AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON [ ], 1997
REGISTRATION NO. 333-[ ]
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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HOLLINGER INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-3518892
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
401 NORTH WABASH AVENUE
CHICAGO, ILLINOIS 60611
(312) 321-3000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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KENNETH L. SEROTA
VICE PRESIDENT - LAW AND FINANCE
AND SECRETARY
HOLLINGER INTERNATIONAL INC.
401 NORTH WABASH AVENUE
CHICAGO, ILLINOIS 60611
(312) 321-2299
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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COPY TO:
WILLIAM P. ROGERS, JR., ESQ.
CRAVATH, SWAINE & MOORE
825 EIGHTH AVENUE
NEW YORK, NEW YORK 10019
(212) 474-1000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time
to time after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box.[ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.[ ]
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CALCULATION OF ADDITIONAL REGISTRATION FEE
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH MAXIMUM AGGREGATE AMOUNT OF
CLASS OF SECURITIES AMOUNT TO BE OFFERING OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE PRICE(2)(3) FEE(2)
Class A Common Stock,
par value $.01
per share............ 6,440,468 N/A $60,190,788 $18,240
(1) The number of shares is based on the maximum Optional Exchange Ratio
multiplied by the total number of HCPH Special Shares outstanding.
This registration statement also registers such indefinite number of
additional shares, if any, as may be issued pursuant to a Mandatory
Exchange, which share amount will be calculated pursuant to the
Mandatory Exchange Number on the Mandatory Exchange Date. Capitalized
terms are used as defined in the prospectus forming apart hereof.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f). Computed on the basis of the average of the
high and low sales prices for the HCPH Special Shares on September 11,
1997 as reported on the Toronto Stock Exchange composite tape.
(3) In U.S. dollars calculated based on the federal reserve Canadian
dollar exchange ratio as of noon September 12, 1997.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This Prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
SUBJECT TO COMPLETION, DATED [ ], 1997
HOLLINGER INTERNATIONAL INC.
Class A Common Stock
(PAR VALUE $.01 PER SHARE)
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This prospectus covers the exchange by Hollinger International Inc., a
Delaware corporation (the "Company") of shares of Class A Common Stock par
value $.01 per share (the "Class A Common Stock") upon the exchange by
holders of the Non-Voting Special Shares (the "HCPH Special Shares") issued
by its subsidiary, Hollinger Canadian Publishing Inc. ("HCPH"). See
"Background and Plan of Distribution". The Company will not receive any
cash proceeds from the Optional or Mandatory exchange of HCPH Special
Shares for Class A Common Stock.
The Class A Common Stock is listed on the New York Stock Exchange (the
"NYSE") and traded under the symbol "HLR." The last sale price of the Class
A Common Stock as reported on the NYSE Composite Tape on September 8, 1997
was $12.69 per share.
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SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE CLASS A COMMON STOCK.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
As described herein, the number of shares of Class A Common Stock, if
any, to be exchanged for each HCPH Special Shares surrendered in a
Mandatory Exchange will be determined based on the applicable Base Amount
and the Current Class a Market Price in effect at such time. The number of
Class A Common Stock, if any, to be exchanged for each HCPH Special Shares
surrendered in an Optional Exchange will be determined based on the
applicable Exchange Ratio in effect at such time. See "Background and Plan
of Distribution".
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The date of this Prospectus is [ ], 1997
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files periodic reports, proxy solicitation materials
and other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy solicitation materials and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices located at
Seven World Trade Center, Suite 1300, New York, New York 10048 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
materials can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that
file electronically with the Commission. The address of the Commission's
Web site is http://www.sec.gov. The Class A Common Stock is listed on the
NYSE. Such reports, proxy solicitation materials and other information can
also be inspected and copied at the NYSE at 20 Broad Street, New York, New
York 10005.
The Company has filed with the Commission a registration statement on
Form S-3 (herein, together with all amendments and exhibits, referred to as
the "Registration Statement") under the Securities Act with respect to the
offering made hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain portions of
which are omitted in accordance with the rules and regulations of the
Commission. Such additional information may be obtained from the
Commission's principal office in Washington, D.C. as set forth above. For
further information, reference is hereby made to the Registration
Statement, including the exhibits filed as a part thereof or otherwise
incorporated herein. Statements made in this Prospectus as to the contents
of any documents referred to are not necessarily complete, and in each
instance reference is made to such exhibit for a more complete description
and each such statement is modified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File
No. 0-24004) pursuant to the Exchange Act are incorporated herein by
reference:
1. the Company's Annual Report on Form 10-K for the year ended
December 31, 1996;
2. the Company's Quarterly Report on Form 10-Q for the quarters
ended March 31, 1997 and June 30, 1997;
3. the Company's Current Reports on Form 8-K dated May 5, 1997; and
July 14, 1997; and
4. the description of the Class A Common Stock contained in the
Company's Registration Statement on Form 8-A dated May 2, 1994,
as the same may be amended from time to time.
5. the description of the Class A Common Stock contained in the
Company's Registration Statement on Form 8-A, as the same may be
amended.
All reports and other documents filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of the offering made
by this Prospectus shall be deemed to be incorporated by reference herein.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is
incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as modified or superseded, to constitute a part
of this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon the written or oral request of such
person, a copy of any or all of the documents that are incorporated herein
by reference, other than exhibits to such information (unless such exhibits
are specifically incorporated by reference into such documents). Requests
should be directed to Hollinger International Inc., 401 North Wabash
Avenue, Chicago, Illinois 60611, Attention: Secretary, telephone number
(312) 321-2299.
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THE COMPANY
The Company, through subsidiaries and affiliated companies, is a
leading publisher of English-language newspapers in the United States, the
United Kingdom, Australia, Canada and Israel. Included among the paid daily
newspapers which the Company owns or has an interest are the Chicago
Sun-Times and The Daily Telegraph. In addition, the Company owns or has an
interest in several hundred non-daily newspapers as well as magazines and
other publications principally in small and medium sized communities in the
United States. The Company's strategy is to achieve growth through
acquisitions and improvements in the cash flow and profitability of its
newspapers, principally through cost reductions.
The Company was incorporated in the State of Delaware on December 28,
1990 and is the successor to a business that was formed through
acquisitions in 1986. Its executive offices are located at 401 North Wabash
Avenue, Chicago, Illinois 60611, telephone number (312) 321-3000.
References herein to the "Company" refer to Hollinger International Inc.
and its subsidiaries, unless the context requires otherwise.
RISK FACTORS
Prospective investors should carefully consider the following factors
relating to the business of the Company, together with the other factors,
information and financial data included or incorporated by reference in
this Prospectus before acquiring any of the shares of Class A Common Stock
offered hereby.
INTERNATIONAL HOLDING COMPANY STRUCTURE
The Company is an international holding company and its assets consist
solely of investments in its subsidiaries and affiliated companies. As a
result, the Company's ability to meet its future financial obligations is
dependent upon the availability of cash flows from its United States and
foreign subsidiaries and affiliated companies (subject to applicable
withholding taxes) through dividends, intercompany advances, management
fees and other payments. Similarly, the Company's ability to pay dividends
on its Common Stock, its preferred stock or its Preferred Redeemable
Increased Dividend Equity Security PRIDES(SM) ("PRIDES") will be limited as
a result of its dependence upon the distribution of earnings of its
subsidiaries and affiliated companies. The Company's subsidiaries and
affiliated companies are under no obligation to pay dividends and, in the
case of Hollinger International Publishing Inc., a Delaware corporation and
a wholly owned subsidiary of the Company through which the Company holds
all the shares of its other subsidiaries ("Publishing"), and its principal
United States and foreign subsidiaries, are subject to statutory
restrictions and restrictions in debt agreements that may limit their
ability to pay dividends. Substantially all of the shares of the
subsidiaries of the Company have been pledged to lenders of the Company.
The Company's right to participate in the distribution of assets of any
subsidiary or affiliated company upon its liquidation or reorganization
will be subject to the prior claims of the creditors of such subsidiary or
affiliated company, including trade creditors, except to the extent that
the Company may itself be a creditor with recognized claims against such
subsidiary or affiliated company.
RISKS INHERENT IN GROWTH STRATEGY
The Company's strategy is to achieve growth through acquisitions and
improvements in the cash flow and profitability of its newspapers,
principally through cost reductions. The Company's growth strategy presents
risks inherent in assessing the value, strengths and weaknesses of
acquisition opportunities, in evaluating the costs of new growth
opportunities at existing operations and in managing the numerous
publications it has acquired and improving their operating efficiency.
While the Company believes that there are significant numbers of potential
acquisition candidates, the Company is unable to predict the number or
timing of future acquisition opportunities or whether any such
opportunities will meet the Company's acquisition criteria or, if such
acquisitions occur, whether the Company will be able to achieve improved
operating efficiencies or enhanced profitability. Accordingly, there can be
no assurance that the Company will continue to experience the rate of
growth that it has had in the past. In addition, the Company's acquisition
strategy is largely dependent on the Company's ability to obtain additional
debt or other financing on acceptable terms.
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NEWSPAPER INDUSTRY COMPETITION
Revenues in the newspaper industry are dependant primarily upon
advertising revenues and paid circulation. Competition for advertising and
circulation revenues comes from local and regional newspapers, radio,
broadcast and cable television, direct mail, and other communications and
advertising media that operate in the Company's markets. The extent and
nature of such competition is, in large part, determined by the location
and demographics of the markets and the number of media alternatives in
those markets. Some of the Company's competitors are larger and have
greater financial resources than the Company. For example, in the Chicago
metropolitan area, the Chicago Sun-Times competes with a large established
metropolitan daily and Sunday newspaper that is the fifth largest
metropolitan daily and Sunday newspaper in the United States such
competition is often intense. In the United Kingdom, The Daily Telegraph
competes with other national newspapers, principally The Times, which over
the past several years has from time to time substantially reduced its
cover price in an effort to increase its circulation. The Daily Telegraph
has met this competition and has from time to time engaged in its own price
reduction or promotional initiatives. These competitive activities can and
have from time to time had an adverse effect on revenues and operating
costs.
CYCLICALITY OF REVENUES
Advertising and, to a lesser extent, circulation revenues of the
Company, as well as those of the newspaper industry in general, are
cyclical and dependent upon general economic conditions. Historically,
increases in advertising revenues have corresponded with economic
recoveries while decreases, as well as changes in the mix of advertising,
have corresponded with general economic downturns and regional and local
economic recessions. The Company believes, however, that the geographic
diversity of its global operations may mitigate, to some degree, the
effects of an economic downturn in any particular market served by the
Company.
NEWSPRINT COSTS
Newsprint represents the single largest raw material expense of the
Company's newspapers throughout the world and is one of its most
significant operating costs. Newsprint costs are cyclical and vary widely
period to period. For example, Newsprint cost increased approximately 40%
per metric ton in 1995 on an industry-wide basis, and the average cost per
metric ton of newsprint was substantially higher in the first half of 1996
than in the first half of 1995. However, Newsprint costs decreased
significantly in the second half of 1996 and have continued to decline
through the second quarter of 1997. Although the Company has implemented
measures in an attempt to offset a rise in newsprint prices, such as
reducing page width and managing its return policy, price increases have
had an adverse effect on the Company's results of operations. The Company
has no effective ability to use long term fixed price newsprint supply
contracts to hedge its exposure to price fluctuations.
FOREIGN OPERATIONS AND CURRENCY EXCHANGE RATES
Operations outside of the United States accounted for approximately
67% of the Company's operating revenues and approximately 50% of the
Company's operating income for the year ended December 31, 1996. In
general, the Company does not hedge against foreign currency exchange rate
risks. As a result, the Company may experience economic loss and a negative
impact on earnings with respect to its investments and on dividends from
its foreign subsidiaries, solely as a result of currency exchange rate
fluctuations.
CONTROL BY HOLLINGER INC.
The Company has outstanding two classes of common stock, Class A
Common Stock and Class B Common Stock, par value $.01 per shares (the
"Class B Common Shares and collectively the "Common Stock"). Hollinger Inc.
owns approximately 59.8% of the Common Stock of the Company and
approximately 84.3% of the combined voting power of the outstanding Common
Stock (without giving effect to the issuance of shares of Class A Common
Stock upon conversion of preferred stock including the PRIDES or the
exchange of the HCPH Special Shares) and 50.5% and 77.1%, respectively,
upon the issuance of up to approximately 20,700,000 Shares of Class A
Common Stock in connection with the PRIDES and upon exchange of all the
HCPH Special Shares (without giving effect to the issuance of Shares of
Class A Common Stock upon conversion of any other outstanding series of
preferred stock.
As a result, Hollinger Inc. is in a position to control the outcome of
substantially all actions requiring stockholder approval, including the
election of the entire Board of Directors. The retention by Hollinger Inc.
of securities representing more than 50% of the voting power of the
Company's outstanding Common Stock
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will preclude any acquisition of control of the Company not favored by
Hollinger Inc. Subject to the fiduciary responsibilities of the directors
of the Company to all stockholders and the terms of agreements defining the
ongoing relationships between Hollinger Inc. and the Company, Hollinger
Inc., through its ability to control the outcome of any election of
directors, will continue to be able to direct management policy, strategic
direction and financial decisions of the Company. Hollinger Inc. is
effectively controlled by Mr. Conrad M. Black, Chairman of the Board and
Chief Executive Officer of Hollinger Inc. and the Company, through his
direct and indirect ownership and control of Hollinger Inc.'s securities.
Mr. Black has advised the Company that Hollinger Inc. does not presently
intend to reduce its voting power in the Company's outstanding Common Stock
to less than 50%. Furthermore, Mr. Black has advised the Company that he
does not presently intend to reduce his voting control over Hollinger Inc.
such that a third party would be able to exercise effective control over
it.
The Class A Common Stock held by Hollinger Inc. is pledged to certain
lenders of Hollinger Inc. In addition, the stock of certain subsidiaries of
the Company have been pledged to secure borrowings by the Company's
subsidiaries. a default by any such borrower under their outstanding debt
instruments would entitle the lenders thereunder to foreclose on shares of
Class A Common Stock or subsidiary stock pledged to such lenders. Any such
foreclose sale could result in (i) a change in control of the company or
one or more of its principal subsidiaries, (ii) a default under or
acceleration of other debts instruments, or both.
DIVIDEND POLICY
The Company has paid quarterly dividends on its Common Stock since the
third quarter of 1994. The quarterly dividend was previously $0.025 per
share of Common Stock and was increased to $0.10 per share of Common Stock
in the first quarter of 1996. As an international holding company, the
Company's ability to declare and pay dividends in the future with respect
to its Common Stock will be dependent, among other factors, upon its
results of operations, financial condition and cash requirements, the
ability of its United States and foreign subsidiaries to pay dividends and
make other payments to the Company under applicable law and subject to
restrictions contained in existing and future loan agreements, the prior
payment of dividends to holders of outstanding preferred stock, including
the PRIDES, the preference share terms and other financing obligations to
third parties relating to such United States or foreign subsidiaries or the
Company, as well as foreign and United States tax liabilities with respect
to dividends and other payments from those entities. See "International
Holding Company Structure," "Restrictions in Debt Agreements" and "Other
Restrictive Agreements" above.
POTENTIAL CONFLICTS OF INTEREST
The Company and Hollinger Inc. have entered into agreements for the
purpose of defining their ongoing relationships, including a Services
Agreement and a Business Opportunities Agreement. These agreements were
developed in the context of a parent-subsidiary relationship and,
therefore, were not the result of arms- length negotiations between
independent parties.
