement (whether
such certificates are issued at present or subsequently issued or sold) shall
have typed or otherwise written thereon a legend substantially to the following
effect:
"The shares represented by this certificate are subject to certain
restrictions on the right to transfer, sell, assign or otherwise deal
with them, pursuant to a shareholders' agreement made as of the 17th
day of April, 1997, and notice of the terms and conditions of such
agreement is hereby given."
ARTICLE 5
THIRD PARTY OFFERS
5.1 DRAG ALONG. If at any time FUMI proposes to sell any of its Common Shares
pursuant to a bonafide offer by, or letter of intent of, a Third Party (a "Third
Party Offer"), FUMI shall deliver a notice in writing to the members of Impark
Management setting out the price per Common Share of the Third Party Offer (the
"Offer Price") and the other relevant material terms and conditions (the "Offer
Terms") of the Third Party Offer and the number of Common Shares that FUMI
intends to sell pursuant to the Third Party Offer and the proportion of the
Common Shares held by FUMI that such number then constitutes (the "FUMI
Proportion"). FUMI may, at its option, specify in such notice that the members
of Impark Management shall be required to sell to the Third Party, at the Offer
Price and on the Offer Terms, that proportion of their Common Shares that is
equal to the FUMI Proportion, and, if FUMI
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so states in such notice, the members of Impark Management shall sell their
Common Shares to the Third Party at the Offer Price and on the Offer Terms.
5.2 TAG ALONG. If FUMI does not require the members of Impark Management to sell
their Common Shares pursuant to section 5.1, then each of the members of Impark
Management may, by notice in writing delivered to FUMI at any time within ten
(10) days following the delivery of the notice by FUMI to such members pursuant
to section 5.1, elect either of the following alternatives:
(a) to sell that proportion of such member's Common Shares that is
equal to the FUMI Proportion at the Offer Price and on the
Offer Terms, in which case FUMI shall cause the Third Party to
purchase, and such member shall sell, such member's Common
Shares to the Third Party; or
(b) not to sell any Common Shares held by such member pursuant to
this section 5.2, in which case FUMI may proceed to sell the
Common Shares indicated in the FUMI' notice described above in
section 5.1 to the Third Party pursuant to the Third Party
Offer at the Offer Price and on the Offer Terms.
5.3 PREFERRED SHARES. In the event that as a result of any Third Party Offer all
of the Common Shares held by any member of Impark Management are to be sold by
such member, FUMI shall cause all of the Preferred Shares held by such member of
Impark Management either to be redeemed by Holdco 2 or to be acquired by some
other person for a price equal to the then current redemption price of such
Preferred Shares, in either event immediately prior to or contemporaneously with
the sale of the Common Shares.
5.4 REPRESENTATIONS AND WARRANTIES. In connection with any sale of Common Shares
in accordance with this Article 5, FUMI may require the members of Impark
Management to enter into agreements with FUMI and/or the Third Party in which
such members shall represent and warrant that, except as specifically disclosed
to FUMI or the Third Party in writing, such member at the time of closing of
such sale does not have actual knowledge that any warranty made by FUMI pursuant
to a written sale agreement, a copy of which was provided to such member, in
connection with such sale was untrue in any material respect as of the closing
of such sale, provided that no such member need make any independent enquiry or
investigation in connection with giving such representation and warranty. The
liability of such member for any inaccuracy in such representation and warranty
shall be limited to the amount which he receives from the sale of his Shares in
connection with such sale and shall be pro rata in accordance with the number of
Shares sold by such member in relation to the total number of shares sold to the
Third Party.
<PAGE> 14
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5.5 CLOSING OF THIRD PARTY PURCHASES. Any purchase and sale of Common Shares
pursuant to this Article 5 shall be effected concurrently with the sale of
Common Shares by FUMI to the Third Party in accordance with the provisions of
Article 8 and shall be completed at the date and time (the "Date of Closing" and
"Time of Closing", respectively, for purposes of Article 8) specified by FUMI or
the Third Party by notice in writing delivered to the member not later than ten
(10) days following the date on which the obligations of such member to sell
Common Shares have arisen pursuant to this Article 5, and in any event the Date
of Closing shall be no later than ninety (90) days following the date of the
Third Party Offer.
ARTICLE 6
DEATH, DISABILITY,
TERMINATION, RESIGNATION AND DEFAULT
6.1 OPTION TO PURCHASE. If at any time any individual member of Impark
Management has ceased to be employed by Impark or by an affiliate of Impark for
any reason (including, without limitation, by reason of voluntary resignation,
termination with or without cause, death or Disability), the following rights
shall arise with respect to the Shares held by such individual member of Impark
Management and by any Affiliate of such individual member (the "Subject
Shares"):
(a) the Designated Representative shall have the right, at his
option, to purchase for cash all but not less than all of the
Subject Shares, which option may be exercised by notice in
writing to such individual member of Impark Management or the
executors or legal personal representatives of an individual
member who has died or become mentally incapacitated or the
permitted successors and assigns of an Affiliate of that
member (the "Selling Manager") and to FUMI given at any time
within 30 days following the date (the Effective Date") which
is the effective date of the resignation, the date of giving
of notice of termination or the date of death or Disability,
as the case may be;
(b) if the Designated Representative does not exercise his option
as set forth in subsection (a) above within 30 days following
the Effective Date or gives notice to the Selling Manager and
FUMI that he does not wish to exercise such option, FUMI shall
have the right, at its option, to purchase for cash all but
not less than all of the Subject Shares, which option may be
exercised by notice in writing to the Selling Manager given at
any time after 30 days following the Effective Date; and
<PAGE> 15
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(c) if the Designated Representatives does not exercise his option
as set forth in subsection (a) above and FUMI does not
exercise its option as set forth in subsection (b) above, the
Selling Manager shall have the right, at his option, to sell
all of his Common Shares to Holdco 2 with the price therefor
to be payable by the issuance of additional Preferred Shares
at $1 per Preferred Share, which option may be exercised by
the Selling Manager giving notice to Holdco 2 and FUMI at any
time after 40 days but before 60 days following the Effective
Date and, in the event of the exercise of such right, the
Preferred Shares issued as a result thereof shall become
Subject Shares of such Selling Manager.
6.2 SALE UPON DEFAULT ON INDEBTEDNESS. If a member of Impark Management defaults
on any indebtedness referred to in section 4.4 or commits any act of bankruptcy,
the Designated Representative and FUMI shall have the option, exercisable in
accordance with the provisions of subsections (a) and (b) of section 6.1,
mutatis mutandis, upon notice (the date of which shall be, for these purposes,
the "Effective Date") to such member at any time following a default, to
purchase all or any portion of the Shares held by such member.
6.3 FUMI OPTION TO PURCHASE. By notice given to the members of Impark Management
at any time after April 17, 2001, FUMI shall have the right, at its option
exercisable from time to time, to purchase all or any portion of the Shares held
by any member or members of Impark Management. The date of the giving of any
such notice shall be the "Effective Date".
6.4 SALE OF PREFERRED SHARES. By written notice given to Holdco 2 and FUMI, at
any time during the month of March in any year commencing with March of 2004,
any member of Impark Management who is not at such time employed by any of FUR,
FUMI or a subsidiary of any of them (the "Selling Manager") shall have the
right, at his option, to require Holdco 2 to purchase all of the Preferred
Shares then owned by such Selling Manager unless such purchase by Holdco 2 would
result in a breach or default under any agreement between Holdco 2 and a Third
Party or would otherwise be contrary to law. The date of the giving of any such
notice shall be the "Effective Date", subject to such condition.
6.5 PURCHASE PRICE. The purchase price per share for Shares transferred pursuant
to sections 6.1, 6.2, 6.3 and 6.4 shall be the Fair Value Per Share as of the
Effective Date.
