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EXHIBIT 2.1
HOLLINGER INTERNATIONAL INC., SOUTHAM INC.,
HOLLINGER CANADIAN NEWSPAPERS, LIMITED PARTNERSHIP AND
HCN PUBLICATIONS COMPANY
-AND-
CANWEST GLOBAL COMMUNICATIONS CORPORATION
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TRANSACTION AGREEMENT
July 30, 2000
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Osler, Hoskin & Harcourt LLP
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ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION............................................................2
1.1 Definitions....................................................................................2
1.2 Certain Rules of Interpretation...............................................................21
1.3 Subsidiary....................................................................................22
1.4 Knowledge.....................................................................................22
1.5 Made Available................................................................................22
1.6 Entire Agreement..............................................................................22
1.7 Applicable Law................................................................................23
1.8 Accounting Principles.........................................................................23
1.9 Schedules.....................................................................................23
ARTICLE 2
REORGANIZATION, PURCHASE AND SALE......................................................................24
2.1 The Reorganization............................................................................24
2.2 Settlement of Inter-Affiliate Payables as of Effective Date...................................25
2.3 Intentionally deleted.........................................................................25
2.4 Actions by the Vendors and CanWest............................................................25
2.5 Place of Closing..............................................................................26
2.6 Tender........................................................................................26
2.7 No Assumption of Liabilities..................................................................26
2.8 Assignment of Contracts.......................................................................26
ARTICLE 3
PURCHASE PRICE.........................................................................................27
3.1 Purchase Price................................................................................27
3.2 Satisfaction of Purchase Price................................................................28
3.3 Adjustment to Consideration...................................................................28
3.4 Delivery of CanWest Year-End Financial Statement..............................................29
3.5 Payment of CanWest EBITDA Adjustment..........................................................29
3.6 Adjustments to the Purchase Price.............................................................29
3.7 Delivery of Effective Date Financial Statement................................................31
3.8 Payment of Working Capital Adjustment Amount..................................................31
3.9 Delivery of Vendor Year-End Financial Statement...............................................32
3.10 Payment of Vendors EBITDA Adjustment Amount...................................................32
3.11 Determination of Tax Shield Reduction Amount..................................................32
3.12 Objection to Effective Date Financial Statement...............................................33
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3.13 Objection to CanWest Year-End Financial Statement, or Vendor Year-End Financial
Statement.....................................................................................34
3.14 Interest......................................................................................35
3.15 Allocation of Purchase Price..................................................................35
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE VENDORs..........................................................35
4.1 Incorporation and Registration................................................................35
4.2 Residence of the Vendors......................................................................36
4.3 Subsidiaries..................................................................................36
4.4 Title to Personal Property....................................................................37
4.5 Right to Sell.................................................................................37
4.6 Capitalization................................................................................38
4.7 Due Authorization.............................................................................38
4.8 Enforceability of Obligations.................................................................39
4.9 Absence of Conflicting Agreements.............................................................39
4.10 Regulatory Approvals..........................................................................39
4.11 Financial Statements and National Post Financial Statements...................................39
4.12 Financial Forecasts...........................................................................40
4.13 Absence of Undisclosed Liabilities............................................................40
4.14 Absence of Changes and Unusual Transactions...................................................40
4.15 No Joint Venture Interests....................................................................42
4.16 Major Suppliers and Customers.................................................................42
4.17 Condition of Assets...........................................................................42
4.18 Inventories...................................................................................42
4.19 Collectibility of Accounts Receivable.........................................................42
4.20 Provisions and Accruals.......................................................................42
4.21 Business in Compliance with Law...............................................................43
4.22 Governmental Authorizations...................................................................43
4.23 Restrictive Covenants.........................................................................43
4.24 Intellectual Property.........................................................................43
4.25 Equipment Contracts...........................................................................45
4.26 Owned Real Property...........................................................................46
4.27 Leased Real Property..........................................................................46
4.28 Real Property Generally.......................................................................48
4.29 Environmental Matters.........................................................................50
4.30 Employment Matters............................................................................52
4.31 Collective Agreements.........................................................................54
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4.32 Pension and Benefit Plans.....................................................................54
4.33 Insurance.....................................................................................56
4.34 Material Contracts............................................................................57
4.35 Copies of Agreements, etc.....................................................................57
4.36 Inter-Affiliate Arrangements..................................................................57
4.37 Section 19 of the Income Tax Act (Canada).....................................................57
4.38 Litigation....................................................................................57
4.39 Tax Matters...................................................................................58
4.40 Books and Records.............................................................................58
4.41 Management Recommendation Letters.............................................................59
4.42 Trade Allowances..............................................................................59
4.43 Third Party Consents..........................................................................59
4.44 Location of the Assets........................................................................59
4.45 Sufficiency of Assets.........................................................................59
4.46 No Broker.....................................................................................59
4.47 Share Ownership...............................................................................60
4.48 Full Disclosure...............................................................................60
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF CANWEST..............................................................60
5.1 Due Authorization.............................................................................60
5.2 Enforceability of Obligations.................................................................60
5.3 Investment Canada.............................................................................60
5.4 Litigation....................................................................................60
5.5 No Broker.....................................................................................61
5.6 CanWest Disclosure Record.....................................................................61
5.7 Absence of Changes............................................................................61
5.8 Title to Property.............................................................................61
5.9 Incorporation and Registration................................................................62
5.10 Capitalization................................................................................62
5.11 Shares........................................................................................62
5.12 Subordinated Debentures.......................................................................63
5.13 Absence of Conflicts..........................................................................63
5.14 Legal Proceedings.............................................................................64
5.15 Government Licenses...........................................................................64
5.16 CanWest Financial Statements..................................................................64
5.17 Intellectual Property.........................................................................64
5.18 Employee Matters..............................................................................65
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5.19 Section 19 of the Income Tax Act..............................................................65
5.20 Environmental Compliance......................................................................65
ARTICLE 6
NON-WAIVER; SURVIVAL...................................................................................65
6.1 Non-Waiver....................................................................................65
6.2 Nature and Survival...........................................................................66
ARTICLE 7
CANWEST'S CONDITIONS PRECEDENT.........................................................................66
7.1 Conditions Precedent..........................................................................66
7.2 Consequences of a Failure to Satisfy Conditions Precedent.....................................70
ARTICLE 8
VENDORS' CONDITIONS PRECEDENT..........................................................................71
8.1 Conditions Precedent..........................................................................71
8.2 Consequences of Failure to Satisfy Conditions Precedent.......................................73
ARTICLE 9
OTHER COVENANTS OF THE PARTIES.........................................................................73
9.1 Conduct of Purchased Businesses Prior to Closing..............................................73
9.2 Conduct of Purchased Businesses following the Reorganization Date.............................74
9.3 Access for Investigation by CanWest...........................................................75
9.4 Access for Investigation by the Vendors.......................................................75
9.5 Actions to Satisfy Closing Conditions.........................................................76
9.6 Change Vendor's Name..........................................................................76
9.7 Change Name of Purchased Companies............................................................76
9.8 Employees.....................................................................................77
9.9 Pension and Other Benefit Plans...............................................................78
9.10 Sales and Transfer Taxes......................................................................79
9.11 Canada Pension Plan and Employment Insurance..................................................79
9.12 Cash Flow During Interim Period...............................................................79
9.13 Preservation of Records.......................................................................80
9.14 Litigation Assistance.........................................................................80
9.15 CanWest's Option if Damage, Etc...............................................................80
9.16 Co-operation of the Parties Regarding Tax Planning............................................81
9.17 Sale of Canada.com Business By CanWest........................................................81
9.18 Sale of Print News Media Assets by CanWest....................................................81
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9.19 Subordinated Debentures.......................................................................82
9.20 Restrictions on Sale of CanWest Stock/Subordinated Debentures.................................82
9.21 Right of First Refusal on Assets..............................................................83
9.22 CanWest Operations Committee..................................................................84
9.23 Affiliation Agreements with Hollinger and Purchasers of Excluded Assets.......................84
9.24 CanWest Financing.............................................................................84
9.25 Consent to Jurisdiction.......................................................................85
9.26 Assurance by Hollinger........................................................................85
9.27 Offers for Purchased Assets or Excluded Assets................................................85
9.28 Schedules.....................................................................................85
9.29 Victoria Times Colonist.......................................................................86
9.30 Services to and from Excluded Assets..........................................................86
9.31 National Post Shareholders Agreement..........................................................86
9.32 Preemptive Rights.............................................................................87
9.33 No Dilution Prior to Closing..................................................................87
9.34 Subsidiaries' Assets..........................................................................87
9.35 Southam News Assets and Employees.............................................................87
9.36 Halifax Daily News............................................................................87
9.37 CanWest Shareholders Meeting..................................................................87
ARTICLE 10
INDEMNIFICATION........................................................................................88
10.1 Indemnification of CanWest by the Vendors for Breaches of Covenants and
Representations and Warranties................................................................88
10.2 Indemnity Regarding Liabilities and Encumbrances..............................................88
10.3 Indemnity Regarding National Post Company.....................................................89
10.4 Bulk Sales and Retail Sales Tax Indemnity.....................................................89
10.5 Environmental Indemnity.......................................................................89
10.6 Indemnification of Hollinger by CanWest for Breaches of Covenants and Representations
and Warranties................................................................................91
10.7 Indemnification Procedures for Third Party Claims.............................................91
ARTICLE 11
GENERAL................................................................................................93
11.1 Public Notices................................................................................93
11.2 Expenses......................................................................................93
11.3 Notices.......................................................................................93
11.4 Assignment....................................................................................94
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11.5 Arbitration...................................................................................94
11.6 Planning Act (Ontario) and Similar Legislation................................................94
11.7 Further Assurances............................................................................95
11.8 Counterparts..................................................................................95
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THIS TRANSACTION AGREEMENT is made July 30, 2000
BETWEEN:
HOLLINGER INTERNATIONAL INC., a corporation governed by the laws of
Delaware, ("Hollinger")
- and -
SOUTHAM INC., a corporation governed by the laws of Canada,
("Southam")
- and -
HOLLINGER CANADIAN NEWSPAPERS, LIMITED PARTNERSHIP, a limited
partnership governed by the laws of the Province of Ontario,
("Newspapers Partnership")
- and -
HCN PUBLICATIONS COMPANY, a corporation governed by the laws of Nova
Scotia, ("HCN Publications")
- and -
CANWEST GLOBAL COMMUNICATIONS CORPORATION, a corporation governed by
the laws of Canada, ("CanWest")
RECITALS:
A. Hollinger indirectly owns all of the issued and outstanding shares in
Southam, indirectly owns all of the issued and outstanding shares of
Hollinger Canadian Newspapers G.P. Inc., the general partner of Newspapers
Partnership, and indirectly owns approximately eighty-five percent of the
limited partnership units of Newspapers Partnership.
B. Hollinger, indirectly through Southam, Newspapers Partnership and HCN
Publications and their subsidiaries, carries on the business in Canada of
owning, operating and publishing newspapers, magazines and related
publications, ancillary business communications operations including the
provision of content through the Internet and has agreed to cause Southam
and Newspapers Partnership and their subsidiaries, to sell to CanWest and
CanWest has agreed to purchase all of the assets, property and undertaking
of and pertaining to such businesses as a going concern other than certain
excluded businesses all on the terms and conditions of this Agreement.
THEREFORE the parties agree as follows:
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ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 DEFINITIONS
Whenever used in this Agreement the following words and terms shall
have the meanings set out below:
"ACCOUNTS PAYABLE" means dividends declared but not yet paid, any and
all amounts in connection with the Purchased Businesses due and owing
to Employees, traders, suppliers and other persons in the ordinary
course of business (including amounts in respect of sales taxes
payable) as of the Effective Date which by their terms are to be paid
within twelve months from the Effective Date and, in the case of
amounts to be paid in instalments, only that portion which by its
terms is to be paid within twelve months from the Effective Date,
other than any amounts owing to Hollinger or any of its Affiliates or
subsidiaries;
"ACCOUNTS RECEIVABLE" means any and all accounts receivable, bills
receivable, trade accounts and book debts recorded as receivable in
the Books and Records and any and all other amounts due to the
Vendors, their subsidiaries or the Business Units in connection with
the Purchased Businesses, including from Transferred Employees, which
by their terms are to be received within twelve months from the
Effective Date and, in the case of amounts to be received in
instalments, only that portion which by its terms is to be received
within twelve months from the Effective Date, including any and all
refunds and rebates receivable in connection with the Purchased
Businesses, and the benefit of any and all security (including cash
deposits), guarantees and other collateral held by the Vendors or the
Business Units in connection with the Purchased Businesses, other than
any amounts receivable from Hollinger or any of its Affiliates or
subsidiaries and other than any of the foregoing which are Excluded
Assets;
"ACCRUED LIABILITIES" means (i) any and all accrued liabilities of the
Purchased Businesses incurred in the ordinary course of business as of
the Effective Date which by their terms are to be paid within twelve
months from the Effective Date and, in the case of amounts to be paid
in instalments, only that portion which by its terms is to be paid
within twelve months from the Effective Date, including the
liabilities associated with prepaid subscriptions, deferred
circulation and advertising revenue, accruals for Compensation Plans
in respect of Southam Employees and Newspapers Partnership Employees,
customer rebates and allowances other than deferred income taxes and
other deferred credits, and (ii) any and all accrued liabilities as of
the Effective Date relating to a SERA and post-employment and
post-retirement benefits relating to Transferred Employees calculated
in accordance with current, accurate and complete data as of the
Effective Date and the assumptions and methods determined in
accordance with Schedule 1.1(a);
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"AFFILIATE" has the meaning given in the Canada Business Corporations
Act, as amended from time to time;
"AGREEMENT" means this Transaction Agreement, including all schedules,
and all instruments supplementing or amending or confirming this
Agreement and references to
"APPLICABLE SECURITIES LAWS" means the Securities Act (Ontario), all
other Canadian provincial and territorial securities legislation, the
United States Securities Act of 1933, as amended and the United States
Securities Exchange Act of 1934, as amended, and, all regulations,
rules, policies and other documents promulgated thereunder;
"ARBITRATION PROCEDURES" means the procedures described in Schedule
1.1(b);
"ARM'S LENGTH" means arm's length as defined in the Income Tax Act
(Canada);
"ARTICLE" or "SECTION" mean and refer to the specified Article or
Section of this Agreement;
"ASSUMED CANADA.COM LIABILITIES" means those of the Assumed
Liabilities which relate to the Canada.com Business;
"ASSUMED CENTRAL SERVICES LIABILITIES" means those of the Assumed
Liabilities which relate to the Central Services;
"ASSUMED LIABILITIES" means (a) the Current Liabilities and (b) those
liabilities and obligations of the Vendors or their Affiliates
necessary or desirable for the ongoing operation of the Purchased
Businesses accruing or due subsequent to the Effective Date in the
ordinary course of the Purchased Businesses under the Contracts, the
Governmental Authorizations and the Permitted Encumbrances relating to
the Purchased Businesses;
"ASSUMED PRINT NEWS MEDIA LIABILITIES" means those of the Assumed
Liabilities which relate to the Print News Media Business;
"BENEFIT PLANS" means all plans, arrangements, agreements, programs,
policies, practices or undertakings, whether oral or written, formal
or informal, funded or unfunded, registered or unregistered to or by
which the Vendors are a party or bound or under which the Vendors
have, or will have, any liability or contingent liability, relating
to: (a) Pension Plans; (b) Insurance Plans; or (c) Compensation Plans,
with respect to any Employees or former employees of the Purchased