Services Agreement. The Services Agreement governs the provision by
Hollinger Inc. of certain advisory, consultative, procurement and
administrative services to the Company. The Services Agreement also
contemplates that the Company may provide services to Hollinger Inc. The
services to be provided pursuant to the Services Agreement include, among
other things, strategic advice and planning and financial services
(including advice and assistance with respect to acquisitions); assistance
in operational matters; participation in group insurance programs; and
guarantees of indebtedness of the Company or other forms of credit
enhancements. The party receiving the services will reimburse the party
rendering the services for its allocable costs in providing those services,
as determined by the provider thereof or, in the case of a guarantee, for
an amount equal to the cost to the party of obtaining a bank letter of
credit in the amount of such guarantee. The party allocating its costs will
consider the salaries or other compensation payable to directors, officers
and employees actually providing services, out-of-pocket costs, the cost of
obtaining substantially equivalent services from a third party and other
factors as may be deemed appropriate. The Services Agreement will be in
effect for so long as Hollinger Inc. holds at least 50% of the voting power
of the Company, subject to termination by either party under certain
specified circumstances. Payments made pursuant to the Services Agreement
are subject to the review and approval of the Audit Committee of the Board
of Directors of the Company.
In addition, Hollinger Inc. and The Telegraph are parties to a
separate services agreement under which The Telegraph bears two-thirds of
the cost of the office of the Chairman incurred by Hollinger Inc. as long
as Mr. Black remains Chairman of the Board of The Telegraph, and requires
that other services will be provided at cost, including the arrangement of
insurance, assistance in the arrangement of financing and assistance and
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advice on acquisitions, dispositions and joint venture arrangements.
Hollinger Inc. has assigned its rights and obligations under The Telegraph
services agreement to the Company and Publishing on May 9, 1996 with the
consent of The Telegraph.
Business Opportunities. The Business Opportunities Agreement provides
that the Company will be Hollinger Inc.'s principal vehicle for engaging in
and effecting acquisitions in newspaper businesses and in related media
businesses in the United States, Israel and, through The Telegraph, the
European Community, Australia and New Zealand (the "Telegraph Territory").
Hollinger Inc. has reserved to itself the ability to pursue newspaper and
all media acquisition opportunities outside the United States, Israel and
the Telegraph Territory, and media acquisition opportunities unrelated to
the newspaper business in the United States, Israel and the Telegraph
Territory, except that the Company is permitted to increase its indirect
investment in Southam. The Business Opportunities Agreement does not
restrict newspaper companies in which Hollinger Inc. has a minority
investment from acquiring newspaper or media businesses in the United
States, Israel or the Telegraph Territory, nor does it restrict
subsidiaries of Hollinger Inc. from acquiring up to 20% interests in
publicly held newspaper businesses in the United States. The Business
Opportunities Agreement will be in effect for so long as Hollinger Inc.
holds at least 50% of the voting power of the Company, subject to
termination by either party under specified circumstances.
USE OF PROCEEDS
The Company will not receive any proceeds from the Optional or
Mandatory exchange of HCPH Special Shares for Class A Common Stock.
However, the Company will receive and hold all such HCPH Special Shares
surrendered for exchange, thereby increasing its equity ownership of HCPH.
BACKGROUND AND PLAN OF DISTRIBUTION
SOUTHAM BID AND SOUTHAM-LINKED DEBENTURE BID
On May 15, 1997 HCPH offered to purchase all of the common shares of
Southam Inc. (the "Southam Bid"), not already owned by HCPH for $23.50
(Cdn.) payable as $13.50 (Cdn.) in cash and by the issuance of one HCPH
Special Share. Upon the closing of the Southam Bid on July 7, 1997, HCPH
issued 6,552,445 HCPH Special Shares. On July 29, 1997 Hollinger Inc.
invited the holders of its 7.00% Southam-Linked Convertible Debentures due
November 1, 1998 (the "Southam-Linked Debentures") to exchange their
Southam-Linked Debentures for, at the option of the holder (i) $1,342.86
(Cdn.) in cash per $1,000 principal amount of the Southam-Linked
Debentures, plus accrued and unpaid interest of $23.59 (Cdn.); or (ii)
$771.43 (Cdn.) in cash and 57.143 HCPH Special Shares per $1,000 principal
amount of Debentures, plus accrued and unpaid interest of $23.59 (Cdn.).
Upon the closing of the Southam Linked Debenture Bid on September 3, 1997,
HCPH issued 4,146,107 HCPH Special Shares.
In conjunction with the Southam Bid and the Southam-Linked Debenture
Bid HCPH and the Company entered into an Exchange Indenture, dated July 18,
1997, among HCPH, the Company and Montreal Trust Company of Canada (the
"Exchange Indenture"). Pursuant to the terms of the Exchange Indenture, set
forth below, the HCPH Special Shares will be exchanged for shares of the
Class A Common Stock of the Company either automatically on the Mandatory
Exchange Date (as defined below) or at the option of the holder on any
Optional Exchange Date (as defined below).
MANDATORY EXCHANGE
Under the Exchange Indenture, subject to the cash payment option
described below, the HCPH Special Shares will be exchanged automatically
for the Mandatory Exchange Number (defined below) the earlier of June 26,
2000, or the date on which an Acceleration Event first occurs (the
"Mandatory Exchange Date"). An Acceleration Event occurs upon (i) the
insolvence, bankruptcy, liquidation, dissolution or winding up of HCPH, the
Company or Hollinger International Publishing; (ii) a payment default under
the second amended and Restated Credit Agreement, dated April 7, 1997
among, HCPH, Hollinger International Publishing and certain financial
institutions, as may be amended or supplemented from time to time (the
"Bank Credit Facility") or default in payment (after the expiration of any
cure or grace period) of the principal of or interest on any other
indebtedness of HCPH, the Company or Hollinger International Publishing,
which, in the aggregate, exceeds U.S.$25,000,000 ("Material Indebtedness");
or (iii) the acceleration of the maturity of
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indebtedness of HCPH or Hollinger International Publishing under the Bank
Credit Facility upon any Event of Default thereunder or of any Material
Indebtedness.
The "Mandatory Exchange Number" will be calculated as of the Mandatory
Exchange Date as (i) the "Base Amount" calculated as U.S.$8.88 less the
amount of any dividends which have been paid per share on the HCPH Special
Shares, divided by (ii) 95% of the then Current Market Price of Class A
Common Stock. The "Current Market Price" on any particular date means the
weighted average trading price of the Class A Common Stock on the NYSE for
the 20 consecutive trading days ending on the 14th day preceding such date.
Not later than 14 days and not earlier than 30 days prior to the
Mandatory Exchange Date the Company shall send to the holders of the HCPH
Special Shares (the "Holders") and to the Montreal Trust Company of Canada
(the "Trustee") an exchange notice (the "Mandatory Exchange Notice")
together with an exchange form (the "Exchange Form"). In order to receive
certificates representing the Class A Common Stock and cash, if any, to
which any Holder is entitled pursuant to the Mandatory Exchange, the Holder
must surrender to the Trustee, at any time on or after the Mandatory
Exchange Date, the HCPH Special Share certificate(s) evidencing the HCPH
Special Shares, together with the Exchange Form duly completed and executed
by the Holder. Whether or not a Holder has surrendered the certificate(s)
evidencing his HCPH Special Shares, on and as of the Mandatory Exchange
Date each Holder shall be deemed to have transferred his HCPH Special
Shares to the Company and shall have no rights as a shareholder of HCPH.
OPTIONAL EXCHANGE
Subject to the cash payment option described below, each HCPH Special
Share will be exchangeable at the option of the holder (an "Optional
Exchange") at any time between December 23, 1997 and June 26, 2000 (the
"Optional Exchange Date") for the following number (each, an "Exchange
Ratio") of Class A Common Stock:
Number of Shares of
Date of Optional Exchange Class A Common Stock
After December 23, 1997 but on or before June 23, 1998 ..... 0.510
Thereafter but on or before December 23, 1998 .............. 0.530
Thereafter but on or before June 23, 1999 .................. 0.550
Thereafter but on or before December 23, 1999 .............. 0.570
Thereafter but on or before June 8, 2000 ................... 0.590
Thereafter but before June 26, 2000 ........................ 0.602
To exercise an Optional Exchange the Holder must deposit with the
Trustee at its stock and bond transfer department in its principal stock
transfer office in the Cities of Toronto, Montreal or Vancouver (or at such
additional place or places as may be decided by the Company from time to
time with the approval of the Trustee), or mail to the Trustee at its stock
and bond transfer department in the Trustee's principal stock transfer
office in the City of Toronto, the HCPH Special Share Certificate(s)
evidencing his HCPH Special Shares, together with an Exchange Form duly
competed and executed. The Exchange Form must specify the person or persons
in whose name or names the Shares of Class A Common Stock are to be
registered, his or their address or addresses and the number of Shares of
Class A Common Stock to be issued to each person. If any of the Class A
Common Stock are to be issued to a person or persons other than the Holder,
the Holder's signature shall be guaranteed by a Canadian chartered bank, by
a trust company that is a member of the Trust Companies Association of
Canada, by a member firm of the Toronto Stock Exchange or of the Montreal
Exchange, or by a member of the National Association of Securities Dealers
of the United States and the Holder shall pay to the Trustee all requisite
stamp or security transfer taxes or other governmental charges exigible in
connection with the issue of such Class A Common Stock to such other person
or persons or shall establish to the satisfaction of the Trustee that such
taxes and charges have been paid.
CASH PAYMENT OPTION
The Company will have the option, in lieu of issuing all or any of the
Class A Common Stock on the Mandatory Exchange or any Optional Exchange, to
make a cash payment in U.S. dollars equal to (i) in the
7
<PAGE>
case of a Mandatory Exchange, that portion of the Base Amount for each HCPH
Special Share specified by the Company in the Mandatory Exchange Notice
given at least two weeks prior to the Mandatory Exchange Date, and (ii) in
the case of an Optional Exchange, the price per share for the last trade of
a board lot on the NYSE prior to the date of the Optional Exchange of all
or such portion of the Class A Common Stock to be exchanged as is specified
by the Company by notice to the Trustee within three business days after
the date of the Optional Exchange.
CERTAIN OTHER PROVISIONS RELATING BOTH MANDATORY EXCHANGES AND OPTIONAL
EXCHANGES
The Company shall send or cause to be sent to each Holder as soon as
practicable and in any event within 10 Business Days after an Optional
Exchange Date or, in the case of a Mandatory Exchange, the surrender of his
HCPH Special Share Certificate(s) and duly completed Exchange Form (i) a
certificate or certificates for the Class A Common Stock to which the
Holder is entitled; or (ii) if the Company has elected to satisfy all or
any part of its obligations upon the exchange of HCPH Special Shares by the
payment of cash, that amount of cash payable or that combination of cash
and certificates for Class A Common Stock to which the Holder is entitled.
In lieu of delivering a fraction of a share of Class A Common Stock,
the Company shall make a cash payment in Canadian dollars equal to the
fraction of the Class A Common Stock multiplied by (i) in the case of a
Mandatory Exchange, the Base Amount and (ii) in the case of an Optional
Exchange, the price per share for the last trade of a board lot of Class A
Common Stock on the NYSE prior to the Optional Exchange Date, in each case
rounded up to the nearest whole cent.
The Company shall satisfy its obligations on a Mandatory Exchange or
Optional Exchange without withholding any tax.
In connection with the foregoing, the Company and HCPH will enter into
arrangements with Hollinger Inc. pursuant to which Hollinger Inc. will
provide to the Company a number of shares of Class A Common Stock equal to
the number of shares, if any, that the Company may be required to deliver
upon the exercise of exchange rights.
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
TO NON-UNITED STATES HOLDERS OF CLASS A COMMON STOCK
The following is a general discussion of certain United States federal
income and estate tax consequences of the purchase, ownership and
disposition of Class A Common Stock by a holder that, for United States
federal tax purposes, is not a "United States person" (a "Non-United States
Holder"). For purposes of this discussion, a "United States person" means
any person or entity which is (a) a citizen or resident of the United
States, (b) a corporation created or organized in or under the laws of the
United States or of any political subdivision thereof or (c) an estate or
Trust that is subject to United States federal taxation on its income
regardless of its source. This summary does not address all United States
federal income and estate tax considerations that may be relevant to a
Non-United States Holder in light of its particular circumstances or to
certain Non-United States Holders that may be subject to special treatment
under United States federal tax laws (i.e., insurance companies, tax-exempt
organizations, financial institutions or broker-dealers). Furthermore, this
summary does not discuss any aspects of foreign, state or local taxation.
This summary is based on current provisions of the Internal Revenue Code,
existing, temporary and proposed United States Treasury regulations
promulgated thereunder and administrative and judicial interpretations
thereof, all of which are subject to change, possibly with retroactive
effect. Each prospective Non-United States Holder is advised to consult its
tax advisor with respect to the tax consequences of purchasing, owning and
disposing of Class A Common Stock.
CONSEQUENCES OF RETRACTION TO U.S. HOLDERS OF HCPH SPECIAL SHARES
It is anticipated that a U.S. Holder of HCPH Special Shares will
recognize gain or loss on the exchange of the HCPH Special Shares in
exchange for either cash or Class A Common Stock. Such gain or loss will be
equal to the difference between the fair market value of the Class A Common
Stock at the time of the exchange (together with any cash received in the
exchange) and the U.S. Holder's tax basis in the HCPH Special Shares. The
gain or loss will be capital gain or loss, except that, with respect to any
declared but unpaid dividends on the HCPH Special Shares, ordinary income
may be recognized by the holder thereof. Capital gain or loss will be
long-term capital gain or loss if the HCPH Special Shares have been held
for more than one year at the time
8
<PAGE>
of the exchange. The U.S. Holder will take as its tax basis in the Class A
Common Stock the fair market value of the Class A Common Stock at the time
of the exchange. The holding period of the Class A Common Stock received by
the U.S. Holder in the exchange will begin on the day after the U.S. Holder
receives the Class A Common Stock.
For U.S. federal income tax purposes, gain realized on the retraction
of HCPH Special Shares for common shares generally will be treated as U.S.
source gain, except that, under the terms of the Canada-United States
Income Tax Convention, such gain may be treated as sourced in Canada. Any
Canadian tax imposed on the exchange will be available as a credit against
U.S. federal income taxes, subject to applicable limitations. a U.S. Holder
that is ineligible for a foreign tax credit with respect to any Canadian
tax paid may be entitled to a deduction therefor in computing U.S. taxable
income.
DIVIDENDS
Dividends paid to a Non-United States Holder will generally be subject
to withholding of United States Federal income tax at the rate of 30%
unless the dividend is effectively connected with the conduct of a trade or
business within the United States by the Non-United States Holder, in which
case the dividend will be subject to the United States Federal income tax
on net income that applies to United States persons (and, with respect to
corporate holders and under certain circumstances, a 30% branch profits
tax). Non-United States Holders should consult any applicable income tax
treaties, which may provide for reduced withholding or other rules
different from those described above. a Non-United States Holder may be
required to satisfy certain certification requirements in order to claim
treaty benefits or to otherwise claim a reduction of or exemption from
withholding under the foregoing rules.
