Page 1 of 27 Pages
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 6)
Hollinger International Inc.
---------------------------------------------------------------
(Name of Issuer)
Class A Common Stock, par value $.01 per share
-----------------------------------------------------------------
(Title of Class of Securities)
435569 10 8
--------------------------------------
(CUSIP Number)
Charles G. Cowan, Q.C.
Vice-President and Secretary
Hollinger Inc.
10 Toronto Street
Toronto, Ontario
Canada M5C 2B7
(416) 363-8721
-----------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 27, 1998
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), (f) or (g), check the following box / /.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act.
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Page 2 of 27 Pages
Schedule 13D/A
1. NAME OF REPORTING PERSON HOLLINGER INC.
--------------
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
--------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
3. SEC USE ONLY
4. SOURCE OF FUNDS OO
----
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
6. CITIZENSHIP OR PLACE OF ORGANIZATION CANADA
------
NUMBER OF 7. SOLE VOTING POWER 64,176,671
SHARES ----------
BENEFICIALLY 8. SHARED VOTING POWER 0
OWNED BY ----
EACH 9. SOLE DISPOSITIVE POWER 64,176,671
REPORTING ----------
PERSON WITH 10. SHARED DISPOSITIVE POWER 0
----
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON 64,176,671
----------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / X /
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 64.8%
-------
14. TYPE OF REPORTING PERSON HC
-----
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Schedule 13D/A
1. NAME OF REPORTING PERSON THE RAVELSTON CORPORATION LIMITED
---------------------------------
S.S. OR I.R.S. IDENTIFICATION NO. OF
ABOVE PERSON -----------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
3. SEC USE ONLY
4. SOURCE OF FUNDS OO
--
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
6. CITIZENSHIP OR PLACE OF ORGANIZATION CANADA
------
NUMBER OF 7. SOLE VOTING POWER 64,176,671
SHARES ----------
BENEFICIALLY 8. SHARED VOTING POWER 0
OWNED BY ----
EACH 9. SOLE DISPOSITIVE POWER 64,176,671
REPORTING ----------
PERSON WITH 10. SHARED DISPOSITIVE POWER 0
----
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON 64,176,671
----------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / X /
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 64.8%
-----
14. TYPE OF REPORTING PERSON HC
---
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Schedule 13D/A
1. NAME OF REPORTING PERSON CONRAD M. BLACK
---------------
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
-----------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
3. SEC USE ONLY
4. SOURCE OF FUNDS OO
---
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
6. CITIZENSHIP OR PLACE OF ORGANIZATION CANADA
NUMBER OF 7. SOLE VOTING POWER 64,286,271
SHARES ----------
BENEFICIALLY 8. SHARED VOTING POWER 0
OWNED BY ---
EACH 9. SOLE DISPOSITIVE POWER 64,286,271
REPORTING ---------
PERSON WITH 10. SHARED DISPOSITIVE POWER 0
----
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON 64,286,271
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / X /
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 64.8%
-----
14. TYPE OF REPORTING PERSON IN
--
<PAGE>
Page 5 of 27 Pages
SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 13D/A
(Amendment No. 6)
This Schedule 13D, Amendment No. 6 (the "Amendment"), amends and
restates in its entirety the Schedule 13D of the filing persons dated October
20, 1995, as amended by Amendment No. 1 thereto dated February 7, 1996,
Amendment No. 2 thereto dated March 7, 1996, Amendment No. 3 thereto dated June
17, 1996, Amendment No. 4 thereto dated August 28, 1996, and Amendment No. 5
thereto dated August 11, 1997.
Item 1. Security and Issuer.
This Schedule relates to the Class A Common Stock, par value $.01
per share (CUSIP Number: 435569 10 8) ("Class A Common Stock"), of Hollinger
International Inc., a Delaware corporation (the "Issuer"). The Issuer's
principal executive office is located at 401 North Wabash Avenue, Chicago,
Illinois 60611. There were 71,651,899 shares of Class A Common Stock outstanding
as of April 13, 1998.
Item 2. Identity and Background.
The persons filing this Schedule are Hollinger Inc., The Ravelston
Corporation Limited ("Ravelston") and The Hon. Conrad M. Black ("Mr. Black").
Set forth below is certain information relating to these filing persons, and,
with respect to Hollinger Inc. and Ravelston, information relating to their
respective directors and executive officers:
Hollinger Inc.
(a) Name: Hollinger Inc.
(b) Address: 10 Toronto Street
Toronto, Ontario, Canada M5C 2B7
(c) Principal
Business: Hollinger Inc. is an international newspaper
company, which, through its subsidiaries
(including the Issuer), is engaged primarily in
the publishing, printing and distribution of
newspapers and magazines in the United Kingdom,
the United States, Canada, and Israel.
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(d), (e) Certain
Proceedings: During the last five years, Hollinger Inc. has not
been the subject of any of the type of legal
proceedings specified in Items 2(d) and (e) of
Schedule 13D.
(f) Citizenship: Hollinger Inc. is a corporation organized and
existing under the laws of Canada.
Ravelston
(a) Name: The Ravelston Corporation Limited
(b) Address: 10 Toronto Street
Toronto, Ontario, Canada M5C 2B7
(c) Principal
Business: Investment holding company.
(d), (e) Certain
Proceedings: During the last five years, Ravelston has not been
the subject of any of the type of legal
proceedings specified in Items 2(d) and (e) of
Schedule 13D.
(f) Citizenship: Ravelston is a corporation organized and existing
under the laws of the Province of Ontario, Canada.
Directors and Executive Officers of Hollinger Inc. and Ravelston
(Including Mr. Black):
Unless otherwise noted, the business address of each of the
individuals listed below is 10 Toronto Street, Toronto, Ontario, Canada M5C 2B7.
During the last five years, none of the individuals listed below has been the
subject of any of the type of legal proceedings specified in Items 2(d) and (e)
of Schedule 13D.
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Page 7 of 27 Pages
POSITIONS WITH
HOLLINGER INC.,
RAVELSTON AND THE PRINCIPAL
NAME (CITIZENSHIP) ISSUER OCCUPATION
- --------------------------------------------------------------------------------
Peter Y. Atkinson Vice-President, General Vice-President and
(Canada) Counsel and Director of General Counsel of
Hollinger Inc. and Hollinger Inc.
Ravelston; Vice President
of the Issuer
Ralph M. Barford Director of Hollinger Inc. President of
(Canada) Valleydene Corporation
Limited
(investment company),
Suite 1903,
20 Eglinton
Avenue West, Toronto,
Ontario, Canada
M4R 1K8
Barbara Amiel Black Vice-President, Editorial Journalist;
(Canada) and Director of Hollinger Vice-President,
Inc.; Vice President, Editorial of Hollinger
Editorial and Director of Inc.
the Issuer
The Hon. Conrad M. Chairman of the Board, Chairman of the Board
Black, P.C., O.C. Chief Executive Officer and Chief Executive
(Canada) and a Director of Officer of Hollinger
Hollinger Inc., Ravelston Inc.
and the Issuer
G. Montegu Black Director of Hollinger Chairman and President
(Canada) Inc. of Txibanguan Limited
(investment holding
company), 1969 Leslie
Street, North York,
Ontario, Canada
M3B 2M3
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Page 8 of 27 Pages
J. A. Boultbee Executive Vice-President Executive Vice-
(Canada) and Director of Hollinger President and Chief
Inc. and Ravelston; Financial Officer of
Executive Vice President, Hollinger Inc.
Chief Financial Officer
of the Issuer
Dixon S. Chant Director of Hollinger Corporate Director
(Canada) Inc. and Ravelston
Daniel W. Colson Vice Chairman and Deputy Chairman and
(Canada) Director of Hollinger Chief Executive of
Inc.; Director of Telegraph Group
Ravelston; Deputy Limited (newspaper
Chairman of the Board and publishing company),
Chief Executive of 1 Canada Square,
Telegraph Group Limited; Canary Wharf,
Vice Chairman and London, England
Director of the Issuer E14 5DT
Charles G. Cowan, Q.C. Vice-President, Secretary Vice-President and
(Canada) and Director of Hollinger Secretary of Hollinger
Inc. and Ravelston Inc.
Frederick A. Creasey Controller of Hollinger Controller of
(Canada) Inc. and Ravelston; Group Hollinger Inc.
Controller of the Issuer
Pierre Des Marais II Director of Hollinger Inc. President and Chief
(Canada) Executive Officer of
UniMedia Inc.
(newspaper
publishing company),
Suite 3200, 600 de
Maisonneuve Boulevard
West, Montreal,
Canada H3A 3J2
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Page 9 of 27 Pages
Garth H. Drabinsky, O.C. Director of Hollinger Inc. Vice Chairman and
(Canada) Director of Livent
Inc. (musical theatre
company)
600-165 Avenue Road
Toronto, Ontario,
Canada M5R 354
Fredrik S. Eaton, O.C. Director of Hollinger Inc. Corporate Director 22
(Canada) Farnham Avenue
Toronto, Ontario,
Canada M4V 1H4
R. Donald Fullerton Director of Hollinger Inc. Chairman of the
(Canada) Executive Committee,
Canadian Imperial Bank
of Commerce (chartered
bank), Suite 3620,
Commerce Court West,
Toronto, Ontario,
Canada M5L 1A2
Marianne Godwin Vice-President, Strategic Vice-President,
(Canada) and Corporate Development Strategic and
of Hollinger Inc. Corporate Development
of Hollinger Inc.
Allan E. Gotlieb, C.C. Director of Hollinger Inc. Senior Consultant,
(Canada) Stikeman Elliot (law
firm, Suite 5300,
Commerce Court West,
Toronto, Ontario
M5L 1B9
Henry H. Ketcham III Director of Hollinger Inc. Chairman, President
(United States) and Chief Executive
Officer of West Fraser
Timber Co. Ltd.(forest
products company)
1000-1100 Melville
Street Vancouver,
British Columbia,
Canada V6E 4A6
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Page 10 of 27 Pages
Larry O. Spencer Treasurer of Hollinger Treasurer of Hollinger
(Canada) Inc. and Ravelston Inc.
F. David Radler Deputy Chairman, Deputy Chairman,
(Canada) President, Chief President and Chief
Operating Officer and Operating Officer of
Director of Hollinger Hollinger Inc., 1827
Inc.; President, Chief West 5th Avenue, 2nd
Operating Officer and Floor, Vancouver,
Director of the Issuer; British Columbia,
President and Director of Canada V6J 1P5
Ravelston
Maureen J. Sabia Director of Hollinger President of Maureen
(Canada) Inc. Sabia International
(consulting company)
and Corporate Director
304-619 Avenue Road
Toronto, Ontario,
Canada M4V 1H4
Tatiana Samila Assistant Controller of Assistant Controller
(Canada) Hollinger Inc. and of Hollinger Inc.
Ravelston
Peter G. White Director of Hollinger Executive Vice-
(Canada) Inc.; Executive President of Ravelston
Vice-President and
Director of Ravelston
Item 3. Source and Amount of Funds or Other Consideration.
Hollinger Inc. and its subsidiaries have acquired beneficial ownership of
the Issuer's securities pursuant to the following transactions with the Issuer:
(i) 14,990,000 shares of the Issuer's Class B Common Stock, par value $.01 per
share("Class B Common Stock"), acquired by Hollinger Inc. in May 1994 in
connection with a recapitalization effected by the Issuer concurrently with the
initial public offering of the Issuer's Class A Common Stock; (ii) 33,610,754
shares of the Issuer's Class A Common Stock pursuant to the Share Exchange
Agreement dated as of July 19, 1995, between Hollinger Inc. and the Issuer (the
"1995 Share Exchange Agreement"); (iii) 3,207,045 shares of
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Page 11 of 27 Pages
the Issuer's Class A Common Stock and 829,409 shares of the Issuer's Series C
Convertible Preferred Stock, par value $.01 per share ("Series C Preferred
Stock") pursuant to the UniMedia Class A Stock Purchase Agreement dated as of
April 18, 1997 among Hollinger Inc., UniMedia Holding Company ("UniMedia") and
the Issuer ("UniMedia Class A Stock Purchase Agreement") and the UniMedia Class
B Stock Purchase Agreement dated as of April 18, 1997 among Hollinger Inc.,
UniMedia and the Issuer ("UniMedia Class B Stock Purchase Agreement"); and (iv)
739,500 shares of the Issuer's Series D Redeemable Convertible Preferred Stock,
par value $.01 per share ("Series D Preferred Stock"). The foregoing beneficial
ownership totals give effect to certain exchange transactions with the Issuer
that were completed in August 1997 pursuant to the Amended and Restated First
Exchange Agreement dated as of July 21, 1997 among Hollinger Inc., UniMedia and
the Issuer ("Amended and Restated First Exchange Agreement") and the Second
Amended and Restated Second Exchange Agreement dated as of July 21, 1997 among
Hollinger Inc., UniMedia and the Issuer ("Second Amended and Restated Second
Exchange Agreement").