6.6 CONFLICT WITH THIRD PARTY OFFER. If an Effective Date occurs with respect to
a member at any time following the delivery of a notice pursuant to section 5.1
setting out a Third Party Offer, the provisions of this Article 6 shall not
apply with respect to
<PAGE> 16
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the Shares held by such member or Affiliate of such member unless (i) FUMI has
not required such member to sell his Shares pursuant to section 5.1 and the
member has elected not to sell any Shares held by the member in accordance with
alternative (b) of section 5.2, in which case the provisions of this Article 6
shall apply, (ii) the purchase and sale transaction with the Third Party
pursuant to section 5.1 is not completed for any reason other than the default
of the member, in which case the provisions of this Article 6 shall apply, or
(iii) such member has become obligated to sell less than all of his Shares to
the Third Party, in which case the provisions of this Article 6 shall apply to
those Shares held by such member which he has not become so obligated to sell.
6.7 COMPLETION. Subject as hereinafter provided, each transfer of Shares under
this Article 6 shall for all purposes be deemed to have been completed on the
Effective Date relating thereto and title to the Shares being transferred shall
pass to the transferee thereof on and as of such date. In the case of transfers
of Shares other than pursuant to section 6.4 and subsection (c) of section 6.1,
the party having the option to purchase shall, in the notice exercising such
option, notify the Selling Manager of a date and time (the "Date of Closing" and
"Time of Closing", respectively, for the purposes of Article 8) for the payment
of the purchase price for the Subject Shares, which date shall be not more than
sixty (60) days after the date of such notice and the closing shall be effected
in the manner provided for in Article 8. In the case of transfers to Holdco 2 of
Common Shares pursuant to subsection (c) of section 6.1 and of Preferred Shares
pursuant to section 6.4, Holdco 2 shall notify the Selling Manager of a date and
time (the "Date of Closing" and "Time of Closing", respectively, for the
purposes of Article 8) for the payment of the purchase price for the Subject
Shares, which date shall be not more than sixty (60) days after the date of such
notice and the closing shall be effected in the manner provided for in Article
8. Notwithstanding the foregoing, any transfer of Shares to Holdco 2 provided
for in section 6.4 or in subsection (c) of section 6.1 shall be conditional upon
all of the members of Impark Management, other than the Selling Manager,
consenting to such transfer and waiving any rights they may have as a condition
precedent to or as a consequence of such transfer in their capacity as holders
of Preferred Shares and Common Shares (i) to the immediate payment of any
accrued but unpaid dividends on their Preferred Shares or (ii) to the
contemporaneous repurchase of any of their Shares. The members of Impark
Management hereby consent to any such transfer and waive any such rights to the
extent arising as a result of any such transfer and hereby authorize and direct
the Designated Representative to execute and deliver on their behalf at the time
of any such transfer a document confirming such consent and waiver.
<PAGE> 17
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ARTICLE 7
FAMILY LAW
7.1 PREVENTION OF TRANSFER ORDERS. Each member of Impark Management agrees to
use his best efforts to prevent or avoid any order or similar act being rendered
by any court of competent jurisdiction under the Family Law Act (Ontario), the
Divorce Act (Canada) or comparable laws or legislation of any other jurisdiction
that would have the effect of transferring beneficial ownership of the Shares
held by such member or any Affiliate of such member to any person (other than by
reason of that person being the individual's heir or legal personal
representative at the time of his or her death or mental incapacity) who was
not, immediately prior to the making of such order or similar act, a member of
Impark Management (any such act or order being a "Transfer Order"), except that
this section 7.1 shall not require any such member to obtain the execution by
his Spouse of any instrument binding such Spouse to the terms of this Article 7
prior to the time of any transfer of Shares or any beneficial interest therein
to his Spouse.
7.2 RIGHT OF FIRST REFUSAL ON TRANSFER. Each member of Impark Management agrees
that any amount that is required to be paid by the member to any Spouse of the
member by order of a court of competent jurisdiction shall, if reasonably
possible, be satisfied by the transfer to such Spouse of property of the member
other than the Shares. If a Transfer Order is made or if any transfer or sale of
Shares is required to satisfy a court order, the affected member of Impark
Management shall forthwith give written notice thereof to the Designated
Representative and FUMI (the date of the giving of such notice being the
"Effective Date") and the Designated Representative and FUMI shall have first
rights, in accordance with the provisions of subsections (a) and (b) of section
6.1, mutatis mutandis, to acquire from such member or any transferee such Shares
as are subject to a Transfer Order or otherwise required to be sold, at a price
per Share (without interest) equal the Fair Value Per Share of such Shares on
the Effective Date.
ARTICLE 8
COMPLETION OF PURCHASE AND SALE OF SHARES
8.1 OUTSTANDING INDEBTEDNESS. If any indebtedness of the Vendor to: (i) any
authorized pledgee pursuant to any financing in accordance with section 4.4;
(ii) Canco 1, Holdco 2, FUMI, or any of their affiliates; or (iii) the
Purchaser; is outstanding upon the occurrence of any purchase and sale of Shares
hereunder, the Vendor hereby irrevocably authorizes and directs that a portion
of the Purchase Price for the Purchased Shares equal to such outstanding
indebtedness be applied in repayment of such indebtedness. The Purchased Shares
shall not be registered in the name of the
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Purchaser unless all such indebtedness has been repaid to the extent of the
Purchase Price.
8.2 DELIVERY OF SHARES AND PAYMENT. At the Time of Closing on the Date of
Closing in respect of any sale and purchase of Purchased Shares, the parties
shall attend at the offices where the closing is being held, the Vendor shall
deliver to the Purchaser certificates representing the Purchased Shares, duly
endorsed in blank for transfer (or, if the Depositary holds such certificates
pursuant to Article 9, an acknowledgement that the Depositary holds such
certificates for the Purchaser), and the Purchaser shall pay to the Vendor the
Purchase Price (or the balance thereof after the repayment of any indebtedness
referred to in section 8.1).
8.3 VENDOR DEFAULT. If the Vendor does not attend at the place of closing at the
Time of Closing, or fails for any reason whatsoever to produce and deliver to
the Purchaser the certificates representing the Purchased Shares duly endorsed
in blank for transfer (or, if the Depositary holds such certificates pursuant to
Article 9, an acknowledgement that the Depositary holds such certificates for
the Purchaser) at or prior to the time payment of the Purchase Price therefor is
required to be made, then the Purchase Price shall be deposited at the time
otherwise provided for its payment into a special account in the name of the
Vendor at the branch of the principal Canadian chartered bank (the "Bank")
primarily utilized by Imperial Parking. Such deposit shall constitute valid and
effective payment to the Vendor of the Purchase Price and shall result in title
to the Purchased Shares passing to the Purchaser, even if the Vendor has
voluntarily sold or pledged any of the Purchased Shares, and notwithstanding
that certificates representing any of the Purchased Shares may have been
delivered to an authorized pledgee, a transferee or other person. If any of the
Purchased Shares have been pledged to an authorized pledgee to secure
obligations or indebtedness of the Vendor, the Purchaser may, at its option, in
lieu of depositing the Purchase Price as aforesaid, pay all or any part of the
Purchase Price to the authorized pledgee to the extent required to discharge
such obligations or indebtedness and receive the certificates representing the
Purchased Shares from the authorized pledgee and deposit the remainder, if any,
of the Purchase Price as aforesaid.
8.4 TRANSFER OF TITLE. From and after the Date of Closing until the time
provided for the payment for the Purchased Shares, and thereafter if such
payment is then made or if a deposit and/or payment is then made in accordance
with section 8.3, and even though the certificates representing the Purchased
Shares may not have been delivered to the Purchaser, the purchase of the
Purchased Shares shall be deemed to have been fully completed and all right,
title, benefit and interest, both at law and in equity, in and to the Purchased
Shares (except as provided in section 8.5) shall be deemed to have been
transferred and assigned to and become vested in the Purchaser and all right,
title, benefit and interest, both at law and in equity, of the Vendor or of
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any transferee, pledgee or any other person having any interest, legal or
equitable, therein or thereto shall cease and determine.