Businesses or the National Post Business (or any dependants or
beneficiaries of any such Employees or former employees), individuals
working on contract with the Vendors or other individuals providing
services of a kind normally provided by employees or eligible
dependants of such person in each case, of the Purchased Businesses;
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"BOOKS AND RECORDS" means all books and records of the Vendors and the
Business Units, relating primarily or exclusively to the Purchased
Businesses, including financial, corporate, operations and sales
books, records, books of account, sales and purchase records, lists of
suppliers and customers, formulae, business reports, plans and
projections and all other documents, surveys, plans, files, records,
correspondence, and other data and information, financial or otherwise
including all data and information stored on computer-related or other
electronic media, other than any such books and records which are
Excluded Assets;
"BUSINESS DAY" means a day, other than a Saturday or Sunday, on which
the principal commercial banks in the Cities of Toronto and Winnipeg
are open for business during normal banking hours;
"BUSINESS UNIT" means any of the individual operating units of the
Purchased Businesses, including the individual newspaper operations
listed and described in Schedule 1.1(c), the magazine operations
listed and described in Schedule 1.1(c) and the operations, portals
and web-sites of the Canada.com Business listed and described in
Schedule 1.1(c);
"BUSINESS UNIT BALANCE SHEET" means, collectively, the balance sheet
of each of the Business Units, respectively, as at May 31, 2000,
forming part of the Financial Statements;
"CANADA.COM ASSETS" means all of the Vendors' right, title and
interest in, to and under the assets, property and undertaking owned
or used or held by the Vendors for use in, or in respect of the
operation of, the Canada.com Business, including the Vendors' 80%
interest in the general partnership operating the Faceoff.com website,
and ancillary communications operations;
"CANADA.COM BUSINESS" means the business of operating the Canada.com
website portal and related websites, including Faceoff.com,
Montrealonline.com, Ottawaonline.com, Vancouvertoday.com, and each of
the other "city"today.com websites, and ancillary communications
operations;
"CANADA.COM COMPANY" means a newly incorporated indirect subsidiary of
Hollinger to which the Canada.com Assets and Assumed Canada.com
Liabilities are transferred pursuant to the Reorganization in
accordance with a Transfer Agreement;
"CANADA.COM COMPANY DEBT" means the indebtedness of Canada.com Company
Holdco incurred in connection with the acquisition of all of the
issued and outstanding shares of Canada.com Company pursuant to the
Reorganization;
"CANADA.COM COMPANY HOLDCO" means a newly incorporated indirect
subsidiary of Hollinger which, on and after the Reorganization Date,
will own all of the issued and outstanding shares in the capital of
Canada.com Company;
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"CANADA.COM COMPANY SHARES" means all of the issued and outstanding
shares in the capital of Canada.com Company Holdco;
"CANWEST AUDITOR" means PricewaterhouseCoopers LLP, Chartered
Accountants;
"CANWEST DISCLOSURE RECORD" means the CanWest Financial Statements,
CanWest's annual information form dated November 24, 1999, management
proxy circular dated November 24, 1999, interim financial statements
for the periods ending November 30, 1999, February 29, 2000 and May
31, 2000, and all filings by CanWest with the Securities and Exchange
Commission in the United States since September 1, 1999;
"CANWEST FINANCIAL STATEMENTS" means the consolidated financial
statements of CanWest for the years ended August 31, 1999 and 1998
consisting of consolidated balance sheets, statements of earnings,
statements of retained earnings and statements of cash flows, together
with the notes thereto and the CanWest Auditor's report thereon and
the interim financial statements of CanWest for the three months, six
months and nine months ended November 30, 1999, February 29, 2000 and
May 31, 2000;
"CANWEST INDENTURE" means the trust indenture governing the
Subordinated Debentures to be entered into by Subco and a trust
company carrying on business in Canada, as trustee, on the Closing
Date in form and substance reasonably satisfactory to CanWest and the
Vendors;
"CANWEST MATERIAL SUBSIDIARIES" means, collectively, the Persons set
forth in Column 1 of Schedule 5.9;
"CANWEST SECURITIES" means, collectively, the Preferred Shares,
Non-Voting Shares and the Subordinated Debentures to be delivered to
the Vendors in accordance with Section 3.2 and the agreement referred
to in Section 3.3(b);
"CANWEST YEAR-END FINANCIAL STATEMENT" means the EBITDA statement of
the CanWest operations and investments listed on Schedule 3.3(a) - 1
for the year ending August 31, 2001 together with a report of the
CanWest Auditor in form and substance reasonably satisfactory to the
Vendors;
"CANWEST 2001 EBITDA" means the earnings of the CanWest operations and
investments listed on Schedule 3.3(a) - 1 for the twelve month period
ending August 31, 2001 calculated without duplication before: (i)
income taxes; (ii) depreciation and amortization (excluding
amortization of program rights); (iii) interest and other financing
charges; (iv) minority interest in the earnings of subsidiaries; (v)
equity income or losses in the earnings of affiliates; (vi) gains and
losses in respect of the disposition of assets; (vii) the reversal of
provisions for costs which were made in respect of prior years
earnings; (viii) inter-corporate management fees paid or payable among
the operations listed on Schedule 3.3(a) - 1; (ix) unusual or
extraordinary items and (x) other expense and income items normally
recorded on the income statement below the operating profit
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line, calculated operation by operation on the basis consistent with
the indicative calculation described in Schedule 3.3(a) - 2, all as
reflected on the CanWest Year-End Financial Statement;
"CENTRAL SERVICES" means those services identified in Schedule 3.1(a);
"CENTRAL SERVICES ASSETS" means all of Southam's right, title and
interest in, to and under the assets, property and undertaking owned
or used or held by Southam for use in, or in respect of, the delivery
of the Purchased Central Services, including the land and building
located at 1450 Don Mills Road in Toronto, Ontario;
"CENTRAL SERVICES COMPANY" means a newly incorporated indirect
subsidiary of Hollinger to which the Central Services Assets and
Assumed Central Services Liabilities are transferred pursuant to the
Reorganization in accordance with a Transfer Agreement;
"CENTRAL SERVICES COMPANY DEBT" means the indebtedness of Central
Services Company Holdco incurred in connection with the acquisition of
all of the issued and outstanding shares of Central Services Company
pursuant to the Reorganization;
"CENTRAL SERVICES COMPANY HOLDCO" means a newly incorporated indirect
subsidiary of Hollinger which, on and after the Reorganization Date,
will own all of the issued and outstanding shares in the capital of
Central Services Company;
"CENTRAL SERVICES COMPANY SHARES" means all of the issued and
outstanding shares in the capital of Central Services Company Holdco;
"CLAIMS" means any claim, demand, action, cause of action, damage,
loss, costs, grievances, complaints, liability or expense, including
reasonable professional fees, legal fees on a solicitor and client
basis and all costs incurred in investigating or pursuing any of the
foregoing or any proceeding relating to any of the foregoing;
"CLOSING" means the completion of the sale to and purchase by CanWest
of the Purchased Shares, the Purchased Debt and the Purchased National
Post Company Interest under this Agreement;
"CLOSING DATE" means the 2nd day of October, 2000 provided that, if
Competition Act Approval shall not have been obtained by such date,
the Closing Date shall be the earlier of December 31, 2000 and the 5th
day following receipt of Competition Act Approval, or such other date
as the Parties may agree in writing as the date upon which the Closing
shall take place;
"CLOSING TIME" means 10:00 a.m., Toronto time, on the Closing Date or
such other time on such date as the Parties may agree in writing as
the time at which the Closing shall take place;
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"COLLECTIVE AGREEMENTS" means the collective agreements and all
related documents including all benefit agreements, letters of
understanding, letters of intent and other communications with Unions
relating to the Employees, the Purchased Businesses or the National
Post Business by which the Vendors are bound or which imposes any
obligations upon the Vendors or sets out the understanding of the
Parties with respect to the meaning of any provisions of such
collective agreements;
"COMPENSATION PLANS" means any and all employment benefits relating to
bonus, commission, incentive pay or compensation, performance
compensation, deferred compensation, profit sharing or deferred profit
sharing, share purchase, share option, stock appreciation, phantom
stock, vacation or vacation pay, sick pay, severance or termination
pay, employee loans or separation from service benefits, or any other
type of arrangement providing for compensation or benefits additional
to base pay or salary;
"COMPETITION ACT APPROVAL" means: (a) the Commissioner of Competition
shall have issued an advance ruling certificate pursuant to section
102 of the Competition Act in respect of the transactions contemplated
by this Agreement; or (b) the waiting period under section 123 of the
Competition Act shall have expired and CanWest shall have been advised
in writing by the Commissioner that the Commissioner has determined
not to make an application for an order under section 92 of the
Competition Act in respect of the transactions contemplated by this
Agreement at that time;
"CONCURRENT SHARE PURCHASE AGREEMENTS" has the meaning given to it in
Section 3.3(b);
"CONTENT" means all text, data, information and graphics included in
any newspapers, magazines, publications or websites, published or
operated in Canada by the Vendors;
"CONTRACTS" means all contracts, licenses, leases, agreements,
commitments, entitlements and engagements of the Vendors relating to
the Purchased Businesses, the National Post Business or the Purchased
Assets and including all quotations, orders or tenders for contracts
which remain open for acceptance and any manufacturers' or suppliers'
warranty, guarantee or commitment (express or implied), other than any
of the foregoing which are Excluded Assets;
"CONTROL" has the meaning given to it in the Canada Business
Corporations Act;
"CRTC" means the Canadian Radio-television and Telecommunications
Commission;
"CRTC DIRECTION" means the Governor in Council's Direction to the CRTC
(ineligibility of Non-Canadians) issued pursuant to the Broadcasting
Act, as amended from time to time;
"CURRENT ASSETS" means the Accounts Receivable, Inventories and
Prepaid Expenses and Deposits;
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"CURRENT LIABILITIES" means Accounts Payable and Accrued Liabilities;
"EFFECTIVE DATE" means the 31st day of August, 2000 or such other date
as the Parties may agree in writing;
"EFFECTIVE DATE FINANCIAL STATEMENT" means the statement of assets and
liabilities of the Purchased Businesses prepared by the Vendors as at
the Effective Date, showing for each of: (i) all of the Print News
Media Assets, including the Current Assets of the Print News Media
Business and the Assumed Print New Media Liabilities; (ii) a statement
of the Working Capital; (iii) the Canada.com Assets and the Assumed
Canada.com Liabilities; (iv) the Central Services Assets and the
Assumed Central Services Liabilities; and (v) the assets, liabilities
and partners' capital of the National Post Business, together with an
unqualified opinion of the Hollinger Auditor to the effect that the
Effective Date Financial Statement has been prepared in accordance
with generally accepted accounting principles consistently applied
with those used in the audited 1999 Southam Consolidated Financial
Statements and presents fairly in all material respects the Working
Capital, the Purchased Assets (other than the National Post Assets)
and the Current Liabilities and the assets, liabilities and partners'
capital of the National Post Business as at the Effective Date;
"EMPLOYEE INTERIM SERVICES AGREEMENT" means the agreement
substantially in the form of Schedule 7.1(s);
"EMPLOYEES" means all persons employed by the Vendors or their
subsidiaries principally in connection with the Purchased Businesses
or the National Post Business, including for greater certainty, such
employees of the Vendors employed at the corporate head offices of
Southam, the Newspapers Partnership or any other subsidiary of
Hollinger;
"EMPLOYMENT CONTRACT" means any contract or commitment, whether oral
or written, relating to an Employee entitled to annual compensation
from employment (including base pay or salary and compensation
received from any Compensation Plan) in excess of $100,000 and
includes any other communication or practice which imposes any
material obligations in respect of any such Employees or sets out the
understanding of the Parties with respect to the meaning of any such
employment contract;
"ENCUMBRANCES" means any pledge, lien, charge, security interest,
lease, title retention agreement, mortgage, restriction, development
or similar agreement, easement, right-of-way, title defect, option,
right to acquire or adverse claim or encumbrance of any kind or
character whatsoever;
"ENVIRONMENT" means the environment or natural environment as defined
in any Environmental Law and includes air, surface water, ground
water, land surface, soil, subsurface strata and any sewer system;
<PAGE> 16
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"ENVIRONMENTAL APPROVALS" means all legally binding permits,
certificates, approvals, licenses, authorizations, consents,
agreements, instructions, directions, registrations or approvals
issued, granted, conferred or required by Governmental Authorities
pursuant to Environmental Laws with respect to the operation or
management of the Purchased Businesses, the National Post Business or
pertaining to the Purchased Assets and includes, without limitation,
any sewer surcharge agreement,
"ENVIRONMENTAL CONDITION" means:
(a) any waste of any nature present at, upon or within any Real
Property at or prior to the Closing Time or any Hazardous Substance
present at, upon, within or emanating from any Real Property at
concentrations exceeding, or in a condition contrary to, applicable
Environmental Standards at or prior to the Closing Time where:
(i) any Governmental Authority issues a written directive,
instruction, requirement or other similar written request (none
of which are necessarily legally binding and, without limiting
the generality of the foregoing, which could result from an
application to redevelop or change the use of any property) to
study, investigate, remediate, control, remove, clean-up or
otherwise address such Hazardous Substance;
(ii) any Governmental Authority issues a Remedial Order as a
result of or relating to such Hazardous Substance;
(iii) the presence of such Hazardous Substance at such
concentrations constitutes a breach of any applicable
Environmental Laws (as such laws existed at the Closing Time) or
any applicable Environmental Laws (as such laws existed at the
Closing Time) require any study, investigation, remediation,
control, removal, clean-up of or other action to address such
Hazardous Substance;
(iv) any court action, suit, claim or proceeding is commenced, or
any written, bona fide claim or demand is made by a third party
as a result of or relating to such Hazardous Substance; or
(v) such Hazardous Substance needs to be studied, investigated,
remediated, controlled, removed, cleaned-up or otherwise
addressed in order to avoid any likely or threatened: (A)
Remedial Order; (B) breach of any applicable Environmental Law
(as such laws existed at the Closing Time); or (C) the
commencement of any court action, suit, claim or proceeding by a
third party; or
(b) any Hazardous Substance present at, upon or within any property
other than the Real Property at or prior to the Closing Time at
concentrations exceeding any applicable Environmental Standard where:
<PAGE> 17
-10-
(i) any Governmental Authority issues a written directive,
instruction, requirement or other similar written request (none
of which are necessarily legally binding and, without limiting
the generality of the foregoing, which could result from an
application to redevelop or change the use of any property) to
study, investigate, remediate, control, remove, clean-up or
otherwise address such Hazardous Substance;
(ii) any Governmental Authority issues a Remedial Order as a
result of or relating to such Hazardous Substance;
(iii) the presence of such Hazardous Substance at such
concentrations constitutes a breach of any applicable
Environmental Laws (as such laws existed at the Closing Time) or
any applicable Environmental Laws (as such laws existed at the
Closing Time) require any study, investigation, remediation,
control, removal, clean-up of or other action to address
Hazardous Substance;
(iv) any court action, suit, claim or proceeding is commenced, or
any written, bona fide claim or demand is made by a third party
as a result of or relating to such Hazardous Substance; or
(v) such Hazardous Substance needs to be studied, investigated,
remediated, controlled, removed, cleaned-up or otherwise
addressed in order to avoid any likely or threatened: (A)
Remedial Order; (B) breach of any applicable Environmental Law
(as such laws existed at the Closing Time); or (C) the
commencement of any court action, suit, claim or proceeding by a
third party,
and, for the purposes of this paragraph (b), where such Hazardous
Substance is present under such property as a result of or relating to
any act or omission of the Vendors or in any way to the carrying on of
the Purchased Businesses by the Vendors;
"ENVIRONMENTAL LAWS" means all Laws relating in full or in part to the
Environment or public health or safety, and includes those Laws
relating to the storage, generation, use, handling, manufacture,
processing, labelling, advertising, sale, display, transportation,
treatment, Release and disposal of Hazardous Substances, and excludes
Occupational Health and Safety Laws;
"ENVIRONMENTAL REPORTS" means the environmental reports with respect
to the Purchased Assets listed in Schedule 4.29(a);
"ENVIRONMENTAL STANDARD" means the concentrations, amounts, conditions
or any other standards specified in any Environmental Laws (as such
laws existed at the Closing Time) or any guideline or policy issued by
any Governmental Authority (as such guidelines or policies existed at
the Closing Time) which describes the acceptable conditions for any
Hazardous Substances or the acceptable generic concentrations or
<PAGE> 18
-11-
amounts of Hazardous Substances which may be present in air,
atmosphere, soils, any subsurface strata, surface water or ground
water;
"EQUIPMENT CONTRACTS" means all motor vehicle leases, equipment
leases, conditional sales contracts, title retention agreements and
other similar agreements binding upon the Vendors relating to
equipment and vehicles used by the Vendors in connection with the
Purchased Businesses or the National Post Business;
"EXCLUDED ASSETS" means:
(a) the assets of the Vendors used solely and exclusively by the
Excluded Businesses;
(b) all cash, bank balances, moneys in possession of banks and other
depositories, term or time deposits and similar cash items of,
owned or held by or for the account of the Vendors as of the
Effective Date, other than petty cash held for day to day use at
each of the individual operations of the Business Units;
(c) the corporate, financial, taxation and other records of the
Vendors not pertaining to the Purchased Businesses or the
National Post Business;
(d) all extra-provincial, sales, excise or other licenses or
registrations issued to or held by the Vendors, whether in
respect of the Purchased Businesses, the National Post Business
or otherwise;
(e) any refunds in respect of reassessments for Taxes paid by the
Vendors pertaining to the Purchased Businesses, the National Post
Business or the Purchased Assets;
(f) refundable Taxes;
(g) all amounts owing from any director, officer, former director or
officer, shareholder, employee (other than an Account Receivable
from a Transferred Employee) or any Affiliate of the Vendors;
(h) all insurance policies and the right to receive insurance
recoveries under such policies except as otherwise specifically
provided in this Agreement (i.e., Benefit Plans);
(i) the assets listed and described on Schedule 1.1(d); and
(j) all Contracts relating to the foregoing;
"EXCLUDED BUSINESSES" means the business of owning, operating and
publishing the newspapers, related publications and the other
businesses listed and described in Schedule 1.1(e);
<PAGE> 19
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"EXCLUDED EMPLOYEES" means (a) all employees of the Southam News
Division of Southam; (b) Inactive Employees; (c) all employees of the
National Post Company; (d) the Employees described in Section 9.2(b);
and (e) those employees of Southam identified by the Vendors prior to
Closing and agreed by CanWest;
"FINANCIAL STATEMENTS" means, collectively, the unaudited financial
statements of each Business Unit for the fiscal period ended May 31,
2000, consisting of a balance sheet and statements of earnings, a copy
of each of which is annexed as Schedule 4.11(a);
"FIXED ASSETS" means the fixed assets, machinery (including printing
presses), equipment, fixtures, furniture, furnishings, vehicles,
material handling equipment, implements, parts, tools, jigs, discs,
molds, patterns and tooling, spare parts owned or used or held by the
Vendors in connection with the Purchased Businesses or the National
Post Business including any which are in storage, or in transit, and
other tangible property and facilities owned by the Vendors and used
primarily in the Purchased Businesses or the National Post Business
whether located in or on the premises of the Vendors or elsewhere,
including the assets listed and described in Schedule 4.17;
"GENERAL PARTNER" means Hollinger Canadian Newspapers G.P.;
"GOODWILL" means the goodwill of the Purchased Businesses and the
National Post Business, and information and documents relevant thereto
including lists of customers and suppliers, credit information,
research materials, research and development files, active library and
morgue of each publication including all clippings, photographs
(negatives and positives), bound files of back issues and microfilm
and microfiche reproductions of back issues and the exclusive right of
CanWest to represent itself as carrying on the Purchased Businesses in
succession to the Vendors and to all rights in respect of the name
"Southam", any variations of such name and any other name under which
the Purchased Businesses are or have been operated (other than the
name "Hollinger");
"GOVERNMENTAL AUTHORITIES" means any government, regulatory authority,
governmental department, agency, commission, board, tribunal, crown
corporation, or court or other law, rule or regulation-making entity
having or purporting to have jurisdiction on behalf of any nation, or
province or state or other subdivision thereof or any municipality,
district or other subdivision thereof;
"GOVERNMENTAL AUTHORIZATION" means all authorizations, approvals,
including orders, consents, directives, notices, licenses, permits,
variances, registrations or similar rights issued to or required by
the Vendors in connection with the Purchased Businesses, the National
Post Business or any of the Purchased Assets by any Governmental
Authorities but excluding Environmental Approvals;
"HAZARDOUS SUBSTANCE" means any pollutant, contaminant, waste of any
nature, substance, hazardous substance, hazardous material, toxic
substance, prohibited
<PAGE> 20
-13-
substance, dangerous substance or dangerous good as defined,
judicially interpreted or identified in any Environmental Law
including any asbestos, asbestos-containing materials, solvents and
petroleum hydrocarbons;
"HISTORICAL MATERIALS" means all inactive books and records, minute
books of predecessor companies to Southam, archives, memorabilia and
other historical information of any nature pertaining to the Purchased
Businesses to the extent that such materials are within the care and
control of the Vendors as of the Closing Date;
"HOLLINGER AUDITOR" means KPMG LLP, Chartered Accountants;