For information concerning the 1995 Share Exchange Agreement, UniMedia
Class A Stock Purchase Agreement, UniMedia Class B Stock Purchase Agreement, the
Amended and Restated First Purchase Agreement and the Second Amended and
Restated Second Exchange Agreement, reference is hereby made to Exhibits 2, 3,
4, 5 and 6, respectively, of this Schedule 13D. For further information
concerning the foregoing transactions, reference is hereby made to Item 3 of
Schedule 13D (Amendment No. 5) filed with the Securities and Exchange Commission
by Hollinger Inc., Ravelston and Mr. Black on or about August 11, 1997.
In September 1997, Hollinger Inc. undertook an internal reorganization
which involved, among other things, transferring its holdings in the Issuer
among different subsidiaries of Hollinger Inc. As reported in Amendment No. 5 to
Schedule 13D, as of August 11, 1997, Hollinger Inc.'s holdings in the Issuer
included securities held by its subsidiaries 3007017 Nova Scotia Limited ("Nova
Scotia"), WMT Holding LLC, a Delaware limited liability company ("WMT") and
UniMedia.
On September 17, 1997, Nova Scotia and UniMedia were amalgamated and
continued as UniMedia. On September 18, 1997, UniMedia transferred all of its
holdings in securities of the Issuer to 504468 N.B. Inc., a New Brunswick
corporation ("NBCo"), except for 2,000,000 shares of the Class B Common Stock of
the Issuer that were retained by UniMedia. On September 19, 1997, WMT wound up
and transferred 15,950,000 shares of Class A Common Stock of the Issuer to
UniMedia. On September 22, 1997, UniMedia transferred all of its holdings of
securities of the Issuer to Hollinger Inc. and was dissolved. Giving effect to
these transactions, Hollinger Inc. and its subsidiaries' beneficial
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Page 12 of 27 Pages
ownership in the Issuer's securities are as set forth in Item 5 below.
In May 1994, Conrad Black Capital Corporation acquired 9,600 shares of
Class A Common Stock for cash. Mr. Black is the sole shareholder and Chairman of
Conrad Black Capital Corporation. In addition, Mr. Black has been granted
options to purchase 100,000 shares of the Issuer's Class A Common Stock pursuant
to the Issuer's 1994 Stock Option Plan and 1997 Stock Incentive Plan.
Item 4. Purpose of Transaction.
Hollinger Inc. beneficially owns shares of both classes of the Issuer's
Common Stock and shares of Series C Preferred Stock representing in the
aggregate approximately 79.2% of the combined voting power of all outstanding
voting securities of the Issuer. The foregoing percentage gives effect to
transactions completed in 1994, 1995 and 1997, and described more fully in Item
3, above. As a result, Hollinger Inc. is in a position to control the outcome of
substantially all actions of the Issuer requiring stockholder approval,
including the election of the entire Board of Directors of the Issuer. Subject
to the fiduciary responsibilities of the directors of the Issuer to all
stockholders and the terms of certain agreements defining the ongoing
relationships between Hollinger Inc. and the Issuer, Hollinger Inc., through its
ability to control the outcome of any election of directors, is able to direct
the management policy, strategic direction and financial decisions of the
Issuer.
Ravelston effectively controls Hollinger Inc. through its direct or
indirect control or direction over 62.6% of the outstanding Equity Units of
Hollinger Inc. Each Equity Unit consists of one Common Share and 30 Retractable
Shares of Hollinger Inc. On May 27, 1998 the shareholders of Hollinger Inc.
approved several amendments to its capital structure, the cumulative effect of
which was to consolidate the 31 shares making up the Equity Unit into one
retractable common share of Hollinger Inc., as described more fully below in
Item 6. The foregoing percentage includes Hollinger Inc. Equity Units held by
Ravelston and by the following direct and indirect subsidiaries of Ravelston:
Argus Corporation Limited, 176264 Canada Limited, 2753430 Canada Limited, 176268
Canada Limited and 176295 Canada Limited. This percentage does not include
Equity Units that Ravelston has the right to acquire through the exercise of
Equity Unit Purchase Warrants which are currently exercisable. Conrad Black
Capital Corporation holds 65.7% of the common shares of Ravelston. Mr. Black is
the sole shareholder and Chairman of Conrad Black Capital Corporation.
By virtue of his control over Conrad Black Capital Corporation, Mr. Black
indirectly controls Ravelston and
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Page 13 of 27 Pages
Hollinger Inc., and may be deemed to possess indirect beneficial ownership of
the Issuer's Class A Common Stock owned directly or indirectly by such entities.
As a result of the performance of their duties as directors and officers
of the Issuer, certain directors and officers of Hollinger Inc. and Ravelston,
including Mr. Black, expect to have continually under consideration various
plans or proposals which may relate to or might result in one or more of the
matters described in paragraphs (a) through (j), inclusive, of Item 4 of
Schedule 13D. Any such plans or proposals would, however, be subject to
consideration and approval by the Board of Directors of the Issuer.
As stockholders, the filing persons intend to periodically review and
evaluate the market for the Issuer's Common Stock, the Issuer's business
prospects and financial condition, general economic conditions and other
opportunities available to the filing persons. On the basis of such periodic
reviews and evaluations, the filing persons may, subject to restrictions imposed
by the agreements described in Item 6 hereof, determine to increase or decrease
their investment in the Issuer's Common Stock through purchases, sales, gifts,
or other means of acquisition or disposition. The filing persons do not
currently anticipate that any dispositions, if made, would reduce their
beneficial ownership to less than 50% of the combined voting power of the
Issuer's outstanding voting securities.
Item 5. Interest in Securities of the Issuer.
Hollinger Inc. and Ravelston
(a) Amount Beneficially Owned: 64,176,671 shares of Class A Common Stock;
64.9% (calculated pursuant to Rule 13d-3). Comprised of the following:
(i)26,071,726 shares of Class A Common Stock held directly by Hollinger
Inc.; (ii)10,746,073 shares of Class A Common Stock held by NBCo, a wholly
owned subsidiary of Hollinger Inc.; (iii) 14,990,000 shares of Class A
Common Stock that may be acquired at any time by the conversion of
14,990,000 shares of Class B Common Stock, 2,000,000 of which are held by
Hollinger Inc. and 12,990,000 of which are held by NBCo; (iv) 7,052,465
shares of Class A Common Stock that may be acquired at any time by the
conversion of 829,409 shares of Series C Preferred Stock held by Hollinger
Inc. and NBCo; and (v) 5,316,407 shares of Class A Common Stock that may
be acquired at any time by the conversion of 739,500 shares of Series D
Preferred Stock held by NBCo (taking each share of Series D Preferred
Stock at Cdn. $146.625 and assuming an exchange rate of $1.00 per Cdn.
$1.4568, as in effect on May 27, 1998). The number of shares of Class A
Common Stock into which the Series D
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Page 14 of 27 Pages
Preferred Stock may be converted will fluctuate from time to time based on
changes in the exchange rate. Through its relationship with Hollinger Inc.
described in Item 4 hereof, Ravelston may be deemed to beneficially own
all of the securities of the Issuer that are held by Hollinger Inc. and
its subsidiaries.
(b) Voting Power; Dispositive Power: Hollinger Inc. has the sole power to
vote or to direct the vote of and to dispose of or direct the disposition
of 64,176,671 shares of Class A Common Stock. Through its relationship
with Hollinger Inc. described in Item 4 hereof, Ravelston may also be
deemed to have the sole power to vote or to direct the vote of these
shares.
(c) Not applicable.
(d) Right to Receive Dividends or Proceeds: NBCo has the right to receive
the dividends from or the proceeds from the sale of the securities which
it holds. The shares of Class A Common Stock owned by NBCo constitute
15.0% of the outstanding shares of Class A Common Stock. The shares of
Class B Common and Series D Preferred Stock held by NBCo represent 86.7%
and 100% of the outstanding shares of Class B Common Stock and Series D
Preferred Stock, respectively.
(e) Not applicable.
The amount and percentage of Class A Common Stock beneficially owned by
Hollinger Inc. and Ravelston exclude 109,600 shares of Class A Common Stock
beneficially owned by Mr. Black. Pursuant to Rule 13d-4, Hollinger Inc. and
Ravelston hereby expressly disclaim beneficial ownership of such shares.
Directors and Executive Officers of Hollinger Inc. and Ravelston (Other
Than Mr. Black):
Except as set forth below, the directors and executive officers of
Hollinger and Ravelston (other than Mr. Black) do not beneficially own any
shares of Class A Common Stock.
Name Number of Shares of Class A Common
Stock Beneficially Owned(1)
Peter Y. Atkinson 13,750
Barbara Amiel Black(2) 5,000
J. A. Boultbee 36,000
Dixon S. Chant 30,000
Charles G. Cowan 20,500
F. David Radler(3) 109,600
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(1) Includes shares subject to presently exercisable options or options
exercisable within 60 days of May 27, 1998 held by all directors and executive
officers of the Issuer under the Issuer's 1994 Stock Option Plan and 1997 Stock
Incentive Plan as follows: Peter Y. Atkinson 13,730 shares; Mrs. Black 5,000
shares; Mr. Boultbee 36,000 shares; Mr. Chant 22,500 shares; Mr. Cowan 20,500
shares; and Mr. Radler 100,000 shares.
(2) Excludes 9,600 shares of Class A Common Stock which are held by Conrad Black
Capital Corporation, 14,990,000 shares of Class A Common Stock issuable upon
conversion of 14,990,000 shares of Class B Common Stock, 7,052,465 shares of
Class A Common Stock into which 829,409 shares of Series C Preferred Stock are
convertible and 5,316,407 shares of Class A Common Stock into which 739,500
shares of Series D Preferred Stock are convertible, all of which are held by
Hollinger Inc. and NBCo and as to which Mr. Black may be deemed to have indirect
beneficial ownership. Also excludes 109,600 shares of Class A Common Stock
beneficially owned by Mr. Black. Mrs. Black disclaims beneficial ownership of
all such securities.
(3) Includes 9,600 shares of Class A Common Stock held by F. D. Radler Ltd., 200
shares of Class A Common Stock held by Mr. Radler's wife, 200 shares of Class A
Common Stock held by one daughter, and 200 shares of Class A Common Stock held
by another daughter, and as to which Mr. Radler may be deemed to have indirect
beneficial ownership. Mr. Radler disclaims beneficial ownership of the Class A
Common Stock held by his wife and daughters.
Mr. Black
(a) Amount Beneficially Owned: 64,286,271 shares of Class A Common Stock;
65.0% of class (calculated pursuant to Rule 13d-3). Comprised of the
following: (i) 64,176,671 shares of Class A Common Stock beneficially
owned by Hollinger Inc. and Ravelston; (ii) 9,600 shares of Class A Common
Stock held by Conrad Black Capital Corporation; and (iii) 100,000 shares
of Class A Common Stock that may be acquired by Mr. Black upon the
exercise of all outstanding options held by him, whether or not presently
exercisable or exercisable within 60 days of May 27, 1998.
(b) Voting Power; Dispositive Power: Through his relationships with
Hollinger Inc., Ravelston and Conrad Black Capital Corporation described
in Item 4 hereof, Mr. Black may be deemed to have the sole power to vote
or to direct the vote of and to dispose of or direct the disposition of
64,286,271 shares of Class A Common Stock.