Under current United States treasury regulations, dividends paid to an
address outside the United States are presumed to be paid to a resident of
such country for purposes if the withholding discussed above (unless the
payer has knowledge to the contrary), and, under the current interpretation
of United States Treasury regulations, for purposes of determining the
applicability of a tax treaty rate. Under recently proposed United States
Treasury regulations (the "Proposed Regulations"), not currently in effect,
however, a Non-United States Holder of Class A Common Stock who wishes to
claim the benefit of an applicable treaty rate would be required to satisfy
applicable certification and other requirements. The Proposed Regulations
are proposed to be effective for payments made after December 31, 1997.
There can be no assurance that the Proposed Regulations will be adopted or
what the provisions will include if and when adopted in temporary or final
form. Certain certification and disclosure requirements must be complied
with in order to be exempt from withholding under the effectively connected
income exemption discussed above.
a Non-United States Holder of Class A Common Stock that is eligible
for a reduced rate of United States tax withholding pursuant to an income
tax treaty may obtain a refund of any excess amounts currently withheld by
filing an appropriate claim for refund with the Internal Revenue Service.
SALE OR DISPOSITION OF CLASS A COMMON STOCK
a Non-United States Holder generally will not be subject to United
States federal income tax on any gain recognized on the sale or other
disposition of Class A Common Stock unless (i) (a) the gain is effectively
connected with a trade or business of the Non-United States Holder in the
United States or (b) if a tax treaty applies, the gain is attributable to a
United States permanent establishment of the Non-United States Holder; (ii)
in the case of a Non-United States Holder who is an individual and holds
the Class A Common Stock as a capital asset, such holder is present in the
United States for 183 or more days in the taxable year of the disposition
and either (a) has a "tax home" for United States federal income tax
purposes in the United States or (b) has an office or other fixed place of
business in the United States to which the gain is attributable; (iii) the
Non-United States Holder is subject to tax pursuant to the provisions of
United States federal income tax laws applicable to certain United States
expatriates; or (iv)(a) the Company is or has been a "U.S. real property
holding corporation" for United States federal income tax purposes at any
time during the five-year period ending on the date of the disposition, or,
if shorter, the period during which the Non-United States Holder held the
Class A Common Stock, and (b) assuming that the Class A Common Stock
continues to be "regularly traded on an established securities market" for
tax purposes, the Non-United States Holder holds, directly or indirectly,
at any time during the five-year period ending on the date of disposition,
more than 5% of the outstanding Class A Common Stock. The Company believes
it is not currently a U.S. Real property holding corporation and does not
anticipate becoming such a corporation.
If an individual Non-United States Holder falls under clause (i)
above, such individual generally will be taxed on the net gain derived from
a sale under regular graduated United States federal income tax rates. If
9
<PAGE>
an individual Non-United States Holder falls under clause (ii) above, such
individual generally will be subject to a flat 30% tax on the gain derived
from a sale, which may be offset by certain United States capital losses
(notwithstanding the fact that such individual is not considered a resident
of the United States). Thus, Non- United States Holders who have spent (or
expect to spend) 183 days or more in the United States in the taxable year
in which they contemplate a sale of Class A Common Stock are urged to
consult their tax advisors as to the tax consequences of such sale.
If a Non-United States Holder that is a foreign corporation falls
under clause (i) above, it generally will be taxed on its net gain under
regular graduated United States federal income tax rates. Effectively
connected gains realized by a Non-United States corporation may also, under
certain circumstances, be subject to an additional "branch profits tax" at
a 30% rate or such lower rate as may be specified by an applicable income
tax treaty.
BACKUP WITHHOLDING AND REPORTING REQUIREMENTS
The Company must report annually to the Internal Revenue Service and
to each Non-United States Holder the amount of dividends paid to, and the
tax withheld with respect to, such holder, regardless of whether any tax
was actually withheld. This information may also be made available to the
tax authorities in the Non- United Sates Holder's country of residence.
Under current law, United States backup withholding (which generally
is imposed at a 31% rate) generally will not apply to (i) the payment of
dividends paid on Class A Common Stock to a Non-United States Holder at an
address outside the United States or (ii) the payment of the proceeds of a
sale of Class A Common Stock to or through the foreign office of a broker.
However, under the Proposed Regulations, dividend payments may be subject
to information reporting and backup withholding unless applicable
certification requirements are satisfied. In the case of the payment of
proceeds from such a sale of Class A Common Stock through a foreign office
of a broker that is a United States person or a "U.S. related person,"
however, information reporting (but not backup withholding) is required
with respect to the payment unless the broker has documentary evidence in
its files that the owner is a Non-United States Holder (and has no actual
knowledge to the contrary) and certain other requirements are met or the
holder otherwise establishes an exemption. For this purpose, a "U.S.
related person" is (i) a "controlled foreign corporation" for United States
federal income tax purposes or (ii) a foreign person 50% or more of whose
gross income from all sources for the three-year period ending with the
close of its taxable year preceding the payment (or for such part of the
period that the broker has been in existence) is derived from activities
which are effectively connected with the conduct of a United States trade
or business. The payment of the proceeds of a sale of shares of class A
Common Stock to or through a United States office of a broker is subject to
information reporting and possible backup withholding at a rate of 31%
unless the holder certifies, among other things, its non-United States
status under penalties or perjury or otherwise establishes an exemption.
Backup withholding is not an additional tax. Amounts withheld under
the backup withholding rules are generally allowable as refund or credit
against such Non-United States Holder's United States federal income tax
liability, if any, provided that the required information is furnished to
the Internal Revenue Service.
FEDERAL ESTATE TAXES
Class A Common Stock owned or treated as owned by an individual who is
not a citizen or resident of the United States (as defined for United Sates
federal estate tax purposes) at the time of death with be included in such
individual's gross estate for United States federal estate tax purposes
unless an applicable estate tax treaty provides otherwise.
THE FOREGOING DISCUSSION IS A SUMMARY OF THE PRINCIPAL UNITED STATES
FEDERAL INCOME AND ESTATE TAX CONSEQUENCES OF THE OWNERSHIP, SALE OR OTHER
DISPOSITION OF CLASS A COMMON STOCK BY NON-UNITED STATES HOLDERS.
ACCORDINGLY, INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT
TO THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE OWNERSHIP AND
DISPOSITION OF CLASS A COMMON STOCK, INCLUDING THE APPLICATION AND EFFECT
OF THE LAWS OF ANY STATE, LOCAL FOREIGN OR OTHER TAXING JURISDICTION.
10
<PAGE>
LEGAL MATTERS
Certain legal matters in connection with the shares of Class A Common
Stock offered hereby will be passed upon for the Company by Cravath, Swaine
& Moore, New York, New York.
EXPERTS
The consolidated financial statements of Hollinger International Inc.
and subsidiaries as of December 31, 1996 and 1995, and for each of the
years in the three-year period ended December 31, 1996, incorporated by
reference herein from the Company's 1996 Form 10-K, have been incorporated
by reference in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, and upon the authority of said
firm as experts in accounting and auditing.
11
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO ==================================
GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS OTHER THAN
THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, HOLLINGER INTERNATIONAL INC.
SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE Class A Common Stock
RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES --------------------
NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY PROSPECTUS
ANY SECURITIES OTHER THAN THE
SECURITIES TO WHICH IT RELATES OR --------------------
AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER ==================================
OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR
THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
TABLE OF CONTENTS
PAGE
Available Information..................... 2
Incorporation of Certain Documents by
Reference................................. 2
The Company............................... 3
Risk Factors.............................. 3
Use of Proceeds........................... 7
Background and Plan of Distribution....... 7
Certain United States Federal Tax
Consequences to Non-united States
Holders of Class A Common Stock..... 9
Legal Matters............................. 11
Experts................................... 11
- -----------------------------------------------
12
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses to be paid by Hollinger Inc., Ontario Limited,
Canada Limited and/or the Company in connection with the distribution of
the securities being registered, other than underwriting discounts and
commissions, are as follows:
Securities and Exchange Commission Filing $18,216
Fee...................................................
*Legal Fees and Expenses.............................. $100,000
*Printing Expenses.................................... $30,000
*Miscellaneous Expenses............................... $1,784
-------
Total $150,000
--------------------
*Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Restated Certificate of Incorporation provides that no
director of the Company will be personally liable to the Company or any of
its stockholders for monetary damages arising from the director's breach of
the duty of care as a director, with certain limited exceptions.
Pursuant to the provisions of Section 145 of the Delaware General
Corporation Law, every Delaware corporation has the power to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (other than an
action by or in the right of the corporation) by reason of the fact that he
is or was a director, officer, employee or agent of any corporation,
partnership, joint venture, trust or other enterprise, against any and all
expenses, judgments, fines and amounts paid in settlement and reasonably
incurred in connection with such action, suit or proceeding. The power to
indemnify applies only if such person acted in good faith and in a manner
he reasonably believed to be in the best interest, or not opposed to the
best interest, of the corporation and with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
The power to indemnify applies to actions brought by or in the right
of the corporation as well, but only to the extent of defense and
settlement expenses and to any satisfaction of a judgment or settlement of
the claim itself, and with the further limitation that in such actions no
indemnification shall be made in the event of any adjudication or liability
unless the court, in its discretion, believes that in light of all the
circumstances indemnification should apply.
To the extent any of the persons referred to in the two immediately
preceding paragraphs is successful in the defense of the actions referred
to therein, such person is entitled, pursuant to Section 145, to
indemnification as described above.
The Company's Restated Certificate of Incorporation and Amended and
Restated Bylaws provide for indemnification to officers and directors of
the Company to the fullest extent permitted by the Delaware General
Corporation Law.
The Company maintains a policy of liability insurance which insures
its officers and directors against losses resulting from certain wrongful
acts committed by them in their capacity as officers and directors of the
Company.
13
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits. The following exhibits are filed as part of this
registration statement:
EXHIBIT
NUMBER Description
4.01 Exchange Indenture, dated July 17, 1997, among Hollinger Canadian
Publishing Inc., Hollinger International and Montreal Trust Company
of Canada
4.02 Specimen certificate evidencing Class A Common Stocks (filed as
Exhibit 4.1 to Registration Statement on Form S-1 (No. 33-74980))
5.01 Opinion of Cravath, Swaine & Moore
23.01 Consent of Cravath, Swaine & Moore (included in Exhibit 5.01)
23.02 Consent of KPMG Peat Marwick LLP
24.01 Powers of Attorney (contained on the signature page)
14
<PAGE>
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
Provided, however, that paragraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post- effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this to registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on September 8, 1997.
HOLLINGER INTERNATIONAL INC.
By: /s/ KENNETH L. SEROTA
Name: Kenneth L. Serota
Title: Vice President Law & Finance
Each person whose signature appears below appoints Kenneth Serota or
Jack a. Boultbee, as his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post- effective amendments) to this Registration Statement, and
to file the same, with all exhibits thereto and all other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and anything appropriate or necessary to be
done, as fully and for all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent or his substitutes may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this to
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE Title Date
--------- ----- ----
<S> <C> <C>
/s/ CONRAD M. BLACK Chairman of the Board, Chief September 8, 1997
- ----------------------------- Executive Officer and Director
Conrad M. Black (Principal Executive Officer)
/s/ F. DAVID RADLER President, Chief Operating Officer September 8, 1997
- ----------------------------- and Director
F. David Radler
/s/ J. A. BOULTBEE Vice President and Chief Financial September 8, 1997
- ----------------------------- Officer (Principal Financial Officer)
J. A. Boultbee
/s/ FREDERICK A. CREASEY Group Corporate Controller September 8, 1997
- ----------------------------- (Principal Accounting Officer)
Frederick A. Creasey
/s/ BARBARA AMIEL BLACK Director September 8, 1997
- -----------------------------
Barbara Amiel Black
/s/ DWAYNE O. ANDREAS Director September 8, 1997
- -----------------------------
Dwayne O. Andreas
- ----------------------------- Director September 8, 1997
Richard Burt
- ----------------------------- Director September 8, 1997
Raymond G. Chambers
/s/ DANIEL W. COLSON Director September 8, 1997
- -----------------------------
Daniel W. Colson
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE Title Date
--------- ----- ----
<S> <C> <C>
/s/ HENRY A. KISSINGER Director September 8, 1997
- -----------------------------
Henry A. Kissinger
/s/ MARIE-JOSEE KRAVIS Director September 8, 1997
- -----------------------------
Marie-Josee Kravis
- ----------------------------- Director September 8, 1997
Shmuel Meitar
/s/ RICHARD N. PERLE Director September 8, 1997
- ------------------------------
Richard N. Perle
/s/ ROBERT S. STRAUSS Director September 8, 1997
- -----------------------------
Robert S. Strauss
- ----------------------------- Director September 8, 1997
Alfred Taubman
/s/ JAMES R. THOMPSON Director September 8, 1997
- -----------------------------
James R. Thompson
/s/ LORD WEIDENFELD Director September 8, 1997
- -----------------------------
Lord Weidenfeld
- ----------------------------- Director September 8, 1997
Leslie H. Wexner
</TABLE>
17
<PAGE>
EXHIBIT INDEX
EXHIBIT SEQUENTIAL PAGE
NUMBER DESCRIPTION NUMBER
4.01 Exchange Indenture, dated July 17 1997,
among Hollinger Canadian Publishing Inc.,
Hollinger International and Montreal
Trust Company of Canada
4.02 Specimen certificate evidencing Class A Common
Stocks (filed as Exhibit 4.1 to Registration
Statement on Form S-1 (No. 33-74980))
5.01 Opinion of Cravath, Swaine & Moore
23.01 Consent of Cravath, Swaine & Moore
(included in Exhibit 5.01)
23.02 Consent of KPMG Peat Marwick LLP
24.01 Powers of Attorney (contained on signature
page).
18
HOLLINGER CANADIAN PUBLISHING HOLDINGS INC.
AND
HOLLINGER INTERNATIONAL INC.
AND
MONTREAL TRUST COMPANY OF CANADA
TRUSTEE
EXCHANGE INDENTURE
PROVIDING FOR THE EXCHANGE OF
NON-VOTING SPECIAL SHARES
<PAGE>
July 18, 1997
<PAGE>
TABLE OF CONTENTS
ARTICLE 1.
INTERPRETATION
1.1. Definitions......................................................
1.2. Interpretation Not Affected by Headings..........................
1.3. Extended Meaning.................................................
1.4. Applicable Law...................................................
1.5. Language.........................................................
1.6. Time of Essence..................................................
1.7. Severability.....................................................
1.8. Business Day.....................................................
1.9. Currency.........................................................
ARTICLE 2.
EXCHANGE OF SPECIAL SHARES
2.1. Mandatory Exchange...............................................
2.2. Optional Exchange................................................
2.3. Election to Pay Cash.............................................
2.4. Relating to the Issue of Class A Shares..........................
2.5. Relating to the Purchase by HII of the Special Shares............
2.6. Fractions of Class A Shares......................................
2.7. Nature of HII's Exchange Obligation..............................
ARTICLE 3.
ADJUSTMENTS
3.1. Changes Affecting the Class A Shares..............................
3.2. No Changes to Special Shares......................................
3.3. Rules Applicable to Adjustments...................................
3.4. Certificate as to Adjustment......................................
<PAGE>
4.1. General Covenants of HII..........................................
4.2. Shareholder Material..............................................
4.3. Trustee's Remuneration and Expenses...............................
4.4. Maintenance of Listing............................................
4.5. Status as a Reporting Company.....................................
ARTICLE 5.