8.5 PAYMENT OF DEFAULTING VENDOR. Subject to section 8.1, the Vendor shall be
entitled to receive the Purchase Price deposited with the Bank upon delivery to
the Purchaser of the certificates representing the Purchased Shares, duly
endorsed in blank for transfer (or, if the Depositary holds such certificates
pursuant to Article 9, an acknowledgement that the Depositary holds such
certificates for the Purchaser).
8.6 POWER OF ATTORNEY. The Vendor hereby irrevocably constitutes and appoints
the Designated Representative (and if the Designated Representative is the
Vendor he appoints each of the officers from time to time of FUMI) as a true and
lawful attorney-in-fact and agent for, in the name of and on behalf of, the
Vendor to execute and deliver in the name of the Vendor all such assignments,
transfers, deeds, receipts, directions and instruments as may be necessary
effectively to sell, transfer and assign the Purchased Shares, or any part
thereof, to the Purchaser on the books of Holdco 2. Each member of Impark
Management shall deliver to the Designated Representative concurrently with the
execution of this agreement a continuing power of attorney for the purposes set
out in section 3.2 and this Article 8 in accordance with section 3.2 and shall
hereafter, upon request, provide such additional or replacement powers of
attorney for such purposes as may be required to fulfil the requirements of
applicable law for valid, effective and enforceable powers of attorney. Each
member of Impark Management hereby ratifies and confirms and agrees to ratify
and confirm all that the attorney appointed pursuant to this section 8.6 may
lawfully do or cause to be done by virtue of the authority hereby and thereby
conferred.
8.7 CONSENT. The Vendor hereby irrevocably consents to any sale or transfer of
the Purchased Shares made pursuant to the provisions hereof.
ARTICLE 9
DEPOSITARY ARRANGEMENTS
9.1 DEPOSIT OF SHARE CERTIFICATES. For so long as this agreement remains in
force, the certificates representing all of the Shares that are at any time held
by any member of Impark Management shall be held by FUMI or a person designated
by FUMI (the "Depositary") to be dealt with in accordance with this agreement.
Notwithstanding the foregoing, in the event that FUMI consents to the pledge of
any Shares pursuant to section 4.4, Shares that are pledged as a result to any
authorized pledgee shall, for so long as they are held by such authorized
pledgee pursuant to such pledge, not be governed by this Article 9.
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9.2 DEPOSIT RECEIPT. The Depositary will issue in the name of and deliver to
each member of Impark Management who deposits with the Depositary a certificate
or certificates representing Shares, a receipt (the "Deposit Receipt") in
substantially the form annexed hereto as Schedule E to evidence such deposit,
which Deposit Receipt shall be non-transferable.
9.3 TRANSFER OF SHARES. If a transfer of Shares has been made in accordance with
the provisions of this agreement, upon delivery to the Depositary of (a) the
relevant Deposit Receipt and (b) written evidence satisfactory to the Depositary
that the transfer of Shares has been made in accordance with the provisions of
this agreement, the Depositary shall return the certificates representing such
Shares to Holdco 2 for cancellation and Holdco 2 shall cancel such Share
certificates and issue in the name of the transferee new Share certificates
evidencing the transferred Shares and, if less than all the Shares held by a
transferor have been transferred, issue in the name of the transferor new Share
certificates evidencing the Shares that were not transferred, which Share
certificates shall be delivered by Holdco 2 to the Depositary to be dealt with
in accordance with the terms of this agreement. Upon receipt by the Depositary
of such new Share certificates, the Depositary shall issue in the name of and
deliver to such transferee a Deposit Receipt evidencing such transferee's rights
to the deposited Share certificates issued in the transferee's name subject to
the terms of this agreement, and, if applicable, shall issue in the name of and
deliver to such transferor a Deposit Receipt evidencing such transferor's rights
to the deposited Share certificates issued in the transferor's name subject to
the terms of this agreement.
9.4 RETURN OF SHARE CERTIFICATES. On the termination of this agreement, each
Deposit Receipt shall entitle the holder thereof, or his executors,
administrators, legal personal representatives or its successors or assigns, or
its or his or their attorney duly appointed by an instrument in writing in form
and execution satisfactory to the Depositary, as the case may be, to
certificates representing the number of Shares represented thereby on surrender
of such Deposit Receipt to the Depositary. Each party agrees that, except as
otherwise expressly provided herein, the Shares represented by certificates
deposited with the Depositary in accordance with the terms hereof shall not be
released by the Depositary except on termination of this agreement and that each
such party will not request nor be entitled to the release of certificates
except on such basis.
9.5 RIGHTS TO REMAIN WITH MEMBERS. FUMI hereby acknowledges and confirms on
behalf of itself and any designee of it that may at any time be the Depositary
that (a) the Depositary will hold the certificates representing Shares subject
to the provisions hereof, (b) the Depositary does not and will not have any
beneficial interest in the Shares in respect of which certificates have been
delivered to it pursuant to this Article 9 solely by reason of such delivery,
and (c) beneficial ownership of the
<PAGE> 21
-21-
Shares represented by certificates deposited with the Depositary pursuant to
this Article 9 and all other rights of ownership with respect thereto shall
remain with the members of Impark Management on behalf of whom the same were
deposited with the Depositary, subject to the powers of attorney provided under
sections 3.2 and 8.6.
9.6 LIMITATION OF DEPOSITARY LIABILITY. The Depositary shall be entitled to rely
as to all matters of fact conclusively upon documents and instruments in writing
signed by the members of Impark Management registered as holders of Shares or by
the Designated Representative as their lawful attorney. The Depositary shall not
be liable for relying in good faith on any such document required or permitted
to be given hereunder.
ARTICLE 10
MISCELLANEOUS
10.1 NOTICE. Any notice, document or thing required or permitted to be given or
delivered hereunder shall be deemed to be properly given or delivered to a party
if (a) delivered in person or by courier to the address set out below and
acknowledged by written receipt signed by the person receiving such notice, or
(b) sent by facsimile transmission and confirmed by prepaid registered letter
addressed to the party receiving such notice, at its respective address or fax
number set out below:
FUMI: c/o First Union Management, Inc.
Suite 1910
55 Public Square
Cleveland, Ohio
44113-1937
Attention: Paul F. Levin
Fax: (216) 781-7364
<PAGE> 22
-22-
Holdco 2: c/o First Union Management, Inc.
Suite 1910
55 Public Square
Cleveland, Ohio
44113-1937
Attention: John Dee
Fax: (216) 781-7467
Impark Management: Designated Representative
c/o Imperial Parking Limited
Suite 300, The Station
601 West Cordova Street
Vancouver, British Columbia
V6B 1G1
Attention: Paul Clough
Fax: (604) 681-4098
Any notice or delivery given in accordance with the provisions of this section
10.1 shall be deemed to have been given and received, if delivered in person or
by courier, on the day of delivery in person or at the time of actual receipt
thereof, and if delivered by facsimile transmission on the date of receipt of
the facsimile transmission at the time of actual receipt thereof unless received
after business hours or on a day other than a Business Day and then on the next
Business Day.
10.2 CHANGE OF ADDRESS. Any party may from time to time by notice in writing
delivered in accordance with the provisions of this Article 10 change its
address for purposes hereof.
10.3 COUNTERPARTS. This agreement may be executed in any number of counterparts,
each of which shall constitute an original, and all of which collectively shall
constitute a single instrument.
10.4 SUCCESSORS AND ASSIGNS. This agreement shall enure to the benefit of and be
binding upon the parties hereto and their respective heirs, legal personal
representatives, successors and permitted assigns. FUMI may assign its rights
and obligations hereunder to any corporation controlled by FUMI without the
consent of any other party hereto. No other party hereunder may assign its
rights or obligations hereunder without the prior written consent of FUMI.