(c) Not applicable.
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Page 16 of 27 Pages
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
The Issuer's Restated Certificate of Incorporation, as amended, provides
that holders of Class B Common Stock are entitled to ten votes per share and
holders of Class A Common Stock are entitled to one vote per share. The holders
of Class A Common Stock and Class B Common Stock vote together as a single class
on all matters on which stockholders may vote, except when class voting is
required by applicable law or on a vote to issue or increase the authorized
number of shares of Class B Common Stock. Dividends must be paid on both the
Class A Common Stock and the Class B Common Stock at any time dividends are paid
on either.
Each share of Class B Common Stock is convertible at any time at the
option of the holder into one share of Class A Common Stock and is transferable
by Hollinger Inc. to a subsidiary or an affiliate. In addition, each share of
Class B Common Stock is automatically convertible into a share of Class A Common
Stock at the time it is sold, transferred or otherwise disposed of by Hollinger
Inc. or a subsequent permitted transferee to any third party (other than a
subsidiary or an affiliate of Hollinger Inc. or such subsequent permitted
transferee) unless such purchaser or transferee offers to purchase all shares of
Class A Common Stock from the holders thereof for an amount per share equal to
the amount per share received by the holder of the Class B Common Stock (a
"Permitted Transaction").
Notwithstanding the foregoing paragraph, any holder of Class B Common
Stock may pledge his or its shares of Class B Common Stock to a pledgee pursuant
to a bona fide pledge of such shares as collateral security for indebtedness due
to the pledgee, provided that such shares shall not be transferred to or
registered in the name of the pledgee and shall remain subject to the transfer
restrictions described in the foregoing paragraph. In the event that shares of
Class B Common Stock are so pledged, the pledged shares shall not be converted
automatically into Class A Common Stock. However, if any such pledged shares
become subject to any foreclosure, realization or other similar action of the
pledgee, they shall be converted automatically into shares of Class A Common
Stock unless they are sold in a Permitted Transaction.
Pursuant to the Issuer's Restated Certificate of Incorporation, as
amended, the Series C Preferred Stock ranks senior in right and priority of
payment to the Class A and Class B Common Stock and on a parity with the
Issuer's outstanding
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Page 17 of 27 Pages
Series B Convertible Preferred Stock, par value $.01 per share ("Series B
Preferred Stock") as to dividends and upon liquidation. Holders of Series C
Preferred Stock are entitled to receive cumulative dividends at a rate of 9 1/2%
per annum of the stated liquidation amount of $108.51 per share of Series C
Preferred Stock, payable quarterly. The Series C Preferred Stock is mandatorily
convertible into shares of Class A Common Stock on June 1, 2001, and the Issuer
has the option to redeem the shares of Series C Preferred Stock, in whole or in
part, at any time on or after June 1, 2000 and prior to June 1, 2001. At any
time prior to June 1, 2001, unless previously redeemed, each share of Series C
Preferred Stock is convertible at the option of the holder thereof into 8.503
shares of Class A Common Stock. On June 1, 2001, unless previously redeemed or
converted, each share of Series C Preferred Stock will mandatorily convert into
(i) 9.8646 shares of Class A Common Stock, subject to adjustment in certain
events, and (ii) the right to receive cash in an amount equal to all accrued and
unpaid dividends thereon. The holders of Series C Preferred Stock have the right
to vote together as a single class with the holders of Class A and Class B
Common Stock and Series B Preferred Stock in the election of Directors and upon
each other matter coming before the stockholders of the Issuer on the basis of
ten votes per share of Series C Preferred Stock, except as otherwise provided by
law or the Issuer's Restated Certificate of Incorporation. In addition, (i)
whenever dividends on the Series C Preferred Stock or any other series of
preferred stock with like voting rights are in arrears and unpaid for six
quarterly dividend periods, and in certain other circumstances, the holders of
all Series C Preferred Stock (voting separately as a class) will be entitled to
vote, on the basis of ten votes for each share of Series C Preferred Stock, for
the election of two directors of the Issuer, such directors to be in addition to
the number of directors constituting the Board of Directors immediately prior to
the accrual of such right, and (ii) the holders of Series C Preferred Stock may
have voting rights with respect to certain alterations of the Restated
Certificate of Incorporation and certain other matters, voting on the same basis
or separately as a class.
The Issuer's Series D Preferred Stock is entitled to receive cumulative
cash dividends, payable quarterly. The amount of each dividend per share is
equal to the aggregate amount (if any) of ordinary course cash dividends paid
during the preceding calendar quarter on 7,395,000 Southam Common Shares owned
beneficially, directly or indirectly, by the Issuer, divided by 739,500. The
Series D Preferred Stock is redeemable in whole or in part, at any time and from
time to time, subject to restrictions in the Issuer's existing credit
facilities, by the Issuer or by a holder of such shares. The Series D Preferred
Stock is nonvoting, except as otherwise provided by law or the Issuer's Restated
Certificate of Incorporation, as amended. Hollinger Inc. has agreed pursuant to
a letter agreement dated as of July 29, 1997,
<PAGE>
Page 18 of 27 Pages
a copy of which is attached hereto as Exhibit 15, to limit the exercise of its
redemption rights concerning the Series D Preferred Stock to a number of Southam
Common Shares that at the time of such exercise have been delivered to the
Issuer free and clear of encumbrances.
The holder or holders of shares of the Series D Preferred Stock may
convert such shares at any time into shares of Class A Common Stock of the
Issuer. The conversion price is initially based upon the Canadian dollar
equivalent of $14.00 per share of Class A Common Stock, subject to adjustment in
certain circumstances. Any holder of Series D Preferred Stock may pledge such
shares to a pledgee pursuant to a bona fide pledge of such shares as collateral
security for indebtedness or other obligations due to the pledgee, provided that
such shares shall remain subject to, and upon foreclosure, realization or other
similar action by the pledgee, shall be transferred only in accordance with, the
transfer restrictions set forth in the Restated Certificate of Incorporation.
Pursuant to the Amended and Restated First Exchange Agreement, the Issuer
has agreed, at Hollinger Inc.'s request, to take commercially reasonable efforts
to cause the registration under the Securities Act of 1933, as amended (the
"Securities Act"), of the shares of Class A Common Stock and Series C Preferred
Stock issued in the First Exchange, and to list such shares on the New York
Stock Exchange. Pursuant to the Second Amended and Restated Second Exchange
Agreement, the Issuer has agreed to use commercially reasonable efforts to cause
the registration under the Securities Act of the shares of Series C Preferred
Stock issued upon the Second Exchange and to list such newly issued shares of
Series C Preferred Stock on the New York Stock Exchange.
Hollinger Inc. has pledged substantially all of its holdings in the Issuer
to Canadian Imperial Bank of Commerce ("CIBC") as collateral security for the
obligations of Hollinger and certain affiliated companies under a Cdn.
$80,000,000 operating facility (the "CIBC Facility"). The terms of this facility
and related pledge are attached hereto as Exhibits 7 and 8, respectively. The
CIBC Facility requires compliance by Hollinger with certain financial and other
covenants and are subject to standard default and other provisions. In addition,
Hollinger Inc. has pledged 401,426 shares of Series D Preferred Stock owned by
NBCo to the Issuer as security for a Cdn. $58,859,223.65 obligation from
Hollinger Inc. to the Issuer evidenced by an interest bearing promissory note
("Note") dated September 3, 1997. Copies of the Note and related pledge
agreement are attached hereto as Exhibits 9 and 10, respectively. The Issuer,
Hollinger Inc. and NBCo have executed a postponement of claim in favor of CIBC
whereby Hollinger Inc. is to make payments under the Note to the Issuer only so
long as (i) it is not in default under the terms
<PAGE>
Page 19 of 27 Pages
governing the CIBC Facility and (ii) such payments would not cause a default
under such terms. Hollinger Inc. has also granted a pari passu security interest
in such shares of Series D Preferred Stock in favor of the holders of Hollinger
Inc.'s Southam-linked debentures.
On July 29, 1997, Hollinger Inc. made an issuer bid (the "Debenture
Offer") for all of its outstanding 7% Southam-linked debentures ("Debentures"),
with the consideration offered per Cdn. $1,000 principal amount of Debentures
being, at the option of a tendering holder of Debentures, (i) Cdn. $1,342.86 in
cash or (ii) Cdn. $771.43 in cash and 57.143 non-voting special shares ("HCPH
Special Shares") of Hollinger Canadian Publishing. An aggregate of Cdn.
$73,416,000 principal amount of Debentures were tendered in the Debenture Offer,
creating a payment obligation for Hollinger Inc. of Cdn. $58,859,223.65 and
4,146,007 HCPH Special Shares. Hollinger Inc. borrowed the Cdn $58,859,223.65
from the Issuer by way of the Note, which is secured by the pledge of 401,426
shares of Series D Preferred Stock held by NBCo referred to above. The 4,146,007
HCPH Special Shares were issued by Hollinger Canadian Publishing in
consideration for non-voting special shares ("Newco Special Shares") of 3396754
Canada Limited ("Newco"), a wholly-owned subsidiary of Hollinger Inc. Pursuant
to the terms of an exchange agreement (the "Exchange Agreement") among Hollinger
Canadian Publishing, Newco and the Issuer, the Newco Special Shares are
exchangeable at any time after December 23, 1997, at the option of the holder,
into Class A Common Stock to be delivered by Newco on the same basis as the
4,146,007 HCPH Special Shares are exchangeable for Class A Common Stock with the
Issuer. A copy of the Exchange Agreement is attached hereto as Exhibit 11.
All or any part of the exchange obligation for the Newco Special Shares
can also be settled, at the option of Newco, by a cash payment of an amount
equivalent to the Current Market price (as defined in the Exchange Agreement) of
the Class A Common Stock to be delivered upon any exchange of Newco Special
Shares. Hollinger Inc. has unconditionally agreed to provide Newco with
sufficient Class A Common Stock and/or cash for Newco to meet its obligations
upon an exchange of Newco Special Shares. The number of Class A Common Stock
which Hollinger Inc. may be required to provide to Newco for optional exchange
prior to the mandatory exchange date, June 26, 2000, is between 2,114,465 and
2,495,896. If exchanges do not occur prior to such date a mandatory exchange
will occur on such date in respect of which Hollinger Inc. will be required to
provide to Newco that number of shares of Class A Common Stock (or the cash
equivalent thereof) equal to U.S. $36,816,542 divided by 95% of the Current
Market Price at such date.
Under the terms of the CIBC Facility, Hollinger Inc. is required to ensure
at all times that CIBC has a first pledge of
<PAGE>
Page 20 of 27 Pages
shares of Class A Common Stock having a Market Value (as defined) at least two
times greater than the amount Hollinger Inc. has borrowed under the CIBC
Facility. The shares of the Issuer pledged by Hollinger Inc. to CIBC currently
have a Market value of over $1 billion, or over twelve times greater than the
maximum amount available under the CIBC Facility. Hollinger Inc. anticipates
that it will have sufficient shares of Class A Common Stock available to satisfy
any and all of the foregoing exchange or pledge obligations.
Certain registration rights agreements, which are incorporated herein by
reference as Exhibits 12, 13 and 14 were entered into in connection with the
above-described pledges in favor of CIBC. These agreements provide for
registration (either within a certain time period of execution of the
registration rights agreement or upon foreclosure) under the Securities Act of
the pledged shares of Class A Common Stock and the shares of Class A Common
Stock into which other pledged securities are convertible.
On May 27, 1998 the shareholders of Hollinger Inc. approved several
amendments to the company's articles to simplify Hollinger Inc.'s share capital
structure, as follows: (i) the terms of the common shares of Hollinger Inc. were
amended to add a retraction privilege and to change their designation to
retractable common shares; (ii) each retractable share of Hollinger Inc. was
changed into one retractable common share of Hollinger Inc.; and (iii) the
retractable common shares of Hollinger Inc. were consolidated on a 1-for-31
basis. The cumulative effect of the amendments was to consolidate the 31 shares
making up an Equity Unit of Hollinger Inc. (currently consisting of one common
share and 30 Retractable Shares) into one retractable common share of Hollinger
Inc. Hollinger Inc. has stated that the article amendments will complete an
initiative to enable its shareholders to have their investment in Hollinger Inc.
more directly aligned with the Class A Common Stock of the Issuer.