MEETINGS OF SPECIAL SHAREHOLDERS
5.1. Right to Convene Meetings.........................................
5.2. Notice............................................................
5.3. Chairman..........................................................
5.4. Quorum............................................................
5.5. Power to Adjourn..................................................
5.6. Show of Hands.....................................................
5.7. Poll and Voting...................................................
5.8. Regulations.......................................................
5.9. Corporation, HII, Trustee and Counsel may be Represented..........
5.10 Powers Exercisable by Extraordinary Resolution....................
5.11 Meaning of Extraordinary Resolution...............................
5.12 Powers Cumulative.................................................
5.13 Minutes...........................................................
5.14 Instruments in Writing............................................
5.15 Binding Effect of Resolutions.....................................
5.16 Holdings by HII or Its Affiliates Disregarded.....................
ARTICLE 6.
SUPPLEMENTAL INDENTURES
6.1. Supplemental Indentures...........................................
6.2. Successor Corporations............................................
ARTICLE 7.
CONCERNING THE TRUSTEE
7.1. Trust Indenture Legislation........................................
7.2. Rights and Duties of Trustee.......................................
7.3. Evidence, Experts and Advisers.....................................
7.4. Documents, Monies, etc. Held by Trustee............................
7.5. Actions by Trustee to Protect Interests............................
<PAGE>
7.6. Trustee Not Required to Give Security...............................
7.7. Protection of Trustee...............................................
7.8. Replacement of Trustee..............................................
7.9. Conflict of Interest................................................
7.10 Indemnity...........................................................
7.11 Acceptance of Trust.................................................
7.12 Trustee Not to be Appointed Receiver................................
7.13 Authorization to Carry on Business..................................
ARTICLE 8.
GENERAL
8.1. Notice to the Corporation, HII and the Trustee......................
8.2. Notice to the Special Shareholders..................................
8.3. Mail Service Interruption...........................................
8.4. Counterparts and Formal Date........................................
8.5. Satisfaction and Discharge of Indenture.............................
8.6. Provisions of Indenture for the Sole Benefit of Parties and Holders.
SCHEDULE A
SCHEDULE B
<PAGE>
THIS EXCHANGE INDENTURE made as of July 18, 1997.
B E T W E E N:
HOLLINGER CANADIAN PUBLISHING HOLDINGS
INC., a corporation amalgamated under
the Business Corporations Act (New
Brunswick)
(the "Corporation")
- and -
HOLLINGER INTERNATIONAL INC., a corporation
incorporated under the laws of the State of Delaware
("HII")
- and -
MONTREAL TRUST COMPANY OF CANADA, a trust
company incorporated under the laws of Canada and duly
authorized t carry on the trust business in each province
of Canada
(the "Trustee")
RECITALS
The Corporation will issue on the date hereof 6,552,445 Special Shares in
connection with its purchase of common shares of Southam Inc. pursuant
to the Corporation's offer dated May 15, 1997 as amended on June 12,
1997 and June 25, 1997 and may issue from time to time additional
Special Shares subject to the rights and obligations of this
Indenture.
The Special Shares will be exchanged automatically with HII on the
Mandatory Exchange Date and will be exchangeable at the option of the
Holder on any Optional Exchange Date in each case for newly issued
Class A Shares on the terms and conditions described herein.
The foregoing recitals are made as representations and statements of fact
by the Corporation and HII and not by the Trustee.
NOW THEREFORE THIS INDENTURE WITNESSES that for good and valuable
consideration mutually given and received, the receipt and sufficiency of
which is hereby acknowledged, it is hereby agreed and declared as follows:
<PAGE>
ARTICLE
INTERPRETATION
Definitions
In this Indenture, unless there is something in the subject
matter or context inconsistent therewith or unless otherwise expressly
provided:
"Accelerated Exchange Date" means the Mandatory Exchange Date if
the Mandatory Exchange Date is earlier than June 26, 2000.
"Acceleration Event" means any of the following events, written
notice of which shall be delivered to the Trustee by HII or the
Corporation, failing which the Trustee shall be deemed to have no knowledge
of such events:
an order shall be made or an effective resolution shall be passed
for the winding-up or liquidation of the Corporation, HII or HIP;
any proceeding shall be instituted against any of the Corporation,
HII or HIP or applying to a substantial part of its property or
assets seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, dissolution, winding-up, reorganization,
arrangement, adjustment, protection, relief of composition of it
or any substantial part of its property or debt under any law
relating to bankruptcy, insolvency or reorganization or relief of
debt or seeking an order for relief or the appointment of a
receiver, trustee or other similar official for it or for any
substantial part of its property or assets and such proceeding
shall have continued undismissed or unstayed for 60 days, or a
creditor or creditors of the Corporation, HII or HIP or any other
interested party shall privately appoint a receiver, trustee or
similar official for any substantial part of the property or
assets of the Corporation, HII or HIP, and, if the Corporation,
HII or HIP shall be contesting such appointment in good faith,
such appointment shall continue for 60 days or any such action or
proceeding shall have been consented to or not expeditiously
opposed by the Corporation, HII or HIP;
any proceeding shall be instituted by any of the Corporation, HII or
HIP seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, dissolution, winding-up, adjustment, protection,
relief or composition of it or any of its property or debt or
making a proposal with respect to it under any law relating to
bankruptcy, insolvency or reorganization or relief of debts or
seeking an order for relief or the appointment of a receiver,
trustee or other similar official for it or for any of its
property or assets, or the Corporation, HII or HIP shall take
corporate action to authorize any such proceeding;
a default in payment of any principal due under the Bank Credit
Facility or default, and
<PAGE>
continuance thereof for five Business Days in payment when due of
any interest on any Loan (as defined in the Bank Credit
Facility), any reimbursement obligation with respect to any
Letter of Credit (as defined in the Bank Credit Facility) or any
fee or other amount payable by any Borrower (as defined in the
Bank Credit Facility) under the Bank Credit Facility or any other
Loan Document (as defined in the Bank Credit Facility) or default
in payment (after the expiry of any cure or grace period) of the
principal of or any interest on any other indebtedness of the
Corporation, HII or HIP which, in the aggregate, exceeds U.S.
$25,000,000; or
there shall have occurred the acceleration of the maturity of Debt (as
such term is defined in the Bank Credit Facility) of either of
the Corporation or HIP under the Bank Credit Facility upon any
Event of Default (as such term is defined in the Bank Credit
Facility) under the Bank Credit Facility or any other
indebtedness of the Corporation, HII or HIP which, in the
aggregate, exceeds U.S. $25,000,000.
"Affiliate" means any person directly or indirectly controlling,
controlled by or under direct or indirect common control with, HII. A
person shall be deemed to control a body corporate if such person
possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such body corporate, whether
through the ownership of voting securities, by contract, or otherwise.
"Applicable Legislation" has the meaning set out in section .
"ASE" means the Alberta Stock Exchange.
"Bank Credit Facility" means the Second Amended and Restated
Credit Agreement dated as of April 7, 1997 among, inter alia, the
Corporation, HIP and certain financial institutions, as the same may be
amended or supplemented from time to time.
"Base Amount" means U.S. $8.88 less the amount of any dividends
which have been paid per share (to a maximum of U.S. $1.67) on the Special
Shares, from time to time, from the date hereof to the Exchange Date.
"Business Day" means any day, other than a Saturday or Sunday, on
which banks and other financial institutions are open for business in
Toronto, Ontario.
"Class A Share Reorganization" has the meaning set out in section
3.1.1.
"Class A Shares" means shares of Class A Common Stock of HII, as
such shares may be reclassified or changed from time to time as
contemplated by section 3.1.
"Corporation" means Hollinger Canadian Publishing Holdings Inc.
and includes any successor corporation to or of the Corporation which has
complied with section .
"Counsel" means a barrister or solicitor or a firm of barristers
and solicitors (who may be counsel for the Corporation) retained by the
Trustee or retained by HII and acceptable to the Trustee, acting
reasonably.
<PAGE>
"Current Market Price" of the Class A Shares means, as at any
date, the weighted average trading price of the Class A Shares on the NYSE
for the period of 20 consecutive trading days (whether or not Class A
Shares traded on such day) ending on (and including) the Determination Date
for such date or, if such shares are not then listed on the NYSE, on any
stock exchange on which such shares are listed as the Directors may select
for this purpose, or if such shares are not listed on any stock exchange,
in such over-the-counter market as the Directors with the approval of the
Trustee may select for such purpose.
"Determination Date" means, in respect of any date, the 14th day
preceding such date.
"Director" means a director of HII for the time being and
"Directors" means the board of directors of HII or, whenever duly
empowered, the executive committee (if any) of the board of directors of
HII, for the time being, and reference without more to action by the
Directors means action by the directors of HII as a board or action by the
executive committee of the board as a committee.
"Dividends Paid in the Ordinary Course" means dividends paid on
the Class A Shares in any financial year of HII whether in (i) cash; (ii)
securities of HII including rights, options or warrants (but excluding
rights, options or warrants referred to in section 3.1.2); or (iii)
property or other assets of HII, provided that the amount or value of such
dividends in the aggregate (any such securities, property or other assets
so distributed to be valued at the fair market value thereof as determined
conclusively by action by the Directors) does not in any such financial
year exceed the greater of:
150% of the aggregate amount of or value of dividends paid by HII
on the Class A Shares in its immediately preceding financial
year; and
100% of the consolidated net income of HII (before extraordinary
items but after dividends payable on all shares ranking
prior to or on a parity with respect to the payment of
dividends with the Class A Shares) for its immediately
preceding financial year as shown in the audited
consolidated financial statements of HII for such financial
year.
"Exchange Date" means the Mandatory Exchange Date or any Optional
Exchange Date.
"Exchange Form" has the meaning set out in section .
"Exchange Ratio" has the meaning set out in section_2.2.1.
"Extraordinary Resolution" has the meaning set out in section .
<PAGE>
"HII" means Hollinger International Inc., a Delaware corporation,
and includes any successor corporation to or of HII which has complied with
section .
"HII's auditors" means an independent firm of chartered
accountants duly appointed as auditors of HII.
"HII Capital Reorganization" has the meaning set out in section
3.1.3.
"HIP" means Hollinger International Publishing Inc., a Delaware
corporation.
"Indenture", "this Indenture", "Indenture", "this Indenture",
"hereto", "herein", "hereby", "hereunder", "hereof" and similar expressions
refer to this Indenture and not to any particular Article, section,
subsection, paragraph, subparagraph, clause, subclause or other portion
hereof, and include any and every supplemental indenture; and "supplemental
indenture" and "indenture supplemental hereto" include any and every
indenture, deed or instrument supplemental or ancillary hereto or in
implementation hereof; and the expressions "Article", "section",
"subsection", "paragraph", "subparagraph", "clause" and "subclause"
followed by a number and/or a letter mean and refer to the specified
Article, section, subsection, paragraph, subparagraph, clause or subclause
of this Indenture.
"Mandatory Exchange" means an exchange of Special Shares for
Class<0- 95>A Shares pursuant to section<0- 95>2.1.
"Mandatory Exchange Date" means the earlier of June 26, 2000, or
the date on which an Acceleration Event first occurs.
"Mandatory Exchange Notice" has the meaning set out in section .
"Mandatory Exchange Number" means, as of any date, the Base
Amount divided by 95% of the Current Market Price of Class A Shares on such
date.
"NYSE" means the New York Stock Exchange.
"Officers' Certificate" of any person (other than a natural
person) means a written certificate signed in the name of such person by
any two of its Chairman, Chief Executive Officer, President, any
Vice-President, Treasurer, any Assistant Treasurer, Controller, any
Assistant Controller, Secretary and any Assistant Secretary, and may
consist of one or more certificates so executed.
"Optional Exchange" means an exchange of Special Shares for
Class_A Shares pursuant to section_2.2.
"Optional Exchange Date" means the date on which the Trustee
receives the documents specified in section 2.2.2 duly tendered by a Holder
in respect of the exercise of his optional exchange right pursuant to
section 2.2.1.
"person" means a natural person, corporation, body corporate,
partnership, joint
<PAGE>
venture or other unincorporated association, trust, government or
governmental authority and pronouns have a similar extended meaning.
"Shelf Registration Statement" has the meaning set out in section
(d).
"Special Shares" means the Non-Voting Special Shares of the
Corporation.
"Special Share Certificate" means a certificate evidencing one or
more Special Shares issued by the Corporation.
"Special Shareholders" or "Holders" means the persons whose names
are for the time being entered in the registers maintained by or on behalf
of the Corporation as holders of Special Shares.
"Special Shareholders' Request" means an instrument signed in one
or more counterparts by Special Shareholders holding in the aggregate not
less than 25% of the aggregate number of Special Shares then outstanding
requesting the Trustee to take the action or proceeding specified therein.
"successor corporation" has the meaning set out in section .
"Trustee" means Montreal Trust Company of Canada and any
successors to Montreal Trust Company of Canada for the time being in the
trusts hereby created.
"TSE" means The Toronto Stock Exchange.
"U.S. Securities Act" means the United States Securities Act of
1933.
Interpretation Not Affected by Headings
The division of this Indenture into Articles, sections and other
subdivisions, the provision of a table of contents and the insertion of
headings are for convenience of reference only and shall not affect the
construction or interpretation of this Indenture.
Extended Meaning
Words importing the singular number only shall include the plural
and vice versa, and words importing the masculine gender shall include the
feminine and neuter genders and vice versa.
Applicable Law
[NYCORP2:429431.1:4575C:9/12/97-- 2:49pm]
<PAGE>
This Indenture shall be governed by and construed in accordance
with the laws of the Province of Ontario and the laws of Canada applicable
therein. The parties hereto irrevocably attorn to the non-exclusive
jurisdiction of the courts of the Province of Ontario with respect to
matters arising under this Indenture.
Language
The parties hereto expressly request and require that this
Indenture and all other documents related thereto be drawn up in English.
Les parties aux presentes conviennent et exigent que cette acte de fiducie
et tous les documents qui s'y rattachent soient rediges en anglais.
Time of Essence
Time shall be of the essence of this Indenture.
Severability
Each of the provisions in this Indenture is distinct and
severable and a declaration of invalidity or unenforceability of any such
provision or part thereof by a court of competent jurisdiction shall not
affect the validity or enforceability of any of the other provisions
hereof.
Business Day
Whenever any action is required to be taken under this Indenture
on or as of a day that is not a Business Day, that action must be taken on
or as of the next day that is a Business Day.
Currency
Any reference in this Indenture to "dollars" or the sign "$"
shall be deemed to be a reference to lawful money of the United States of
America.
ARTICLE
EXCHANGE OF SPECIAL SHARES
Mandatory Exchange
Subject to sections 2.3 and 2.6, on the Mandatory Exchange
Date each Special Share shall be exchanged automatically (without any
further action on the part of the Holder or HII) by the Holder thereof
with HII for the Mandatory Exchange Number calculated as of the
Mandatory Exchange Date of newly issued Class A Shares to be issued by
HII. Subject to sections 2.3 and 2.6, not later than seven days prior
to the Mandatory Exchange Date if it is not an Accelerated Exchange
Date and forthwith after an Accelerated Exchange Date, HII shall
provide the Trustee with an Officers' Certificate of HII showing the
computation of the number of Class A Shares to be delivered per
Special Share.
Not later than 14 days and not earlier than 30 days prior to
the Mandatory
<PAGE>
Exchange Date if it is not an Accelerated Exchange Date and forthwith
after an Accelerated Exchange Date, HII shall send to the Special
Shareholders and to the Trustee an exchange notice (the "Mandatory
Exchange Notice") substantially in the form attached hereto as
Schedule "A" together with an exchange form (the "Exchange Form")
substantially in the form attached as Schedule "B".