"INACTIVE EMPLOYEES" means all Employees, whether or not members of a
Union, who are not actively engaged in the Purchased Businesses or the
National Post Business, as the case may be, as of the Closing Date,
including those Employees on leaves of absence (including Employees on
pregnancy or parental leave), who are receiving benefits under any
sick leave plan, short term disability plan, long term disability
plan, or salary continuance plan and for greater certainty, excludes
any Employee who is not actively engaged in the Purchased Businesses
or the National Post Business, as the case may be, as of the Closing
Date by reason of shift patterns, holiday, vacation, bereavement leave
or jury leave;
"INSURANCE PLANS" means any and all employment benefits relating to
disability or wage continuation during periods of absence from work
(including short-term disability, long-term disability and workers'
compensation), hospitalization, health, eye care, medical or dental
treatments or expenses, life insurance, death or survivor's benefits
and supplementary employment insurance, in each case regardless of
whether or not such benefits are insured or self-insured;
"INTELLECTUAL PROPERTY" means all patents, copyrights, Trade-marks,
industrial designs and integrated circuit topographies (including
registrations of and applications for all of the foregoing in any
jurisdiction and renewals, divisions, extensions and reissues, where
applicable, relating thereto), trade secrets, confidential
information, Technology and all other intellectual property rights of
any kind or nature;
"INTERIM PERIOD" shall have the meaning given to it in Section 9.12;
"INVENTORIES" means all inventories of every kind and nature and
wheresoever situate owned by the Vendors and pertaining to the
Purchased Businesses including all work in progress, supplies of
newsprint, paper ink and other operating supplies and packaging
materials of or pertaining to the Purchased Businesses;
"LAWS" means all applicable laws, including common law, by-laws,
rules, statutes, regulations and legally binding decisions, orders,
ordinances, protocols, codes, guidelines, policies, notices,
directions, instructions and authorizations and judgements or other
legally binding requirements of any Governmental Authority;
<PAGE> 21
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"LEASED REAL PROPERTY" means all premises used or reasonably required
by the Purchased Businesses or the National Post Business which are
leased, subleased, licensed or otherwise occupied by the Vendors and
the interest of the Vendors in all plants, buildings, structures,
fixtures, erections, improvements, easements, rights-of-way, spur
tracks and other appurtenances situated on or forming part of such
premises;
"LISTED INTELLECTUAL PROPERTY" has the meaning given in Section 4.24;
"MANAGEMENT SERVICES AGREEMENT" means the management services
agreement to be dated as of the Closing Date to be entered into by
Ravelston and CanWest substantially in the form of Schedule 7.1(p);
"MATERIAL ADVERSE EFFECT" means any condition, event or development
which is or reasonably could be expected to result in or represent a
material adverse effect or change, individually or in the aggregate,
on or in the financial condition, assets, business, operations or
prospects, results of operations, liabilities or rights of a Person or
which has a significant adverse effect on the value of the business of
such Person, other than those resulting from industry-wide conditions
or general economic conditions affecting the industry in which the
businesses of the Person is carried on;
"MATERIAL CONTRACT" means (a) all newsprint and ink supply agreements;
(b) all Real Property Leases in respect of which the annual rent
exceeds $100,000; (c) all Trade-Mark licenses which are material to a
Business Unit, the Purchased Businesses or National Post Business ;
(d) all Permitted Encumbrances other than those identified on Schedule
4.4 in items 2 and 7; and (e) any Contract (i) involving a one-time
cost or annual payments to or by the Vendors or their subsidiaries in
excess of $1 million, (ii) involving rights or obligations that may
reasonably extend beyond 1 year which cannot be terminated without
penalty on less than 3 months notice and which has annual payments in
excess of $100,000, (iii) which is outside the ordinary course of
business, or (iv) containing any material restriction on the ability
of the Vendors or any subsidiary of the Vendors to carry on the
Purchased Businesses or the National Post Business;
"MULTIPLE VOTING SHARES" means the multiple voting shares in the
capital of CanWest;
"NATIONAL POST AFFILIATION/SERVICES AGREEMENT" means the agreement
substantially in the form of Schedule 7.1(r);
"NATIONAL POST ASSETS" means all of National Post Company's right,
title and interest in, to and under the assets, property and
undertaking owned or used or held by National Post Company for use in,
or in respect of the operation of the National Post Business
(including, for greater certainty, the Vendors' right to title and
interest in the printing press located in the production facility of
the Hamilton Spectator);
"NATIONAL POST BALANCE SHEET" means the balance sheet of National Post
Company as at May 31, 2000 included in the National Post Financial
Statements;
<PAGE> 22
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"NATIONAL POST BUSINESS" means the business of owning, operating and
publishing the National Post newspaper, Saturday Night Magazine,
National Post Business Magazine and related publications and the
operation of the National Post website;
"NATIONAL POST COMPANY" means the general partnership currently
carrying on the National Post Business;
"NATIONAL POST FINANCIAL FORECAST" means the budget of National Post
Company for the year ending December 31, 2000;
"NATIONAL POST FINANCIAL STATEMENTS" means the unaudited financial
statements of National Post Company for the fiscal period ended May
31, 2000 consisting of a balance sheet and income statement, a copy of
which is annexed as Schedule 4.11(b);
"NATIONAL POST SHAREHOLDER AGREEMENT" means the agreement
substantially in the form of Schedule 7.1(q) to be converted to a
partnership agreement prior to Closing;
"NEWSMEDIACO" means, collectively, the newly incorporated indirect
subsidiaries of Hollinger to which all of the Purchased Assets, other
than the National Post Assets, the Canada.com Assets and the Central
Services Assets, are transferred and which assumes all the Assumed
Liabilities, other than the Assumed Canada.com Liabilities, the
Assumed Central Services Liabilities, pursuant to the Reorganization
in accordance with a Transfer Agreement;
"NEWSMEDIACO DEBT" means the indebtedness of NewsMediaCo Holdco
incurred in connection with the acquisition of all of the issued and
outstanding shares of NewsMediaCo pursuant to the Reorganization;
"NEWSMEDIACO HOLDCO" means, collectively, the newly incorporated
indirect subsidiaries of Hollinger which, on and after the
Reorganization Date, will own all of the issued and outstanding shares
in the capital of NewsMediaCo;
"NEWSMEDIACO SHARES" means all of the issued and outstanding shares in
the capital of NewsMediaCo Holdco;
"NEWSPAPER PARTNERSHIP EMPLOYEES" means all Employees of Newspapers
Partnership and its subsidiaries other than Excluded Employees
provided that for the purposes of Section 9.8(d), the definition of
Inactive Employee shall be read as if the reference to "Closing Date"
were January 1, 2001;
"NON-ASSIGNABLE RIGHTS" shall have the meaning given in Section 2.8;
"NON-COMPETITION AGREEMENTS" means the agreements substantially in the
form of Schedule 7.1(j);
"NON-VOTING SHARES" means non-voting shares in the capital of CanWest;
<PAGE> 23
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"NOTICE" shall have the meaning given in Section 11.3;
"OCCUPATIONAL HEALTH AND SAFETY LAWS" means the Ontario Occupational
Health and Safety Act, the Workplace Safety and Insurance Act or such
other similar federal or provincial legislation relating in full or in
part to the protection of employee health and safety as may be
applicable to the Purchased Businesses;
"OWNED REAL PROPERTY" means all freehold lands currently principally
used in or reasonably required for the Purchased Businesses or the
National Post Business which are owned or purported to be owned, in
fee simple, by the Vendors including all plants, buildings,
structures, fixtures, erections, improvements, easements,
rights-of-way, spur tracks and other appurtenances situated on or
forming part of such lands other than any such lands which are
currently used solely and exclusively by the Excluded Businesses;
"PARTIES" means the Vendors and CanWest collectively, and "Party"
means any one of them;
"PENSION AND EMPLOYEE BENEFITS PLANS AGREEMENT" means an agreement
substantially in the form of Schedule 7.1(v);
"PENSION PLANS" means any and all benefits relating to retirement or
retirement savings including, without limitation, pension plans,
pensions or supplemental pensions, registered retirement savings
plans, "registered pension plans" (as defined in the Income Tax Act
(Canada)) and "retirement compensation arrangements" (as defined in
the Income Tax Act (Canada));
"PERMITTED ENCUMBRANCES" means the Encumbrances listed in Schedule
4.4;
"PERSON" means any individual, sole proprietorship, partnership,
unincorporated association, unincorporated syndicate, unincorporated
organization, trust, body corporate, Governmental Authority, and a
natural person in such person's capacity as trustee, executor,
administrator or other legal representative;
"PREPAID EXPENSES AND DEPOSITS" means all amounts prepaid in
connection with the Purchased Businesses in respect of the twelve
month period following the Effective Date, including prepaid
subscriptions, property taxes, business taxes, rents, telephone and
telecommunications costs, insurance premiums in respect of insurance
for the period from the Effective Date to the Closing Date, prepaid
advertising amounts, other than (a) income or other taxes which are
personal to the Vendors and its subsidiaries, (b) any amounts paid in
respect of the Pension Plans or Benefit Plans, (c) all deposits with
any public utility or any Governmental Authority, (d) deferred
financing and other charges and (e) any prepaid amounts which are
Excluded Assets;
<PAGE> 24
-17-
"PREFERRED SHARES" means the Class 1 Preference Shares, in the capital
of CanWest having substantially the rights, privileges, terms and
conditions set forth in Schedule 3.2(a);
"PRINT NEWS MEDIA ASSETS" means all of the Purchased Assets other than
the National Post Assets, the Central Services Assets and the
Canada.com Assets;
"PRINT NEWS MEDIA BUSINESS" means the businesses of the Vendors
engaged in the operation, publication and management of newspapers,
magazines, specialty publications, and ancillary communications
operations in Canada and the provision of Content through the internet
and the website operations of such businesses (being the operations of
the Vendors that produce the revenues and sales and incur the
operating costs directly relating thereto of all websites providing
online access to the Content of a newspaper or magazine or its
classified advertising such as Careerclick.com, Carclick.com and
Homeclick.com but for greater certainty, does not include the
operations generating the costs of construction, design and technical
maintenance of such websites (which are included in the Canada.com
Assets)), including those businesses of the Vendors listed and
described in Schedule 1.1(c), but not including the National Post
Business, the Canada.com Business, the Central Services and the
Excluded Businesses;
"PRINT NEWS MEDIA BUSINESS EBITDA" means the audited earnings of the
Print News Media Business (including the revenues and sales and
operating costs relating to the operation by the Vendors of all
websites providing online access to the Content of a newspaper or
magazine or its classified advertising such as Careerclick.com,
Carclick.com and Homeclick.com but, for greater certainty, excludes
the costs of construction, design and technical maintenance of such
websites) for the twelve month period ending December 31, 2000
calculated without duplication before: (i) income taxes; (ii)
depreciation and amortization; (iii) interest and other financing
charges; (iv) the cost of the Central Services; (v) the non-recurring
cost of the strike at the Calgary Herald (net of any operating cost
saving realized during the strike); (vi) the non-recurring set-up
costs of the introduction of new presses in Saskatoon; (vii) any
employer Canada Pension Plan and Employment Insurance contributions
borne by the Vendors pursuant to Section 9.11; (viii) minority
interest in the earnings of subsidiaries; (ix) equity income or losses
in the earnings of Affiliates; (x) dividend, interest and other sundry
income not earned in the ordinary course of business; (xi) gains and
losses in respect of the disposition of assets; (xii) the reversal of
provisions for costs which were made in respect of prior years
earnings; (xiii) unusual or extraordinary items; (xiv) pension income
relating to the Southam Retirement Plan; and (xv) other expense and
income items normally recorded on the income statement below the
operating profit line, all as determined in accordance with GAAP on a
basis consistent with prior years, calculated on a basis consistent
with the indicative calculation attached as Schedule 3.6(b), all as
reflected on the Vendor Year-End Financial Statement. For greater
certainty, Print News Media Business EBITDA shall include those
expenses relating to pensions, SERA, post-retirement and
<PAGE> 25
-18-
post-employment benefits of all the Employees employed in the Print
News Media Business consistent with the indicative calculation
attached as Schedule 3.6(b);
"PRINT NEWS MEDIA FINANCIAL FORECAST" means the forecast for the Print
News Media Business for the year ending December 31, 2000 included in
the Confidential Information Memorandum provided to CanWest and
summarized in Schedule 4.12;
"PURCHASE PRICE" has the meaning given it in Section 3.1;
"PURCHASED ASSETS" means all of the Vendors' right, title and
interest, directly and indirectly, in, to and under the assets,
property and undertaking owned or used or held by the Vendors for use
in, or in respect of the operation of the Purchased Businesses or the
National Post Business, including the following properties, assets and
rights:
(k) the Owned Real Property;
(l) the Contracts including:
(i) the Real Property Leases; and
(ii) the Equipment Contracts;
(m) the Inventories;
(n) the Fixed Assets;
(o) the Goodwill;
(p) the Historical Materials;
(q) Prepaid Expenses and Deposits;
(r) the Accounts Receivable;
(s) the Intellectual Property;
(t) the Books and Records;
(u) the shares owned by the Vendors in any corporation which holds
any of the Purchased Assets after the Reorganization Date other
than the Purchased Shares;
(v) the Government Authorizations; and
(w) all other rights, properties and assets (other than any Excluded
Assets) of the Vendors used or useful in the operation of the
Purchased Businesses or the
<PAGE> 26
-19-
National Post Business, of whatsoever nature or kind and wherever
situated other than those which are used exclusively by the
Excluded Assets;
"PURCHASED BUSINESSES" means all business and operations of the
Vendors in Canada including the Print News Media Business, the
Purchased Central Services, and the Canada.com Business but not
including the National Post Business or any of the Excluded
Businesses;
"PURCHASED CENTRAL SERVICES" means the Central Services other than
those which constitute Excluded Assets;
"PURCHASED DEBT" means the NewsMediaCo Debt, Central Services Company
Debt and Canada.com Company Debt;
"PURCHASED NATIONAL POST COMPANY INTEREST" means a fifty percent
partnership interest in National Post Company;
"PURCHASED SHARES" mean the NewsMediaCo Shares, the Canada.com Company
Shares and the Central Services Company Shares;
"RAVELSTON" means The Ravelston Corporation Limited;
"REAL PROPERTY" means the Owned Real Property and the Leased Real
Property;
"REAL PROPERTY LEASES" means those agreements to lease, leases,
subleases or licenses or other occupancy rights pursuant to which the
Vendors use or occupy any part of the Leased Real Property;
"REGISTRATION RIGHTS AGREEMENT" means an agreement substantially in
the form of Schedule 8.1(j);
"RELEASE" has the meaning prescribed in any Environmental Law and
includes, without limitation, any sudden, intermittent or gradual
release, spill, leak, pumping, pouring, emission, addition, emptying,
discharge, injection, escape, leaching, disposal, dumping, deposit,
spraying, burial, abandonment, seepage, or placement;
"REMEDIAL ORDER" means any complaint, direction, instruction, order or
sanction which is legally binding and which is issued, filed or
imposed by any Governmental Authority pursuant to any Environmental
Laws and includes, without limitation, any order requiring any study,
investigation, remediation, control, removal, clean-up of or other
action to address any Hazardous Substance, or requiring that any
Release or any related activity be reduced, modified or eliminated or
requiring any form of payment or cooperation to be provided to any
Governmental Authority;
<PAGE> 27
-20-
"REORGANIZATION" means the reorganization of the Purchased Businesses
and the National Post Business substantially in the manner and on
substantially the terms described in Schedule 2.1-1, pursuant to which
Hollinger shall cause:
(x) NewsMediaCo to acquire on or prior to the Reorganization Date the
Purchased Assets, other than the National Post Assets, the
Central Services Assets and the Canada.com Assets, and to assume
the Assumed Liabilities, other than the Assumed Liabilities
associated with the National Post Business and the Assumed
Central Services Liabilities and the Assumed Canada.com
Liabilities, in accordance with the terms of a Transfer
Agreement;
(y) Canada.com Company to acquire on or prior to the Reorganization
Date the Canada.com Assets and to assume the Assumed Canada.com
Liabilities in accordance with the terms of a Transfer Agreement;
(z) Central Services Company to acquire on or prior to the
Reorganization Date the Central Services Assets and to assume the
Assumed Central Services Liabilities; and
(aa) NewsMediaCo Holdco, Central Services Company Holdco and
Canada.com Company Holdco to acquire prior to the Closing Date
all of the issued and outstanding shares in NewsMediaCo, Central
Services Company and Canada.com Company, respectively;
"REORGANIZATION DATE" means the date on which Hollinger completes
steps 1 through 5 of the Reorganization;
"SECURITIES COMMISSIONS" means each of the Canadian provincial and
territorial securities regulatory authorities and the United States
Securities and Exchange Commission;
"SERA" means a supplemental executive retirement arrangement listed in
Part 2 of Schedule 4.32;
"SENIOR SECURED FACILITY" shall have the meaning given to it in
Section 5.8;
"SOUTHAM EMPLOYEES" means those Employees of Southam and its
subsidiaries (excluding, for this purpose, Newspapers Partnership and
its subsidiaries) other than the Excluded Employees;
"SUBCO" means a newly incorporated direct wholly-owned subsidiary of
CanWest which will own on the Closing Date all of the issued and
outstanding shares of Global Television Network Inc.;
<PAGE> 28
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"SUBORDINATED DEBENTURES" means the unsecured subordinated debentures
of Subco having the terms and conditions set forth in Schedule 3.2(e);
"SUBORDINATE VOTING SHARES" means the subordinate voting shares in the
capital of CanWest;
"TAX RETURNS" includes all returns, reports, declarations, elections,
notices, filings, information returns and statements filed or required
to be filed in respect of Taxes;
"TAX SHIELD REDUCTION AMOUNT" shall have the meaning given in Section
3.6(c);
"TAXES" includes all taxes, duties, fees, premiums, assessments,
imposts, levies and other charges of any kind whatsoever imposed by
any Governmental Authority, together with all interest, penalties,
fines, additions to tax or other additional amounts imposed in respect
thereof including those levied on, or measured by, or referred to as
income, gross receipts, profits, capital, transfer, land transfer,
sales, goods and services, harmonized sales, use, value-added, excise,
stamp, withholding, business, franchising, property, payroll,
employment, health, employer health, social services, education and
social security taxes, all surtaxes, all customs duties and import and
export taxes, all license, franchise and registration fees and all
unemployment insurance, health insurance and Canada, Quebec and other
government pension plan premiums or contributions;
"TECHNOLOGY" means any computer software and hardware, equipment,
device, tool, method, process, procedure, technique, formula, design,
plan, technical information, research data, discovery, know-how,
concept or invention, whether or not patentable, and any other subject
matter of a technical or functional nature;
"TRADE-MARKS" means trade-marks, brand names, internet domain names,
trade names, slogans, URLs, designs, graphics and logos, and other
indicia of origin, whether or not registered;
"TRANSFER AGREEMENT" means an asset transfer agreement, substantially
in the form of Schedule 2.1-2, providing for the transfer of a portion
of the Purchased Assets and assumption of a portion of the Assumed
Liabilities;
"TRANSFERRED EMPLOYEES" means the Southam Employees and the Newspaper
Partnership Employees who accept employment with NewsMediaCo, Central
Services Company or Canada.com Company, as the case may be;
"TRANSFERRING PLAN" means a Transferring Plan as defined in the
Pension and Employee Benefit Plans Agreement;
"UNION" includes any union, trade union or association that may
qualify as a union or trade union pursuant to the terms of the Ontario
Labour Relations Act or any other federal or provincial legislation;
<PAGE> 29
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"UNION PLANS" means any and all Benefit Plans which are or are
required to be established and maintained pursuant to a Collective
Agreement and which are not maintained or administered solely by the
Vendors;
"URL" means a universal resource locator which designates a unique
internet protocol address for locating and accessing an Internet
website, or page or location within a website;
"VENDOR YEAR-END FINANCIAL STATEMENT" means the combined consolidated
statement of the Print News Media Business EBITDA;
"VENDORS" means, collectively, Southam, Newspapers Partnership and HCN
Publications; and
"WORKING CAPITAL" means those of the Current Assets relating solely to
the Print News Media Business less those of the Current Liabilities
relating solely to the Print News Media Business calculated in
accordance with the procedures set forth in Schedule 3.7:
1.2 CERTAIN RULES OF INTERPRETATION
In this Agreement and the Schedules:
(a) TIME -- time is of the essence in the performance of the Parties'
respective obligations;
(b) CURRENCY -- unless otherwise specified, all references to money
amounts are to Canadian currency;
(c) HEADINGS -- descriptive headings of Articles and Sections are inserted
solely for convenience of reference and are not intended as complete
or accurate descriptions of the content of such Articles or Sections;
(d) SINGULAR, ETC. -- use of words in the singular or plural, or with a
particular gender, shall not limit the scope or exclude the
application of any provision of this Agreement to such person or
persons or circumstances as the context otherwise permits;
(e) CONSENT -- whenever a provision of this Agreement requires an approval
or consent by a Party to this Agreement and notification of such
approval or consent is not delivered within the applicable time limit,
then, unless otherwise specified, the Party whose consent or approval
is required shall be conclusively deemed to have withheld its approval
or consent;
(f) CALCULATION OF TIME -- unless otherwise specified, time periods within
or following which any payment is to be made or act is to be done
shall be calculated by excluding the day on which the period commences
and including the day on
<PAGE> 30
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which the period ends and by extending the period to the next Business
Day following if the last day of the period is not a Business Day;
(g) BUSINESS DAY -- whenever any payment to be made or action to be taken
under this Agreement is required to be made or taken on a day other
than a Business Day, such payment shall be made or action taken on the
next Business Day following such day; and
(h) INCLUSION -- where the words "including" or "includes" appear in this
Agreement, they mean "including (or includes) without limitation".