The retractable common shares will permit the holder to cause
Hollinger Inc. to redeem such shares at any time upon demand, in exchange for a
number of shares of Class A Common Stock of the Issuer held by Hollinger Inc.
determined pursuant to a formula or cash, at Hollinger Inc.'s option. The
"Retraction Price" for such shares will be an amount determined by the Board of
Directors of Hollinger Inc. (or committee thereof) on a quarterly basis within a
range of not less than 90% and not more than 100% of the "Current Value" on the
relevant date divided by the number of retractable common shares outstanding on
such date. For these purposes, "Current Value" is defined by reference to the
fair market value of all of the assets of Hollinger Inc., less amounts payable
upon liquidation to holders of Hollinger Inc.'s preference shares and certain
tax liabilities, all as
<PAGE>
Page 21 of 27 Pages
determined by the Board of Directors of Hollinger Inc. Hollinger Inc. has stated
that employing this range will allow fluctuating market conditions to be taken
into account in setting the Retraction Price. At present, the Retraction Price
is equal to 90% of "Current Value" on the relevant date, thus imposing a 10%
discount. Upon receipt of a retraction notice, Hollinger Inc. will redeem the
appropriate number of its retractable common shares by sending to the holder a
stock certificate representing that number of shares of Class A Common Stock of
the Issuer equal to the applicable Retraction Price divided by the "Current
Class A Market Price" on the retraction date. For these purposes, the "Current
Class A Market Price" will be determined primarily by reference to the per share
closing price of the Issuer's Class A Common Stock on the New York Stock
Exchange, with such price being converted into the Canadian dollar equivalent.
If Hollinger Inc. elects to satisfy the Retraction Price in cash, it may do so
for all or any part of the shares to be redeemed. Hollinger Inc. is obligated to
satisfy certain conditions with respect to shares of the Issuer's Class A Common
Stock delivered as a redemption of retractable common shares, including the
effectiveness of a registration statement under the Securities Act with respect
to such shares or the availability of an exemption from such registration, and
the listing of such shares on each stock exchange on which the Class A Common
Stock is then listed.
Pursuant to grants under the Issuer's 1994 Stock Option Plan and the 1997
Stock Incentive Plan, Mr. Black has been granted options to purchase a total of
390,000 shares of Class A Common Stock of the Issuer of which 100,000 of such
shares are presently exercisable by Mr. Black or exercisable by him within 60
days.
<PAGE>
Page 22 of 27 Pages
Item 7. Materials to Be Filed as Exhibits.
Exhibit No. Description
1 Joint Filing Agreement dated October 20, 1995, among Hollinger
Inc., The Ravelston Corporation Limited and The Hon. Conrad M.
Black, P.C., O.C. (individually and on behalf of Conrad Black
Capital Corporation).
2 Share Exchange Agreement dated as of July 19, 1995 between
American Publishing Company and Hollinger Inc. (incorporated by
reference to the definitive proxy statement of the Issuer dated
September 28, 1995).
3 UniMedia Class A Stock Purchase Agreement dated as of April 18,
1997 among Hollinger Inc., UniMedia Holding Company and
Hollinger International Inc.
4 UniMedia Class B Stock Purchase Agreement dated as of April 18,
1997 among Hollinger Inc., UniMedia Holding Company and
Hollinger International Inc.
5 Amended and Restated First Exchange Agreement dated as of July
21, 1997 among Hollinger Inc., UniMedia and Hollinger
International Inc.
6 Second Amended and Restated Second Exchange Agreement dated as
of July 21, 1997 among Hollinger Inc., UniMedia and Hollinger
International Inc.
7 Amended and Restated Term sheet dated as of April 21, 1997
regarding loan facility and pledge of securities of the Issuer
by Hollinger Inc. in favor the Canadian Imperial Bank of
Commerce.
8 Securities Pledge Agreement dated May 24, 1996 by 1159670
Ontario Limited in favor of the Canadian Imperial Bank of
Commerce.
9 Promissory Note dated September 3, 1997 made by Hollinger Inc.
in favor of Hollinger International Inc.
10 Limited Recourse Guarantee and Securities Pledge Agreement dated
September 3, 1997 between Hollinger International Inc.
and UniMedia Holding Company.
<PAGE>
Page 23 of 27 Pages
11 Exchange Agreement Providing for the Exchange of Non-Voting
Special Shares among 3396754 Canada Limited, Hollinger
Canadian Publishing Holdings Inc. and Hollinger International
Inc. dated September 3, 1997.
12 Letter agreement dated October 13, 1995 between Hollinger Inc.
and the Canadian Imperial Bank of Commerce.
13 Registration Rights Agreement dated February 29, 1996 among
Hollinger Inc., 1159670 Ontario Limited and certain lenders.
14 Letter agreement dated May 24, 1996 among Hollinger Inc.,
Hollinger International Inc., 1159670 Ontario Limited, 3184081
Canada Limited and the Canadian Imperial Bank of Commerce
(omitting Schedules A and B).
15 Letter agreement dated July 29, 1997, between Hollinger Inc.,
Hollinger International Inc. and Hollinger Canadian Publishing
Holdings Inc.
<PAGE>
Page 24 of 27 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this Statement is true, complete and
correct.
Dated: June 12, 1998
HOLLINGER INC.
By: /S/ C. G. COWAN
----------------------------------
Charles G. Cowan, Q.C.
Vice-President and Secretary
THE RAVELSTON CORPORATION LIMITED
By: /S/ C. G. COWAN
-----------------------------------
Charles G. Cowan, Q.C.
Vice-President and Secretary
By: /S/ CONRAD M. BLACK
-----------------------------------
The Hon. Conrad M. Black, P.C.,
O.C., individually and on behalf
of Conrad Black Capital Corporation
Title: Chairman of Conrad Black
Capital Corporation
<PAGE>
Page 25 of 27 Pages
Exhibit Index
1 Joint Filing Agreement dated Incorporated by reference from
October 20, 1995, among Exhibit 1 of Schedule 13D of
Hollinger Inc., The Ravelston Hollinger Inc., Ravelston and
Corporation Limited and The Mr. Black (the "Reporting
Hon. Conrad M. Black, P.C., Persons") dated as of October
O.C. (individually and on 20, 1995 with respect to their
behalf of Conrad Black Capital deemed beneficial ownership of
Corporation). shares of Hollinger
International Inc. (the
"Schedule 13D").
2 Share Exchange Agreement dated Incorporated by reference from
as of July 19, 1995 between Exhibit 2 of Schedule 13D.
American Publishing Company and
Hollinger Inc. (incorporated by
reference to the definitive
proxy statement of the Issuer
dated September 28, 1995).
3 UniMedia Class A Stock Incorporated by reference from
Purchase Agreement dated Exhibit 14 of Schedule 13D/A
as of April 18, 1997 among dated as of the Reporting Persons
Hollinger Inc., UniMedia dated as of August 11, 1997
Holding Company and ("Amendment No. 5").
Hollinger International Inc.
4 UniMedia Class B Stock Incorporated by reference from
Purchase Agreement dated as Exhibit 15 of Schedule 13D/A
of April 18, 1997 among Amendment No. 5.
Hollinger Inc., UniMedia
Holding Company and Hollinger
International Inc.
<PAGE>
Page 26 of 27 Pages
5 Amended and Restated First Incorporated by reference from
Exchange Agreement dated Exhibit 16 of Schedule 13D/A
as of July 21, 1997 among Amendment No. 5.
Hollinger Inc., UniMedia
and Hollinger International
Inc.
6 Second Amended and Restated Incorporated by reference from
Second Exchange Agreement dated Exhibit 17 of Schedule 13D/A
as of July 21, 1997 among Amendment No. 5.
Hollinger Inc., UniMedia and
Hollinger International Inc.
7 Amended and Restated Term sheet (filed herewith)
dated as of April 21, 1997
regarding loan facility and
pledge of securities of the
Issuer by Hollinger Inc. in
favor the Canadian Imperial
Bank of Commerce.
8 Securities Pledge Agreement Incorporated by reference from
dated May 24, 1996 by 1159670 Exhibit 9 of Schedule 13D/A of
Ontario Limited in favor of the the Reporting Persons dated as
Canadian Imperial Bank of of August 28, 1996 ("Amendment
Commerce No. 4").
9 Promissory Note dated (filed herewith)
September 3, 1997 made by
Hollinger Inc. in favor of
Hollinger International Inc.
10 Limited Recourse Guarantee and (filed herewith)
Securities Pledge Agreement
dated September 3, 1997 between
Hollinger International Inc.
and UniMedia Holding Company.
11 Exchange Agreement Providing (filed herewith)
for the Exchange of Non-Voting
Special Shares among 3396754
Canada Limited, Hollinger
Canadian Publishing Holdings
Inc. and Hollinger
International Inc. dated
September 3, 1997.
<PAGE>
Page 27 of 27 Pages
12 Letter agreement dated October Incorporated by reference from
13, 1995 between Hollinger Exhibit 4 of Schedule 13D/A
Inc. and the Canadian Imperial Amendment No. 4.
Bank of Commerce.
13 Registration Rights Agreement Incorporated by reference from
dated February 29, 1996 among Exhibit 8 of Schedule 13D/A
Hollinger Inc., 1159670 Amendment No. 4.
Ontario Limited and certain
lenders.
14 Letter agreement dated May 24, Incorporated by reference from
1996 among Hollinger Inc., Exhibit 11 of Schedule 13D/A
Hollinger International Inc., Amendment No. 4.
1159670 Ontario Limited,
3184081 Canada Limited and the
Canadian Imperial Bank of
Commerce (omitting Schedules A
and B).
15 Letter agreement dated July (filed herewith)
29, 1997, between Hollinger
Inc., Hollinger International
Inc. and Hollinger Canadian
Publishing Holdings Inc.
<PAGE>
EXHIBIT NO. 7
AMENDED AND RESTATED
SUMMARY OF TERMS AND CONDITIONS
Dated February 10, 1993
Offered to
HOLLINGER INC.
by
MEDIA & TELECOMMUNICATIONS
CANADIAN IMPERIAL BANK OF COMMERCE
as of
April 21, 1997
<PAGE>
HOLLINGER INC.
AMENDED AND RESTATED
SUMMARY OF TERMS AND CONDITIONS
dated February 10, 1993
as of April 21, 1997
================================================================================
BORROWERS: Hollinger Inc., and Sugra Limited (with Hollinger Inc.
and Sugra Limited being jointly and severly liable for
all borrowings made by either of them), Saturday Night
Magazine Limited and Domgroup Ltd.).
LENDER: Canadian Imperial Bank of Commerce ("CIBC" or the
"Bank").
CREDIT FACILITY: February 10, 1993 Operating Facility - Continued on
the following terms and conditions in the maximum
principal amount of Cdn.$80,000,000, within which up to
Cdn.$2,000,000 in the aggregate for Letters of Credit is
available for Saturday Night Magazine Limited and
Domgroup Ltd.
February 10, 1993 364 Day Revolving Facility-Cancelled.
PURPOSE: Available for general corporate purposes and to assist
with the working capital requirements of the Borrowers.
AVAILABILITY: Operating Facility available by way of Prime or US
Base Rate overdraft, Letters of Credit and Bankers'
Acceptances.
REPAYMENT: Repayable on demand.
SECURITY: The Borrowers will deliver the following documentation
to the Bank in support of the Credit Facility:
(i) a first ranking pledge of all Hollinger
International Inc. Class A and B shares owned
by Hollinger Inc. and its subsidiaries;
<PAGE>
(ii) guarantees of each of 1159670 Ontario Limited
and 503264 N.B. Inc. in respect of Saturday
Night Magazine Limited and Domgroup Ltd.;
(iii) a guarantee signed by Hollinger Inc. for all
Borrowers other than Hollinger Inc.;
(iv) guarantees of each of 1159670 Ontario Limited and
503264 N.B. Inc. in respect of Hollinger,
supported by such first ranking security from
1159670 Ontario Limited and 503264 N.B. Inc. as
may be required by the Bank, such guarantees and
security to be provided promptly upon repayment
in full of the ELCS;
(v) a pledge from Sugra Limited over its GII
aircraft;
(vi) guarantees of Hollinger Inc. in respect of Sugra
Limited and guarantees of Sugar Limited in
respect of Hollinger Inc. and such other
guarantees that the Bank may require, consistent
with the current security for borrowings relative
to Hollinger; and
(vii) such other documents and confirmation of the
guarantors and others as the Bank consider
necessary, acting reasonably.