In order to receive certificates representing the Class A
Shares and cash, if any, to which any Holder is entitled pursuant to
this section .1, the Holder must surrender to the Trustee, at any time
on or after the Mandatory Exchange Date, the documents specified in
section 2.2.2 in the manner set out in such section. The provisions of
sections 2.2.3, 2.2.4, 2.2.5, 2.2.6 and 2.2.7 shall apply, mutatis
mutandis, to a Mandatory Exchange. Whether or not a Holder has so
surrendered the certificate(s) evidencing his Special Shares, on and
as of the Mandatory Exchange Date each Holder shall be deemed to have
transferred his Special Shares to HII and from the Mandatory Exchange
Date each Holder shall have no rights as a shareholder of the
Corporation in respect of such Special Shares.
HII shall satisfy its obligations on a Mandatory Exchange or
Optional Exchange without withholding any tax.
Optional Exchange
Each Holder shall have the right at his option at any time
after December_23, 1997 to exchange any or all of his Special
Shares with HII for the following number (each, an "Exchange Ratio")
of newly issued Class A Shares to be issued by HII per Special Share:
Optional Exchange Date No. of Class A
Shares
After December 23, 1997 but on or before June_23, 1998 0.510
Thereafter but on or before December_23, 1998 0.530
Thereafter but on or before June 23, 1999 0.550
<PAGE>
Thereafter but on or before December 23, 1999 0.570
Thereafter but on or before June 8, 2000 0.590
Thereafter but before June 26, 2000 0.602
Each Holder may exercise his right pursuant to section 2.2.1
by depositing with the Trustee at its stock and bond transfer
department in its principal stock transfer office in the Cities of
Toronto, Montreal or Vancouver (or at such additional place or places
as may be decided by HII from time to time with the approval of the
Trustee), or by mailing to the Trustee at its stock and bond transfer
department in the Trustee's principal stock transfer office in the
City of Toronto, the Special Share Certificate(s) evidencing his
Special Shares, together with an Exchange Form duly completed and
executed by the Holder or his executors or administrators or other
legal representatives or his or their attorney duly appointed by an
instrument in writing in form and manner satisfactory to the Trustee.
The Exchange Form shall be deemed not to be duly completed if the name
and mailing address of the Holder do not appear legibly thereon or
such Exchange Form is not signed by the Holder, his executors,
administrators, other legal representatives or such Holder's attorney
duly appointed. The Trustee shall notify HII promptly after its
receipt of documents pursuant to this section 2.2.2.
The Exchange Form shall specify the person or persons in
whose name or names the Class A Shares are to be registered, his or
their address or addresses and the number of Class A Shares to be
issued to each such person if more than one is so specified, provided
that the Special Shareholder shall only be entitled to direct his
entitlement to the Class A Shares in a manner permitted by applicable
securities legislation.
If any of the Class A Shares to be issued in exchange for
the Special Shares are to be issued to a person or persons other than
the Special Shareholder in accordance with the provisions of section
hereof, the Holder's signature shall be guaranteed by a Canadian
chartered bank, by a trust company that is a member of the Trust
Companies Association of Canada, by a member firm of the TSE or of the
Montreal Exchange, or by a member of the National Association of
Securities Dealers of the United States and the Special Shareholder
shall pay to the Trustee all requisite stamp or security transfer
taxes or other governmental charges exigible in connection with the
issue of such Class A Shares to such other person or persons or shall
establish to the satisfaction of the Trustee that such taxes and
charges have been paid.
HII shall send or cause to be sent to each Holder as soon as
practicable and in any event within 10 Business Days after an Optional
Exchange Date or, in the case of a Mandatory Exchange, the surrender
of his Special Share Certificate(s) and duly completed
<PAGE>
Exchange Form in accordance with this Article : (i) a certificate or
certificates for the Class A Shares to which the Holder is entitled;
or (ii) if HII has elected in accordance with section to satisfy all
or any part of its obligations on exchange of Special Shares by the
payment of cash, that amount of cash payable or that combination of
cash and certificates for Class A Shares to which the Holder is
entitled.
HII shall pay to the Trustee sufficient funds in lawful
money of the United States of America to permit the Trustee to make
any payment to be made to Special Shareholders on the date that such
payment is due pursuant to this Article . Any such payment by HII to
the Trustee shall be in same day U.S. funds, by wire as follows:
If the U.S. funds are from the United States:
Pay: Bank of Nova Scotia
New York Agency
67 Wall Street
ABA# 026002532
For Payment to: Bank of Nova Scotia, Toronto
Transit #: 80002
For Further Credit to: Montreal Trust Company of Canada,
Toronto
Account: 086008-13
If the U.S. funds are wired from within Canada or any other
country, other than the United States:
Pay: Bank of Nova Scotia
International Banking Division
Toronto, Ontario
For Payment to: Bank of Nova Scotia, Toronto
Transit #: 80002
For Further Credit to: Montreal Trust Company of Canada,
Toronto
Account #: 086008-13
<PAGE>
The Trustee will give notice to HII of any changes in its
instructions for receipt of wire transferred funds. In no event shall the
Trustee be required to make payment to holders unless and until it has
received the funds from HII.
Certificates evidencing all Special Shares exchanged
pursuant to this Article shall be delivered by the Trustee to HII.
During the month of May, 2000 HII shall publish a notice
once in the national edition of The Globe and Mail or The Financial
Post or other daily newspaper(s) providing national distribution
reasonably acceptable to the Trustee, setting out the terms of
Optional Exchange for the period commencing after June<0- 95>8, 2000
and the terms of Mandatory Exchange.
Election to Pay Cash
Notwithstanding anything in this Indenture to the contrary,
the obligation of HII to issue Class A Shares on the exchange of
Special Shares as contemplated by section or section 2.2 may be
satisfied at the option of HII:
in the case of a Mandatory Exchange, with respect to all or any
portion of the Base Amount by payment in cash in lawful
money of the United States of America of that portion of the
Base Amount for each Special Share so designated by HII in
accordance with section ; and
in the case of an Optional Exchange, with respect to any or all
of the Class A Shares issuable on such Optional Exchange, by
payment in cash in lawful money of the United States of
America of an amount per Class A Share equal to the price
per share for the last trade of a board lot of Class A
Shares on the NYSE prior to the Optional Exchange Date.
HII shall exercise its right pursuant to section in the case
of a Mandatory Exchange by so specifying in the Mandatory Exchange
Notice and in the case of an Optional Exchange by giving notice to the
Trustee within three Business Days following an Optional Exchange
Date. HII shall, not later than three Business Days following an
Optional Exchange Date and at least seven days prior to the Mandatory
Exchange Date if it is not an Accelerated Exchange Date and forthwith
after an Accelerated Exchange Date, provide the Trustee with an
Officers' Certificate of HII showing the computation of the number of
Class A Shares (if any) to be delivered per Special Share and of the
cash (if any) to be paid per Special Share.
Relating to the Issue of Class A Shares
A Holder shall be treated as the shareholder of record of
the Class A Shares issued on exchange of his Special Shares effective
on the relevant Exchange Date and to have become entitled to all
substitutions therefor, all income earned thereon or accretions
thereto and all dividends or distributions (including stock dividends
and dividends or distributions in kind) thereon and arising
thereafter, and before such Class A Shares are delivered or sent and
in the event that the Trustee receives the same, it shall hold the
same
<PAGE>
in trust for the benefit of such Holder.
HII shall at all times reserve and keep available out of its
authorized Class A Shares (if the number thereof is or becomes
limited) solely for the purpose of issue and delivery upon exchange of
the Special Shares and shall issue to Holders such number of Class A
Shares as shall be issuable upon exchange in accordance with this
Article 2. All Class A Shares which shall be so issuable shall be duly
and validly issued as fully paid and non-assessable.
HII shall comply with all applicable securities legislation
regulating the issue and delivery of Class A Shares upon exchange of
the Special Shares and shall cause to be listed and posted for trading
such Class A Shares on each stock exchange on which the Class A Shares
are then listed.
HII shall from time to time promptly pay or make provisions
satisfactory to the Trustee for the payment of all taxes and charges
which may be imposed by the laws of Canada or any province thereof
(except income tax or security transfer tax, if any) which shall be
payable with respect to the issuance or delivery of Class A Shares to
Holders upon exchange of the Special Shares pursuant to the terms of
this Indenture.
Relating to the Purchase by HII of the Special Shares
Provided HII shall have fulfilled its obligations on an Exchange
Date pursuant to this Article , HII shall be treated as the shareholder of
record of the Special Shares acquired by it pursuant to this Article 2 and
shall be entered on the register as owner of such Special Shares effective
on the Exchange Date and to have become entitled to all substitutions
therefor, all income earned thereon or accretions thereto and all dividends
or distributions (including stock dividends and dividends or distributions
in kind) thereon arising thereafter and before such Special Shares are
delivered or sent to the Trustee pursuant hereto.
Fractions of Class A Shares
HII shall not issue a fraction of a Class A Share on the exchange
of any Special Share. To the extent that the Holder of a Special Share is
entitled to receive on the exchange thereof a fraction of a Class A Share,
HII shall make an appropriate cash payment in lieu of fractional shares.
The amount of cash payment shall be equal to the fraction of the Class A
Share to which the Holder would be entitled multiplied by (a) in the case
of a Mandatory Exchange, the Base Amount and (b) in the case of an Optional
Exchange, the price per share for the last trade of a board lot of Class A
Shares on the NYSE prior to the Optional Exchange Date, in each case
rounded up to the nearest whole cent. HII shall, no later than three
Business Days following an Optional Exchange Date and at least seven days
prior to the Mandatory Exchange Date if it is not an Accelerated Exchange
Date, and forthwith after an Accelerated Exchange Date, provide the Trustee
with an Officers' Certificate of HII showing, in the case of a Mandatory
Exchange, the Base Amount for the purposes of the calculation in this
section 2.6 or, in the case of an Optional
<PAGE>
Exchange, the price per Class A Share for the last trade of a board lot on
the NYSE prior to the Optional Exchange Date for the purposes of the
calculation in this section 2.6.
Nature of HII's Exchange Obligation
The obligation of HII to acquire Special Shares on a Mandatory
Exchange or Optional Exchange hereunder is a direct unsecured obligation of
HII ranking pari passu with all other unsecured claims against it.
ARTICLE
ADJUSTMENTS
Changes Affecting the Class A Shares
If and whenever at any time after the date hereof and prior
to the Mandatory Exchange Date HII:
issues Class A Shares or securities exchangeable for or
convertible into Class A Shares to all or substantially all
the holders of Class_A Shares as a stock dividend or
other distribution (other than a Dividend Paid in the
Ordinary Course);
makes a distribution on its outstanding Class A Shares payable in
Class_A Shares or securities exchangeable for or
convertible into Class_A Shares (other than as a
Dividend Paid in the Ordinary Course);
subdivides its outstanding Class_A Shares into a greater
number of Class_A Shares; or
consolidates its outstanding Class_A Shares into a smaller
number of Class_A Shares,
(any of such events in clauses (a) through (d) being called a "Class A
Share Reorganization"), then the Exchange Ratios will be adjusted
effective immediately after the effective date or record date for the
happening of a Class A Share Reorganization, as the case may be, at
which the holders of Class A Shares are determined for the purpose of
the Class A Share Reorganization, by multiplying each Exchange Ratio
in effect immediately prior to such effective date or record date by a
fraction, the numerator of which will be the number of Class A Shares
outstanding immediately after giving effect to such Class A Share
Reorganization (including, in the case where securities exchangeable
for or convertible into Class A Shares are distributed, the number of
Class A Shares that would have been outstanding had all such
securities been exchanged for or converted into Class A Shares on such
effective date or record date) and the denominator of which will be
the number of Class A Shares outstanding on such effective date or
record date before giving effect to such Class A Share Reorganization.
<PAGE>
If and whenever at any time after the date hereof and prior
to the Exchange Date HII fixes a record date for the issue of rights,
options or warrants to all or substantially all the holders of Class A
Shares under which such holders are entitled, during a period expiring
not more than 45 days after the date of such issue (the "Rights
Period"), to subscribe for or purchase Class_A Shares or
securities exchangeable for or convertible into Class_A Shares
at a price per share to the holder (or at an exchange or conversion
price per share during the Rights Period to the holder in the case of
securities exchangeable for or convertible into Class A Shares) of
less than 95% of the Current Market Price calculated as of such record
date (any of such events being called a "Rights Offering"), then each
Exchange Ratio will be adjusted effective immediately after the end of
the Rights Period by multiplying such Exchange Ratio in effect
immediately prior to the end of the Rights Period by a fraction:
the numerator of which will be the number of Class A Shares
outstanding, or the number of Class A Shares which would be
outstanding if all the exchangeable or convertible
securities were exchanged for or converted into Class_A
Shares during the Rights Period, after giving effect to the
Rights Offering and including the number of Class A Shares
actually issued or subscribed for during the Rights Period
upon exercise of the rights, warrants or options under the
Rights Offering; and
the denominator of which will be the aggregate of:
the number of Class A Shares outstanding as of the record
date for the Rights Offering; and
a number determined by dividing (1) either (A) the
product of the number of Class A Shares issued or
subscribed for during the Rights Period upon the
exercise of the rights, warrants or options under the
Rights Offering and the price at which such Class_A
Shares are offered, or, as the case may be, (B) the
product of the exchange or conversion price of such
securities exchangeable for or convertible into Class_A
Shares and the number of Class_A Shares for or into
which the securities so offered pursuant to the Rights
Offering could have been exchanged or converted during
the Rights Period, by (2) the Current Market Price of
the Class_A Shares calculated as of the record date for
the Rights Offering.
Any Holder who has made an Optional Exchange in accordance with
section_2.2 during the period beginning immediately after the record
date for a Rights Offering and ending on the last day of the Rights
Period for the Rights Offering will, in addition to the Class_A Shares
issued to that Holder on such Optional Exchange, be entitled to that
number of additional Class_A Shares equal to the result obtained when
the difference, if any, between the
<PAGE>
Exchange Ratio as adjusted for such Rights Offering pursuant to this
subsection and the applicable Exchange Ratio in effect on the date of
such Optional Exchange is multiplied by the number of Special Shares
exchanged pursuant to such Optional Exchange by such Holder. Such
additional Class A Shares will be deemed to have been issued to the
Holder immediately following the end of the Rights Period and a
certificate for such additional Class A Shares will be delivered to
such Holder within 15 Business Days following the end of the Rights
Period.
If and whenever at any time after the date hereof and prior
to the Mandatory Exchange Date, HII fixes a record date for the issue
or the distribution to all or substantially all the holders of Class A
Shares of (i) securities of HII, including rights, options or warrants
to acquire securities of HII or any of its property or assets
(including evidences of indebtedness) or (ii) any property or other
assets (including evidences of indebtedness) and if such issuance or
distribution does not constitute a Dividend Paid in the Ordinary
Course, a Class A Share Reorganization or a Rights Offering (any of
such non-excluded events being called a "Special Distribution"), each
Exchange Ratio will be adjusted effective immediately after such
record date by multiplying such Exchange Ratio by a fraction:
the numerator of which will be the product of the number of
Class A Shares outstanding on such record date and the
Current Market Price of the Class_A Shares calculated
as of such record date; and
the denominator of which will be:
the product of the number of Class A Shares outstanding on
such record date and the Current Market Price of the
Class A Shares on such record date; less
the fair market value, as determined by action by the
Directors (whose determination will be conclusive), to
the holders of Class A Shares of such securities or
property or other assets so issued or distributed in
the Special Distribution.