1.3 SUBSIDIARY
In this Agreement, a Person is a subsidiary of another Person if:
(a) it is controlled by:
(i) that other Person;
(ii) that other Person and one or more other Persons each of which is
controlled by that other Person; or
(iii) two or more Persons each of which is controlled by that other
Person; or
(b) it is a subsidiary of a Person that is a subsidiary of that other
Person.
1.4 KNOWLEDGE
Any reference to the knowledge of any Party shall mean to the actual knowledge
of the executive officers of such Party (including, in the case of the Vendors,
the publishers of the Business Units and for certainty including David Radler,
Peter Atkinson, Jack Boultbee and David Dodd) after reviewing all relevant
records and making due inquiries regarding the relevant matter.
1.5 MADE AVAILABLE
Any reference to information or materials being made available by the Vendors to
CanWest shall mean that such information or materials were placed in the due
diligence data room at the offices of Torys, counsel to the Vendors, or were
placed in the due diligence data room at the office of Southam located at 1450
Don Mills Road, or were provided directly to a senior executive of CanWest.
1.6 ENTIRE AGREEMENT
This Agreement together with the agreements and other documents to be delivered
pursuant to this Agreement and the confidentiality agreements dated May 16, 2000
between Hollinger and CanWest, constitute the entire agreement between the
Parties pertaining to the subject matter of
<PAGE> 31
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this Agreement and supersede all prior agreements, understandings, negotiations
and discussions, whether oral or written, of the Parties, and there are no
warranties, representations or other agreements between the Parties in
connection with the subject matter of this Agreement except as specifically set
forth in this Agreement and any document delivered pursuant to this Agreement.
No supplement, modification or waiver or termination of this Agreement shall be
binding unless executed in writing by the Party to be bound thereby.
1.7 APPLICABLE LAW
This Agreement shall be construed in accordance with the laws of the Province of
Ontario and the laws of Canada applicable therein and shall be treated, in all
respects, as an Ontario contract.
1.8 ACCOUNTING PRINCIPLES
All references to generally accepted accounting principles or GAAP means the
principles recommended, from time to time, in the Handbook of the Canadian
Institute of Chartered Accountants and all accounting terms not otherwise
defined in this Agreement have the meanings assigned to them in accordance with
Canadian generally accepted accounting principles.
1.9 SCHEDULES
The schedules to this Agreement, as listed below, are an integral part of this
Agreement:
<TABLE>
<CAPTION>
SCHEDULE DESCRIPTION
-------- -----------
<S> <C>
Schedule 1.1(a) Assumptions and Methods relating to Accrued Liabilities
Schedule 1.1(b) Arbitration Procedures
Schedule 1.1(c) Business Units
Schedule 1.1(d) Excluded Assets
Schedule 1.1(e) Excluded Businesses
Schedule 2.1-1 Reorganization Steps
Schedule 2.1-2 Form of Transfer Agreement
Schedule 3.1(a) Central Services
Schedule 3.2(a) Terms of Class 1 Preference Shares
Schedule 3.2(e) Principal Terms of Subordinated Debentures
Schedule 3.3(a)-1 CanWest Operations
Schedule 3.3(a)-2 Description of Calculation of CanWest 2001 EBITDA
Schedule 3.6(b) Indicative Calculation of Print News Media Business EBITDA
Schedule 3.6(c) Estimated Tax Shield Reduction Amount
Schedule 3.7 Working Capital Procedures
Schedule 3.15 Allocation of Purchase Price
Schedule 4.3 Subsidiaries
Schedule 4.4 Permitted Encumbrances
</TABLE>
<PAGE> 32
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<TABLE>
<S> <C>
Schedule 4.6 Capitalization
Schedule 4.11(a) Financial Statements
Schedule 4.11(b) National Post Financial Statements
Schedule 4.12 Print News Media Financial Forecast
Schedule 4.13 Undisclosed Liabilities
Schedule 4.14(e) Unusual Transactions
Schedule 4.15 Joint Venture Interests
Schedule 4.17 Fixed Assets
Schedule 4.22 Licenses, Permits etc.
Schedule 4.23 Restrictive Covenants
Schedule 4.24 Intellectual Property
Schedule 4.25 Equipment Contracts
Schedule 4.26 Owned Real Property
Schedule 4.27 Leased Real Property
Schedule 4.28 Real Property Generally
Schedule 4.29 Environmental Matters
Schedule 4.30(a) Employee Matters
Schedule 4.30(b) Employment Contracts
Schedule 4.30(c) Employment Policies
Schedule 4.30(h) Independent Contractors
Schedule 4.31 Collective Agreements
Schedule 4.32 Pension/Benefit Plans
Schedule 4.34 Material Contracts
Schedule 4.36 Inter-Affiliate Arrangements
Schedule 4.38 Litigation
Schedule 4.42 Trade Allowances
Schedule 4.43 Third-Party Consents
Schedule 4.44 Location of the Assets
Schedule 5.8 Title to Property
Schedule 5.9 Incorporation and Registration
Schedule 7.1(j) Form of Non-Competition Agreements
Schedule 7.1(p) Form of Management Services Agreement
Schedule 7.1(q) Form of National Post Shareholders Agreement
Schedule 7.1(r) Form of National Post Affiliation/Services Agreement
Schedule 7.1(s) Form of Employee Interim Services Agreement
Schedule 7.1(v) Form of Pension and Benefits Plans Agreement
Schedule 8.1(j) Form of Registration Rights Agreement
</TABLE>
<PAGE> 33
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ARTICLE 2
REORGANIZATION, PURCHASE AND SALE
2.1 THE REORGANIZATION
On or prior to the Closing Date, Hollinger shall have completed the
Reorganization.
2.2 SETTLEMENT OF INTER-AFFILIATE PAYABLES AS OF EFFECTIVE DATE
(a) Hollinger shall cause all amounts relating to the Purchased
Businesses due and owing, payable or otherwise accrued to, and
all amounts relating to the Purchased Businesses receivable or
otherwise accrued from, the Vendors and their subsidiaries,
including the National Post Business and the Excluded Assets, to
be paid or settled as of the Effective Date.
(b) Hollinger shall cause all amounts relating to the Print News
Media Business due and owing, payable or otherwise accrued to,
and all amounts relating to the Print News Media Business
receivable or otherwise accrued from, the Canada.com Business and
the Central Services to be paid or settled as of the Effective
Date.
2.3 INTENTIONALLY DELETED.
2.4 ACTIONS BY THE VENDORS AND CANWEST
At the Closing Time with effect as of and from the Effective Date:
(a) PURCHASE AND SALE -- The Vendors shall sell, transfer and assign
or cause to be sold to CanWest and CanWest shall purchase and
accept the assignment from the Vendors of the Purchased Shares,
the Purchased Debt and the Purchased National Post Company
Interest for the Purchase Price payable as provided in this
Agreement;
(b) PAYMENT OF PURCHASE PRICE -- CanWest shall deliver to the
Vendors, or as the Vendors may direct, the Purchase Price in
accordance with the provisions of Schedule 2.4(b);
(c) TRANSFER AND DELIVERY OF THE PURCHASED SHARES AND THE PURCHASED
NATIONAL POST COMPANY INTEREST -- The Vendors shall transfer or
cause to be transferred and delivered to CanWest share
certificates or partnership units, as the case may be,
representing the Purchased Shares and the Purchased National Post
Company Interest duly endorsed in blank for transfer, or
accompanied by irrevocable security transfer powers of attorney
duly executed in blank, by the holders of record, and shall take
such steps as shall be necessary to cause NewsMediaCo Holdco,
Canada.com Company Holdco, Central Services Company Holdco and
National Post Company, respectively, to enter CanWest or its
nominee(s) upon
<PAGE> 34
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the books of NewsMediaCo Holdco, Canada.com Company Holdco,
Central Services Company Holdco or National Post Company,
respectively, and to issue one or more share certificates or
partnership units, as the case may be, to CanWest or its
nominee(s) representing the NewsMediaCo Shares, the Canada.com
Company Shares, the Central Services Company Shares and the
Purchased National Post Company Interest.
2.5 PLACE OF CLOSING
The Closing shall take place at the Closing Time at the offices of Osler, Hoskin
& Harcourt LLP, 1 First Canadian Place, Suite 6300, Toronto, Ontario, M5X 1B8,
or at such other place as may be agreed upon by Hollinger and CanWest.
2.6 TENDER
Any tender of documents or money under this Agreement may be made upon the
Parties or their respective counsel and money may be tendered by official bank
draft drawn upon a Canadian chartered bank or by negotiable cheque payable in
Canadian funds and certified by a Canadian chartered bank or trust company or,
with the consent of the Party entitled to payment, by wire transfer of
immediately available funds to the account specified by that Party.
2.7 NO ASSUMPTION OF LIABILITIES
For greater certainty, CanWest is not assuming, and NewsMediaCo, Central
Services Company and Canada.com Company shall not assume, and shall not be
responsible for any of the liabilities, debts or obligations of the Vendors or
their subsidiaries, whether present or future, absolute or contingent and
whether or not relating to the Purchased Businesses including any liability for
litigation against or involving Hollinger or any of its Affiliates, including
any and all Claims by or on behalf of any Employee, former Employee or Union
made on or before the Closing Date in the case of the Southam Employees and on
or before January 1, 2001 in the case of the Newspapers Partnership Employees,
or which related to events on or before the Closing Date in the case of the
Southam Employees and, subject to the terms of the Employee Interim Services
Agreement, on or before January 1, 2001 in the case of the Newspapers
Partnership Employees, other than, in the case of Canada.com Company, the
Assumed Canada.com Liabilities, in the case of NewsMediaCo, the Assumed Print
News Media Liabilities and in the case of Central Services Company, the Assumed
Central Services Liabilities and the Vendors shall indemnify and save harmless
CanWest from and against all liabilities, debts or obligations of Hollinger and
its Affiliates or the Purchased Businesses other than the Assumed Liabilities.
CanWest agrees to cause NewsMediaCo, Central Services Company and Canada.com
Company to pay, satisfy or perform the Assumed Liabilities on and after the
Closing Date and shall indemnify and save harmless the Vendors therefrom.
<PAGE> 35
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2.8 ASSIGNMENT OF CONTRACTS
Nothing in this Agreement shall be construed as an assignment of, or an attempt
to assign to NewsMediaCo, Central Services Company or Canada.com Company, any
Contract, Intellectual Property right or Governmental Authorization which, as a
matter of law or by its terms, is (i) not assignable, or (ii) not assignable
without the approval or consent of the issuer thereof or the other party or
parties thereto, without first obtaining such approval or consent (collectively
"Non-Assignable Rights"). In connection with such Non-Assignable Rights, and
without prejudice to the rights of CanWest under Section 7.1(e) the Vendors
shall, at the request of CanWest:
(a) apply for and use all reasonable efforts to obtain all consents
or approvals contemplated by the Contracts or Governmental
Authorization, in a form satisfactory to CanWest acting
reasonably;
(b) co-operate with CanWest in any reasonable and lawful arrangements
designed to provide the benefits of such Non-Assignable Rights to
NewsMediaCo, Central Services Company or Canada.com Company
including holding any such Non-Assignable Rights solely in trust
for or solely acting as agent for NewsMediaCo, Central Services
Company or Canada.com Company, as the case may be;
(c) enforce any rights of the Vendors arising from such
Non-Assignable Rights against the issuer thereof or the other
party or parties thereto;
(d) take all such actions and do, or cause to be done, all such
things at the request of CanWest as shall reasonably be necessary
and proper in order that the value of any Non-Assignable Rights
shall be preserved and shall endure to the benefit of
NewsMediaCo, Central Services Company or Canada.com Company, as
the case may be; and
(e) pay over to NewsMediaCo, Central Services Company or Canada.com
Company, as the case may be, all monies collected by or paid to
the Vendors in respect of such Non-Assignable Rights.
CanWest shall reimburse the Vendors for out-of-pocket expenses incurred, and
shall indemnify and save the Vendors harmless from any Claims in respect of any
Non-Assignable Rights in connection with or arising as a result of any action of
the Vendors taken in accordance with the foregoing. If the Vendors are unable to
lawfully provide the benefit of any Governmental Authorization to NewsMediaCo,
Central Services Company or Canada.com Company, as the case may be, it shall
not, at any time, use such Governmental Authorization for its own purposes or
assign or provide the benefit of such Governmental Authorization to any other
party.
<PAGE> 36
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ARTICLE 3
PURCHASE PRICE
3.1 PURCHASE PRICE
The amount payable by CanWest for the Purchased Shares, the Purchased Debt and
the Purchased National Post Company Interest (the "Purchase Price"), subject to
any adjustments required by Section 3.6, and exclusive of all applicable sales
and transfer taxes, shall be the amount of $3,837,760,000, being the sum of the
following amounts:
(a) $3,627,760,000 for the NewsMediaCo Shares, the NewsMediaCo Debt, the
Central Services Company Shares and the Central Services Company Debt,
plus
(b) $100 million for the Purchased National Post Company Interest; plus
(c) $30 million for the Canada.com Company Shares and the Canada.com
Company Debt; plus
(d) $80 million in consideration of the receipt by CanWest on behalf of
CanWest and NewsMediaCo of the Non-Competition Agreements; less
(e) the difference, if any, between the aggregate price paid by the
Vendors for the shares of CanWest acquired pursuant to the Concurrent
Share Purchase Agreements and the price which would have been paid had
such shares been acquired for $25.00 per share.