INTEREST RATES:
Prime Rate Loans/
US Base Rate Loans +50 bps
Bankers' Acceptances +125 bps
Letters of Credit 130 bps (min. $150/
issuance)
FINANCIAL COVENANTS: i) The Borrowers shall ensure at all times
outstandings under the Operating Facility do not
exceed 50% of the Market Value of the pledged
Hollinger International Inc. Class A and Class B
common shares.
2
<PAGE>
ii) Hollinger Inc., on an unconsolidated basis, shall
ensure that Interest Coverage, defined as the
ratio of earnings before extraordinary or
non-recurring items including the gain or loss on
disposal or write down of an asset, depreciation
and amortization, interest expense and income
taxes to interest expense, calculated at the end
of each fiscal quarter on a rolling four quarter
basis, exceeds 1.50:1.
iii) Hollinger Inc., on an unconsolidated basis, shall
ensure the Fixed Charge Ratio, defined as the
ratio of earnings before extraordinary or
non-recurring items including the gain or loss on
disposal or write down of an asset, depreciation
and amortization, interest expense and income
taxes to Fixed Charges, calculated at the end of
each fiscal quarter on a rolling four quarter
basis, exceeds 1.00:1.
iv) Hollinger Inc., on a consolidated basis, shall
ensure that at the end of each fiscal quarter, the
Debt to Equity Ratio, defined as debt for borrowed
money to shareholders' equity, does not exceed
3.6:1 with step downs to be determined.
COVENANTS: Hollinger Inc. covenants with the Bank that it will
and will cause each Borrower, guarantor and
subsidiary (other than Hollinger International Inc.
and its subsidiaries) to:
i) not create, incur, assume or permit to exist
any debt or liability (including guarantees) other
than permitted indebtedness acceptable to the
Bank;
ii) not create, assume or permit to exist over all or
any part of its assets, any lien other than
permitted liens acceptable to the Bank;
iii) not enter into any reorganization, merger or
consolidation, except as consented to by the Bank;
iv) in any fiscal year, not make any investments or
acquisitions in any business that is materially
different from the business currently carried on
by Hollinger Inc. and its subsidiaries if such
investments would exceed for Hollinger Inc., on a
consolidated basis, but excluding the results of
Hollinger International Inc. and its subsidiaries,
$15,000,000;
3
<PAGE>
v) in any fiscal year not make capital expenditures
if such expenditures in the aggregate would exceed
for Hollinger Inc., on a consolidated basis, but
excluding the results of Hollinger International
Inc. and its subsidiaries, $5,000,000;
vi) not sell, swap, exchange or divest in any way of
any material subsidiary or material asset;
vii) Hollinger Inc. shall be permitted to declare
dividends or make any other distributions of any
kind during any fiscal year provided that the
aggregate amount does not exceed normalized,
historic levels (other than the May 12, 1997
dividend of Cdn. $2.50 per common share) unless
otherwise agreed to in writing by the Bank and
provided that the Borrower is not in default of
any of its covenants or obligations under the loan
agreement. Hollinger shall ensure that any
dividend or other distribution, including its May
12, 1997 dividend are permitted, where applicable
by law, including Section 42 of the Canadian
Business Corporations Act;
viii) Hollinger Inc. shall be permitted to pay
management fees during any fiscal year provided
that the fees are in accordance with the terms
approved by Hollinger Inc.'s Compensation
Committee and provided that the Borrower is not in
default of any of its covenants or obligations
under the loan agreement;
ix) not make any payments of principal or interest on
account of any of Hollinger's debt prior to
maturity, other than scheduled interest payments
on the ELCS or the redemption of the ELCS, as
required by virtue of Hollinger's offer for common
shares of Southam Inc.;
x) Hollinger Inc., on an unconsolidated basis will
not create, assume, incur or permit to exist any
debt or convertible instrument other than
permitted indebtedness unless it is on terms and
conditions acceptable to the Bank. Notwithstanding
the above, any debt or convertible debt instrument
issued to replace the LYONS or ELCS shall be on a
subordinated basis with the terms of the
subordination satisfactory to the Bank;
4
<PAGE>
xi) the Borrowers shall deliver to the Bank, 90 days
prior to maturity of the ELCS and LYONS, a
financing plan showing Hollinger's planned capital
structure and method of refinancing the ELCS and
the LYONS.
OTHER COVENANTS: Usual for transactions of this nature and will include
reporting of financial and other information on a
quarterly and annual basis including the provision of
a monthly and quarterly compliance certificates,
maintenance of corporate existence, insurance and
other liability coverage, etc.
CONDITIONS OF CREDIT: On or before closing, and if required by CIBC, prior
to any advance under the facility, CIBC shall have
received:
i) the Security and all related legal opinions,
representations and warranties, certificates of no
default and any other supporting documentation,
including all applicable third party consents and
an undertaking to take all further steps needed to
register the pledged securities to permit resale
at the time of realization, in form and manner
satisfactory to the Bank and its solicitor;
ii) a Compliance Certificate signed by the Chief
Financial Officer of the Borrower including the
financial covenant calculations referred to above;
iii) full particulars regarding the corporate
structure of Hollinger Inc. and its subsidiaries,
all acceptable to the Bank and its solicitors; and
iv) a copy of the certificate presented to Hollinger
Inc.'s Board of Directors and signed by the Chief
Financial Officer confirming that Hollinger's May
12, 1997 dividend of $2.50 per common share will
not cause Hollinger Inc. to be insolvent within
the meaning of Section 42 of the Canadian Business
Corporations Act.
5
<PAGE>
DOCUMENTATION: The Operating facility is being continued on the
terms and conditions contained herein, subject to
negotiation and completion of satisfactory loan
documentation within 20 business days, including a
loan agreement, which will set out the terms and
conditions contained herein in addition to
representations, warranties, covenants, events of
default, environmental liability and indemnity
provisions and other terms and conditions, including
but not limited to increased cost, reserve, tax,
capital adequacy and other indemnity provisions as
the Bank and the Borrower may mutually agree. This
amended and restated summary of terms and conditions
amends and restates the summary of terms and
conditions dated February 10, 1993.
GOVERNING LAWS: Laws of Ontario.
EXPENSES: All legal fees, disbursements and other expenses
associated with this transaction incurred by the Bank
are for the account of the Borrower whether or not
the transaction contemplated herein is completed.
DEFINITIONS: GAAP means generally accepted accounting principles
in Canada and statement of interpretations (if
applicable) issued by the Canadian Institute of
Chartered Accountants or any successor body in effect
as at date of signing of the definitive Loan
Agreement.
MARKET VALUE means the simple average of the closing
price of the Class A common shares of Hollinger
International Inc., determined for each of the ten
business days immediately preceding the relevant
valuation date.
FIXED CHARGES means for any period the sum of i)
interest expense ii) all financial expenses and other
interest expenses including applicable interest on
subordinated debt iii) mandatory principal payments
excluding principal payments on account of the ELCS
or LYONS funded through the incurrence of new debt or
convertible debt instruments iv) dividends paid or
accrued by Hollinger Inc. on preferred shares v)
management fees paid or accrued by Hollinger Inc. and
vi) head office expenses. Items i) through vi)
calculated with respect to Hollinger Inc. on an
unconsolidated basis.
6
<PAGE>
EXPIRY: Unless extended in writing this offer shall expire on
May 12, 1997 at 5:00 p.m.
Should you agree to the foregoing terms and conditions, kindly indicate
acceptance by signing and returning the duplicate copy of this offering on or
before the expiry date.
Canadian Imperial Bank of Commerce
Per: /S/
-----------------------------------
Accepted and Agreed
this 18th day of March, 1997
HOLLINGER INC., on its own behalf and on
behalf of SUGRA LIMITED, SATURDAY NIGHT
MAGAZINE LIMITED
and DOMGROUP LTD.
Per: /S/ C. G. COWAN
-------------------------------
Per: VICE PRESIDENT & SECRETARY
-------------------------------
7
<PAGE>
EXHIBIT NO. 9
PROMISSORY NOTE
Date: September 3, 1997 Cdn.$58,859,223.65
FOR VALUE RECEIVED the undersigned hereby unconditionally promises
to pay to or to the order of HOLLINGER INTERNATIONAL INC. ("HII") the principal
sum of Fifty Eight Million Eight Hundred and Fifty Nine Thousand Two Hundred and
Twenty Three dollars and sixty five cents in Canadian currency
(Cdn.$58,859,223.65) on December 1, 1997, together with interest thereon as
calculated below.
This note is secured by a pledge of shares of Series D Preferred
Stock of HII (the "Pledged Shares") held by a wholly-owned subsidiary of the
undersigned. Interest shall be paid on this Note in the same amount and due on
the date which is one Business Day after the date on which any dividends are
paid on the Pledged Shares. A "Business Day" is a day, other than a Saturday or
a Sunday, which is not a statutory holiday in the Province of Ontario.
When not in default hereunder, the undersigned may at any time
prepay all or any portion of the principal amount of and interest on the Note
without penalty or premium.
The undersigned waives presentment for payment, notice of
non-payment, protest and notice of protest of this Note and diligence in
collection or bringing suit.
This note shall be governed by and construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable therein.
HOLLINGER INC.
By: /S/ C. G. COWAN
-------------------------------
Vice President & Secretary
/S/ P. Y. ATKINSON
-------------------------------
Vice President & General
Counsel
<PAGE>
EXHIBIT NO. 10
LIMITED RECOURSE GUARANTEE
AND SECURITIES PLEDGE AGREEMENT
TO: HOLLINGER INTERNATIONAL INC.
WHEREAS in order to secure the due payment and performance of the
Obligations (as defined below), the undersigned (the "Pledgor") has agreed to
provide a limited recourse guarantee of the Obligations and to pledge the
Pledged Securities (as defined below) to Hollinger International Inc. (the
"Lender");
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are conclusively acknowledged by the parties hereto, the
Pledgor hereby agrees as follows:
1. DEFINED TERMS. In this Agreement, the following words have the following
meanings:
"COMPANY" means Hollinger International Inc.;
"DEFAULT" means a failure to pay any of the Obligations when due;
"LIEN" means a mortgage, hypothec, title retention, pledge, lien,
charge, security interest or other encumbrance whatsoever, whether fixed or
floating and howsoever created or arising;
"OBLIGATIONS" means all present and future indebtedness and
liabilities of every kind, nature and description (whether direct or indirect,
joint or several, absolute or contingent, matured or unmatured) of Hollinger
Inc. to the Lender evidenced by the promissory note dated the date hereof made
by Hollinger Inc. in favour of the Lender and any unpaid balance thereof; and
"PLEDGED SECURITIES" means the securities listed under the heading
"Pledged Securities" in Schedule "A".
2. LIMITED RECOURSE GUARANTEE. The Pledgor unconditionally and irrevocably
guarantees the due payment and performance of all Obligations. The recourse of
the Lender against the Pledgor in respect of the Obligations shall be limited to
realizing on the Collateral (as defined below). The Pledgor shall not be liable
to the Lender for any deficiency resulting from any such realization or
otherwise.