To the extent that any Special Distribution is not so made, the
Exchange Ratio will be readjusted effective immediately to the
Exchange Ratio which would then be in effect based upon such
securities or property or other assets as actually distributed.
If and whenever at any time after the date hereof and prior
to the Mandatory Exchange Date there is a reclassification of the
Class A Shares at any time outstanding or change of the Class A Shares
into other shares or into other securities or other capital
reorganization (other than a Class A Share Reorganization), or a
consolidation, amalgamation, arrangement or merger of HII with or into
any other corporation or other entity (other than a consolidation,
amalgamation, arrangement or merger which does not result in any
reclassification of the outstanding Class A Shares or a change of the
Class A Shares into other shares), or a transfer of the undertaking or
assets of HII as an entirety or substantially as an entirety to
another corporation or other entity in which the holders of Class A
Shares are entitled to receive shares, other securities or other
property (any of such events being called an "HII Capital
Reorganization"), a Special Shareholder will be entitled to receive on
any Exchange Date, and shall accept in lieu of Class A Shares, the
aggregate
<PAGE>
number of shares, other securities or other property which such Holder
would have been entitled to receive as a result of such HII Capital
Reorganization if, on the effective date thereof, the Holder had been
the registered holder of the number of Class A Shares which such
Holder would have received if the Exchange Date were immediately prior
to such effective date, subject in all such cases, to HII's rights
under section 2.3. If determined appropriate by the Directors,
appropriate adjustments will be made as a result of any such HII
Capital Reorganization in the application of the provisions set forth
in this Article with respect to the rights and interests thereafter of
Special Shareholders to the end that the provisions set forth in this
Article will thereafter correspondingly be made applicable as nearly
as may reasonably be in relation to any shares, other securities or
other property thereafter deliverable upon the exercise of any Special
Shares. Any such adjustment will be made by and set forth in an
indenture supplemental hereto approved by the Directors and entered
into pursuant to the provisions of Article 6 and will for all purposes
be conclusively deemed to be an appropriate adjustment.
No Changes to Special Shares
The Corporation shall not at any time after the date hereof and
prior to the Mandatory Exchange Date take any of the actions referred to in
section_3.1 in respect of the Special Shares. If, contrary to the
foregoing, the Corporation takes any of such actions, the terms of
Mandatory Exchange and Optional Exchange shall be adjusted effective
immediately after the effective date or record date thereof to ensure that
the entitlement of Holders pursuant to this Indenture is not affected
adversely thereby.
Rules Applicable to Adjustments
For the purposes of section and :
The adjustments provided for in sections and are cumulative
and will be made successively whenever an event referred to therein
occurs, subject to the following subsections of this section.
No adjustment of the Exchange Ratios will be required unless
such adjustment would result in a change of at least 1% in the
applicable Exchange Ratios; provided, however, that any adjustments
which, except for the provisions of this subsection would otherwise
have been required to be made, will be carried forward and taken into
account in any subsequent adjustment.
If at any time a dispute arises with respect to adjustments
provided for in sections and , such dispute will be conclusively
determined by HII's auditors or if they are unable or unwilling to
act, by such other firm of independent chartered accountants as may be
selected by action by the Directors and any such determination will be
binding upon HII, the Corporation, the Trustee and the Holders of
Special Shares; such auditors or accountants will be given access to
all necessary records of the Corporation and HII. If any such
<PAGE>
determination is made, HII will deliver an Officers' Certificate to
the Trustee describing such determination.
If after the date of this Indenture the Corporation or HII
takes any action affecting the Special Shares or Class A Shares,
respectively, other than action described in sections and , which in
the opinion of the Directors would materially affect the rights of the
Special Shareholders, the Exchange Ratios or other terms of Article 2
will be adjusted in such manner, if any, and at such time, by action
by the Directors, in their sole discretion, as they may determine to
be equitable in the circumstances, but subject in all cases to any
necessary regulatory approvals, including any approval required by any
stock exchange on which the Special Shares or Class A Shares may be
listed. Failure of the taking of action by the Directors so as to
provide for an adjustment on or prior to the effective date of any
action by the Corporation or HII affecting the Special Shares or Class
A Shares, respectively, will be conclusive evidence that the Directors
have determined that it is equitable to make no adjustment in the
circumstances.
If the Corporation or HII sets a record date to determine
the holders of Class A Shares to take any action and thereafter and
before the taking of such action, legally abandons its plan to take
such other action, then no adjustment will be required by reason of
the setting of such record date.
As a condition precedent to the taking of any action which
might require any adjustment, HII will take any corporate action which
may, in the opinion of Counsel, be necessary in order that HII have
unissued and reserved in its authorized capital stock and may validly
and legally issue as fully paid and non-assessable all the shares or
other securities which all the holders of such Special Shares are
entitled to receive on the full exercise thereof in accordance with
the provisions thereof.
The Trustee shall not at any time be under any duty or
responsibility to any Holder to determine whether any facts exist
which may require any adjustment contemplated by Article , nor to
verify the nature or extent of any such adjustment when made, or the
method employed in making the same.
Certificate as to Adjustment
Immediately after the occurrence of any event that requires an
adjustment or readjustment as provided in sections and , HII will deliver
an Officers' Certificate to the Trustee specifying the nature of the event
requiring the adjustment and the amount of the adjustment necessitated
thereby and setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based, which certificate and
the amount of the adjustment specified therein will be verified by HII's
auditors and will be conclusive and binding on all parties in interest.
When so approved, HII will forthwith give notice to the Special
Shareholders in the manner provided in section specifying the event
requiring such adjustment or readjustment and the results thereof.
ARTICLE
COVENANTS OF HII AND THE CORPORATION
<PAGE>
General Covenants of HII
HII covenants with the Trustee that:
so long as the Special Shares have not been exchanged pursuant to
the terms and conditions hereof, it will at all times comply with
all provisions of this Indenture to be complied with by it;
it will cause the Class A Shares and the certificates representing
the Class A Shares issuable upon exchange of the Special Shares
to be issued and delivered in accordance with the terms hereof as
fully paid and non-assessable shares;
so long as the Special Shares have not been exchanged pursuant to
the terms and conditions hereof, it will maintain its corporate
existence;
HII shall, at its cost, file with the United States Securities and
Exchange Commission and shall use all reasonable efforts to cause
to be declared effective on or before December_23, 1997 a
registration statement (the "Shelf Registration Statement") on
Form S-3 under the U.S. Securities Act relating to the issuance
of Class A Shares by HII to the Holders upon the consummation of
the Mandatory Exchange or any Optional Exchange pursuant to
Article 2 hereof. HII shall maintain the effectiveness of the
Shelf Registration Statement until the earlier of (i) the date
that is 15 days after the Mandatory Exchange Date and (ii) the
date on which all Special Shares shall have been exchanged for
Class A Shares. In the event that HII is unable to have the Shelf
Registration Statement as described above declared effective, HII
shall use all reasonable efforts to cause to be declared
effective on or before December 31, 1997 a Shelf Registration
Statement relating to the resale of Class A Shares issued by HII
to the Holders upon the consummation of the Mandatory Exchange or
any Optional Exchange pursuant to Article 2 hereof. HII shall
maintain the effectiveness of any such Shelf Registration
Statement for resales until the earlier of (i) 2 years after the
date on which the last Special Shares have been issued, (ii) such
time as all Special Shares have been sold or disposed of pursuant
to the Shelf Registration Statement and (iii) such time as all
Special Shares may be freely sold under restriction under the
Securities Act; and
HII shall use all reasonable efforts to obtain on or prior to
December_23, 1997 a rating of the Special Shares from two
credit rating agencies one of which will be Standard & Poor's
Corporation or Moody's Investors Services, Inc.
Shareholder Material
HII, at its own expense, will arrange for any continuous
disclosure documentation and other informational material provided by HII
to holders of Class A Shares to be mailed to all Holders at the same time
that such material is provided to shareholders of HII.
Trustee's Remuneration and Expenses
HII covenants that it will pay to the Trustee from time to time
reasonable
<PAGE>
remuneration for its services hereunder and will pay or reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in the administration or execution
of the trusts created hereby (including the reasonable fees and
disbursements of its Counsel and all other advisers and assistants not
regularly in its employ), both before any default hereunder and thereafter
until all duties of the Trustee under such trusts are finally and fully
performed, except any such expenses, disbursements or advances as may arise
from the negligence or wilful misconduct of the Trustee.
Maintenance of Listing
The Corporation will use its best efforts to ensure that all
of the outstanding Special Shares shall be listed and posted or
admitted for trading on the facilities of the TSE until the Mandatory
Exchange Date.
HII will use its best efforts to ensure that its Class A
Shares shall be listed and posted or admitted for trading on the
facilities of the NYSE until and on the Mandatory Exchange Date.
Status as a Reporting Company
The Corporation covenants that, for as long as any Special Shares
are outstanding, it will at all times comply with all provisions of this
Indenture to be complied with by it and use its reasonable best efforts to
maintain its status as a reporting issuer not in default under the
legislation administered by the Ontario Securities Commission or under any
similar provincial legislation of any of the other provinces of Canada or
any similar Canadian federal legislation hereinafter enacted.
ARTICLE
MEETINGS OF SPECIAL SHAREHOLDERS
Right to Convene Meetings
The Trustee may at any time and from time to time, and shall on
receipt of a written request of HII or the Corporation or of a Special
Shareholders' Request, convene a meeting of the Special Shareholders to
consider matter(s) relating to this Indenture provided that the Trustee is
funded and indemnified to its reasonable satisfaction by HII or the
Corporation or by the Special Shareholders signing such Special
Shareholders' Request against the costs which may be incurred in connection
with the calling and holding of such meeting. If the Trustee fails to give
notice to convene a meeting within 10 Business Days after the receipt of a
written request of HII or the Corporation or a Special Shareholders'
Request and indemnity given as aforesaid, HII, the Corporation or such
Special Shareholders, as the case may be, may convene such meeting. Every
such meeting shall be held in the City of Toronto or at such other place as
may be approved or determined by the Trustee.
Notice
At least 10 days' prior notice of any meeting of Special
Shareholders shall be given by the Corporation to the Special Shareholders
in the manner provided for in section and a copy
<PAGE>
of such notice shall be delivered to the Trustee unless the meeting has
been called by the Trustee, and to HII or the Corporation unless the
meeting has been called by it. Such notice shall state the time and place
of the meeting, the general nature of the business to be transacted and
shall contain such information as is reasonably necessary to enable the
Holders to make a reasoned decision on the matter but it shall not be
necessary for any such notice to set out the terms of any resolution to be
proposed or any of the provisions of this Article 5. The notice convening
any such meeting may be signed by an appropriate officer of the Trustee or
of HII or the Corporation or the person designated by the Special
Shareholders, as the case may be.
Chairman
The Trustee may nominate in writing an individual to be Chairman
of the meeting and if no individual is so nominated, or if the individual
so nominated is not present within 15 minutes after the time fixed for the
holding of the meeting, the Special Shareholders present in person or by
proxy shall appoint an individual present to be Chairman.
Quorum
Subject to the provisions of section , at any meeting of the
Special Shareholders a quorum shall consist of Special Shareholders present
in person or represented by proxy holding at least 25% of the Special
Shares then outstanding, provided that at least two persons entitled to
vote thereat are personally present. If a quorum of the Holders shall not
be present within one half-hour from the time fixed for holding any
meeting, the meeting, if summoned by the Holders or on a Special
Shareholders' Request, shall be dissolved; but in any other case the
meeting shall be adjourned to the same day in the next week (unless such
day is not a Business Day in which case it shall be adjourned to the next
following Business Day) at the same time and place to the extent possible
and, subject to the provisions of section , no notice of the adjournment
need be given. Any business may be brought before or dealt with at an
adjourned meeting which might have been dealt with at the original meeting
in accordance with the notice calling the same. At the adjourned meeting
the Special Shareholders present in person or represented by proxy shall
form a quorum and may transact the business for which the meeting was
originally convened, notwithstanding that they may not represent at least
25% of the Special Shares then outstanding. No business shall be transacted
at any meeting unless a quorum is present at the commencement of business.
Power to Adjourn
The Chairman of any meeting at which a quorum of the Special
Shareholders is present may, with the consent of the meeting, adjourn any
such meeting, and no notice of such adjournment need be given except such
notice, if any, as the meeting may prescribe.
Show of Hands
Every question submitted to a meeting shall be decided in the
first place by a majority of the votes given on a show of hands, except
that votes on an extraordinary resolution
<PAGE>
shall be given in the manner hereinafter provided. At any such meeting,
unless a poll is duly demanded as herein provided, a declaration by the
Chairman that a resolution has been carried or carried unanimously or by a
particular majority or lost or not carried by a particular majority shall
be conclusive evidence of the fact.
Poll and Voting
On every extraordinary resolution, and when demanded by the
Chairman or by one or more of the Special Shareholders acting in person or
by proxy on any other question submitted to a meeting and after a vote by
show of hands, a poll shall be taken in such manner as the Chairman shall
direct. Questions other than those required to be determined by
extraordinary resolution shall be decided by a majority of the votes cast
on the poll. On a show of hands, every person who is present and entitled
to vote, whether as a Special Shareholder or as proxy for one or more
absent Special Shareholders, or both, shall have one vote. On a poll, each
Special Shareholder present in person or represented by a proxy duly
appointed by instrument in writing shall be entitled to one vote in respect
of each Special Share held by him. A proxy need not be a Special
Shareholder. The Chairman of any meeting shall be entitled, both on a show
of hands and on a poll, to vote in respect of the Special Shares, if any,
held or represented by him.
Regulations
Subject to the provisions of this Indenture, the Trustee or HII,
with the approval of the Trustee, or the Corporation, with the approval of
the Trustee, may from time to time make and from time to time vary such
regulations as it shall consider necessary for:
the setting of a record date for a meeting for the purpose of
determining Special Shareholders entitled to receive notice and
to vote at a meeting;
the deposit of instruments appointing proxies at some approved place
other than the place at which the meeting is to be held and
enabling particulars of such instruments appointing proxies to be
mailed, cabled or telegraphed before the meeting to the
Corporation or to the Trustee at the place where the same is to
be held and for the voting of proxies so deposited as though the
instruments themselves were produced at the meeting;
the form of the instrument of proxy; and
generally for the calling of meetings of Special Shareholders and the
conduct of business thereat.
Any regulations so made shall be binding and effective and the
votes given in accordance therewith shall be valid and shall be counted.
Save as such regulations may provide, the only persons who shall be
recognized at any meeting as a Special Shareholder, or be entitled to vote
or be present at the meeting in respect thereof (subject to section ),
shall be Special Shareholders or persons holding proxies of Special
Shareholders.
Corporation, HII, Trustee and Counsel may be Represented
<PAGE>
The Corporation, HII and the Trustee, by their respective
directors, officers and employees, and the counsel for each of the
Corporation, HII, the Special Shareholders and the Trustee may attend any
meeting of the Special Shareholders, but shall have no vote except, with
respect to the Trustee only, in its capacity as a Special Shareholder.