<PAGE> 23
-23-
10.5 GOVERNING LAW. This agreement shall be construed and interpreted in
accordance with the laws of the Province of New Brunswick and the federal laws
of Canada applicable therein. Each of the parties hereby irrevocably attorns to
the non-exclusive jurisdiction of the courts of the Province of New Brunswick
and all courts competent to hear appeals therefrom.
10.6 SEVERABILITY. If any provision contained herein is determined to be void or
unenforceable in whole or in part, it shall not be deemed to affect or impair
the validity of any other provision herein and each such provision is deemed to
be separate and distinct.
10.7 ENTIRE AGREEMENT. This agreement constitutes the entire agreement between
the parties hereto pertaining to the respective obligations of Impark Management
and the other parties hereto in respect of the Shares, save and except for the
Share Purchase Agreement. There are not and shall not be any oral statements,
representations, warranties, undertakings or agreements between the parties with
respect to the subject matter hereof and this agreement may not be amended or
modified in any respect except by written instrument signed by the parties
hereto.
10.8 IMPLEMENTATION OF AGREEMENT. The parties hereto hereby covenant and agree
to do or cause to be done all acts and things, whether by the directors of Canco
2 or Holdco 2 or otherwise, to execute and deliver or cause to be executed and
delivered all such instruments and to exercise or cause to be exercised any and
all voting rights attaching to the Shares held by each of them in order that all
provisions of this agreement shall be fully and effectively carried out,
implemented and given effect to in accordance with the terms hereof. Holdco 2
agrees not to take or approve any action that would contravene any provision of
this agreement and shall cause to be provided all necessary approvals for any
transfer of Shares that is effected in compliance with this agreement.
<PAGE> 24
-24-
10.9 TERMINATION. This agreement shall terminate upon the agreement of
shareholders of Holdco 2 who hold at least 97% of the voting rights attached to
all Common Shares or, if earlier, at the option of FUMI immediately upon the
closing of a sale of 97% or more of the outstanding Common Shares to a Third
Party in accordance herewith.
IN WITNESS WHEREOF this agreement has been executed by the parties hereto
as of the date first above written.
SIGNED, SEALED AND DELIVERED )
in the presence of )
)
/S/ Paul Clough
----------------------
) Paul T. Clough
)
)
)
/S/ Bruce Newsome
----------------------
) J. Bruce Newsome
)
)
)
/S/ Douglas Poirier
----------------------
) Douglas I. Poirier
)
)
)
/S/ J. Robin Bateman
----------------------
) J. Robin Bateman
)
)
)
/S/ James MacKay
----------------------
) James MacKay
)
)
)
/S/ Michael T. Menzies
----------------------
) Michael T. Menzies
)
)
)
/S/ Robert Noiles
----------------------
) Robert L. Noiles
)
)
)
/S/ Harry Renaud
----------------------
) Harry J. Renaud
)
<PAGE> 25
-25-
)
)
/S/ Stuart MacKenzie
--------------------
) Stuart M. MacKenzie
)
)
)
/S/ Daniel Sawchuck
--------------------
) Daniel Sawchuck
)
LAURENTIAN BANK OF CANADA,
in trust for J.Bruce Newsome,
Account No. VOO2679
by Authorized Signor
------------------------------
RBC DOMINION SECURITIES INC.,
in trust for Douglas I. Poirier,
Account No. 496-81890-11
by Authorized Signor
------------------------------
GUNDYCO,
in trust for J. Robin Bateman,
Account No. 590-90333-17
by Authorized Signor
------------------------------
GUNDYCO,
in trust for Robert L. Noiles,
Account No. 590-77616-12
by Authorized Signor
------------------------------
GUNDYCO,
in trust for Stuart M. MacKenzie,
Account No. 590-90254-12
by Authorized Signor
------------------------------
<PAGE> 26
-26-
MIDLAND WALWYN CAPITAL INC.,
in trust for Henry J. Renaud,
Account No. 8RABNQS
by Authorized Signor
------------------------------
504308 N.B. INC.
by Authorized Signor
------------------------------
FIRST UNION MANAGEMENT, INC.
by Authorized Signor
------------------------------
<PAGE> 27
-27-
SCHEDULE A
Subscribers Common Shares of Holdco 2 to be Acquired
- ----------- -----------------------------------------
Paul T. Clough 19,632
Bruce Newsome 4,531
Doug Poirier 2,805
Rob Bateman 1,512
Jim MacKay 1,542
Mike Menzies 1,542
Rob Noiles 1,123
Harry Renaud 2,663
Stuart MacKenzie 1,379
Dan Sawchuck 771
<PAGE> 28
SCHEDULE B
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned hereby
irrevocably nominates, constitutes and appoints ________________________ (the
"Attorney") , as the true and lawful attorney-in-fact and agent for the
undersigned and in the name, place and stead of the undersigned, in the capacity
of the undersigned as a shareholder of 504308 N.B. Inc. for the following
purposes:
(i) to execute and deliver proxies and vote any and all shares of the
undersigned in 504308 N.B. Inc. on behalf of the undersigned in
respect of any matter on which the undersigned is entitled to vote in
such manner as may be determined by the Attorney in his sole
discretion; and
(ii) to execute and deliver any and all assignments, transfers, deeds,
directions, receipts and other instruments as may be necessary
effectively to sell, transfer and assign any of such shares in
accordance with the provisions of the shareholders' agreement made as
of April 17, 1997.
The execution of this document indicates the intention of the
undersigned that this document provides the Attorney with a continuing power of
attorney for property under the [SUBSTITUTE DECISIONS ACT (ONTARIO)] for the
purposes set out herein and that such appointment and power of attorney, being
coupled with an interest, shall not be revocable at the option of the
undersigned and shall not be revoked by the insolvency, bankruptcy or incapacity
of the undersigned and shall come into effect upon the date that this document
is signed and witnessed. The undersigned hereby ratifies and confirms and agrees
to ratify and confirm all that the Attorney may lawfully do or cause to be done
by virtue of this power of attorney.
DATED this day of , 199 .
___________________________________ _________________________________
Name of Witness Name of Appointor
___________________________________ _________________________________
Signature Signature
___________________________________
Name of Witness
___________________________________
Signature
<PAGE> 29
SCHEDULE C
PERFORMANCE ACHIEVEMENT PROGRAM
1. DEFINITIONS. Capitalized terms which are defined in the shareholders
agreement entered into as of April 17, 1997 between 504308 N.B. Inc., First
Union Management, Inc. and certain employees of Impark have the meanings as
provided for therein. In addition, the following terms have the following
meanings:
"PERFORMANCE ACHIEVEMENT" for any year means the Percentage Achievement
for such year of the Performance Bonus Base for such year;
"PERCENTAGE ACHIEVEMENT" means as follows:
(i) for 1997 and 1998, 100% minus the amount of any Shortfall
Percentage for the applicable year;
(ii) for 1999, 100% minus the product of 1.5 and any Shortfall
Percentage for 1999; and
(iii) for 2000, 100% minus the product of 3 and any Shortfall
Percentage for 2000;
"PERFORMANCE BONUS BASE" means as follows:
(i) for 1998, the Percentage Achievement for 1997 of $694,444;
(ii) for 1999, the Performance Achievement for 1998; and
(iii) for 2000, the Performance Achievement for 1999; and
"SHORTFALL PERCENTAGE" for any period means the percentage obtained by
multiplying 100% times the quotient of the Performance Shortfall for
such period divided by the Performance Target for such period.