3. PLEDGE. As general and continuing collateral security for the payment and
performance of all Obligations, the Pledgor hereby assigns and pledges to and in
favour of the Lender, and the Pledgor hereby grants to the Lender a continuing
security interest in the following (collectively, the "Collateral"):
<PAGE>
-2-
(i) the Pledged Securities, together with any replacements thereof and
substitutions therefor, and all certificates and instruments
evidencing or representing such securities;
(ii) all dividends, whether in cash, kind or stock, received or
receivable upon or in respect of any of the Pledged Securities and
all moneys or other property payable or paid on account of any
return or repayment of capital in respect of any of the Pledged
Securities or otherwise distributed in respect thereof or which will
in any way be charged to, or payable or paid out of, the capital of
the Company on account of the Pledged Securities;
(iii) all other property that may at any time be received or receivable by
or otherwise distributed to the Pledgor in respect of, or in
substitution for, or in exchange for, any of the foregoing; and
(iv) all cash, securities and other proceeds of the foregoing and all
rights and interests of the Pledgor in respect thereof or evidenced
thereby, including all moneys received from time to time by the
Pledgor in connection with the sale or other disposition of any of
the Pledged Securities; provided, however, that the Pledgor will not
sell or otherwise dispose of any of the Pledged Securities or
purport to do any of the foregoing without the prior written consent
of the Lender.
4. DELIVERY OF PLEDGED SECURITIES. The certificates representing the Pledged
Securities duly endorsed by the appropriate person in blank for transfer or
accompanied by powers of attorney satisfactory to the Lender will forthwith be
delivered to and remain in the custody of the Lender or its nominee. All Pledged
Securities may, at the option of the Lender, be registered in the name of the
Lender or its nominee.
5. REPRESENTATIONS AND WARRANTIES. The Pledgor hereby represents and warrants to
the Lender and acknowledges that the Lender is relying thereon, notwithstanding
any investigation by the Lender or otherwise, that:
(i) the Pledgor is the lawful owner of the Collateral, free and clear of
any and all Liens or claims of others other than any Lien granted by
the Pledgor to the Lender hereunder and as otherwise set out herein,
with full right to deliver, assign, pledge and charge the Collateral
to the Lender pursuant hereto;
(ii) there is no existing agreement, option, right or privilege capable
of becoming an agreement or option pursuant to which the Pledgor
would be required to sell or otherwise dispose of any of the Pledged
Securities;
(iii) except as otherwise set out herein, the Liens granted by the Pledgor
to the Lender pursuant to this Agreement constitute Liens on the
Collateral in favour of the Lender which are prior to all other
Liens on the Collateral, whether created by the Pledgor or any other
Person, and in existence on the date hereof;
<PAGE>
-3-
(iv) the Pledgor has the power and authority and the legal right to
execute and deliver, to perform its obligations under, and to grant
the Lien on the Collateral pursuant to, this Agreement and the
Pledgor has taken all necessary corporate action to authorize its
execution, delivery and performance of, and grant of the Lien on the
Collateral pursuant to, this Agreement;
(v) this Agreement constitutes a legal, valid and binding obligation of
the Pledgor enforceable in accordance with its terms, except as
enforceability may be limited bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general principles of equity;
(vi) the execution, delivery and performance of this Agreement will not
violate any provision or requirement of any law or contractual
obligation of the Pledgor and will not result in the creation or
imposition of any Lien on any of the properties or revenues of the
Pledgor pursuant to any requirement of law or contractual obligation
of the Pledgor;
(vii) no consent or authorization of, filing with, or other act by or in
respect of, any arbitrator or governmental authority and no consent
of any other person (including any shareholder or creditor of the
Pledgor), is required in connection with the execution, delivery,
performance, validity or enforceability of this Agreement, except
for such as have been obtained or made and are in full force and
effect, and the terms of which have been disclosed to the Lender;
and
(viii) no litigation, investigation or proceeding of or before any
arbitrator or governmental authority is pending or, to the knowledge
of the Pledgor, threatened by or against the Pledgor or against any
of its properties or revenues which may materially adversely affect
the business, property or financial or other condition of the
Pledgor.
6. COVENANTS. The Pledgor covenants and agrees with the Lender that:
(i) at any time and from time to time, upon the written request of
the Lender, and at the sole expense of the Pledgor, the Pledgor will
promptly and duly execute and deliver such further instruments and
documents and take such further action as the Lender may request for
the purpose of obtaining or preserving the full benefits of this
Agreement and of the rights and powers herein granted, including the
filing or execution of any financing or financing change statements
under any applicable legislation in effect in any jurisdiction with
respect to the Liens created hereby;
(ii) the Pledgor authorizes the Lender to file any such financing or
financing change statement without the signature of the Pledgor to
the extent permitted by applicable law;
<PAGE>
-4-
(iii) the Pledgor will not create, incur or permit to exist, but will
defend the Collateral against, and will take such other action as is
necessary to remove, any Lien or claim on or to the Collateral,
other than the Liens created hereby and other than as permitted in
writing by the Lender;
(iv) the Pledgor will not sell, transfer, lease or otherwise dispose of
any of the Collateral except as permitted in writing by the Lender;
and
(v) the Pledgor will ensure that at the request of the Lender, all
Pledged Securities are registered in the name of the Lender or its
nominee, that the certificates representing the Pledged Securities
will be forthwith delivered to and remain in the custody of the
Lender or its nominee, and that all certificates, instruments or
other documents representing or evidencing any Pledged Securities
acquired or issued subsequent to the date hereof will be registered
in the name of the Lender or its nominee and will forthwith after
issuance be delivered to, and remain in the custody of, the Lender
or its nominee.
7. ACKNOWLEDGEMENT. The Lender acknowledges that the Collateral is subject to a
security interest in favour of the holders of Hollinger Inc.'s Southam-linked
debentures due November 1, 1998 which is rateable with and ranks pari passu to
the security interest in favour of the Lender created hereunder.
8. RIGHTS AND DUTIES OF LENDER. The Lender will have and be entitled to exercise
all such powers hereunder as are specifically delegated to the Lender by the
terms hereof, together with such powers as are incidental thereto. The Lender
may execute any of its duties hereunder by or through agents and will be
entitled to retain counsel and to act in reliance upon the advice of such
counsel concerning all matters pertaining to its duties hereunder. The Lender
and any nominee on its behalf will be bound to exercise in the holding of the
Pledged Securities and other Collateral only the same degree of care as it would
exercise with respect to similar property of its own held in the same place.
Neither the Lender, nor any nominee acting on behalf of the Lender, nor any
director, officer or employee of the Lender or such nominee, will be liable for
any action taken or admitted to be taken by it hereunder or in connection
herewith except for its own gross negligence or wilful misconduct.
9. VOTING RIGHTS. Unless a Default has occurred and is continuing, the Pledgor
will be entitled to exercise all voting power from time to time exercisable in
respect of the Pledged Securities and given consents, waivers and ratifications
in respect thereof. Immediately upon the occurrence and during the continuance
of any Default, all such rights of the Pledgor to vote and give consents,
waivers and ratifications will cease and the Lender will be entitled to exercise
all such voting rights and to give all consents, waivers and ratifications as
permitted by the Lender.
10. DIVIDENDS. Unless a Default has occurred and is continuing, the Pledgor
will, subject to any agreement with the Lender to the contrary, be entitled to
receive any and all cash dividends and other distributions on the Pledged
Securities which it is otherwise entitled to receive. If a Default has occurred
and is continuing, the Lender will have the sole and exclusive right and
<PAGE>
-5-
authority to receive and retain the dividends and other distributions which the
Pledgor would otherwise be authorized to receive. Any money and other property
paid over to or received by the Lender pursuant to the provisions of this
Section 8 will be retained by the Lender as additional Collateral hereunder and
be applied in accordance with the provisions hereof.
11. REMEDIES. If a Default has occurred and is continuing, the Lender may,
without notice to or the consent of the Pledgor or any other person (other than
as required by applicable law), take all or any of the following actions:
(a) transfer all or any part of the Collateral into the name of the
Lender or any nominee on behalf of the Lender, with or without
disclosing that such Collateral is subject to the Lien hereunder;
(b) notify any parties obligated on any of the Collateral to make
payment to the Lender of any amounts due or to become due hereunder;
(c) exercise any and all rights of conversion, exchange, subscription or
any other rights, privileges or options pertaining to any of the
Pledged Securities as if it were the absolute owner thereof;
(d) from time to time realize upon, collect, sell, transfer, assign,
give options to purchase, or otherwise dispose of and deliver the
Pledged Securities and other Collateral, or any part thereof, in
such a manner as may seem to it advisable, and for the purposes
thereof each and every requirement relating thereto and prescribed
by law or otherwise is hereby waived to the extent permitted by law;
(e) enforce collection of any of the Collateral by suit or otherwise,
and surrender, release or exchange all or any part of any property
in addition to the Collateral, securing any of the Obligations, or
compromise or extend or renew for any period (whether or not longer
than the original period) any obligations of any nature of any party
with respect to any property; and
(f) to the extent permitted by applicable law, the Lender may purchase
any or all of the Pledged Securities and other Collateral, whether
in connection with a sale made under the power of sale herein
contained or pursuant to judicial proceedings or otherwise;
provided, however, that the Lender will not be bound to deal with the Pledged
Securities and other Collateral as aforesaid, and will not be liable for any
loss which may be occasioned by any failure to do so and no action of the Lender
permitted hereunder will impair or affect any rights of the Lender in and to the
Collateral.
12. APPLICATION OF PROCEEDS. After payment of expenses as provided in Section 11
hereof, the balance of any proceeds received by the Lender in or in connection
with realizing, collecting, selling, transferring, delivering or obtaining
payment of the Collateral or any part thereof may be
<PAGE>
-6-
held by the Lender and may, as and when the Lender thinks fit, be applied on
account of such part of the Obligations as to the Lender seems best, without
prejudice to the Lender's claims upon the Pledgor for any deficiency.
13. PAYMENT OF EXPENSES. The Lender may charge on its own behalf and also pay to
others all out-of-pocket expenses of the Lender and others retained by the
Lender, incurred in connection with realizing, collecting, selling,
transferring, delivering or obtaining payment of the Pledged Securities or any
other Collateral or any part thereof, or in connection with the administration
or amendment of this Agreement or incidental to the care, safekeeping, or
otherwise of any and all of the Collateral, and may deduct the amount of such
sums from any proceeds of the Collateral. The Pledgor agrees to indemnify and
hold harmless the Lender from and against any and all liability incurred by the
Lender; or any nominee, agent or employees of the Lender hereunder or in
connection herewith, unless such liability was due to wilful misconduct or gross
negligence on the part of the Lender or such nominee or agent.
14. ASSIGNMENT. This Agreement will be binding upon the Pledgor and its
successors and permitted assigns and will enure to the benefit of and be
enforceable by the Lender and its respective successors and assigns.
15. NO WAIVER; CUMULATIVE REMEDIES. The Lender will not by any act, delay,
indulgence, omission or otherwise be deemed to have waived and any right or
remedy hereunder or to have acquiesced in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of the Lender, any right, power or privilege hereunder will operate as a
waiver thereof.
16. COMMUNICATION. All communications provided for or permitted hereunder shall
be in writing, personally delivered to an officer or other responsible employee
of the addressee or sent by registered mail, charges prepaid, or by telecopy, to
the address or telecopy number set forth opposite the name of the Pledgor in the
execution pages of this Agreement, in the case of the Pledgor, and to Hollinger
International Inc., 401 North Wabash Avenue, Suite 740, Chicago, Illinois 60611
(Attention: Vice-President - Law and Finance and Secretary) (Telecopy: (312)
321-0629), in the case of the Lender, or to such other address as the applicable
party hereto may from time to time designate to the other in such manner. Any
communication so personally delivered shall be deemed to have been validly and
effectively given on the date of such delivery. Communications so sent by
telecopy shall be deemed to have been validly and effectively given on the
business day next following the day on which it is sent. Communications so sent
by mail shall be deemed to have been validly and effectively given on the fifth
business day next following the day on which it is sent.
17. DEALINGS BY LENDER. The Lender may grant extensions of time and other
indulgences, take and give up security, accept compositions, grant releases and
discharges and otherwise deal with the Pledgor and any third party having
dealings with the Pledgor, and with the Collateral or any part thereof, and with
other security and sureties, as the Lender may see fit, all without prejudice to
the Obligations or to the rights of the Lender under this Agreement. The Lender
will be accountable only for amounts that the Lender actually receives as a
result of the exercise of
<PAGE>
-7-
such powers, and neither the Lender nor any of its officers, directors,
employees or agents will be responsible to the Pledgor any act or failure to act
hereunder, except for its or their own gross negligence or willful misconduct.