3.2 SATISFACTION OF PURCHASE PRICE
CanWest shall pay and satisfy the Purchase Price, subject to any adjustments
required by Section 3.3 and as further provided in Schedule 2.4(b), as follows:
(a) as to the amount of $10,125,000, by the issuance and delivery to the
Vendors or as the Vendors may direct of 2.7 million Preferred Shares
representing 5.68% of the votes attached to CanWest's outstanding
share capital on a fully diluted basis after giving effect to the
transactions contemplated by this Agreement;
(b) as to the amount of $607,500,000, subject to any adjustments required
by Section 3.3, by the issuance and delivery to the Vendors or as the
Vendors may direct of 24.3 million Non-Voting Shares representing
14.01% of CanWest's outstanding share capital on a fully diluted basis
after giving effect to the transactions contemplated by this
Agreement;
(c) as to the amount of $114,000,000 by wire transfer of immediately
available funds to an account or accounts designated by the Vendors or
by delivery to the Vendors or as the Vendors may direct of a certified
cheque or bank draft made payable in lawful money of Canada;
<PAGE> 37
-30-
(d) as to the amount of $2,330,583,000 by wire transfer of immediately
available funds to an account or accounts designated by the Vendors or
by delivery to the Vendors or as the Vendors may direct of a certified
cheque or bank draft made payable in lawful money of Canada; and
(e) as to the balance, by the delivery to the Vendors of Subordinated
Debentures having an aggregate principal amount equal to $775,552,000
plus (i) any amount payable by CanWest to the Vendors pursuant to
Sections 3.3(a) or 3.6(a), less (ii) any amounts payable by the
Vendors to CanWest by a reduction in the principal amount of the
Subordinated Debentures pursuant to Sections 3.6(a), (b) or (c).
3.3 ADJUSTMENT TO CONSIDERATION
(a) CANWEST EBITDA ADJUSTMENT - In the event that the CanWest 2001 EBITDA
is less than $421,991,000, CanWest shall pay to the Vendors an amount
equal to the product of (i) twelve (12) times the amount by which the
CanWest 2001 EBITDA is less than $421,991,000 multiplied by (ii)
15.11%.
(b) ISSUANCE OF NON-VOTING SHARES - CanWest acknowledges that the Vendors
have by agreement with CanWest Communications Corporation ("CCC")
agreed to purchase from CCC up to 1 million Non-Voting Shares and may
acquire Subordinate Voting Shares from another seller (the aggregate
number of such shares being up to 2.7 million) (collectively the
"Concurrent Share Purchase Agreements") on or about the Closing Date
at a purchase price of up to $25.00 per share, which agreement is
subject to certain conditions precedent for the benefit of CCC and
Southam to be satisfied prior to the Closing Date. In the event that
Southam does not acquire 2.7 million Non-Voting Shares and/or
Subordinate Voting Shares (other than by reason of its default),
CanWest shall sell and deliver to the Vendors or as the Vendors may
direct that number of additional Non-Voting Shares as is equal to the
difference between 2.7 million and the number of Non-Voting Shares
and/or Subordinate Voting Shares purchased by the Vendors pursuant to
the Concurrent Share Purchase Agreements at a purchase price of $25.00
per share. The purchase price for such additional Non-Voting Shares
shall be satisfied by an equivalent reduction in the amount payable by
CanWest to the Vendors by wire transfer, certified cheque or bank
draft in accordance with Section 3.2(d).
3.4 DELIVERY OF CANWEST YEAR-END FINANCIAL STATEMENT
As soon as reasonably practical after August 31, 2001 and in any event not later
than 120 days thereafter, CanWest shall prepare and deliver to the Vendors the
CanWest Year-End Financial Statement. The Vendors and the Hollinger Auditor
shall be afforded reasonable access to the books and records of CanWest and the
working papers of the CanWest Auditor for the purpose of reviewing the CanWest
Year-End Financial Statement.
<PAGE> 38
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3.5 PAYMENT OF CANWEST EBITDA ADJUSTMENT
Subject to Section 3.13, within 30 days after delivery by CanWest to the Vendors
of the CanWest Year-End Financial Statement, CanWest shall pay to the Vendors
any amount payable pursuant to Section 3.3(a). CanWest will satisfy such payment
through an increase in the aggregate principal amount of Subordinated Debentures
equal to such amount
3.6 ADJUSTMENTS TO THE PURCHASE PRICE
(a) WORKING CAPITAL ADJUSTMENT - The Purchase Price payable pursuant to
Section 3.1 is based upon the assumption that the Working Capital as
of the Effective Date is $0.00. The Purchase Price shall be increased
or decreased on a dollar for dollar basis by the amount, if any, by
which Working Capital reflected on the Effective Date Financial
Statements is greater or less than $0.00.
(b) VENDORS EBITDA ADJUSTMENT - The Purchase Price payable pursuant to
Section 3.1 is based upon the estimate that the Print News Media
Business EBITDA, is $398,276,000. The Purchase Price shall be
decreased by an amount equal to the difference between: (i) ten (10)
times the amount, if any, by which the actual Print News Media
Business EBITDA, is less than $398,276,000 (the "Gross Reduction") and
(ii) the Tax Shield Adjustment. The Tax Shield Adjustment is the
product obtained when 75% of the Gross Reduction is multiplied by
0.1640625.
(c) TAX SHIELD REDUCTION - The Purchase Price payable pursuant to Section
3.1 for the Purchased Shares shall be reduced by an amount ("Tax
Shield Reduction Amount") determined by the following formula:
Tax Shield Reduction Amount = A x C x T x R +X where:
---------
R + i
A = in respect of any Purchased Asset that is depreciable property,
1+ i/2; and
------
1+ i
in respect of any other Purchased Asset, nil.
i = the agreed discount rate of 9%
T = the agreed tax rate of 37.5%
C = in respect of each Purchased Asset that is part of the
Purchased Businesses, the difference between: (i) the fair market
value (or in the case of a Purchased Asset that is eligible
capital property ("ECP") for
<PAGE> 39
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purposes of the Income Tax Act (Canada) or any applicable
provincial income tax legislation 3/4 of the fair market value)
of such asset on the Effective Date as determined in accordance
with Section 3.11 of this Agreement; and (ii) the cost amount (or
in the case of a Purchased Asset that is ECP, 3/4 of the cost
amount) on the Effective Date to NewsMediaCo, Central Services
Company or Canada.com Company, as the case may be, of such asset
for purposes of the Income Tax Act (Canada) or any applicable
provincial income tax legislation having regard, without
limitation, to any elections executed (whether before, on or
after the Closing Date) by NewsMediaCo, Central Services Company
or Canada.com Company under either subsection 85(1) or 85(2) of
the Income Tax Act (Canada) and any analogous provision of any
provincial income tax legislation in respect of the acquisition
of such asset;
in respect of each Purchased Asset that is part of the National
Post Business, 50% of the difference between: (i) the fair market
value (or in the case of a Purchased Asset that is ECP 3/4 of the
fair market value) of such asset on the Effective Date as
determined in accordance with Section 3.11 of this Agreement; and
(ii) the cost amount (or in the case of Purchased Asset that is
ECP, 3/4 of the cost amount) on the Effective Date to The
National Post Company of such asset for purposes of the Income
Tax Act (Canada) or any applicable provincial income tax
legislation;
R = in respect of any Purchased Asset that is depreciable
property of a prescribed class for purposes of the Income Tax Act
(Canada) or any applicable provincial income tax legislation, the
percentage rate of capital cost allowance prescribed by
Regulations to the Income Tax Act (Canada) or applicable
provincial income tax legislation;
in respect of any Purchased Asset that is ECP 7%; and
in respect of any other Purchased Asset, nil; and
X = $10 million.
In the event that the Tax Shield Reduction Amount has not been
finally determined on or prior to the Closing Date the Purchase
Price payable on the Closing Date shall be reduced by the sum of
$10,000,000 plus the amount of $410,135,122 representing the
amount of the Tax Shield Reduction Amount calculated in
accordance with Schedule 3.6(c) (the "Estimated Tax Shield
Reduction Amount"). This reduction in Purchase Price shall be
satisfied as to 76% of the Estimated Tax Shield Reduction Amount
by a reduction in the amount payable pursuant to Section 3.2(d)
and, as to 24% of the Estimated Tax Shield Reduction Amount, by a
reduction in the aggregate principal amount of Subordinated
Debentures issuable pursuant to Section 3.2(e).
<PAGE> 40
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3.7 DELIVERY OF EFFECTIVE DATE FINANCIAL STATEMENT
As soon as reasonably practical after the Effective Date and in any event not
later than 90 days thereafter, the Vendors shall prepare the Effective Date
Financial Statement in accordance with the procedures set forth in Schedule 3.7
and shall deliver to CanWest the Effective Date Financial Statement. CanWest
shall co-operate fully with the Vendors in the preparation of the Effective Date
Financial Statement. CanWest and the CanWest Auditor shall be afforded
reasonable access to the Books and Records and the working papers of the
Hollinger Auditor for the purposes of reviewing the Effective Date Financial
Statement.
3.8 PAYMENT OF WORKING CAPITAL ADJUSTMENT AMOUNT
Subject to Section 3.12, within 30 days after delivery by the Vendors to CanWest
of the Effective Date Financial Statement, the Vendors or CanWest, as the case
may be, shall pay to the other the amount by which, based upon the Effective
Date Financial Statement, the Purchase Price is to be adjusted pursuant to
Section 3.6(a). The payment of such amount shall be satisfied, as to 76% of such
amount, by wire transfer, certified cheque or bank draft and, as to 24% of such
amount, by an increase or a reduction, as the case may be, in the aggregate
principal amount of Subordinated Debentures.
3.9 DELIVERY OF VENDOR YEAR-END FINANCIAL STATEMENT
As soon as reasonably practical after December 31, 2000 and in any event not
later than 120 days thereafter, CanWest shall prepare and deliver to the Vendors
the Vendor Year-End Financial Statement. The Vendors with the assistance of the
Manager under the Management Services Agreement shall co-operate fully with
CanWest in the preparation of the Vendor Year-End Financial Statement. The
Vendors and the Hollinger Auditor shall be afforded reasonable access to the
Books and Records and the working papers of the CanWest Auditor for the purpose
of reviewing the Vendor Year-End Financial Statement.
3.10 PAYMENT OF VENDORS EBITDA ADJUSTMENT AMOUNT
Subject to Section 3.13, within 30 days after delivery by CanWest to the Vendors
of the Vendor Year-End Financial Statement, the Vendors shall pay to CanWest the
amount by which, based on the Vendor Year-End Financial Statement, the Purchase
Price is to be adjusted pursuant to Section 3.6(b). The payment of such amount
shall be satisfied, as to 76% of such amount, by wire transfer, certified cheque
or bank draft and, as to 24% of such amount, by a reduction in the aggregate
principal amount of Subordinated Debentures.
3.11 DETERMINATION OF TAX SHIELD REDUCTION AMOUNT
As soon as reasonably practicable, and in any event within 30 days following the
date of this Agreement, the Vendors shall deliver to CanWest a statement of the
Tax Shield Reduction Amount (the "Tax Shield Reduction Amount Statement")
calculated on a basis consistent with the calculation of the Estimated Tax
Shield Reduction Amount attached as Schedule 3.6(c)
<PAGE> 41
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which shall include the Vendors' estimate of the fair market value of the
Purchased Assets, together with draft election forms under subsection 85(1) or
(2) of the Income Tax Act (Canada) and the analogous provisions of any
provincial income tax legislation in respect of the asset transfers under the
Transfer Agreements. CanWest, the CanWest Auditor and any valuator retained by
CanWest shall be afforded reasonable access to the Books and Records, the
Purchased Assets and to the working papers of the Hollinger Auditor for the
purpose of reviewing the Tax Shield Reduction Amount Statement.
In the event that CanWest objects in good faith to any aspect of the Tax Shield
Reduction Amount Statement including the Vendors' estimate of the fair market
value of any Purchased Asset, CanWest shall so advise the Vendors by delivery to
the Vendors of a written notice (the "Tax Shield Objection Notice") within 30
days after the delivery to CanWest of the Tax Shield Reduction Amount Statement.
The Tax Shield Objection Notice shall set out the reasons for CanWest's
objection, as well as the amount under dispute and reasonable details of the
calculation of such amount. In the event that the Parties agree on a resolution
of the dispute set out in the Tax Shield Objection Notice, the Parties shall
confirm this resolution in writing and shall thereafter be bound by such
resolution.
In the event that the Parties are unable to settle any dispute with respect to
the Tax Shield Reduction Amount Statement by the Closing Date, the dispute shall
forthwith be referred to an international accounting firm with no connection to
either of the Parties to be chosen by lot as arbitrator. The arbitration shall,
except to the extent provided for in this Section 3.11, be conducted in Toronto
in accordance with the Arbitration Procedures. Arbitration under this section
shall be in substitution for and precludes the bringing of any action in any
court in connection with any objection made by CanWest pursuant to this Section
3.11. The determination of the arbitrator shall be made within 30 Business Days
after the date on which the dispute was referred to it and the determination of
the arbitrator shall be final and binding on all Parties. The Tax Shield
Reduction Amount Statement shall be adjusted in accordance with the
determination of the arbitrator. Within 5 Business Days after the final
determination of the arbitrator, the Vendors, or CanWest, as the case may be,
shall pay to the other the difference, if any, between (A) the amount by which,
based on the Tax Shield Reduction Amount Statement as finally determined by the
arbitrator, the Purchase Price is to be adjusted pursuant to Section 3.6(c) and
(B) the amount of the Estimated Tax Shield Reduction Amount. Such amount shall
be satisfied, as to 76% of such amount, by wire transfer, certified cheque or
bank draft and, as to 24% of such amount, by a reduction or increase, as
applicable in the aggregate principal amount of Subordinated Debentures.
3.12 OBJECTION TO EFFECTIVE DATE FINANCIAL STATEMENT
(a) DELIVERY OF CANWEST OBJECTION NOTICE - In the event that CanWest
objects in good faith to any aspect of the Effective Date Financial
Statement, CanWest shall so advise the Vendors by delivery to the
Vendors of a written notice (the "CanWest Objection Notice") within 30
days after the delivery to CanWest of the Effective Date Financial
Statement. The CanWest Objection Notice shall set out
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the reasons for CanWest's objection, as well as the amount under
dispute and reasonable details of the calculation of such amount.
(b) AGREEMENT OF PARTIES - In the event that the Parties agree on a
resolution of the dispute set out in the CanWest Objection Notice, the
Parties shall confirm this resolution in writing and shall thereafter
be bound by such resolution.
(c) ARBITRATION - In the event that the Parties are unable to settle any
dispute with respect to the Effective Date Financial Statement within
30 days after the delivery by CanWest to the Vendors of the CanWest
Objection Notice, the dispute shall forthwith, and in any event within
60 days after the delivery by CanWest to the Vendors of the CanWest
Objection Notice, be referred to an international accounting firm with
no connection to either of the Parties to be chosen by lot as
arbitrator. The arbitration shall, except to the extent provided for
in this Section 3.12, be conducted in Toronto in accordance with the
Arbitration Procedures. Arbitration under this Section 3.12 shall be
in substitution for and precludes the bringing of any action in any
court in connection with any objection made by CanWest pursuant to
this Section 3.12.
(d) DETERMINATION OF ARBITRATOR - The determination of the arbitrator
shall be made within 30 days after the date on which the dispute was
referred to it and the determination of the arbitrator shall be final
and binding on all Parties. The Effective Date Financial Statement and
the Purchase Price shall be adjusted in accordance with the
determination of the arbitrator.
(e) PAYMENT IN ACCORDANCE WITH DETERMINATION - Within 5 Business Days
after resolution, by agreement of the Parties, of the dispute which
was the subject of the CanWest Objection Notice or, failing such
resolution, within 5 Business Days after the final determination of
the arbitrator, the Vendors or CanWest, as the case may be, shall pay
to the other the amount by which the Purchase Price is to be adjusted
as a result of such resolution or final determination in the manner
contemplated by Section 3.8.
3.13 OBJECTION TO CANWEST YEAR-END FINANCIAL STATEMENT, OR VENDOR YEAR-END
FINANCIAL STATEMENT
(a) DELIVERY OF VENDORS OBJECTION NOTICE - In the event that the Vendors
object in good faith to any aspect of the CanWest Year-End Financial
Statement or Vendor Year-End Financial Statement, as the case may be,
the Vendors shall so advise CanWest by delivery to CanWest of a
written notice (the "Vendors Objection Notice") within 30 days after
the delivery to the Vendors of the CanWest Year-End Financial
Statement or Vendor Year-End Financial Statement, as the case may be.
The Vendors Objection Notice shall set out the reasons for the
Vendors' objection, as well as the amount under dispute and reasonable
details of the calculation of such amount.
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(b) AGREEMENT OF PARTIES - In the event that the Parties agree on a
resolution of the dispute set out in the Vendors Objection Notice, the
Parties shall confirm this resolution in writing and shall thereafter
be bound by such resolution.
(c) ARBITRATION - In the event that the Parties are unable to settle any
dispute with respect to the CanWest Year-End Financial Statement or
Vendor Year-End Financial Statement, as the case may be, within 30
days after the delivery by the Vendors to CanWest of the Vendors
Objection Notice, the dispute shall forthwith, and in any event within
60 days after the delivery by the Vendors to CanWest of the Vendors
Objection Notice, be referred to an international accounting firm with
no connection to either of the Parties to be chosen by lot as
arbitrator. The arbitration shall, except to the extent provided for
in this Section 3.13, be conducted in Toronto in accordance with the
Arbitration Procedures. Arbitration under this Section 3.13 shall be
in substitution for and precludes the bringing of any action in any
court in connection with any objection made by the Vendors pursuant to
this Section 3.13.