2. PARTICIPANTS. Subject as hereinafter provided, the participants in the
Program (the "Participants") and the interest of each Participant (the
"Participant's Share") will be as follows:
<PAGE> 30
Participant Participant's Share
Paul T. Clough 52.35%
J. Bruce Newsome 12.08%
Douglas I. Poirier 7.47%
J. Robin Bateman 4.03%
James MacKay 4.11%
Michael T. Menzies 4.11%
Robert L. Noiles 3.00%
Harry J. Renaud 7.11%
Stuart M. MacKenzie 3.68%
Daniel Sawchuck 2.06%
Notwithstanding the foregoing, in the event that individuals who are employed by
Impark as at April 17, 1997 become new members of Impark Management prior to
June 30, 1997, the Designated Representative shall have the right at any time
prior to such date to include any of such new members as Participants and to
designate the Participant's Share of each such new Participant provided that the
Participant's Share of Paul Clough shall be reduced by the aggregate of the
Participant's Shares of such new Participants. The inclusion and designation
provided for in the preceding sentence shall be made by written notice delivered
to Holdco 2 and FUMI on or before June 30, 1997.
3. PERFORMANCE ACHIEVEMENT AWARD. Each Participant will be conditionally
entitled to receive a bonus payment in respect of each of the calendar years
1998, 1999 and 2000. The amount to which a Participant will be conditionally
entitled in respect of any such year will be such Participant's Share of the
Performance Achievement for such year. The actual entitlement of such
Participant to such bonus will be dependant upon such Participant being
continuously employed by any of Impark, FUR or FUMI or a subsidiary of any of
them from April 17, 1997 through to the end of the third calendar year following
the year in respect of which such bonus was determined. If the Participant is so
continuously employed until the end of such third year, he will be paid the full
amount of such bonus on the last day of such third year. If such Participant
ceases to be so employed during such third year, he will be paid on or before
the last day of such third year a pro rata portion of such bonus based on the
number of days he was so employed during such third year relative to the total
number of days in such year.
<PAGE> 31
4. COORDINATION. The Program shall be coordinated with the comparable program to
be instituted by Imperial Parking so as to ensure that each member of Impark
Management participates in one or the other of the programs without double
counting.
<PAGE> 32
SCHEDULE D
PERFORMANCE BONUS PROGRAM
1. DEFINITIONS. Capitalized terms which are defined in the shareholders
agreement entered into as of April 17, 1997 between 504308 N.B. Inc. and certain
employees of Impark have the meanings as provided for therein.
2. PARTICIPANTS. The participants in the Program (the "Participants") will
be the employees from time to time of Impark and the interest of each
Participant (the "Participant's Share") will be determined from time to time by
the Designated Representative.
3. PERFORMANCE ACHIEVEMENT AWARD. In 1998, 1999, 2000 and 2001, each Participant
who is still employed by Impark will be entitled to receive a cash bonus payment
equal to such Participant's Share of the amount which is 5% of any amount by
which the Consolidated Performance for the immediately preceding calendar year
exceeds the Performance Target for such immediately preceding calendar year.
4. COORDINATION. The Program shall be coordinated with the comparable program to
be instituted by Imperial Parking so as to ensure that each member of Impark
Management participates in one or the other of the programs without double
counting.
<PAGE> 33
SCHEDULE E
DEPOSIT RECEIPT
THE UNDERSIGNED, ____________________ (the "Depositary"),
hereby confirms that ______________________ (the "Holder") is the registered
holder of the following shares (the "Shares") in the capital of 504308 N.B.
Inc.:
Common Shares _______________________
Preferred Shares _______________________
The certificates in respect of such Shares are held by the
Depositary pursuant to the agreement (the "Shareholders Agreement") made as of
the 17th day of April, 1997 between 504308 N.B. Inc., First Union Management,
Inc. and the individuals listed on Schedule A thereto. This Deposit Receipt
evidences the ownership by the Holder of the Shares held by the Depositary in
accordance with the Shareholders Agreement. The Depositary is bound to hold the
Shares in accordance with the Shareholders Agreement and the rights of the
Holder with respect to the Shares are expressly subject to, governed by and may
be exercised only in accordance with, the terms and conditions set forth in the
Shareholders Agreement (as such agreement may be amended from time to time). By
acceptance of this Deposit Receipt, the Holder assents to such terms and
conditions.
This Deposit Receipt is not transferable.
IN WITNESS WHEREOF the Depositary has caused this Deposit
Receipt to be signed by its duly authorized signatory this ____ day of ________,
_____.
_______________________________
by ___________________________
<PAGE> 1
Exhibit (10I)
ASSIGNMENT
THIS ASSIGNMENT is made this 27th day of March, 1997 by and between First
Union Real Estate Equity and Mortgage Investments, an Ohio business trust
("FUR"), and First Union Management, Inc., a Delaware corporation ("FUMI").
WHEREAS, FUR is party to that certain Share Purchase Agreement dated as of
February 18, 1997 among FUR, Impark Investments Inc., the persons listed on
Schedule 1 thereto and certain others (as amended through the date hereof, the
"Share Purchase Agreement"); and
WHEREAS, FUR desires to assign its rights and obligations under the Share
Purchase Agreement to FUMI and FUMI desires to accept such assignment;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each party, the parties hereby
agree as follows:
1. Terms used herein commencing with initial capital letters and not
otherwise defined shall have the respective meanings ascribed thereto in
the Share Purchase Agreement.
2. In consideration of a Promissory Note issued by FUMI in the amount of (a)
U.S. $1,459,125.08, representing the U.S. dollar equivalent as of the date
hereof of Can. $2,004,691.95 being the Escrowed Funds (as defined in the
Escrow Agreement), plus (b) U.S. $3,200,000, representing the additional
fees, costs and expenses incurred by FUR in connection with the Share
Purchase Agreement and the transactions contemplated thereby, FUR hereby
assigns to FUMI all rights, title, benefits, interest, liabilities and
obligations under the Share Purchase Agreement and any other documents
related thereto to which any of the Vendors and FUR are parties or which
have been executed by any of them for the benefit of FUR (collectively,
the "Documents").
3. FUMI hereby accepts the within assignment to it of the rights, title,
benefits and interest of FUR (the "Rights") and hereby covenants and
agrees with FUR that it shall and will, from time to time, and at all
times hereafter be bound by, observe, perform and fulfil each and every
covenant, proviso, obligation, term and condition on the part of FUR in
the Documents relating to the acquisition of the Purchased Shares and the
payment of the Purchase Price therefor to the same extent as if FUMI had
been originally named as a party to the Documents in the place and stead
of
<PAGE> 2
FUR in so far as the Documents relate to the acquisition of the Purchased
Shares.
4. FUMI shall be entitled to hold and enforce all of the Rights in, to and
under the Documents (including, without limitation, under the Escrow
Agreement).
5. All references to "Purchaser" in the Documents shall be deemed to include
FUMI insofar as is necessary to give effect to the assignment of the
Rights in, to and under the Documents effected hereby and, for grater
certainty, any Loss suffered by FUMI shall be deemed to be a Loss suffered
by FUR for purposes of Article 11 of the Purchase Agreement.
6. FUR further covenants to do all such acts and execute all such documents
as may be reasonably necessary or desirable to secure the vesting in FUMI
of all rights assigned to FUMI hereunder.
7. This Assignment shall be governed by and construed in accordance with the
laws of the State of Ohio.
8. This Assignment is for the benefit of FUMI and its subsidiaries and may be
assigned by FUMI to any of its direct or indirect subsidiaries.
9. This Assignment constitutes the entire agreement between the parties with
respect to the subject matter hereof. No amendment or waiver of any
provision of this Assignment shall be binding on any party unless
consented to in writing by such party.
<PAGE> 3
IN WITNESS WHEREOF, this Assignment has been duly executed by the
authorized officers of the parties hereto.
FIRST UNION REAL ESTATE EQUITY
AND MORTGAGE INVESTMENTS
By: /s/ Authorized Signer
______________________________
Name: ______________________________
Title: ______________________________
FIRST UNION MANAGEMENT, INC.
By: /s/ Authorized Signer
______________________________
Name: ______________________________
Title: ______________________________
<PAGE> 1
Exhibit (10J)
ASSIGNMENT
THIS ASSIGNMENT is made this 16th day of April, 1997 by and between First
Union Management, Inc., a Delaware corporation ("FUMI"), and 3355489 Canada
Inc., a Canadian corporation ("Holdco 1").