Powers Exercisable by Extraordinary Resolution
In addition to all other powers conferred upon them relating to
this Indenture by any other provisions of this Indenture or by law, the
Special Shareholders at a meeting shall have the power, exercisable from
time to time by extraordinary resolution:
subject to the prior written consent of the TSE and, so long as the
Special Shares are listed on the ASE, the ASE, to agree with the
Corporation and HII to any modification, alteration, compromise
or arrangement of the rights of Special Shareholders or the
Trustee in its capacity as trustee hereunder or on behalf of the
Special Shareholders against the Corporation, whether such rights
arise under this Indenture or otherwise;
to amend or repeal any extraordinary resolution previously passed or
sanctioned by the Special Shareholders;
to restrain any Special Shareholder from taking or instituting any
suit, action or proceeding against the Corporation or HII for the
enforcement of any of the covenants on the part of the
Corporation or HII contained in this Indenture or to enforce any
of the rights of the Special Shareholders;
to direct any Special Shareholder who, as such, has brought any
suit, action or proceeding to stay or discontinue or otherwise
deal with any such suit, action or proceeding, upon payment of
the costs, charges and expenses reasonably and properly incurred
by such Special Shareholder in connection therewith;
to assent to any change in or omission from the provisions contained
in this Indenture or any ancillary or supplemental instrument
which may be agreed to by HII and the Corporation (where the
Corporation may reasonably be affected), and to authorize the
Trustee to concur in and execute any ancillary or supplemental
indenture embodying the change or omission;
to remove the Trustee or its successor in office and to appoint a
new trustee or trustees to take the place of the Trustee so
removed; and
to assent to any compromise or arrangement with any creditor or
creditors or any class or classes of creditors, whether secured
or otherwise, and with holders of any shares or other securities
of the Corporation.
<PAGE>
Meaning of Extraordinary Resolution
The expression "extraordinary resolution" when used in this
Indenture means, subject as hereinafter in this section and in section
provided, a resolution proposed at a meeting of Special Shareholders
duly convened for that purpose in accordance with section and held in
accordance with the provisions of this Article 5 at which there are
present in person or represented by proxy Special Shareholders holding
at least 25% of the outstanding Special Shares and passed by the
affirmative votes of Special Shareholders holding not less than 66
2/3% of the Special Shares represented at the meeting and voted on the
poll upon such resolution excluding Special Shares owned legally or
beneficially by HII or any of its Affiliates.
If, at any meeting called for the purpose of passing an
extraordinary resolution, Special Shareholders holding at least 25% of
the then outstanding Special Shares are not present in person or by
proxy within one half-hour after the time appointed for the meeting,
then the meeting, if convened by Special Shareholders or on a Special
Shareholders' Request, shall be dissolved; but in any other case it
shall stand adjourned to such day, being not less than ten nor more
than fifteen days later, and to such place and time as may be
appointed by the Chairman. Not less than seven days' prior notice
shall be given of the time and place of such adjourned meeting in the
manner provided in sections , and . Such notice shall state that at
the adjourned meeting the Special Shareholders present in person or
represented by proxy shall form a quorum but it shall not be necessary
to set forth the purposes for which the meeting was originally called
or any other particulars. At the adjourned meeting the Special
Shareholders present in person or represented by proxy shall form a
quorum and may transact the business for which the meeting was
originally convened and a resolution proposed at such adjourned
meeting and passed by the requisite vote as provided in section shall
be an extraordinary resolution within the meaning of this Indenture
notwithstanding that Special Shareholders holding at least 25% of the
then outstanding Special Shares are not present in person or
represented by proxy at such adjourned meeting.
Votes on an extraordinary resolution shall always be given
on a poll and no demand for a poll on an extraordinary resolution
shall be necessary.
Powers Cumulative
It is hereby declared and agreed that any one or more of the
powers or any combination of the powers in this Indenture stated to be
exercisable by the Special Shareholders by extraordinary resolution or
otherwise may be exercised from time to time and the exercise of any one or
more of such powers or any combination of powers from time to time shall
not be deemed to exhaust the right of the Special Shareholders to exercise
such powers or combination of powers then or thereafter from time to time.
Minutes
Minutes of all resolutions and proceedings at every meeting of
Special Shareholders shall be made and duly entered in books to be from
time to time provided for that purpose by the Trustee at the expense of
HII, and any such minutes as aforesaid, if signed by the Chairman of the
meeting at which such resolutions were passed or proceedings had, or by the
Chairman of the next succeeding meeting of the Special Shareholders, shall
be prima facie evidence of the matters therein
<PAGE>
stated and, until the contrary is proved, every such meeting in respect of
the proceedings of which minutes shall have been made shall be deemed to
have been duly convened and held, and all resolutions passed thereat or
proceedings taken shall be deemed to have been duly passed and taken.
Instruments in Writing
All actions which may be taken and all powers that may be
exercised by the Special Shareholders at a meeting held as provided in this
Article may also be taken and exercised by Special Shareholders (excluding
Special Shares held by HII or its Affiliates) holding not less than 66-2/3%
of the then outstanding Special Shares by an instrument in writing signed
in one or more counterparts by such Special Shareholders in person or by
attorney duly appointed in writing, and the expression "extraordinary
resolution" when used in this Indenture shall include an instrument so
signed.
Binding Effect of Resolutions
Every resolution and every extraordinary resolution passed in
accordance with the provisions of this Article at a meeting of Special
Shareholders shall be binding upon all the Special Shareholders, whether
present at or absent from such meeting, and every instrument in writing
signed by Special Shareholders in accordance with section shall be binding
upon all the Special Shareholders, whether signatories thereto or not, and
each and every Special Shareholder and the Trustee (subject to the
provisions for indemnity herein contained) shall be bound to give effect
accordingly to every such resolution and instrument in writing. In the case
of an instrument in writing the Trustee shall give a copy of such
instrument in writing in the manner contemplated in sections and to all
Special Shareholders, HII and the Corporation as soon as is reasonably
practicable.
Holdings by HII or Its Affiliates Disregarded
In determining whether Special Shareholders holding the required
number of Special Shares are present at a meeting of Special Shareholders
for the purpose of determining a quorum or have concurred in any consent,
waiver, extraordinary resolution, Special Shareholders' Request or other
action under this Indenture, Special Shares owned legally or beneficially
by HII or any of its Affiliates shall be disregarded. The Trustee may rely
on an Officers' Certificate of HII in determining which Special Shares, if
any, are owned legally or beneficially by HII or its Affiliates. HII shall,
forthwith upon the Trustee's written request, file with the Trustee an
Officers' Certificate of HII setting forth as at the date of such
certificate the number of Special Shares owned legally or beneficially by
HII or its Affiliates.
ARTICLE
SUPPLEMENTAL INDENTURES
Supplemental Indentures
<PAGE>
From time to time HII, the Corporation (where the Corporation may
reasonably be affected) and the Trustee may, subject to the provisions of
this Indenture, and they shall, when so directed by this Indenture, execute
and deliver by their proper officers, indentures or instruments
supplemental hereto, which thereafter shall form part hereof, for any one
or more or all of the following purposes:
setting forth adjustments in the application of the provisions of
Article ;
adding to the provisions hereof such additional covenants and
enforcement provisions as in the opinion of counsel to HII are
necessary or advisable, provided that the same are not in the
opinion of the Trustee prejudicial to the interests of the
Special Shareholders;
giving effect to any extraordinary resolution passed as provided in
Article ;
making such provisions not inconsistent with this Indenture as may be
necessary or desirable with respect to matters or questions
arising hereunder provided that such provisions are not, in the
opinion of the Trustee, prejudicial to the interest of the
Special Shareholders hereunder;
amending any of the provisions of this Indenture or relieving HII or
the Corporation from any of the obligations, conditions or
restrictions herein contained, provided that no such amendment or
relief shall be or become operative or effective if, in the
opinion of the Trustee, such amendment or relief impairs any of
the rights of the Special Shareholders or of the Trustee, and
provided further that the Trustee may in its sole discretion
decline to enter into any such supplemental indenture which in
its opinion may not afford adequate protection to the Trustee
when the same shall become operative; and
for any other purpose not inconsistent with the terms of this
Indenture, including the correction or rectification of any
ambiguities, defective or inconsistent provisions, errors or
omissions herein, provided that, in the opinion of the Trustee,
the rights of the Trustee and of the Special Shareholders are in
no way prejudiced thereby.
Successor Corporations
In the case of the consolidation, amalgamation, arrangement,
merger or transfer of the undertaking or assets of the Corporation as
an entirety or substantially as an entirety to another corporation
("successor corporation"), the successor corporation resulting from
such consolidation, amalgamation, arrangement, merger or transfer (if
not the Corporation) shall be a corporation incorporated under the
laws of Canada or one of the provinces thereof and shall expressly
assume, by supplemental indenture satisfactory in form to the Trustee
and executed and delivered to the Trustee, the due and punctual
performance and observance of each and every covenant and condition of
this Indenture to be performed and observed by the Corporation.
In the case of the consolidation, amalgamation, arrangement
or merger of HII with or into another corporation or the transfer of
the undertaking or assets of HII as an entirety, or substantially as
an entirety to another corporation ("successor corporation"), the
<PAGE>
successor corporation resulting from such consolidation, amalgamation,
arrangement, merger or transfer (if not HII) shall expressly assume,
by supplemental indenture satisfactory in form to the Trustee and
executed and delivered to the Trustee, the due and punctual
performance and observance of each and every covenant and condition of
this Indenture to be performed and observed by HII.
ARTICLE
CONCERNING THE TRUSTEE
Trust Indenture Legislation
In this Article, the term "Applicable Legislation" means the
provisions of any statute of Canada or a province thereof, and of
regulations under any such statute, relating to trust indentures
and/or to the rights, duties and obligations of trustees and of
corporations under trust indentures, to the extent that such
provisions are at the time in force and applicable to this Indenture.
If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with a mandatory requirement of
Applicable Legislation, such mandatory requirement shall prevail.
HII, the Corporation (to the extent applicable) and the
Trustee agree that each will at all times in relation to this
Indenture and any action to be taken hereunder observe and comply with
and be entitled to the benefit of Applicable Legislation.
Rights and Duties of Trustee
In the exercise of the rights and duties prescribed or
conferred by the terms of this Indenture, the Trustee shall act
honestly and in good faith with a view to the best interests of the
Special Shareholders and shall exercise that degree of care, diligence
and skill that a reasonably prudent trustee would exercise in
comparable circumstances. No provision of this Indenture shall be
construed to relieve the Trustee from, or require any other person to
indemnify the Trustee against, liability for its own negligence,
wilful misconduct or bad faith.
The Trustee shall not be bound to do or take any act, action
or proceeding for the enforcement of any of the obligations of HII or
the Corporation under this Indenture unless and until it shall have
received a Special Shareholders' Request specifying the act, action or
proceeding which the Trustee is requested to take. The obligation of
the Trustee to commence or continue any act, action or proceeding for
the purpose of enforcing any rights of the Trustee or the Special
Shareholders hereunder shall be conditional upon the Special
Shareholders furnishing, when required by notice in writing by the
Trustee, sufficient funds to commence or continue such act, action or
proceeding and an indemnity
<PAGE>
reasonably satisfactory to the Trustee to protect and hold harmless
the Trustee against the costs, charges and expenses and liabilities to
be incurred thereby and any loss and damage it may suffer by reason
thereof. None of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers unless indemnified as
aforesaid.
The Trustee may, before commencing or at any time during the
continuance of any such act, action or proceeding, require the Special
Shareholders, at whose instance it is acting, to deposit with the
Trustee the Special Shares held by them, for which Special Shares the
Trustee shall issue receipts.
Every provision of this Indenture that by its terms relieves
the Trustee of liability or entitles it to rely upon any evidence
submitted to it is subject to the provisions of Applicable
Legislation, of section and of section .
The Trustee shall retain the right not to act and shall not
be held liable for refusing to act unless it has received clear and
reasonable documentation which complies with the terms of this
Indenture. Such documentation must not require the exercise of any
discretion or independent judgment unless pursuant to the terms of
this Indenture.
In the event of any disagreement arising regarding the terms
of this Indenture, the Trustee shall be entitled, at its option, to
refuse to comply with any or all demands whatsoever until the dispute
is settled either by agreement amongst the various parties or by a
court of competent jurisdiction.
Evidence, Experts and Advisers
In addition to the reports, certificates, opinions and other
evidence required by this Indenture, HII and the Corporation, as the
case may be, shall furnish to the Trustee such additional evidence of
compliance with any provision hereof in such form as may be prescribed
by Applicable Legislation, or as the Trustee may reasonably require by
written notice to HII or the Corporation.
In the exercise of its rights and duties hereunder, the
Trustee may, if it is acting in good faith, rely as the truth of the
statements and the accuracy of the opinions expressed therein, upon
statutory declarations, opinions, reports, written requests, consents,
certificates or orders of HII or the Corporation, as the case may be,
or other evidence furnished to the Trustee, provided that such
evidence complies with Applicable Legislation and the Trustee examines
the same and determines that such evidence complies with the
applicable requirements of this Indenture.
Whenever Applicable Legislation requires that evidence
referred to in section_ be in the form of a statutory
declaration, the Trustee may accept such statutory declaration in lieu
of a certificate of HII or the Corporation, as the case may be,
required by any provision hereof. Any such statutory declaration may
be made by any officer of the HII or the Corporation as the case may
be.
Proof of the execution of an instrument in writing,
including a Special
<PAGE>
Shareholders' Request, by any Special Shareholder may be made by the
certificate of a notary public, or other officer with similar powers,
that the person signing such instrument acknowledged to him the
execution thereof, or by an affidavit of a witness to such execution
or in any other manner which the Trustee may consider adequate.
The Trustee may employ or retain such counsel, accountants,
appraisers or other experts or advisers as it may reasonably require
for the purpose of determining and discharging its duties hereunder
and may pay reasonable remuneration for all services so performed by
any of them, without taxation of costs of any counsel, and shall not
be responsible for any misconduct on the part of any of them. Such
remuneration is to be paid by HII subject to section<0- 95>.
Documents, Monies, etc. Held by Trustee
Any securities, documents of title or other instruments that
may at any time be held by the Trustee subject to the trusts hereof
may be placed in the deposit vaults of the Trustee or of any Canadian
chartered bank or trust company or deposited for safekeeping with any
such bank or trust company. Unless herein otherwise expressly
provided, any monies so held, pending the application or withdrawal
thereof under any provisions of this Indenture, may be deposited in
the name of the Trustee in any Canadian chartered bank or trust
company, including the Trustee's deposit department, at the rate of
interest (if any) then current on similar deposits or may be deposited
in such institutions or invested in such securities as HII may consent
to. All interest or other income received by the Trustee in respect of
such deposits and investments shall belong to HII.
Actions by Trustee to Protect Interests
Subject to the provisions of this Indenture and applicable
law, the Trustee shall have the power to institute and to maintain
such actions and proceedings as it may consider necessary or expedient
to preserve, protect or enforce its interests and the interests of the
Special Shareholders.
Trustee Not Required to Give Security
The Trustee shall not be required to give any bond or
security in respect of the execution of the trusts and powers of this
Indenture or otherwise.
Protection of Trustee
By way of supplement to the provisions of any law for the time
being relating to trustees, it is expressly declared and agreed as follows:
The Trustee shall not be liable for or by reason of any
statements of fact or
<PAGE>
recitals in this Indenture (except the representation contained in
section ) or be required to verify the same, but all such statements
or recitals are and shall be deemed to be made by HII or the
Corporation, as the case may be.
Nothing herein contained shall impose any obligation on the
Trustee to see to or to require evidence of the registration or filing
(or renewal thereof) of this Indenture or any instrument ancillary or
supplemental hereto.
The Trustee shall not be bound to give notice to any person
of the execution hereof.