(d) DETERMINATION OF ARBITRATOR - The determination of the arbitrator
shall be made within 30 days after the date on which the dispute was
referred to it and the determination of the arbitrator shall be final
and binding on all Parties. The CanWest Year-End Financial Statement,
Vendor Year-End Financial Statement, as the case may be, and the
Purchase Price, in the case of the Vendor Year-End Financial
Statement, shall be adjusted in accordance with the determination of
the arbitrator.
(e) PAYMENT IN ACCORDANCE WITH DETERMINATION - Within 5 Business Days
after resolution, by agreement of the Parties, of the dispute which
was the subject of the Vendors Objection Notice or, failing such
resolution, within 5 Business Days after the final determination of
the arbitrator, the Vendors or CanWest, as the case may be, shall pay
to the other the amount payable pursuant to Sections 3.5 or 3.10, as
the case may be, as a result of such resolution or final determination
in the manner contemplated by Sections 3.5 or 3.10, as the case may
be.
3.14 INTEREST
The amount of the Purchase Price payable pursuant to Sections 3.2(c), (d) and
(e) and all amounts paid as adjustments to the Purchase Price under Sections
3.5, 3.8, 3.10, 3.11, 3.12 and 3.13 shall be paid together with interest thereon
compounding quarterly from the Effective Date to the date of payment, at the
rate per annum equal to the weighted average rate of interest payable in respect
of the debt financings used by CanWest to partially fund the Purchase Price,
including the Subordinated Debentures.
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3.15 ALLOCATION OF PURCHASE PRICE
The Purchase Price shall be allocated in accordance with the provisions of
Schedule 3.15 provided that if the Purchase Price shall be adjusted pursuant to
Section 3.6, the amount of adjustment required shall, if such amount cannot be
reasonably allocated to the shares of a particular NewsMediaCo, be allocated on
a pro rata basis among the various NewsMediaCo Shares listed in Schedule 3.15.
The Vendors and CanWest agree to report the purchase and sale of the Purchased
Shares, Purchased Debt and the Purchased National Post Company Interest in any
returns required to be filed under the Income Tax Act (Canada) and other
taxation statutes in accordance with the provisions of Schedule 3.15.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE VENDORS
The Vendors hereby jointly and severally represent and warrant to CanWest, the
matters set out below on the basis that those representations and warranties
which are qualified by "Material Adverse Effect", "material", "in all material
respects" and words or phrases of similar import, are true and correct and any
other representations and warranties which are not qualified by "Material
Adverse Effect", "material", "in all material respects" and words and phrases of
similar import are true and correct in all material respects, in all cases as at
the date hereof.
4.1 INCORPORATION AND REGISTRATION
(a) Each of Hollinger, Southam, the General Partner and HCN
Publications is a corporation duly incorporated and validly
existing under the laws of its jurisdiction of incorporation and
Newspapers Partnership is a limited partnership properly formed
and duly registered as a limited partnership under the laws of
Ontario and each of the Vendors has all necessary power,
authority and capacity to own its property and assets and to
carry on the Purchased Businesses as presently conducted.
Neither the nature of the Purchased Businesses nor the location
or character of the property owned or leased by the Vendors in
connection with the Purchased Businesses requires any of the
Vendors to be registered, licensed or otherwise qualified as an
extra-provincial or foreign corporation or limited partnership
in any jurisdiction other than the jurisdictions in which each
of the Vendors is duly registered, licensed or otherwise
qualified for such purpose and other than jurisdictions where
the failure to be so registered licensed or otherwise qualified
would not have a Material Adverse Effect on any of Hollinger,
Southam, the General Partner or HCN Publications.
(b) National Post Company is a general partnership properly formed
and duly registered as a partnership under the laws of Ontario
and has all necessary power, authority and capacity to own its
property and assets and to carry on the National Post
Business. National Post Company has not carried on any
business other than the National Post Business.
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(c) At the Closing Time, each of NewsMediaCo, Canada.com Company,
Central Services Company, NewsMediaCo Holdco, Canada.com Company
Holdco and Central Services Company Holdco will be a corporation
duly incorporated and validly existing under the laws of its
jurisdiction of incorporation and will have all necessary power,
authority and capacity to own its property and assets and to
carry on the Purchased Businesses or the National Post Business,
as the case may be. None of NewsMediaCo, Canada.com Company,
Central Services Company, NewsMediaCo Holdco, Canada.com Company
Holdco or Central Services Company Holdco will, at the Closing
Time, have carried on any business other than the Purchased
Businesses or the National Post Business, as the case may be.
None of NewsMediaCo, Central Services Company or Canada.com
Company will have any liabilities as of the Effective Date other
than the Assumed Liabilities. None of NewsMediaCo Holdco,
Central Services Company Holdco or Canada.com Company Holdco
will have any liabilities other than the NewsMediaCo Debt, the
Central Services Company Debt and the Canada.com Company Debt,
respectively.
4.2 RESIDENCE OF THE VENDORS
None of the Vendors is a non-resident of Canada for the purposes of the Income
Tax Act (Canada).
4.3 SUBSIDIARIES
At the Closing Time, except as provided in Section 9.34, other than the
interests in the corporations listed in Schedule 4.3, NewsMediaCo, Central
Services Company, Canada.com Company and National Post Company will not own, or
have any interest in, any shares of any corporation.
4.4 TITLE TO PERSONAL PROPERTY
(a) Except as identified elsewhere in this Agreement, either
Southam, Newspapers Partnership or HCN Publications is, or will
be prior to the Reorganization, the sole legal and beneficial
owner of the personal property included in the Print News Media
Assets and Canada.com Assets with good and valid title, free and
clear of all Encumbrances other than Permitted Encumbrances, and
is exclusively entitled to possess and dispose of same (subject
only to obtaining all necessary corporate and partnership
approvals and in the case of Contracts, Intellectual Property
rights or Governmental Authorizations, to the necessity for
obtaining consents to their assignment). There has been no
assignment, subletting or granting of any licence (of occupation
or otherwise) of or in respect of any of the personal property
included in the Print News Media Assets or Canada.com Assets or
any granting of any agreement or right capable of becoming an
agreement or option for the purchase of the personal property
included in the Print News Media
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Assets or Canada.com Assets other than pursuant to the
provisions of, or as disclosed in, this Agreement.
(b) National Post Company is the sole legal and beneficial owner of
the personal property included in the National Post Assets with
good and valid title, free and clear of all Encumbrances other
than Permitted Encumbrances. There has been no assignment,
subletting or granting of any licence (of occupation or
otherwise) of or in respect of any of the personal property
included in the National Post Assets or any granting of any
agreement or right capable of becoming an agreement or option
for the purchase of the personal property included in the
National Post Assets other than pursuant to the provisions of,
or as disclosed in, this Agreement.
(c) Upon completion of the Reorganization, NewsMediaCo will be the
sole legal and beneficial owner of the personal property
included in the Print News Media Assets with good and valid
title, free and clear of all Encumbrances other than Permitted
Encumbrances.
(d) Upon completion of the Reorganization, Canada.com Company will
be the sole legal and beneficial owner of the personal property
included in the Canada.com Assets with good and valid title,
free and clear of all Encumbrances other than Permitted
Encumbrances.
(e) Upon completion of the Reorganization, Central Services Company
will be the sole legal and beneficial owner of the personal
property included in the Central Services Assets with good and
valid title, free and clear of all Encumbrances other than
Permitted Encumbrances.
4.5 RIGHT TO SELL
At the Closing Time, either Southam, Newspapers Partnership or HCN Publications
will be the sole registered and beneficial owner of the Purchased Shares, the
Purchased Debt and the Purchased National Post Company Interest free and clear
of all Encumbrances except as created pursuant to this Agreement. At the Closing
Time, either Southam, Newspapers Partnership or HCN Publications will have the
exclusive right to dispose of the Purchased Shares, Purchased Debt and the
Purchased National Post Company Interest as provided in this Agreement and such
disposition will not violate, contravene, breach or offend against or result in
any default under any indenture, mortgage, lease, agreement, obligation,
instrument, charter or by-law provision, statute, regulation, order, judgment,
decree, license, permit or law to which the Vendors are a party or subject or by
which the Vendors are bound or affected. At the Closing Time, the Purchased
Shares will not be subject to the terms of any shareholders' agreement.
4.6 CAPITALIZATION
At the Closing Time:
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(a) the authorized and issued share capital of NewsMediaCo,
Canada.com Company, Central Services Company, National Post
Company General Partner Inc., NewsMediaCo Holdco, Canada.com
Company Holdco and Central Services Company Holdco will be as
set forth in Schedule 4.6;
(b) all of the issued and outstanding shares of NewsMediaCo, Central
Services Company and Canada.com Company will have been duly and
validly issued and will be outstanding as fully paid and
non-assessable shares of NewsMediaCo, Central Services Company
and Canada.com Company, as the case may be, and Southam,
Newspapers Partnership or HCN Publications will be the sole
registered and beneficial owner of such shares;
(c) all of the Purchased Shares will have been duly and validly
issued and will be outstanding as fully paid and non-assessable
shares of NewsMediaCo Holdco, Central Services Company Holdco or
Canada.com Company Holdco, as the case may be;
(d) no options, warrants or other rights to purchase shares or other
securities of NewsMediaCo Holdco, Central Services Company
Holdco or Canada.com Company Holdco and no securities or
obligations convertible into or exchangeable for shares or other
securities of NewsMediaCo Holdco, Central Services Company
Holdco or Canada.com Company Holdco will have been authorized or
agreed to be issued or will be outstanding.
4.7 DUE AUTHORIZATION
(a) Each of Hollinger, Southam, HCN Publications and the General
Partner has all necessary corporate power, authority and
capacity to enter into this Agreement and to carry out its
obligations under this Agreement. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated by this Agreement have been or will be by Closing
duly authorized by all necessary corporate action on the part of
each of Hollinger, Southam, HCN Publications and the General
Partner.
(b) Newspapers Partnership has all necessary power, authority and
capacity to enter into this Agreement and to carry out its
obligations under this Agreement. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated by this Agreement have been duly or will be by
Closing authorized by all necessary action on the part of
Newspapers Partnership.
4.8 ENFORCEABILITY OF OBLIGATIONS
This Agreement constitutes a valid and binding obligation of Hollinger and each
of the Vendors enforceable against each of them in accordance with its terms.
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4.9 ABSENCE OF CONFLICTING AGREEMENTS
Except for the requirement for Competition Act Approval, none of Hollinger or
the Vendors is a party to, bound or affected by or subject to any indenture,
mortgage, lease, agreement, obligation, instrument, charter or by-law provision,
statute, regulation, order, judgement, decree, license, permit or law which
would be violated, contravened, breached by, or under which default would occur
or an Encumbrance would be created as a result of the execution and delivery of
this Agreement or any other agreement to be entered into under the terms of this
Agreement, or the performance by Hollinger or the Vendors of any of their
obligations provided for under this Agreement or any other agreement
contemplated under this Agreement, except for any violation, contravention or
breach which would not result in a Material Adverse Effect on any Business Unit
or National Post Company.
4.10 REGULATORY APPROVALS
No approval, order, consent of or filing with any Governmental Authority is
required other than Competition Act Approval, on the part of Hollinger or the
Vendors, in connection with the execution and delivery of this Agreement or any
other documents and agreements to be delivered under this Agreement or the
performance of Hollinger's or the Vendors' obligations under this Agreement or
any other documents and agreements to be delivered under this Agreement.
4.11 FINANCIAL STATEMENTS AND NATIONAL POST FINANCIAL STATEMENTS
(a) The Financial Statements have been prepared in accordance with
generally accepted accounting principles (other than footnotes)
applied on a basis consistent with that of the preceding period
and present fairly:
(i) all of the assets, liabilities and financial position of
each of the Business Units as at May 31, 2000; and
(ii) the sales, earnings and results of operations of each of
the Business Units for the five month period ended May 31,
2000.
(b) The National Post Financial Statements have been prepared in
accordance with generally accepted accounting principles (other
than footnotes) applied on a basis consistent with that of the
proceeding period and present fairly:
(i) all of the assets, liabilities and financial position of
National Post Company as at May 31, 2000; and
(ii) the sales, earnings and results of operations and changes
in financial position of National Post Company for the five
month period ended May 31, 2000.
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4.12 FINANCIAL FORECASTS
(a) The Print News Media Financial Forecast is based upon hypotheses
and assumptions disclosed in the Print News Media Financial
Forecast which have been developed based upon the budgets
prepared by management of each of the Business Units. The
Vendors believe such hypotheses and assumptions to be reasonable
and appropriate and believe that such forecast will be achieved;
the aggregate Print News Media Business EBITDA for the five
months ended May 31, 2000 is $137,452,000 (before adjustment for
Central Services and the Southam Retirement Plan); and
(b) The National Post Financial Forecast is based upon hypotheses
and assumptions disclosed in the National Post Financial
Forecast which have been developed based upon the budget
prepared by management of the National Post. The Vendors believe
such hypotheses and assumptions to be reasonable and appropriate
and believe that such forecast will be achieved; the EBITDA for
the National Post Business for the five months ended May 31,
2000 is ($19,836,000).
4.13 ABSENCE OF UNDISCLOSED LIABILITIES
Since the date of the Business Unit Balance Sheet or the National Post Balance
Sheet, the Vendors and their subsidiaries have not incurred any liabilities or
obligations (whether accrued, absolute, contingent or otherwise) relating to the
Purchased Businesses or the National Post Business, which continue to be
outstanding, except as disclosed on Schedule 4.13 or incurred in the ordinary
course of business and which would not have a Material Adverse Effect on any
Business Unit or National Post Company.
4.14 ABSENCE OF CHANGES AND UNUSUAL TRANSACTIONS
Since the date of the Business Unit Balance Sheet or the National Post Balance
Sheet, respectively:
(a) there has not been any material change in the financial
condition or operations or prospects of any Business Unit or
National Post Company other than changes in the ordinary and
usual course of business, none of which has resulted in a
Material Adverse Effect on any Business Unit or National Post
Company;
(b) there has not been any damage, destruction, loss or other event,
development or condition of any character (whether or not
covered by insurance) which has resulted in a Material Adverse
Effect on any Business Unit or National Post Company;
(c) there has not been any change in the level of Inventories or the
level of inventories of National Post Company in each case other
than in the ordinary course of business;
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(d) the Vendors and their subsidiaries have not transferred,
assigned, sold or otherwise disposed of any of the assets shown
or reflected in the Business Unit Balance Sheet or the National
Post Balance Sheet, respectively, or cancelled any debts or
entitlements except, in each case, in the ordinary and usual
course of business;
(e) none of the Vendors or their subsidiaries has incurred or
assumed any obligation or liability (fixed or contingent)
constituting an Assumed Liability, except those listed in
Schedule 4.14(e) and except unsecured current obligations and
liabilities incurred in the ordinary and usual course of
business none of which has resulted in a Material Adverse Effect
on a Business Unit;
(f) none of the Vendors nor their subsidiaries has discharged or
satisfied any lien or Encumbrance, or paid any obligation or
liability (fixed or contingent) of the Purchased Businesses or
National Post Business other than liabilities included in the
Business Unit Balance Sheet or the National Post Balance Sheet,
respectively, and liabilities incurred since the date of the
Business Unit Balance Sheet or the National Post Balance Sheet
in the ordinary and usual course of business;
(g) none of the Vendors or any of their subsidiaries has , in
respect of the Print News Media Business, suffered an operating
loss or any extraordinary loss, and, in respect of all of their
businesses, waived or omitted to take any action in respect of
any rights of substantial value, or entered into any commitment
or transaction not in the ordinary and usual course of business
where such loss, rights, commitment or transaction is or would
be material in relation to any Business Unit or National Post
Company;
(h) except in the ordinary course of business and consistent with
past practice and existing arrangements, including, as provided
for in any Collective Agreement, the Vendors and their
subsidiaries have not granted any bonuses, whether monetary or
otherwise, or made any general wage or salary increases in
respect of the Employees or changed the terms of employment for
any Employee;
(i) none of the Vendors or their subsidiaries has hired or dismissed
any Employee other than in the ordinary course of business and
there has been no material change in the number of Employees
employed by any Business Unit;
(j) the Vendors and their subsidiaries have not, except as disclosed
in Schedule 4.4, mortgaged, pledged, subjected to lien, granted
a security interest in or otherwise encumbered any of the
Purchased Assets; and
(k) the Vendors and their subsidiaries have not authorized, agreed
or otherwise become committed to do any of the foregoing.
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4.15 NO JOINT VENTURE INTERESTS
Except as disclosed on Schedule 4.15, none of the Vendors, in connection with
the Purchased Businesses or the National Post Business, (a) is a partner,
beneficiary, trustee, co-tenant, joint-venturer or otherwise a participant in
any partnership, trust, joint venture, co-tenancy or similar joint-owned
business undertaking or (b) has a significant investment interest in any
business owned or controlled by any third party.
4.16 MAJOR SUPPLIERS AND CUSTOMERS
The Vendors have provided to CanWest a comprehensive listing of each significant
supplier of goods and services to, and each significant customer of, the
Purchased Businesses and the National Post Business, together with, in each
case, the amount so billed or paid. To the knowledge of the Vendors, no such
significant supplier or customer has announced or advised the Vendors of any
intention to materially change its relationship or the terms upon which it
conducts business with the Purchased Businesses or the National Post Business,
including as a result of the transfer of the Purchased Assets as contemplated in
this Agreement.
4.17 CONDITION OF ASSETS
Other than Fixed Assets which are under construction, the Fixed Assets, taken as
a whole on a Business Unit basis, are in good condition, repair and (where
applicable) proper working order, normal wear and tear excepted. The machinery
and equipment included in the Fixed Assets, taken as a whole on a Business Unit
basis, and the printing presses, other than the printing press in Montreal, do
not require any material capital expenditure in order to ensure the continued
operation of such Fixed Asset.