WHEREAS, FUR was party to that certain Share Purchase Agreement dated as
of February 18, 1997 among FUR, Impark Investments Inc., the persons listed on
Schedule 1 thereto and certain others (as amended through the date hereof, the
"Share Purchase Agreement"); and
WHEREAS, FUR has assigned its rights and obligations under the Share
Purchase Agreement to FUMI and FUMI has accepted such assignment pursuant to an
Assignment dated March 27, 1997 between FUR and FUMI (the "Assignment");
WHEREAS, FUMI desires to assign its rights and obligations under the
Assignment to Holdco 1 and Holdco 1 desires to accept such assignment;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each party, the parties hereby
agree as follows:
1. Terms used herein commencing with initial capital letters and not
otherwise defined shall have the respective meanings ascribed thereto in
the Share Purchase Agreement.
2. In consideration of assuming all obligations under the Promissory Note
issued by FUMI to FUR in the amount of $4,659,125.08, FUMI hereby assigns
to Holdco 1 all rights, title, benefits, interest, liabilities and
obligations under the Assignment and any other documents related thereto
to which any of the Vendors and FUMI are parties or which have been
executed by any of them for the benefit of FUMI (collectively, the
"Documents").
3. Holdco 1 hereby accepts the within assignment to it of the rights, title,
benefits and interest of FUMI (the "Rights") and hereby covenants and
agrees with FUMI that it shall and will, from time to time, and at all
times hereafter be bound by, observe, perform and fulfil each and every
covenant, proviso, obligation, term and condition on the part of FUMI in
the Documents relating to the acquisition of the Purchased Shares and the
payment of the Purchase Price therefor to the same extent as if Holdco 1
had been originally named as a party to the Documents in the place
<PAGE> 2
and stead of FUMI in so far as the Documents relate to the acquisition of
the Purchased Shares.
4. Holdco 1 shall be entitled to hold and enforce all of the Rights in, to
and under the Documents (including, without limitation, under the Escrow
Agreement).
5. All references to "Purchaser" in the Documents shall be deemed to include
Holdco 1 insofar as is necessary to give effect to the assignment of the
Rights in, to and under the Documents effected hereby and, for greater
certainty, any Loss suffered by Holdco 1 shall be deemed to be a Loss
suffered by Purchaser for purposes of Article 11 of the Purchase
Agreement.
6. FUMI further covenants to do all such acts and execute all such documents
as may be reasonably necessary or desirable to secure the vesting in
Holdco 1 of all rights assigned to Holdco 1 hereunder.
7. This Assignment shall be governed by and construed in accordance with the
laws of the State of Ohio.
8. This Assignment is for the benefit of Holdco 1 and its subsidiaries and
may be assigned by Holdco 1 to any of its direct or indirect subsidiaries.
9. This Assignment constitutes the entire agreement between the parties with
respect to the subject matter hereof. No amendment or waiver of any
provision of this Assignment shall be binding on any party unless
consented to in writing by such party.
<PAGE> 3
IN WITNESS WHEREOF, this Assignment has been duly executed by the
authorized officers of the parties hereto.
FIRST UNION MANAGEMENT, INC.
By: /s/ Authorized Signer
_______________________________
Name: _______________________________
Title: _______________________________
3355489 CANADA INC.
By: /s/ Authorized Signer
_______________________________
Name: _______________________________
Title: _______________________________
<PAGE> 4
ALLONGE TO DEMAND PROMISSORY NOTE
3355489 Canada Inc. assumes all obligations and rights of First Union
Management, Inc. ("FUMI") under the Demand Promissory Note in the amount of U.S.
$4,659,125.08 dated March 27, 1997 issued by FUMI and payable to the order of
First Union Real Estate Equity and Mortgage Investments.
Dated: April 17, 1997 3355489 CANADA INC.
By:__________________________
Name:________________________
Title:_______________________
Accepted and Agreed:
FIRST UNION REAL ESTATE EQUITY
AND MORTGAGE INVESTMENTS
By:___________________________
Name:_________________________
Title:________________________
<PAGE> 5
ALLONGE TO DEMAND PROMISSORY NOTE
3357392 Canada Inc. assumes all obligations and rights of 3355489
Canada Inc. under the Demand Promissory Note in the amount of U.S. $4,659,125.08
dated March 27, 1997 issued by FUMI and assumed be 3355489 Canada Inc. and
payable to the order of First Union Real Estate Equity and Mortgage Investments.
Dated: April 17, 1997 3357392 CANADA INC.
By:__________________________
Name:________________________
Title:_______________________
Accepted and Agreed:
FIRST UNION REAL ESTATE EQUITY
AND MORTGAGE INVESTMENTS
By:___________________________
Name:_________________________
Title:________________________
<PAGE> 1
Exhibit (10K)
ASSIGNMENT
THIS ASSIGNMENT is made this 16th day of April, 1997 by and between
3355489 Canada Inc., a Canadian corporation ("Holdco 1"), and 3357392 Canada
Inc., a Canadian corporation ("Canco 1").
WHEREAS, FUR was party to that certain Share Purchase Agreement dated as
of February 18, 1997 among FUR, Impark Investments Inc., the persons listed on
Schedule 1 thereto and certain others (as amended through the date hereof, the
"Share Purchase Agreement"); and
WHEREAS, FUR has assigned its rights and obligations under the Share
Purchase Agreement to FUMI and FUMI has accepted such assignment pursuant to an
Assignment dated March 27, 1997 between FUR and FUMI (the "FUMI Assignment");
WHEREAS, FUMI has assigned its rights and obligations under the FUMI
Assignment to Holdco 1 and Holdco 1 has accepted such assignment pursuant to an
Assignment dated April 16, 1997 between FUMI and Holdco 1 (the "Assignment");
WHEREAS, Holdco 1 desires to assign its rights and obligations under the
Assignment to Canco 1 and Canco 1 desires to accept such assignment;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each party, the parties hereby
agree as follows:
1. Terms used herein commencing with initial capital letters and not
otherwise defined shall have the respective meanings ascribed thereto in
the Share Purchase Agreement.
2. In consideration of assuming all obligations under the Promissory Note
issued by FUMI to FUR in the amount of $4,659,125.08 and assumed by Holdco
1, Holdco 1 hereby assigns to Canco 1 all rights, title, benefits,
interest, liabilities and obligations under the Assignment and any other
documents related thereto to which any of the Vendors and Holdco 1 are
parties or which have been executed by any of them for the benefit of
Holdco 1 (collectively, the "Documents").
3. Canco 1 hereby accepts the within assignment to it of the rights, title,
benefits and interest of Holdco 1 (the "Rights") and hereby covenants and
agrees with Holdco 1 that it shall and will, from time to time, and at all
times hereafter be bound by, observe, perform and fulfil each and
<PAGE> 2
every covenant, proviso, obligation, term and condition on the part of
Holdco 1 in the Documents relating to the acquisition of the Purchased
Shares and the payment of the Purchase Price therefor to the same extent
as if Canco 1 had been originally named as a party to the Documents in the
place and stead of Holdco 1 in so far as the Documents relate to the
acquisition of the Purchased Shares.
4. Canco 1 shall be entitled to hold and enforce all of the Rights in, to and
under the Documents (including, without limitation, under the Escrow
Agreement).
5. All references to "Purchaser" in the Documents shall be deemed to include
Canco 1 insofar as is necessary to give effect to the assignment of the
Rights in, to and under the Documents effected hereby and, for greater
certainty, any Loss suffered by Canco 1 shall be deemed to be a Loss
suffered by Purchaser for purposes of Article 11 of the Purchase
Agreement.
6. Holdco 1 further covenants to do all such acts and execute all such
documents as may be reasonably necessary or desirable to secure the
vesting in Canco 1 of all rights assigned to Canco 1 hereunder.