The Trustee shall not incur any liability or responsibility
whatsoever or be in any way responsible for the consequence of any
breach on the part of HII or the Corporation of any of the covenants
herein contained or of any acts of any directors, officers, employees,
agents or servants of HII or the Corporation, as the case may be.
The Trustee will process all proffered transfers of Special
Shares in good faith upon the presumption that such transfers are
permissible pursuant to all applicable legislation and the terms of
this Indenture. The transferor and transferee are solely responsible
for ensuring compliance with any applicable securities laws, and the
Trustee shall have no obligation to ensure compliance with any laws
applicable to the issue or transfer of any Special Shares.
The Trustee shall incur no liability with regard to the
delivery or non-delivery of any certificate, whether delivered by
hand, mail or other means.
The Trustee shall disburse monies according to this
Indenture only to the extent that monies have been deposited with it.
The countersignature of the Trustee on the Special Share
Certificates shall not be construed as a representation or warranty by
the Trustee as to the validity of this Indenture or the Special
Shares, and the Trustee shall in no respect be liable or answerable
for the use made of the Special Shares or any of them.
Replacement of Trustee
The Trustee may resign its trust and be discharged from all
further duties and liabilities hereunder by giving to the Corporation
and HII not less than 30 days' prior notice in writing or such shorter
prior notice as HII may accept as sufficient. The Special Shareholders
by extraordinary resolution shall have the power at any time to remove
the existing Trustee and to appoint a new trustee. In the event of the
Trustee resigning or being removed as aforesaid or being dissolved,
becoming bankrupt, going into liquidation or otherwise becoming
incapable of acting hereunder, HII shall forthwith appoint a new
trustee unless a new trustee has already been appointed by the Special
Shareholders; failing such appointment by HII, the retiring Trustee or
any Special Shareholder may apply to a justice of the Ontario Court of
Justice, General Division, on such notice as such justice may direct,
for the appointment of a new trustee at HII's expense; but any new
trustee so appointed by HII or by the Court shall be subject to
removal as aforesaid by the Special Shareholders. Any new trustee
appointed under any provision of this section shall be a corporation
<PAGE>
authorized to carry on the business of a trust company in each of the
Provinces of Canada. On any such appointment the new trustee shall be
vested with the same powers, rights, duties and responsibilities as if
it had been originally named herein as Trustee without any further
assurance, conveyance, act or deed; but there shall be immediately
executed, at the expense of HII, all such conveyances or other
instruments as may, in the opinion of counsel, be necessary or
advisable for the purpose of assuring the same to the new trustee,
provided that, any resignation or removal of the Trustee and
appointment of a successor trustee shall not become effective until
the successor trustee shall have executed an appropriate instrument
accepting such appointment and, at the request of HII, the predecessor
Trustee, upon payment of its outstanding remuneration and expenses,
shall execute and deliver to the successor trustee an appropriate
instrument transferring to such successor trustee all rights and
powers of the Trustee hereunder.
Upon the appointment of a successor trustee, HII shall
promptly notify the Special Shareholders thereof in the manner
provided for in section or .
Any corporation into or with which the Trustee may be merged
or consolidated or amalgamated, or any corporation succeeding to the
trust business of the Trustee, shall be the successor to the Trustee
hereunder without any further act on its part or of any of the parties
hereto provided that such corporation would be eligible for
appointment as a new Trustee under section .
Conflict of Interest
The Trustee represents to HII that, at the time of execution
and delivery hereof, no material conflict of interest exists in the
Trustee's role as fiduciary hereunder and agrees that in the event of
a material conflict of interest, it will eliminate the same or resign
its trust hereunder to a successor trustee approved by HII. If any
such material conflict of interest exists or hereafter shall exist,
the validity and enforceability of this Indenture shall not be
affected in any manner whatsoever by reason thereof.
Subject to section , the Trustee, in its personal or any
other capacity, may buy, lend upon and deal in securities of HII or
the Corporation and generally may contract and enter into financial
transactions with HII or the Corporation or any subsidiary of HII or
the Corporation without being liable to account for any profit made
thereby.
Indemnity
The Trustee will at all times be indemnified and saved harmless
by HII from and against all claims, demands, losses, actions, causes of
action, costs, charges, expenses, damages and liabilities whatsoever
arising in connection with this Exchange Indenture including, without
limitation, those arising out of or related to actions taken or omitted to
be taken by the Trustee contemplated hereby, legal fees and disbursements
on a solicitor and client basis and costs and expenses incurred in
connection with the enforcement of this indemnity, which the Trustee may
suffer or incur, whether at law or in equity, in any way caused by or
arising, directly or indirectly,
<PAGE>
in respect of any act, deed, matter or thing whatsoever made, done,
acquiesced in or omitted in or about or in relation to the execution of its
duties as Trustee. The foregoing provisions of this Section do not apply to
the extent that in any circumstances there has been a failure by the
Trustee or its directors, officers, employees or agents to act honestly and
in good faith or to discharge the Trustee's obligations under Section
hereof. This indemnity will survive the termination or discharge of this
Exchange Indenture and the resignation or removal of the Trustee.
Acceptance of Trust
The Trustee hereby accepts the trusts in this Indenture declared
and provided for and agrees to perform the same upon the terms and
conditions herein set forth.
Trustee Not to be Appointed Receiver
The Trustee and any person related to the Trustee shall not be
appointed a receiver or receiver and manager or liquidator of all or any
part of the assets or undertaking of HII or the Corporation.
Authorization to Carry on Business
The Trustee represents to HII that it is duly authorized and
qualified to carry on the business of a trust company in each of the
Provinces of Canada.
ARTICLE
GENERAL
Notice to the Corporation, HII and the Trustee
Unless herein otherwise expressly provided, any notice to be
given hereunder to the Corporation, HII or the Trustee shall be deemed
to be validly given if delivered or if sent by first class insured
mail, postage prepaid or if sent by facsimile:
if to the Corporation:
10 Toronto Street
Toronto, Ontario, M5C 2B7
Fax: (416) 364-2088
Attention: President
if to HII
401 North Wabash Avenue
<PAGE>
Suite 740
Chicago, Illinois, 60611
Fax: (312) 321-0629
Attention: Vice-President, Law & Finance and Secretary
if the Trustee:
Montreal Trust Company of Canada
151 Front Street West
Suite 605
Toronto, Ontario, M5J 2N1
Fax: (416) 981-9777
Attention: Manager, Corporate Trust Services
and any such notice delivered in accordance with the foregoing shall
be deemed to have been received on the date of delivery if that date
is a Business Day or, if mailed, on the fifth Business Day following
the date of the postmark on such notice.
HII, the Corporation or the Trustee, as the case may be, may
from time to time notify the others in the manner provided in section
of a change of address which from the effective date of such notice
and until changed by like notice, shall be the address of HII, the
Corporation or the Trustee, as the case may be, for all purposes of
this Indenture. A copy of any notice of change of address given
pursuant to this section shall be available for inspection at the
principal corporate office of the Trustee in the City of Toronto by
Special Shareholders during normal business hours.
Notice to the Special Shareholders
Any notice to Special Shareholders under the provision of this
Indenture shall be deemed to be validly given, subject to section , if
delivered or if sent by first class mail, postage prepaid, to the holders
at their addresses appearing in one of the registers herein before
mentioned. Any notice so delivered shall be deemed to have been received on
the date of delivery if that date is a Business Day or, if mailed, on the
fifth Business Day following the date on which it was mailed. Accidental
error or omission in giving notice of accidental failure to give notice to
any Special Shareholder shall not invalidate any action or proceeding
founded thereon.
Mail Service Interruption
<PAGE>
If by reason of any interruption of mail service, actual or
threatened, any notice to be given to the Special Shareholders, the
Trustee, HII or the Corporation would reasonably be unlikely to reach
its destination in the ordinary course of mail, such notice shall be
valid and effective only if:
in the case of the Trustee, HII or the Corporation, delivered
to an officer of the party to which it is addressed or if
sent to such party, at the appropriate address in accordance
with section , by facsimile or other means of prepaid
transmitted or recorded communication; and
in the case of Special Shareholders, published once in the
national edition of The Globe and Mail or The Financial Post
and in such other place or places and manner, if any, as the
Trustee may require.
Any notice given to the Special Shareholders by publication
shall be deemed to have been given on the last day on which
publication shall have been effected in all of the cities in which
publication is required pursuant to section .
Counterparts and Formal Date
This Indenture may be executed in several counterparts, each of
which when so executed shall be deemed to be an original and such
counterparts together shall constitute one and the same instrument and
notwithstanding their date of execution shall be deemed to be dated as of
July 18, 1997.
Satisfaction and Discharge of Indenture
Upon the Mandatory Exchange Date, this Indenture, except to the
extent that Class A Shares, certificates therefor and cash, if any, have
not been transferred and delivered hereunder or the Trustee, HII or the
Corporation has not performed any of its obligations hereunder, shall cease
to be of further effect and the Trustee, on demand of and at the cost and
expense of HII and upon delivery to the Trustee of a certificate of HII and
the Corporation stating that all conditions precedent to the satisfaction
and discharge of this Indenture have been complied with and upon payment to
the Trustee of the fees and other remuneration payable to the Trustee,
shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture.
Provisions of Indenture for the Sole Benefit of Parties and
Holders
Nothing in this Indenture, expressed or implied, shall give or be
construed to give to any person other than the parties hereto and the
Holders any legal or equitable right, remedy or claim under this Indenture,
or under any covenant or provision therein contained, all such covenants
and provisions being for the sole benefit of the parties hereto and the
Special Shareholders.
<PAGE>
IN WITNESS WHEREOF the parties hereto have executed this
Indenture under the hands of their proper officers in that behalf.
HOLLINGER CANADIAN PUBLISHING
HOLDINGS INC.
By:.........................................
HOLLINGER INTERNATIONAL INC.
By:.........................................
MONTREAL TRUST COMPANY OF
CANADA
By:..........................................
By:..........................................
<PAGE>
SCHEDULE A
Form of Mandatory Exchange Notice
HOLLINGER INTERNATIONAL INC.
NON-VOTING SPECIAL SHARES OF
HOLLINGER CANADIAN PUBLISHING HOLDINGS INC.
MANDATORY EXCHANGE NOTICE
-------------------------
To: Holders of Non-Voting Special Shares ("Special Shares") of Hollinger
Canadian Publishing Holdings Inc. ("HCPH")
Notice is hereby given pursuant to section 2.1.2 of the Exchange
Indenture dated as of July 18, 1997 between Hollinger International Inc.
(the "Corporation"), HCPH and Montreal Trust Company of Canada as trustee
(the "Trustee") that each Special Share will be automatically exchanged on
June 26, 2000 (the "Mandatory Exchange Date") for the Mandatory Exchange
Number as of the Mandatory Exchange Date of shares of Class A Common Stock
("Class A Shares") of the Corporation. The Mandatory Exchange Number as of
the Mandatory Exchange Date of Class A Shares will be calculated as the
Base Amount divided by 95% of the weighted average trading price of Class A
Shares on the New York Stock Exchange for the 20 consecutive trading days
ending on ( 2000 [the 14th trading day prior to the Mandatory Exchange
Date] (the "Current Market Price of Class A Shares"). The Base Amount is
U.S.$8.88 less the amount of any dividends which have been paid per share
(to a maximum of U.S.$1.67) on the Special Shares. [The following dividends
have been paid to date:] The Corporation will provide holders of the
Special Shares with notice of any dividend paid subsequent to the date
hereof as soon as practicable after the occurrence thereof.
On and after the Mandatory Exchange Date, a holder's rights as
holders of Special Shares cease, except the right to receive Class A Shares
and/or cash for Special Shares surrendered in accordance with this notice.
[Pursuant to section of the Exchange Indenture, the Corporation
hereby irrevocably elects to pay to holders of Special Shares cash equal to
(% of the Base Amount per Special Share on the exchange of Special Shares].
In order to effect the exchange of his Special Shares, a holder
is required to deliver to the Trustee at any of the following stock
transfer offices:
[set out addresses of stock and bond transfer offices in Toronto,
Montreal and Vancouver]
an exchange form in the form annexed hereto duly completed and executed by
such holder or his executors or administrators or other legal
representatives or his or their attorney duly appointed by instrument in
form and execution satisfactory to the Trustee, together with the
certificate or certificates representing the holder's Special Shares to
which such notice relates. Class A Shares and cash, if any, to which the
holder is entitled will not be released until such form and certificate(s)
are delivered to the Trustee as set out above.
DATED: , 2000
<PAGE>
SCHEDULE B
Form Of Exchange Form
EXCHANGE FORM
To: HOLLINGER INTERNATIONAL INC.
and to: MONTREAL TRUST COMPANY OF CANADA
The undersigned registered holder of Non-Voting Special Shares
("Special Shares") of Hollinger Canadian Publishing Holdings Inc. ("HCPH")
bearing Certificate No(s). hereby delivers such Special
Shares and irrevocably directs that on the exchange of the Special Shares
in accordance with the terms of the Exchange Indenture dated July 18, 1997
(the "Exchange Indenture") among Hollinger International Inc., HCPH and
Montreal Trust Company of Canada, the shares of Class A Common Stock of
Hollinger International Inc. and any cash or property in lieu thereof or in
addition thereto be delivered to the person indicated below or, in the
absence of instructions below, to the registered holder of the Special
Shares. The undersigned acknowledges that the shares of Class A Common
Stock and any cash or property in lieu thereof or in addition thereto will
be forwarded within 10 business days of the surrender of this form duly
completed by the undersigned, together with the certificate(s) representing
the Special Shares (provided that in the case of a mandatory exchange such
10-day period shall not commence prior to the Mandatory Exchange Date). (If
shares of Class A Common Stock are to be issued in the name of a person
other than the holder, all requisite transfer taxes must be tendered by the
undersigned).
Dated:
(Signature of Registered Holder)
- ---------------------------------------
Name of Person (other than registered
holder of the attached Special Shares)
in which shares of Class A Common Stock
of Hollinger International Inc. are to
be registered and/or cheque to be made
payable.
- ---------------------------------------
Address of such Person
(Street Address, City, Province/State
and Postal/Zip Code)
Social Insurance/Social
Security Number of such Person:
------------------------------------
Taxpayer Identification
Number of such Person (if applicable):
-------------------------------
<PAGE>
Signature Guarantee:
- -------------------------------- --------------------------------
Authorized Officer Name of Institution
Note: If shares of Class A Common Stock or any cash or property in lieu
thereof or in addition thereto are to be delivered to a person other than
the holder, the signature of the holder must be guaranteed by a Canadian
chartered bank, by a trust company that is a member of the Trust Company
Association of Canada, by a member firm of The Toronto Stock Exchange or
the Montreal Exchange, or by a member of the National Association of
Securities Dealers of the United States. Notarized or witnessed signatures
are not acceptable as guaranteed signatures.
EXHIBIT 23.02
Independent Auditors' Consent
The Board of Directors
Hollinger International Inc.
We consent to incorporation by reference in the registration
statement on Form S-3 of Hollinger International Inc. of our
report dated February 28, 1997, relating to the consolidated
balance sheets of Hollinger International Inc. as of
December 31, 1996, and the related consolidated statements
of operaitons, stockholders' equity and cash flows for each
of the three-years ended December 31, 1996, which report
appears in the December 31, 1996, annual report on Form 10-K
of Hollinger International Inc.
/s/KPMG Peat Marwick LLP
Chicago, Illinois
September 8, 1997