4.18 INVENTORIES
All Inventories are valued on the books of the Vendors at the lower of cost,
using the first in, first out method, and net realizable value. All Inventories
and inventories of National Post Company are undamaged, merchantable or usable
and are in quantities usable or saleable in the ordinary course of business.
4.19 COLLECTIBILITY OF ACCOUNTS RECEIVABLE
The Accounts Receivable are good and collectible at the aggregate recorded
amounts, except to the extent of any provisions provided for such accounts in
the Business Unit Balance Sheet as adjusted in the ordinary and usual course of
business, and are not subject to any defence, counterclaim or set off.
4.20 PROVISIONS AND ACCRUALS
The provisions and Accrued Liabilities disclosed on or reflected in the
Financial Statements and the Books and Records and to be reflected on the
Effective Date Financial Statement, are
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sufficient in all respects to provide for the liabilities in respect of which
they have been established, including for greater certainty, all accrued
liabilities with respect to all salaries and other amounts payable pursuant to
Compensation Plans to Transferred Employees in accordance with the terms of
their employment.
4.21 BUSINESS IN COMPLIANCE WITH LAW
In all material respects, the operations of the Purchased Businesses and the
National Post Business have been and are now conducted in compliance with all
Laws of each jurisdiction in which the Purchased Businesses and the National
Post Business have been and are carried on and since May 31, 2000 the Vendors
and their subsidiaries have not received any notice of any alleged violation of
any such Laws which has not been cured.
4.22 GOVERNMENTAL AUTHORIZATIONS
Schedule 4.22 sets forth a complete list of all material Governmental
Authorizations by Business Unit and for National Post Company. The Governmental
Authorizations listed in Schedule 4.22 are all the material Governmental
Authorizations required by the Vendors to enable them to carry on the Purchased
Businesses and the National Post Business in compliance with all Laws. The
Governmental Authorizations are in full force and effect in accordance with
their terms in all material respects, and there have been no violations thereof
and no proceedings are pending or, to the knowledge of the Vendors, threatened,
which could result in their revocation or limitation.
4.23 RESTRICTIVE COVENANTS
Except as set forth in Schedule 4.23 or the Real Property Leases, none of
Hollinger, the Vendors or any of their subsidiaries are a party to or bound or
affected by any commitment, agreement or document relating to the Purchased
Businesses or the National Post Business containing any covenant expressly
limiting the freedom of Hollinger, the Vendors or any of their subsidiaries to
compete in any line of business, transfer or move any of their assets or
operations or which materially and adversely affects the business practices,
operations or conditions of the Purchased Businesses or the National Post
Business or the continued operation of the Purchased Businesses or the National
Post Business after the Effective Date or, by reason of the shareholdings of the
Vendors in CanWest after Closing, would affect the ability of CanWest to carry
on any business.
4.24 INTELLECTUAL PROPERTY
(a) Schedule 4.24 sets forth a complete list and brief description
of all Intellectual Property used primarily in the Purchased
Businesses or the National Post Business which has been
registered or for which applications for registration have been
filed, including all URL's and Internet domain names, and all
unregistered Intellectual Property which is material to the
Purchased Businesses or the National Post Business (the "Listed
Intellectual Property").
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(b) The registrations of Listed Intellectual Property are valid and
subsisting, and all necessary steps have been taken, including
payment of fees, to maintain such registrations in full force
and effect. All applications for Listed Intellectual Property
have been duly filed and are being diligently prosecuted, and
there is no objection or opposition to registration of such
Intellectual Property which would have a Material Adverse Effect
on any Business Unit or National Post Company. The Vendors have
taken appropriate steps to protect all Intellectual Property
which is material to the Purchased Businesses or the National
Post Business. The Vendors do not register copyrights in the
normal course of operating the Purchased Businesses or the
National Post Business. The Vendors have registered or applied
to register in Canada certain Trade-marks that in the judgement
of the Vendors are material to the Purchased Businesses or the
National Post Business, and the practice of the Vendors with
respect to registering or applying to register Intellectual
Property is consistent with practices generally prevailing in
the newspaper publishing industry in Canada.
(c) Except as disclosed in Schedule 4.24, the Vendors have the sole
and exclusive right to use and are the sole and exclusive owners
of all right, title and interest in and to all Intellectual
Property used in the Purchased Businesses or the National Post
Business (with no breaks in the chain of title) or are using all
such Intellectual Property only with the consent of or license
from the rightful owners thereof; all material consents and
licenses are in full force and effect, and there has not been
any material default under any such consent or license
agreement. Schedule 4.24 sets forth an accurate and complete
list of (i) all material licenses or other agreements with third
persons pursuant to which the Vendors have acquired rights to
use Intellectual Property owned by third persons in the
Purchased Businesses or the National Post Business, and (ii) all
material licenses or other agreements pursuant to which the
Vendors have granted any third Persons the right to use any
Intellectual Property owned by Vendors and used in the Purchased
Businesses or the National Post Business. All such licenses and
agreements are in writing, valid and binding on the other
parties to such agreements and except as disclosed in Schedule
4.24, assignable to CanWest. True copies of all material third
party licenses have been delivered to CanWest.
(d) All terms of use, including privacy policies, and other
agreements with on-line users of any websites that form part of
the Purchased Businesses or the National Post Business are
disclosed on the URL websites listed in Schedule 4.24.
(e) The Vendors have complied and are in compliance with all
internet domain name registration agreements and all other
applicable requirements of internet administration authorities
in all material respects, with respect to all internet domain
names used in the Purchased Businesses or the National Post
Business, and true and complete copies of all such registration
agreements and renewals or transfers thereof have been provided
to CanWest.
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(f) The Intellectual Property owned by the Vendors and used in the
Purchased Businesses or the National Post Business is in full
force and effect in all material respects and has not been used
or enforced or failed to be used or enforced in a manner that
would result in the abandonment, cancellation or
unenforceability of any of such Intellectual Property which
would result in a Material Adverse Effect on any Business Unit
or National Post Company.
(g) Except as disclosed in Schedule 4.24, there is no written claim
of adverse ownership, invalidity or other opposition to or
conflict with any Intellectual Property used in the Purchased
Businesses or the National Post Business, nor any pending or
threatened suit, proceeding, claim, demand, action or
investigation of any nature or kind against the Vendors relating
to such Intellectual Property.
(h) Except as disclosed in Schedule 4.24, the Purchased Businesses,
the National Post Business, all activities in which the Vendors
are engaged in connection with the Purchased Businesses or the
National Post Business, all products which the Vendors produce,
use, sell or distribute in connection with the Purchased
Businesses or the National Post Business, all processes,
methods, or materials, including all Content, that the Vendors
employ in the Purchased Businesses or the National Post
Business, and the use of any of the Intellectual Property in the
Purchased Businesses or the National Post Business do not
breach, violate, infringe or interfere with any intellectual
property rights of any third Person or require payment for the
use any intellectual property right of a third Person, including
any patent, trade-name, trade secret, Trade-mark and copyright
which would result in a Material Adverse Effect on any Business
Unit or National Post Company.
(i) Except as disclosed in Schedule 4.24, all Content used by the
Vendors in the Purchased Businesses or the National Post
Business is free and clear of all rights or interests of any
past or present employees, contractors, or consultants of the
Purchased Businesses or the National Post Business, including
moral rights, and the Vendors have obtained from all such
persons the right to make any and all uses of such Content,
including the right to publish, distribute, fix, reproduce,
communicate to the public by telecommunication and make
available such Content in any media in perpetuity, and following
Closing, CanWest shall have the rights to continue so to
publish, distribute, fix, reproduce, communicate to the public
by telecommunication and make available such Content in any
media free and clear of any claims by or obligations to make
payment to such Persons, or any claims by any third Person,
including Claims alleging that such Content is libellous,
slanderous, defamatory or otherwise in violation of any
applicable laws.
4.25 EQUIPMENT CONTRACTS
Schedule 4.25 sets forth a complete list of all Equipment Contracts constituting
a Material Contract together with a description of the equipment to which such
Equipment Contracts relate.
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All of the Equipment Contracts are in full force and effect in all material
respects and no material default exists on the part of the Vendors or any of
their subsidiaries, or, to the knowledge of the Vendors, on the part of any of
the other parties thereto. The entire interest of the Vendors and their
subsidiaries under each of the Equipment Contracts is held by it free and clear
of any Encumbrances, other than Permitted Encumbrances, and all payments due
under the Equipment Contracts have been duly and punctually paid.
4.26 OWNED REAL PROPERTY
(a) Schedule 4.26 sets forth a complete list of:
(i) the Owned Real Property in each case by reference to the
current registered and beneficial owner and municipal
address; and
(ii) the matters described in Sections 4.28 (f) and (o) as
applicable.
(b) Either Southam, Newspapers Partnership or HCN Publications
Company is, or will be prior to the Reorganization, the
beneficial owner of the Owned Real Property in fee simple, with
good and marketable title thereto, free and clear of all
Encumbrances other than Permitted Encumbrances.
(c) As at the Closing Time, NewsMediaCo will be the legal and
beneficial owner of the Owned Real Property included in the
Print News Media Assets in fee simple, with good and marketable
title thereto, free and clear of all Encumbrances other than
Permitted Encumbrances.
(d) As at the Closing Time, Central Services Company will be the
legal and beneficial owner of the Owned Real Property included
in the Central Services Company Assets in fee simple, with good
and marketable title thereto, free and clear of all Encumbrances
other than Permitted Encumbrances.
(e) As at the Closing Time, Canada.com Company will be the legal and
beneficial owner of the Owned Real Property included in the
Canada.com Assets in fee simple with good and marketable title
thereto, free and clear of all Encumbrances other than Permitted
Encumbrances.
(f) National Post Company is the legal and beneficial owner of the
Owned Real Property included in the National Post Assets in fee
simple, with good and marketable title thereto, free and clear
of all Encumbrances other than Permitted Encumbrances.
(g) There are, and as at the Closing Time there will be, no
material agreements, undertakings or other documents which
affect or relate to the title to, or ownership of such Owned
Real Property except as set forth in Schedule 4.26 or as
disclosed by registered title to the Owned Real Property.
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(h) None of the buildings or structures situate on the Owned Real
Property encroaches on any abutting or adjoining land.
4.27 LEASED REAL PROPERTY
(a) Schedule 4.27 sets forth a complete list of:
(i) the Leased Real Property by reference to municipal address
and Real Property Leases by reference to all relevant
documents including details of parties thereto and dates of
documents; and
(ii) the matters described in Sections 4.28(f) and (o) as
applicable.
(b) The Real Property Leases have not been altered or amended and
are in full force and effect. As at the Closing Date, the Real
Property Leases shall not have been altered or amended except
with the consent of CanWest which may be withheld in the
discretion of CanWest.
(c) There are no agreements or understandings between the landlord
and tenant, or sublandlord and subtenant, other than as
contained in the Real Property Leases, pertaining to the rights
and obligations of the parties thereto or relating to the use
and occupation of the Leased Real Property.
(d) All interests held by the Vendors as lessee or occupant under
the Real Property Leases are free and clear of all Encumbrances
other than Permitted Encumbrances.
(e) All payments required to be made by the Vendors pursuant to the
Real Property Leases on or prior to the date of this Agreement
have been duly paid, all such payments required to be paid on or
prior to the Closing Date will be paid by the Closing Date and
the Vendors are not otherwise in default in meeting any of their
obligations under any of the Real Property Leases.
(f) To the knowledge of the Vendors, none of the landlords or
sublandlords under any of the Real Property Leases is in default
in meeting any of its obligations under Real Property Leases to
which it is a party.
(g) Except as set out in the Real Property Leases, none of the
Vendors has any option, right of first refusal or other
contractual right relating to the Leased Real Property.
(h) No event exists which, but for the passing of time or the giving
of notice, or both, would constitute a default by the Vendors to
any of the Real Property Leases and no landlord or sublandlord
is claiming any such default or taking any action based
purportedly upon any such default.
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(i) The Vendors have not waived, or omitted to take, any action in
respect of any substantial rights under any of the Real Property
Leases.
(j) As at the Closing Time, NewsMediaCo will hold all interests as
lessee or occupant under the Real Property Leases included in
the Print News Media Assets, free and clear of all Encumbrances
other than Permitted Encumbrances.
(k) As at the Closing Time, Canada.com Company will hold all
interests as lessee or occupant under the Real Property Leases
included in the Canada.com Assets free and clear of all
Encumbrances other than Permitted Encumbrances.
(l) As at the Closing Time, Central Services Company will hold all
interests as lessee or occupant under the Real Property Leases
included in the Central Services Company Assets free and clear
of all Encumbrances other than Permitted Encumbrances.
(m) As at the Closing Time, The National Post Company will hold all
interests as lessee or occupant under the Real Property Leases
included in the National Post Assets free and clear of all
Encumbrances other than Permitted Encumbrances.
4.28 REAL PROPERTY GENERALLY
(a) The plant, buildings, structures, erections, improvements and
fixtures situate on or used in connection with the Real
Property, taken as a whole on a Business Unit basis, are in good
condition, repair and proper working order, normal wear and tear
excepted. None of such plant, buildings, structures, erections,
improvements or fixtures require any capital expenditures in the
ordinary course of business other than as included in the Print
News Media Financial Forecast or the National Post Financial
Forecast, respectively.
(b) The Vendors have, and as of the Closing Time NewsMediaCo,
Central Services Company and The National Post Company will
have, such rights of entry and exit to and from the Real
Property as are reasonably necessary to carry on the Purchased
Businesses or the National Post Business upon the Real Property.
(c) Except as disclosed on Schedule 4.28 or by registered title to
the Owned Real Property, no person has any right to purchase any
of the Owned Real Property and no person other than the Vendors
is using or has any right to use, as tenant, or is in possession
or occupancy of, any part of the Real Property (other than
National Post Company) and as at the Closing Time no person
other than NewsMediaCo, Central Services Company, Canada.com
Company or National Post Company, as the case may be, will be
using or have any right to use, as tenant, or be in possession
or occupancy of, any part of such Real Property.
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(d) Except as disclosed on Schedule 4.28 or by registered title to
the Owned Real Property, the Vendors have not granted any
option, right of first refusal or other contractual rights with
respect to any of the Real Property other than to NewsMediaCo,
Central Services Company, Canada.com Company or National Post
Company, as the case may be, pursuant to this Agreement.
(e) The Vendors have not entered into any agreement to sell,
transfer, encumber, or otherwise dispose of or impair the right,
title and interest of the Vendors in and to the Real Property or
the air, density and easement rights relating to the Real
Property except as disclosed by registered title to the Owned
Real Property, any such agreements which individually or in the
aggregate would not have a Material Adverse Effect on any
Business Unit or National Post Company.
(f) Schedules 4.26 and 4.27 provide details on the most up-to-date
surveys, prepared by licensed land surveyors, relating to the
Real Property which are available to the Vendors, and such
surveys have been delivered or made available to CanWest.
(g) The Vendors have not received any notification of and have no
knowledge of, any outstanding or incomplete work orders in
respect of any of the buildings, improvements or other
structures constructed on the Real Property or of any current
non-compliance (other than non-compliances which are legal
non-conforming under relevant zoning by-laws) with applicable
statutes and regulations or building and zoning by-laws and
regulations which would result in a Material Adverse Effect on
any Business Unit or National Post Company.
(h) The current uses of the Owned Real Property are permitted under
current zoning regulations.
(i) The Vendors have not made application for a rezoning of any of
the Real Property and have no knowledge of any proposed or
pending change to any zoning affecting the Real Property.
(j) The Vendors have no knowledge of any expropriation or
condemnation or similar proceeding pending or threatened against
the Real Property or any material part of the Real Property.
(k) All accounts for work and services performed or materials placed
or furnished upon or in respect of the construction and
completion of any of the buildings, improvements or other
structures constructed on the Real Property have been fully paid
or adequate reserves, which are included in the Accrued
Liabilities, have been taken therefor.
(l) All components of all improvements included within the Real
Property, including the roofs and structural elements thereof
and the heating, ventilation, air-conditioning, plumbing,
electrical, mechanical, sewer, waste water and storm
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water systems, taken as a whole on a Business Unit basis, are
in good condition, repair and proper working order, normal
wear and tear excepted.
(m) The Real Property is fully serviced to permit the operations of
the Purchased Businesses and the National Post Business by
NewsMediaCo, Central Services Company, Canada.com Company or
National Post Company, as the case may be, as at the Closing
Date. All municipal levies, local improvements, imposts and
permit fees due and payable prior to the Closing Date have been
or will as at the Closing Date be paid by the Vendors.
(n) All Permitted Encumbrances which are easements, agreements,
rights-of-way, restrictive covenants or restrictions are in good
standing and the Vendors have performed all obligations required
to be performed by them thereunder and there is no breach or
default in any respect thereunder nor has there occurred any
event nor does there exist any condition which, in either case,
with the giving of notice or the lapse of time, would constitute
such a breach or default except where the failure to perform or
such breach or default would not result in a Material Adverse
Effect on any Business Unit or National Post Company.
(o) All easements, rights-of-way and other similar appurtenant
interests necessary for the continued use and operation of the
Real Property for the Purchased Businesses or the National Post
Business are listed in Schedules 4.26 and 4.27 or disclosed by
registered title to the Real Property and none of such
easements, rights-of-way or other interests requires the consent
of any other party to the transactions contemplated by this
Agreement except as set forth on Schedule 4.26 or 4.27 or as
disclosed by registered title.
(p) There are no matters affecting the right, title and interest of
the Vendors in and to the Real Property which, in the aggregate,
would materially and adversely affect the ability of
NewsMediaCo, Central Services Company, Canada.com Company or
National Post Company, as the case may be, as of the Closing
Date, to carry on the Purchased Businesses or the National Post
Business upon the Real Property as it has been carried on in the
ordinary course in the past.