7. This Assignment shall be governed by and construed in accordance with the
laws of the Province of Ontario.
8. This Assignment is for the benefit of Canco 1 and its subsidiaries and may
be assigned by Canco 1 to any of its direct or indirect subsidiaries.
9. This Assignment constitutes the entire agreement between the parties with
respect to the subject matter hereof. No amendment or waiver of any
provision of this Assignment shall be binding on any party unless
consented to in writing by such party.
<PAGE> 3
IN WITNESS WHEREOF, this Assignment has been duly executed by the
authorized officers of the parties hereto.
3355489 CANADA INC.
By: /s/ Authorized Signer
_______________________________
Name: _______________________________
Title: _______________________________
3357392 CANADA INC.
By: /s/ Authorized Signer
_______________________________
Name: _______________________________
Title: _______________________________
<PAGE> 1
Exhibit (10L)
AMENDMENT TO ASSIGNMENT
THIS AMENDMENT TO ASSIGNMENT is made this 8th day of May, 1997 by and
between First Union Real Estate Equity and Mortgage Investments, an Ohio
business trust ("FUR"), and Imperial Parking Limited, a Canadian corporation
("Impark") but is to be effective as of March 27, 1997.
WHEREAS, FUR and First Union Management, Inc. ("FUMI") are parties to
an Assignment dated March 27, 1997 (the "Assignment") pursuant to which FUR
assigned its rights and obligations under the Share Purchase Agreement dated as
of February 18,1997 among FUR, Impark Investments Inc., the persons listed on
Schedule 1 thereto and certain others (as amended from time to time, the
"Share Purchase Agreement") to FUMI and FUMI accepted such assignment;
WHEREAS, FUMI assigned its rights and obligations under the Assignment
to 3355489 Canada Inc., a Canadian corporation ("Holdco 1"), and Holdco 1
accepted such assignment pursuant to an assignment dated April 16, 1997 (the
"Holdco Assignment");
WHEREAS, Holdco 1 assigned its rights and obligations under the Holdco
Assignment to 3357392 Canada Inc., a Canadian corporation ("Canco 1"), and Canco
1 accepted such assignment pursuant to an assignment dated April 16, 1997 (the
"Canco Assignment");
WHEREAS, Impark is the successor by amalgamation to the obligations of
Canco 1 under the Canco Assignment;
WHEREAS, the parties hereto desire to amend the Assignment to correct
an error in the calculation of the fees and expenses incurred by FUR in
connection with the Share Purchase Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each party, the parties hereby
agree as follows:
1. The amount U.S. $3,200,000 appearing in clause (b) of Section 2 of the
Assignment reflected the estimated costs to complete the transactions
contemplated by the Share Purchase Agreement and not the actual costs
incurred and paid by FUR as of the date of the Assignment. In order to
correct this error and to reflect the true intent of the parties,
clause (b) of Section 2 to the Assignment is amended in its entirety to
read as follows:
"(b) U.S. $36,630, representing the additional fees, costs
and expenses incurred and paid by FUR in connection with the
Share Purchase Agreement and the transactions contemplated
thereby,".
<PAGE> 2
2. The Promissory Note referenced in Section 2 of the Assignment, the
obligations of which were assumed by Impark pursuant to the
amalgamation with Canco 1, is hereby terminated and declared null and
void and is replaced in its entirety with the Promisoory Note attached
hereto as Exhibit A.
3. This Amendment shall be governed by and construed in accordance with
the laws of the State of Ohio.
IN WITNESS WHEREOF, this Amendment has been duly executed by the
authorized officers of the parties hereto.
FIRST UNION REAL ESTATE EQUITY
AND MORTGAGE INVESTMENTS
By: /s/ Authorized Signer
_______________________________
Name: _______________________________
Title:_______________________________
IMPERIAL PARKING LIMITED
By: /s/ Authorized Signer
_______________________________
Name: _______________________________
Title:_______________________________
<PAGE> 3
$4,659,125.08 March 27, 1997
The undersigned, First Union Management, Inc., a Delaware corporation
("FUMI"), hereby promises to pay to the order of First Union Real Estate Equity
and Mortgage Investments, an Ohio business trust ("FUR"), on demand the
principal amount of Four Million Six Hundred Fifty-Nine Thousand One Hundred
Twenty-Five and 08/100 Dollars ($4,659,125.08), together with interest on the
unpaid principal amount hereof from time to time outstanding at the rate of 9.5%
per annum (calculated on the basis of a year of 360 days consisting of twelve
30-day months) from and including the date hereof to maturity. All accrued
interest hereon shall be payable in a lump sum on the earlier of (i) demand and
(ii) March 31, 2002 (or if such date is not a business day, the immediately
preceding business day). The accumulation of interest on this Note on or prior
to such interest payment date shall not bear interest.
This Note may be prepaid without penalty, in whole or in part, by FUMI
at any time and from time to time.
Payments of both principal and interest on this Note will be made by
internal bank or wire transfer of funds to the account of FUR at 55 Public
Square, Suite 1900, Cleveland, Ohio 44113, or at any other payment office in the
United States previously designated to FUMI in writing by the holder of this
Note, in lawful money of the United States of America.
FUMI hereby waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note.
This Note shall be governed by the laws of the State of Ohio.
IN WITNESS WHEREOF, First Union Management, Inc. has executed this Note
as of the date first written above.
FIRST UNION MANAGEMENT, INC.
Address:
55 Public Square, Suite 1900
Cleveland, Ohio 44113 By: _____________________________
Attention: Chief Investment Its: _____________________________
Officer
<PAGE> 1
EXHIBIT 11
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS AND
FIRST UNION MANAGEMENT, INC.
STATEMENTS RE: COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
1997 1996
---- ----
<S> <C> <C>
Shares Outstanding:
For computation of primary net
income per share -
Weighted average 19,896 17,262
Share equivalents - Options 419 --
- Restricted shares 196 --
------ ------
Adjusted shares outstanding 20,511 17,262
====== ======
For computation of fully diluted
net income per share -
Weighted average, without regard to,
exercise under share option plans,
or purchase of outstanding shares 19,896 17,198
Assumption of exercise under share
option plans 419 --
Weighted average of restricted
shares granted 196 64
------ ------
Adjusted shares outstanding 20,511 17,262
====== ======
Net Income (loss):
Net income (loss) applicable to shares
of beneficial interest (used for
computing primary and fully diluted
net income per share) $ 970 $ (877)
====== ======
Net income (loss) per share of beneficial interest:
Primary and fully diluted
Net income (loss) $ .05 $ (.05)
====== ======
</TABLE>
The proforma basic earnings per share for the three months ended March 31, 1997
in accordance with SFAS 128 (Earnings per Share) is $.05 per Share.
7
<PAGE> 1
EXHIBIT 12
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS AND
-----------------------------------------------------------
FIRST UNION MANAGEMENT, INC.