18. NON-EXCLUSIVE OF REMEDIES. This Agreement and the Liens arising hereunder
are in addition to and not in substitution for any other security now or
hereafter held by the Lender in respect of the Dealer, the Obligations or the
Collateral. No remedy for the enforcement of the rights of the Lender hereunder
will be exclusive of or dependent on any other such remedy but any one or more
of such remedies may from time to time be exercised independently or in
combination.
19. POWER OF ATTORNEY. The Pledgor hereby irrevocably constitutes and appoints
the Lender and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact, with full irrevocable power and authority
in the place and stead of the Pledgor and in the name of the Pledgor or in its
own name, from time to time in the Lender's discretion, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate
action, to do, make and execute any and all statements, acts, matters,
documents, instruments and things which may be necessary or desirable to
accomplish the purposes of this Agreement and from time to time to exercise all
rights and powers and to perform all acts of ownership in respect to the Pledged
Securities to the same extent as the Pledgor might have done were it not for
this Agreement. The Pledgor hereby ratifies all that said attorneys will
lawfully do or cause to be done by virtue hereof. This power of attorney is a
power coupled with an interest and will be irrevocable until the Obligations
have been paid and performed in full.
20. NO MERGER. Neither the taking and holding of the Pledged Securities and
other Collateral nor the obtaining of any judgment by the Lender will operate as
a merger of any Obligation or any other indebtedness or liability of the Pledgor
to the Lender or operate to prejudice the security constituted by this
Agreement.
21. SEVERABILITY. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and any such prohibition or unenforceability in any
jurisdiction will not invalidate or render unenforceable such provision in any
other jurisdiction.
22. GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of Ontario.
23. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All agreements, representations,
warranties and covenants made by or on behalf of the Pledgor herein are
material, will be considered to have been relied upon by the Lender and will
survive the execution and delivery of this Agreement or any investigation made
at any time by or on behalf of the Lender and any disposition or payment of the
Obligations until repayment in full thereof.
<PAGE>
-8-
24. ACKNOWLEDGEMENT OF RECEIPT. The Pledgor acknowledges receipt of an executed
copy of this Agreement.
DATED: September 3, 1997.
ADDRESS UNIMEDIA HOLDING COMPANY
10 Toronto Street
Toronto, Ontario
M5K 1N2 By: /S/ C. G. COWAN
------------------------------
Name: Charles G. Cowan
Title: Vice President &
Secretary
Attention: President By: /S/ P. Y. ATKINSON
------------------------------
Name: P. Y. Atkinson
Title: Vice President &
General Counsel
Facsimile: (416) 364-2088
<PAGE>
SCHEDULE "A"
COMPANY NO. PLEDGED SECURITIES CLASS
1. Hollinger International Inc. 401,426 Series D Preferred Shares
<PAGE>
EXHIBIT NO. 11
3396754 CANADA LIMITED
AND
HOLLINGER CANADIAN PUBLISHING HOLDINGS INC.
AND
HOLLINGER INTERNATIONAL INC.
--------------------------------------
EXCHANGE AGREEMENT
PROVIDING FOR THE EXCHANGE OF
NON-VOTING SPECIAL SHARES
--------------------------------------
September 3, 1997
<PAGE>
TABLE OF CONTENTS
ARTICLE 1.
INTERPRETATION
1.1. Definitions................................................. 1
1.2. Interpretation Not Affected by Headings..................... 5
1.3. Extended Meaning............................................ 5
1.4. Applicable Law.............................................. 6
1.5. Time of Essence............................................. 6
1.6. Severability................................................ 6
1.7. Business Day................................................ 6
1.8. Currency.................................................... 6
ARTICLE 2.
EXCHANGE OF SPECIAL SHARES
2.1. Mandatory Exchange.......................................... 6
2.2. Optional Exchange........................................... 7
2.3. Election to Pay Cash........................................ 8
2.4. Relating to the Purchase for Cancellation by the
Corporation of the Special Shares........................... 8
2.5. Fractions of Class A Shares................................. 8
2.6. Nature of the Corporation's Exchange Obligation ............ 9
2.7. Delivery on Exchange........................................ 9
ARTICLE 3.
ADJUSTMENTS
3.1. Changes Affecting the Class A Shares ....................... 9
3.2. No Changes to Special Shares................................ 12
3.3. Rules Applicable to Adjustments............................. 12
3.4. Notice of Adjustment........................................ 12
ARTICLE 4.
SUPPLEMENTAL AGREEMENTS AND COVENANT
4.1. Supplemental Agreements..................................... 12
4.2. Successor Corporations...................................... 13
4.3. Compliance with Terms....................................... 13
<PAGE>
ii
ARTICLE 5.
GENERAL
5.1. Notice to the Corporation and the Holders................... 13
5.2. Assignment ................................................. 14
5.3. Counterparts and Formal Date................................ 14
5.4. Satisfaction and Discharge of Agreement..................... 15
SCHEDULE A ............................................................ 17
<PAGE>
THIS EXCHANGE AGREEMENT made as of September 3, 1997.
B E T W E E N:
3396754 CANADA LIMITED, a corporation incorporated under
the CANADA BUSINESS CORPORATIONS ACT
(the "Corporation")
- and -
HOLLINGER CANADIAN PUBLISHING HOLDINGS INC., a
corporation amalgamated under the BUSINESS CORPORATIONS
ACT (New Brunswick)
("HCPH")
- and
HOLLINGER INTERNATIONAL INC., a Delaware corporation
("HII")
RECITALS
1. The Corporation will issue to HCPH on the date hereof 4,146,007 Special
Shares in exchange for 4,146,007 non-voting special shares of HCPH.
2. The Special Shares will be purchased for cancellation automatically on the
Mandatory Exchange Date and will be purchased for cancellation at the
option of HCPH on any Optional Exchange Date in each case for Class A
Shares on the terms and conditions described herein.
NOW THEREFORE THIS AGREEMENT 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:
ARTICLE 1.
INTERPRETATION
1.1. DEFINITIONS
In this Agreement, unless there is something in the subject matter
or context inconsistent therewith or unless otherwise expressly provided:
<PAGE>
-2-
"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 HCPH by the Corporation:
(a) an order shall be made or an effective resolution shall be passed
for the winding- up or liquidation of the Corporation, HII or HIP;
(b) 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;
(c) 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;
(d) a default in payment of any principal due under the Bank Credit
Facility or default, and 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
<PAGE>
-3-
(e) there shall have occurred the acceleration of the maturity of Debt
(as such term is defined in the Bank Credit Facility) of 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, a person. A
person shall be deemed to control a body corporate if such person possess,
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.
"AGREEMENT", "THIS AGREEMENT", "HERETO", "HEREIN", "HEREBY",
"HEREUNDER", "HEREOF" and similar expressions refer to this Agreement and not to
any particular Article, section, subsection, paragraph, subparagraph, clause,
subclause or other portion 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 Agreement.
"BANK CREDIT FACILITY" means the Second Amended and Restated Credit
Agreement dated as of April 7, 1997 among, INTER ALIA, HII, 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 3396754 Canada Limited, a corporation
incorporated under the CANADA BUSINESS CORPORATIONS ACT, and includes any
successor corporation to or of the Corporation.
"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
<PAGE>
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purpose, or if such shares are not listed on any stock exchange, in such
over-the-counter market as the Directors may select for such purpose.
"DETERMINATION DATE" means, in respect of any date, the 14th day
preceding such date.
"DIRECTOR" means a director of the Corporation for the time being
and "DIRECTORS" means the board of directors of the Corporation.
"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:
(a) 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
(b) 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 2.1.2.
"EXCHANGE RATIO" has the meaning set out in section 2.2.1.
"HCPH" means Hollinger Canadian Publishing Holdings Inc., a
corporation amalgamated under the BUSINESS CORPORATIONS ACT (New Brunswick), and
includes any successor corporation to or of HCPH.
"HII" means Hollinger International Inc., a Delaware corporation,
and includes any successor corporation to or of HII.
"HII CAPITAL REORGANIZATION" has the meaning set out in section
3.1.3.
"HIP" means Hollinger International Publishing Inc., a Delaware
corporation.
<PAGE>
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"MANDATORY EXCHANGE" means an exchange of Special Shares for Class A
Shares pursuant to section 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
2.1.2.
"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.
"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 Corporation
receives the documents specified in section 2.2.2 duly tendered by a HCPH in
respect of the exercise of its optional exchange right pursuant to section
2.2.1.
"PERSON" means a natural person, corporation, body corporate,
partnership, joint venture or other unincorporated association, trust,
government or governmental authority and pronouns have a similar extended
meaning.
"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.
"SUCCESSOR CORPORATION" has the meaning set out in section 4.2.
1.2. INTERPRETATION NOT AFFECTED BY HEADINGS
The division of this Agreement 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 Agreement.
1.3. 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.
<PAGE>
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1.4. APPLICABLE LAW
This Agreement 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
Agreement.
1.5. TIME OF ESSENCE
Time shall be of the essence of this Agreement.
1.6. SEVERABILITY
Each of the provisions in this Agreement 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.
1.7. BUSINESS DAY
Whenever any action is required to be taken under this Agreement 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.
1.8. CURRENCY
Any reference in this Agreement to "dollars" or the sign "$" shall
be deemed to be a reference to lawful money of the United States of America.
ARTICLE 2.
EXCHANGE OF SPECIAL SHARES
2.1. MANDATORY EXCHANGE
2.1.1. Subject to sections 2.3 and 2.6, on the Mandatory Exchange Date
each Special Share shall be purchased for cancellation automatically
(without any further action on the part of HCPH) by the Corporation for
the Mandatory Exchange Number calculated as of the Mandatory Exchange Date
of Class A Shares to be delivered by the Corporation.
2.1.2. Not later than 3 days and not earlier than 30 days prior to the
Mandatory Exchange Date if it is not an Accelerated Exchange Date and
forthwith after an Accelerated Exchange Date, the Corporation shall send
to HCPH an exchange notice (the "Mandatory Exchange Notice") substantially
in the form attached hereto as Schedule "A".
<PAGE>
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2.1.3. In order for HII to receive certificates representing the Class A
Shares and cash, if any, which the Corporation is required to deliver pursuant
to this section 2.1, HCPH must surrender to the Corporation, at any time on or
after the Mandatory Exchange Date, the document specified in section 2.2.2 in
the manner set out in such section. Whether or not HCPH has so surrendered the
certificate(s) evidencing its Special Shares, on and as of the Mandatory
Exchange Date HCPH shall be deemed to have transferred its Special Shares to the
Corporation and from the Mandatory Exchange Date HCPH shall have no rights as a
shareholder of the Corporation in respect of such Special Shares.
2.2. OPTIONAL EXCHANGE
2.2.1. HCPH shall have the right at its option at any time after December
23, 1997 to have any or all of its Special Shares purchased for
cancellation by the Corporation for the following number (each, an
"Exchange Ratio") of Class A Shares to be delivered by the Corporation 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
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
2.2.2. HCPH may exercise its right pursuant to section 2.2.1 by depositing
with the Corporation at the address set out in Section 5.1, the Special
Share Certificate(s) evidencing its Special Shares.
2.2.3. The Corporation shall send or cause to be sent to HII 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
HCPH's Special Share Certificate(s) in accordance with this Article 2: (i)
a certificate or certificates for the Class A Shares which the Corporation
is required to deliver; or (ii) if the Corporation has elected in
accordance with section 2.3 to satisfy all or any part of its obligations
on purchase for cancellation of Special Shares by the payment of cash,
that amount of cash payable or that combination of cash and certificates
for Class A Shares which the Corporation is required to deliver.
<PAGE>
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2.3. ELECTION TO PAY CASH
2.3.1. Notwithstanding anything in this Agreement to the contrary, the
obligation of the Corporation to deliver Class A Shares on the purchase
for cancellation of Special Shares as contemplated by section 2.1 or
section 2.2 may be satisfied at the option of the Corporation:
(a) 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 the
Corporation in accordance with section 2.3.2; and
(b) 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.