----------------------------
STATEMENTS OF RATIOS OF COMBINED INCOME FROM OPERATIONS
-------------------------------------------------------
AND COMBINED NET INCOME TO FIXED CHARGES
----------------------------------------
(IN THOUSANDS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
3 Months Ended
March 31, Years Ended December 31,
------------------ ------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------- ------- -------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Income (loss) before capital gain or
loss, extraordinary loss and
cumulative effect of accounting
change $ 2,178 $ (877) $ 4,422 $ 3,256 $ 6,485 $10,276 $12,657
Add fixed charges, exclusive of
construction interest capitalized 5,404 5,869 24,018 22,987 21,865 19,103 19,469
------- ------ ------- ------- ------- ------ -------
Income from operations, as defined 7,582 4,992 28,440 26,243 28,350 29,379 32,126
Capital gains --- --- --- 29,870 --- 4,948 5,775
Reduction for unrealized loss on
carrying value of assets
identified for disposition --- --- --- ( 14,000) --- --- ---
------- ------- ------- ------- ------- ------- -------
Net income, as defined $ 7,582 $ 4,992 $28,440 $42,113 $28,350 $34,327 $37,901
======= ======= ======= ======= ======= ======= =======
Fixed charges:
Interest
- Mortgage loans $ 2,426 $ 1,825 $ 8,877 $ 7,670 $ 7,335 $ 5,777 $ 6,182
- Senior notes 2,219 2,326 9,090 9,305 9,305 5,779 4,199
- 10.25% debentures --- --- --- --- --- 3,214 3,858
- Bank loans and other 611 1,568 5,459 5,422 4,640 3,747 4,694
- Capitalized interest --- 81 121 169 --- --- ---
Amortization of debt issue costs 52 49 196 184 168 162 122
Rents (1) 96 101 396 406 417 424 414
------- -------- ------- ------- ------- ------- -------
Fixed charges, as defined $ 5,404 $ 5,950 $24,139 $23,156 $21,865 $19,103 $19,469
======= ======== ======= ======= ======= ======= =======
Preferred dividend accrued $ 1,208 $ --- $ 845 $ --- $ --- $ --- $ ---
====== ======= ====== ====== ====== ====== ======
Ratio of income from operations, as
defined, to fixed charges 1.40 .84 1.18 1.13 1.30 1.54 1.65
======= ======== ======= ======= ====== ======= =======
Ratio of net income, as defined,
to fixed charges 1.40 .84 1.18 1.82 1.30 1.80 1.95
======= ======== ======= ======= ====== ======= =======
Ratio of net income from operations
as defined, to fixed charges and
preferred dividend 1.15 .84 1.14 1.82 1.30 1.80 1.95
======= ======== ======= ======= ====== ======= =======
<FN>
(1) The interest portion of rentals is assumed to be one-third of all ground
rental and net lease payments.
</TABLE>
8
<PAGE> 1
EXHIBIT 20
FIRST UNION REAL ESTATE EQUITY and MORTGAGE INVESTMENTS
- -------------------------------------------------------
Combined Balance Sheets
<TABLE>
<CAPTION>
Unaudited (In thousands, except shares) March 31, December 31,
1997 1996
--------- ----------
<S> <C> <C>
ASSETS
Investments in real estate
Land $ 51,723 $ 52,891
Buildings and improvements 398,203 406,672
--------- ---------
449,926 459,563
Less - Accumulated depreciation (110,692) (112,614)
--------- ---------
Total investments in real estate 339,234 346,949
Investment in joint venture 31,191 30,776
Mortgage loans receivable 26,999 42,266
Other assets
Cash and cash equivalents 39,613 2,951
Accounts receivable and prepayments 8,323 8,440
Deferred charges and other, net 5,328 5,225
Unamortized debt issue costs 3,770 3,923
--------- ---------
$ 454,458 $ 440,530
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgage loans and note payable $ 120,199 $ 129,068
Senior notes 100,000 100,000
Bank loans 25,800
Accounts payable and accrued liabilities 17,978 14,549
Deferred obligations 10,821 10,825
Deferred capital gains and other deferred income 7,718 7,735
Shareholders' equity, including shares of
beneficial interest, $1 par, unlimited
authorization, outstanding 1997--21,625,503;
1996--17,621,799 197,742 152,553
--------- ---------
$ 454,458 $ 440,530
========= =========
</TABLE>
<PAGE> 2
FIRST UNION REAL ESTATE EQUITY and MORTGAGE INVESTMENTS
- -------------------------------------------------------
Combined Statements of Income
<TABLE>
<CAPTION>
Unaudited (In thousands, except per share data) Three Months Ended
March 31,
----------------------
1997 1996
-------- --------
<S> <C> <C>
Revenues
Rents $ 19,003 $ 18,463
Interest - Mortgage loans 931 1,205
- Short-term investments 348 7
Equity in income from joint venture 337
Management fees 767
Other 736 222
-------- --------
22,122 19,897
-------- --------
Expenses
Property operating 6,914 7,166
Real estate taxes 2,339 2,020
Depreciation and amortization 3,230 3,753
Interest - Mortgage loans 2,426 1,825
- Senior notes 2,219 2,326
- Bank loans and other 611 1,568
General and administrative 2,205 2,116
-------- --------
19,944 20,774
-------- --------
Net income (loss) before preferred dividend 2,178 (877)
Preferred dividend (1,208)
-------- --------
Net income (loss) applicable to shares of
beneficial interest $ 970 $ (877)
-------- --------
Per share
Net income (loss) applicable to shares of
beneficial interest $ .05 $ (.05)
-------- --------
Adjusted shares of beneficial interest 20,511 17,262
-------- --------
</TABLE>
<PAGE> 3
FIRST UNION REAL ESTATE EQUITY and MORTGAGE INVESTMENTS
- -------------------------------------------------------
Combined Statements of Changes in Cash
<TABLE>
<CAPTION>
Unaudited (In thousands) Three Months
Ended March 31,
----------------------------
1997 1996
---------- ----------
<S> <C> <C>
Cash provided by (used for) operations
Net income (loss) before preferred dividend $ 2,178 $ (877)
Adjustments to reconcile net income (loss) to net
cash provided by operations --
Depreciation and amortization 3,230 3,753
Increase in deferred charges, net (313) (329)
Increase in deferred interest on
mortgage investments, net (65) (96)
(Decrease) increase in deferred obligations (4) 40
Net changes in other assets and liabilities 2,096 2,586
-------- -------
Net cash provided by operations 7,122 5,077
-------- -------
Cash provided by (used for) investing
Repayment of mortgage investment 16,200
Principal received from mortgage investments 47 42
Proceeds from sale of properties 8,988 1,825
Investment in capital and tenant improvements (4,143) (8,662)
-------- -------
Net cash provided by (used for) investing 21,092 (6,795)
-------- -------
Cash provided by (used for) financing
Increase in mortgage loans 12,500
(Decrease) increase in short-term loans (25,800) 100
Repayment of mortgage loans - Normal payments (722) (720)
- Balloon payments (8,301)
Dividends paid to shares of beneficial interest (1,923) (2,028)
Dividends paid to preferred shares of beneficial interest (1,248)
Debt issue costs paid (23) (611)
Purchase of First Union shares (7,125)
Sale of First Union shares 46,465 79
Sale of interest rate protection agreement 1,025
Other 2
-------- -------
Net cash provided by financing 8,448 3,222
-------- -------
Increase in cash and cash equivalents 36,662 1,504
Cash and cash equivalents at beginning of period 2,951 3,402
-------- -------
Cash and cash equivalents at end of period $ 39,613 $ 4,906
-------- -------
</TABLE>
Notes to Combined Financial Statements
1. Income per share of beneficial interest has been computed on weighted
average shares and share equivalents outstanding for the applicable
periods.
2. In January 1997, the Trust sold a shopping center in Wilkesboro, North
Carolina for $9 million in cash resulting in a loss of $4.9 million. In
February 1996, the Trust sold two office buildings in Cleveland, Ohio for
$1.8 million in cash and a $7 million mortgage note, which was subsequently
repaid, resulting in a loss of $5.6 million. Both losses had been
previously recognized during the fourth quarter of 1995 as part of a $14
million unrealized loss on carrying value of assets identified for
disposition.
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<CIK> 0000037008
<NAME> FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 39,613,000
<SECURITIES> 0
<RECEIVABLES> 8,323,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 47,936,000
<PP&E> 449,926,000
<DEPRECIATION> (110,692,000)
<TOTAL-ASSETS> 454,458,000
<CURRENT-LIABILITIES> 17,978,000
<BONDS> 220,199,000
<COMMON> 143,633,000
54,109,000
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 454,458,000
<SALES> 22,122,000
<TOTAL-REVENUES> 22,122,000
<CGS> 0
<TOTAL-COSTS> 9,253,000
<OTHER-EXPENSES> 5,435,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,256,000
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 970,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 970,000
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