2.3.2. The Corporation shall exercise its right pursuant to section 2.3.1
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 HCPH within three Business Days following an Optional Exchange Date.
2.4. RELATING TO THE PURCHASE FOR CANCELLATION BY THE CORPORATION OF
THE SPECIAL SHARES
Provided the Corporation shall have fulfilled its obligations on an
Exchange Date pursuant to this Article 2, the Corporation shall be treated as
having purchased for cancellation the Special Shares acquired by it pursuant to
this Article 2.
2.5. FRACTIONS OF CLASS A SHARES
The Corporation shall not deliver a fraction of a Class A Share on
the purchase for cancellation of any Special Share. To the extent that HCPH is
entitled to receive on the exchange of a Special Share a fraction of a Class A
Share, the Corporation 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 HCPH 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.
<PAGE>
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2.6. NATURE OF THE CORPORATION'S EXCHANGE OBLIGATION
The obligation of the Corporation to purchase for cancellation
Special Shares on a Mandatory Exchange or Optional Exchange hereunder is a
direct unsecured obligation of the Corporation ranking PARI PASSU with all other
unsecured claims against it.
2.7. DELIVERY ON EXCHANGE
2.7.1. Notwithstanding any other provision of this Agreement, the Class A
Shares or cash, if any, which the Corporation is required to deliver on a
Mandatory Exchange or an Optional Exchange, shall be delivered to HII.
2.7.2. The Corporation shall satisfy its obligations on a Mandatory
Exchange or Optional Exchange without withholding any tax.
ARTICLE 3.
ADJUSTMENTS
3.1. CHANGES AFFECTING THE CLASS A SHARES
3.1.1. If and whenever at any time after the date hereof and prior to the
Mandatory Exchange Date HII:
(a) 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);
(b) 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);
(c) subdivides its outstanding Class A Shares into a greater
number of Class A Shares; or
(d) 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
<PAGE>
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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.
3.1.2. 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:
(a) 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
(b) the denominator of which will be the aggregate of:
(i) the number of Class A Shares outstanding as of the
record date for the Rights Offering; and
(ii) 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.
<PAGE>
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If HCPH 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 it will, in addition to the Class A Shares issued to HCPH 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
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 HCPH. Such additional Class A Shares
will be deemed to have been issued to HCPH immediately following the end
of the Rights Period and a certificate for such additional Class A Shares
will be delivered to HCPH 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:
(a) 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
(b) the denominator of which will be:
(i) 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
(ii) 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.
<PAGE>
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3.1.3. 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"), HCPH will be entitled to receive on any Exchange Date,
and shall accept in lieu of Class A Shares, the aggregate number of
shares, other securities or other property which HCPH would have been
entitled to receive as a result of such HII Capital Reorganization if, on
the effective date thereof, HCPH had been the registered holder of the
number of Class A Shares which HCPH would have received if the Exchange
Date were immediately prior to such effective date, subject in all such
cases, to the Corporation'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 HCPH hereunder 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 agreement
supplemental hereto approved by the Directors and will for all purposes be
conclusively deemed to be an appropriate adjustment.
3.4. NOTICE OF ADJUSTMENT
Immediately after the occurrence of any event that requires an
adjustment or readjustment as provided in sections 3.1 and 3.2, the Corporation
will deliver a notice to HCPH 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 notice will be conclusive and binding on all
parties in interest.
ARTICLE 4.
SUPPLEMENTAL AGREEMENTS AND COVENANT
4.1. SUPPLEMENTAL AGREEMENTS
From time to time the parties hereto may, subject to the provisions
of this Agreement, and they shall, when so directed by this Agreement, execute
and deliver by their proper officers, agreements or instruments supplemental
hereto, which thereafter shall form part hereof, for any one or more or all of
the following purposes:
<PAGE>
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(a) setting forth adjustments in the application of the provisions of
Article 3;
(b) adding to the provisions hereof such additional covenants and
enforcement provisions as in the opinion of counsel to the
Corporation are necessary or advisable, provided that the same are
not prejudicial to the interests of HCPH hereunder;
(c) making such provisions not inconsistent with this Agreement as may
be necessary or desirable with respect to matters or questions
arising hereunder;
(d) amending any of the provisions of this Agreement or relieving 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 such amendment or relief impairs
any of the rights of HCPH hereunder; and
(e) for any other purpose not inconsistent with the terms of this
Agreement, including the correction or rectification of any
ambiguities, defective or inconsistent provisions, errors or
omissions herein.
4.2. SUCCESSOR CORPORATIONS
4.2.1. 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 agreement satisfactory in form to the holders, the due and
punctual performance and observance of each and every covenant and
condition of this Agreement to be performed and observed by the
Corporation.
4.3. COMPLIANCE WITH TERMS
The Corporation covenants that, for as long as any Special Shares
are outstanding, it will at all times comply with all provisions of this
Agreement to be complied with by it.
ARTICLE 5.
GENERAL
5.1. NOTICE TO THE CORPORATION AND THE HOLDERS
5.1.1. Unless herein otherwise expressly provided, any notice to be given
hereunder to the Corporation or HCPH shall be deemed to be validly given
if delivered or if sent by first class insured mail, postage prepaid or if
sent by facsimile:
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(a) if to the Corporation:
10 Toronto Street
Toronto, Ontario, M5C 2B7
Fax: (416) 364-2088
Attention: President
(b) if to HCPH
10 Toronto Street
Toronto, Ontario, M5C 2B7
Fax: (416) 364-2088
Attention: President
(c) if to HII
401 North Wabash Avenue
Chicago, Illinois 60611
U.S.A.
Fax: (312) 321-0629
Attention: Vice-President - Law and Finance and Secretary
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.
5.2. ASSIGNMENT
HCPH may assign this Agreement to any of its Affiliates provided
that it first gives to the Corporation notice of such assignment.
5.3. COUNTERPARTS AND FORMAL DATE
This Agreement may be executed in counterpart, 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 September 3, 1997.
<PAGE>
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5.4. SATISFACTION AND DISCHARGE OF AGREEMENT
Upon the Mandatory Exchange Date, this Agreement, except to the
extent that Class A Shares, certificates therefor and cash, if any, have not
been transferred and delivered hereunder or the Corporation has not performed
any of its obligations hereunder, shall cease to be of further effect.
IN WITNESS WHEREOF the parties hereto have executed this Agreement
under the hands of their proper officers in that behalf.
3396754 CANADA LIMITED
By: /S/ C. G. COWAN
---------------------------------
Vice President & Secretary
HOLLINGER CANADIAN
PUBLISHING HOLDINGS INC.
By: /S/ C. G. COWAN
---------------------------------
Vice President & Secretary
HOLLINGER INTERNATIONAL INC.
By: /S/ J. A. BOULTBEE
---------------------------------
Executive Vice President &
Chief Financial Officer
<PAGE>
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CONFIRMATION
The undersigned confirms to 3396754 Canada Limited, Hollinger
Canadian Publishing Holdings Inc. (and its permitted assignees from time to
time) and to Hollinger International Inc. that the undersigned will provide to
3396754 Canada Limited, its wholly-owned subsidiary, sufficient Class A Common
Shares for 3396754 Canada Limited to satisfy its obligation upon the purchase
for cancellation of Special Shares pursuant to the terms of this Agreement.
ACKNOWLEDGED AND AGREED AS OF SEPTEMBER 3, 1997
HOLDINGS INC.
By: /S/ C. G. COWAN
-------------------------------
Vice President & Secretary
<PAGE>
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SCHEDULE A
FORM OF MANDATORY EXCHANGE NOTICE
NON-VOTING SPECIAL SHARES OF
3396754 CANADA LIMITED
MANDATORY EXCHANGE NOTICE
TO: HOLLINGER CANADIAN PUBLISHING HOLDINGS INC. ("HCPH"), THE HOLDER OF
NON-VOTING SPECIAL SHARES ("SPECIAL SHARES") OF 3396754 CANADA LIMITED
(THE "CORPORATION")
Notice is hereby given pursuant to section 2.1.2 of the Exchange
Agreement dated as of September 3, 1997 between 3396754 Canada Limited (the
"Corporation") and HCPH that each Special Share will be purchased for
cancellation 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 Hollinger International Inc. 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 HCPH 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, HCPH's rights as a holder
of Special Shares cease.
[Pursuant to section 2.3 of the Exchange Agreement, the Corporation
hereby irrevocably elects to pay to HII, at the direction of HCPH as provided in
the Exchange Agreement, cash equal to / /% of the Base Amount per Special Share
on the purchase for cancellation of Special Shares].
In order to effect the purchase for cancellation of the Special
Shares, HCPH is required to deliver to the Corporation at 10 Toronto Street,
Toronto, Ontario M5L 2R7 the certificate or certificates representing the
Special Shares. Class A Shares and cash, if any, to which to which HII is
entitled will not be released until such certificate(s) are delivered to the
Corporation as set out above.
DATED: _______________, 2000
<PAGE>
EXHIBIT NO. 15
Hollinger International Inc.
401 N. Wabash Avenue
Chicago, Illinois 60611
July 29, 1997
Hollinger Inc.
Hollinger Canadian Publishing
Holdings Inc.
10 Toronto Street
Toronto, Ontario M5C 2B7
Canada
Attention: J. A. Boultbee
Vice-President,
Finance and Treasury
Ladies and Gentlemen:
Reference is hereby made to (a) that certain Second Amended and
Restated Second Exchange Agreement dated as of July 21, 1997, among Hollinger
International Inc. ("International"), Hollinger Inc. ("Hollinger"), UniMedia
Holding Company and 1159670 Ontario Limited (the "1997 Exchange Agreement") and
(b) the Share Exchange Agreement dated as of July 19, 1995 between International
and Hollinger, as amended (the "Hollinger/APC Share Exchange Agreement").
This letter will confirm our understanding that, upon completion of
the transactions contemplated by the 1997 Exchange Agreement, the shares of
International's Series D Redeemable Convertible Preferred Stock, par value $.01
per share ("Series D Preferred Stock") to be issued in the Second Exchange (as
defined in the 1997 Exchange Agreement) will be subject to the same contractual
restrictions upon redemption applicable to International's Series A Redeemable
Convertible Preferred Stock, par value $.01 per share ("Series A Preferred
Stock") set forth in Sections 5(h)(iii), (vi) and (vii) of the Hollinger/APC
Share Exchange Agreement, as if all of such restrictions were set forth herein
in their entirety.
For the avoidance of doubt, the formula governing the maximum number
of shares of International's Series A Preferred Stock that may be redeemed at
the option of Hollinger, set forth in Section 5(h)(vi)(A) of the Hollinger/APC
Share Exchange Agreement, shall be amended in all respects so as to delete all
references to International's Series A Preferred Stock and, in lieu
<PAGE>
thereof, to insert references to International's Series D Preferred Stock.
Hollinger agrees to cause any transferee of International's Series D Preferred
Stock (whether by means of a transfer or other disposition permitted under
Section 12 of the Certificate of Designations relating to the Series D Preferred
Stock or as a result of any merger, consolidation, amalgamation, or sale, lease,
transfer, assignment or other disposition of all or any significant portion of
the properties or assets of Hollinger) to agree in writing to be bound by such
limitations and to provide a copy thereof to International.
As amended hereby, the Hollinger/APC Share Exchange Agreement is
hereby reaffirmed and confirmed in every respect and remain in full force and
effect.
Very truly yours,
HOLLINGER INTERNATIONAL INC.
By: /S/ J. A. BOULTBEE
--------------------------
J. A. Boultbee,
Executive Vice President, and
Chief Financial Officer
Agreed and Accepted
this ____ day of July, 1997
HOLLINGER INC. By: /S/ RICHARD N. PERLE
--------------------------
Richard N. Perle
By: /S/ J. A. BOULTBEE Chairman, Special
-------------------------- Committee of independent
J. A. Boultbee directors
Vice-President,
Finance and Treasury
HOLLINGER CANADIAN PUBLISHING HOLDINGS INC.
By: /S/ J. A. BOULTBEE
---------------------------
J. A. Boultbee
Vice-President,
Finance and Treasury