4.29 ENVIRONMENTAL MATTERS
(a) Except as disclosed in the Environmental Reports:
(i) all operations of the Vendors pertaining to the Purchased
Businesses or the National Post Business or the Purchased Assets
or conducted on the Real Property and the Real Property itself
while occupied by the Vendors or its Affiliates are now in
compliance with all Environmental Laws except to the extent that
non-compliance would not result in a Material Adverse Effect on
any Business Unit or National Post Company. To the knowledge of
the Vendors, any Release by the Vendors or its Affiliates of any
Hazardous Substance from the Purchased
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Businesses, the National Post Business or the Purchased Assets
into the Environment complied and complies with all
Environmental Laws except to the extent that non-compliance
would not result in a Material Adverse Effect on any Business
Unit or National Post Company;
(ii) the material Environmental Approvals have been obtained and
they have been and are being complied with except to the extent
that non-compliance would not result in a Material Adverse
Effect on any Business Unit or National Post Company and there
have been and are no proceedings commenced or, to the knowledge
of the Vendors, threatened, to revoke or amend any Environmental
Approvals;
(iii) none of the Purchased Businesses, the National Post
Business nor any of the Purchased Assets is now the subject of
any Remedial Order, nor do the Vendors have any knowledge of any
investigation or evaluation commenced or threatened as to
whether any such Remedial Order is necessary nor has any threat
of any such Remedial Order been made nor, to the knowledge of
the Vendors, are there any circumstances or conditions which
could result in the issuance of any Remedial Order with respect
to the Purchased Businesses or the Purchased Assets;
(iv) with respect to the Purchased Businesses, the National Post
Business and the Purchased Assets, none of the Vendors nor any
of their respective officers, directors or employees (while
acting within the scope of their work on behalf of the Vendors)
or, to the knowledge of the Vendors, any Affiliates who were
predecessors in title have ever been prosecuted for, convicted
or received notice of any offence under Environmental Laws, nor
have the Vendors or, to the knowledge of the Vendors, any
Affiliates who were predecessors in title been found liable in
any proceeding to pay any fine, damages, penalty, amount or
judgment to any person as a result of any Release or threatened
Release of any Hazardous Substance into the Environment or as a
result of the breach of any Environmental Law and, to the
knowledge of the Vendors, there is no basis for any such
proceeding or action;
(v) to the knowledge of the Vendors, no part of the Real
Property or any other Purchased Assets has ever been used as a
landfill or for the disposal of waste;
(vi) to the knowledge of the Vendors, no asbestos or
asbestos-containing materials are used, stored or otherwise
present in or on the Real Property or any other Purchased Asset
except in compliance with Environmental Laws and no equipment,
waste or other material containing polychlorinated biphenyls
(PCBs) are used, stored or otherwise present in or on the Real
Property or any other Purchased Asset;
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(vii) the Vendors have no knowledge of any Hazardous Substance
in, on or under the Real Property at concentrations which exceed
the concentrations specified in any applicable Environmental
Standard;
(viii) to the knowledge of the Vendors, there are no underground
storage tanks on the Real Property;
(ix) the Vendors have no knowledge of any Hazardous Substance
originating from any neighbouring or adjoining properties which
has migrated onto, into or under or is migrating towards any of
the Real Property at concentrations which exceed any applicable
Environmental Standard.
(b) the Vendors have delivered to CanWest or made available for
CanWest's review all Environmental Reports. There is no other
environmental documentation, information, data or study
(including the results of any environmental assessment or audit)
with respect to the Purchased Businesses, the National Post
Business or the Purchased Assets which would identify a
potential or actual Material Adverse Effect on any Business Unit
or National Post Company.
(c) Notwithstanding anything else in this Agreement, the
representations and warranties made in this Section 4.29 are the
exclusive and only representations and warranties made to
CanWest pertaining to environmental matters, including matters
relating to the Environment or compliance with Environmental
Laws.
4.30 EMPLOYMENT MATTERS
(a) Schedule 4.30(a) sets forth a complete list of all Employees
identifying whether such Employees are employed in the National
Post Business, the Canada.com Business or the Print News Media
Business or to provide the Central Services and the Vendors will
provide CanWest, by August 31, 2000 with the titles, service
dates and material terms of employment, including current wages,
salaries or hourly rate of pay, incentive compensation and bonus
(whether monetary or otherwise) paid since the beginning of the
most recently completed fiscal year or payable to each such
Employee. Within thirty (30) Business Days from the date of
receiving a request from CanWest, the Vendors shall provide to
CanWest the most recent statement received, setting out premium
rates and accident cost history under the Workplace Safety and
Insurance Act (Ontario) and identifying the Business Units
respect thereto or any other applicable workers' compensation
legislation, relating to the Purchased Businesses.
(b) Except for those written Employment Contracts with Employees
identified in Schedule 4.30(b), there are no written Employment
Contracts nor any oral contracts of employment which are not
terminable on the giving of reasonable notice in accordance with
applicable law, and there are no management agreements,
retention bonuses or other agreements which provide for cash,
other
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compensation or benefits, or other rights or contingent rights
upon the consummation of all or any of the transactions
contemplated in this Agreement.
(c) Except for the Benefit Plans or as set out in Schedule 4.30(c),
there are no employment policies or plans, including policies or
plans regarding incentive compensation, stock options, severance
pay or other terms and conditions of employment or terms or
conditions upon which an Employee may be terminated, which are
binding upon the Vendors.
(d) The Purchased Businesses and the National Post Business have
been and are being operated in compliance in all material
aspects with all Laws relating to employees, including
employment standards, Occupational Health and Safety Laws, human
rights, labour relations and pay equity. The Vendors and their
subsidiaries have complied in all material respects with and
posted plans as required under the Pay Equity Act (Ontario).
There have been no Claims nor, to the knowledge of the Vendors,
are there any threatened complaints under such Laws relating to
employees, independent contractors or consultants against the
Vendors and their subsidiaries in respect of the Purchased
Businesses or the National Post Business except where any such
Claims would not, in the aggregate, have a Material Adverse
Effect on any Business Unit or National Post Company. There are
no outstanding decisions or settlements or pending settlements
which place any obligation upon the Vendors or any of their
subsidiaries to do or refrain from doing any act the failure to
comply with which would have a Material Adverse Effect on any
Business Unit or National Post Company.
(e) All current assessments and obligations under the Workplace
Safety and Insurance Act (Ontario) and any workers' compensation
laws in other provinces in relation to the Purchased Businesses
or the National Post Business have been paid or accrued by the
Vendors and their subsidiaries and the Purchased Businesses and
the National Post Business have not been and are not subject to
any special or penalty assessment or obligation under such
legislation which has not been paid.
(f) Upon written request of CanWest, and within ten (10) days of
receiving such request, the Vendors will make available to
CanWest for review, all inspection reports and remedial orders
under the Occupational Health and Safety Laws relating to the
Purchased Businesses or the National Post Business. To the
knowledge of the Vendors, there have been no fatal or critical
accidents since July 30, 1999 which might lead to charges under
Occupational Health and Safety Laws. To the knowledge of the
Vendors, there are no materials present in the Purchased
Businesses or the National Post Business, exposure to which may
result in an industrial disease as defined in the Workplace
Safety and Insurance
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Act (Ontario) or similar provisions of workers' compensation
laws in other provinces.
(g) The Employees of the National Post Business and in each of the
Business Units included in the Purchased Businesses together
with the services provided pursuant to the Management Services
Agreement are sufficient to operate such businesses in
substantially the same fashion as such businesses were operated
prior to Closing and none of such businesses are dependent on
any services or employees which are not being offered employment
by NewsMediaCo, Canada.com Company or Central Services Company,
as the case may be, in accordance with Section 9.8 of this
Agreement or are employed by National Post Company other than
the services being provided pursuant to the Management Services
Agreement.
(h) Schedule 4.30(h) sets forth a complete list of all agreements
between Hollinger or its Affiliates and any independent
contractor or consultant engaged in the Purchased Businesses,
the Canada.com Business, or the National Post Business who is
entitled to annual compensation for services rendered to such
business in excess of $100,000.
4.31 COLLECTIVE AGREEMENTS
(a) Schedule 4.31 sets forth a complete list of the Collective
Agreements, either directly or by operation of law, with any
Union. Current and complete copies of all Collective Agreements
have been provided to CanWest. Except as set forth in Schedule
4.31, no Union has bargaining rights with respect to any
Employees of the Vendors or their subsidiaries.
(b) Except as disclosed in Schedule 4.31, there are no outstanding
or, to the knowledge of the Vendors, threatened labour tribunal
proceedings of any kind, including any proceedings which could
result in certification of a Union as bargaining agent for any
Employees or dependent contractors of the Vendors or their
subsidiaries not already covered by the Collective Agreements,
and there have not been any such proceedings within the last 2
years.
(c) Except as disclosed in Schedule 4.31, to the knowledge of the
Vendors there are no threatened or apparent Union organizing
activities involving Employees or dependent contractors of the
Vendors or their subsidiaries in respect of the Purchased
Businesses or the National Post Business, not already covered by
the Collective Agreements.
(d) The Vendors and their subsidiaries have complied in all material
respects with all Collective Agreements.
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(e) Except as disclosed in Schedule 4.31, there is no strike, lock
out or other labour dispute occurring, or to the knowledge of
the Vendors, threatened affecting the Purchased Businesses or
the National Post Business.
(f) Except as disclosed in Schedule 4.31, the Vendors and their
subsidiaries do not have any unresolved grievances or pending
arbitration cases outstanding or serious labour problems
relating to the Purchased Businesses or the National Post
Business which would have a Material Adverse Effect on any
Business Unit or National Post Company.
4.32 PENSION AND BENEFIT PLANS
(a) Schedule 4.32 sets forth a complete list of the Benefit Plans.
(b) Current and complete copies of all written Benefit Plans or,
where oral, written summaries of the material terms thereof,
have been provided or made available to CanWest together with
current and complete copies of all documents relating to the
Benefit Plans, including, as applicable:
(i) the most recent trust agreements and funding agreements;
(ii) the most recent insurance contracts, actuarial valuations,
investment management agreements, subscription and
participation agreements;
(iii) the most recent financial statements, accounting
statements and reports, accounting expense letters and
investment reports;
(iv) the most recent annual information returns and material
correspondence with any regulatory authority; and
(v) the most recent booklets, summaries, manuals and written
communications of a general nature distributed or made
available to any Employees or former employees concerning
any Benefit Plan.
(c) Each Benefit Plan is, and has been, established, registered
(where required), and administered in compliance with (i) the
terms thereof, (ii) all Laws and (iii) the Collective
Agreements.
(d) There have been no improvements, increases or changes to or
promised improvements, increases or changes to the benefits
provided under any Benefit Plan which are not contained in the
documents provided or made available to CanWest under Section
4.32(b). Except as disclosed in Schedule 4.32, none of the
Benefit Plans provide for benefit increases or the acceleration
of funding obligations that are contingent upon or will be
triggered by the entering into of this Agreement or the
completion of the transactions contemplated herein.
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(e) All employer or employee payments, contributions and premiums
required to be remitted, paid to or in respect of each Benefit
Plan have been paid or remitted in a timely fashion in
accordance with the terms thereof and all Laws, and no current
Taxes, penalties or fees are owing or exigible under any Benefit
Plan.
(f) There is no proceeding or Claim (other than routine claims for
payment of benefits) pending or to the knowledge of the Vendors
threatened, involving any Benefit Plan or their assets or any
notice from any person questioning or challenging compliance
with the terms of the Benefit Plans, any Laws or the Collective
Agreements, nor, to the knowledge of the Vendors is there any
investigation by a Governmental Authority and, to the knowledge
of the Vendors, no facts exist which could reasonably be
expected to give rise to any such proceeding, investigation,
Claim (other than routine claims for payment of benefits) or
notice.
(g) To the knowledge of the Vendors, no event has occurred
respecting any registered Transferring Plan which would result
in the revocation of the registration of such Transferring Plan
or entitle any person (without the consent of the Vendors) to
wind-up or terminate any Transferring Plan, in whole or in part,
or which could otherwise reasonably be expected to adversely
affect the tax status thereof.
(h) Except as disclosed in Schedule 4.32, there are no going concern
unfunded actuarial liabilities or solvency deficiencies
respecting any of the Transferring Plans.
(i) Except for changes in the general economic conditions, no
material changes have occurred in respect of any Benefit Plans
since the date of the most recent financial, accounting,
actuarial or other report, as applicable, issued in connection
with any Benefit Plan, which could reasonably be expected to
adversely affect the relevant report (including rendering it
misleading in any material respect).
(j) The Vendors have not received, or applied for, any payment of
surplus out of any Transferring Plan.
(k) Except as disclosed in Schedule 4.32, (i) the Vendors have not
taken any contribution or premium holidays under any
Transferring Plan and, where so disclosed, the Vendors were
entitled under the terms of the Transferring Plan, applicable
Collective Agreements and under all Laws to take such
contribution holidays; and (ii) there have been no improper
withdrawals or transfers of assets from any Transferring Plan
and where so disclosed such withdrawal or transfer of assets
were in accordance with the terms of such Transferring Plan,
applicable Collective Agreements and all Laws.
(l) Except for those Benefit Plans identified as such in Schedule
4.32, none of the Benefit Plans is a Union Plan.
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(m) To the knowledge of the Vendors, all employee data necessary to
administer each Benefit Plan is in the possession of the Vendors
and is complete, correct and in a form which is sufficient for
the proper administration of the Benefit Plan.
(n) Except as disclosed on Schedule 4.32, none of the Benefit Plans,
other than the Pension Plans, provide benefits beyond retirement
or other termination of service to Employees or former employees
or to the beneficiaries or dependants of such employees.
(o) None of the Benefit Plans require or permit a retroactive
increase in premiums or payments.
The Vendors sole obligation or liability to or in respect of any Union Plans is
to make monetary contributions to the Union Plans in the amounts and in the
manner set forth in the Collective Agreements disclosed to CanWest hereunder.
4.33 INSURANCE
The Vendors maintain such policies of insurance, issued by responsible insurers,
as are appropriate to the Purchased Businesses and the National Post Business,
in such amounts and against such risks as are customarily carried and insured
against by owners of comparable businesses, properties and assets. All such
policies of insurance are in full force and effect and the Vendors are not in
default, as to the payment of premium or otherwise, under the terms of any such
policy.
4.34 MATERIAL CONTRACTS
Schedule 4.34 sets forth a complete list of the Material Contracts that have not
been listed on any other Schedule. The Material Contracts listed in Schedule
4.34 are all in full force and effect unamended and no material default exists
under such Material Contracts on the part of the Vendors or, to the knowledge of
the Vendors, on the part of any other party to such Material Contracts. To the
knowledge of the Vendors, through the Purchased Businesses, the Canada.com
Business and the National Post Business, the Vendors have the capacity,
including the necessary personnel, equipment and supplies, to perform all their
obligations under the Material Contracts.
4.35 COPIES OF AGREEMENTS, ETC.
Current and complete copies of the Material Contracts have been made available
to CanWest and there are no current or pending negotiations with respect to the
renewal, repudiation or material amendment of any such agreement, plan or
policy.
4.36 INTER-AFFILIATE ARRANGEMENTS
Schedule 4.36 sets forth a complete list of all Contracts between and among
Ravelston, Hollinger Inc., Hollinger, any Affiliate or subsidiary of Hollinger
and the Excluded Businesses relating to
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the Purchased Businesses and the National Post Business. Except as disclosed on
Schedule 4.36, all such Contracts are on reasonable commercial terms that are
not less advantageous to any party than if such Contract had been obtained from
a Person or company dealing at arm's length with such party. All such Contracts
may be terminated by CanWest upon not more than 30 days prior notice without
bonus or penalty.
4.37 SECTION 19 OF THE INCOME TAX ACT (CANADA)
Every issue of a newspaper published as part of the Purchased Businesses or the
National Post Business during the period when such businesses have been owned by
Hollinger or one of its subsidiaries has qualified as a Canadian issue of a
Canadian newspaper, within the meaning of section 19 of the Income Tax Act
(Canada). Every issue of a periodical published as part of the Purchased
Businesses or the National Post Business during the period when such businesses
have been owned by Hollinger or any one of its subsidiaries has qualified as a
Canadian issue of a Canadian periodical within the meaning of section 19 of the
Income Tax Act (Canada) and, for purposes of proposed section 19.01 of the
Income Tax Act (Canada) as contained in the June 5, 2000 Notice of Ways and
Means Motion to amend the Income Tax Act (Canada), the original editorial
content of each such issue of periodicals has been 80% or more of the total
non-advertising content in the issue.
4.38 LITIGATION
Except as disclosed in Schedule 4.38, there is no suit, action, litigation,
investigation, Claim, complaint, grievance or proceeding, including appeals and
applications for review, in progress, or, to the knowledge of Hollinger, the
Vendors or any of their subsidiaries, pending or threatened against or relating
to Hollinger, the Vendors or any of their subsidiaries before any court,
Governmental Authority, commission, board, bureau, agency or arbitration panel
which, if determined adversely to Hollinger, the Vendors or any of their
subsidiaries, would,
(a) have a Material Adverse Effect on the Purchased Businesses or
the National Post Business,
(b) enjoin, restrict or prohibit the transfer of all or any part of
the Purchased Assets, Purchased Shares or Purchased National
Post Company Interest as contemplated by this Agreement, or
(c) prevent Hollinger, the Vendors or any of their subsidiaries from
fulfilling all of their obligations set out in this Agreement or
arising from this Agreement,
and Hollinger, the Vendors and their subsidiaries have no knowledge of any
existing ground on which any such action, suit, litigation or proceeding might
be commenced with any reasonable likelihood of success. Except as disclosed in
such Schedule 4.38, there is not presently outstanding against Hollinger, the
Vendors or any of their subsidiaries, any judgment, decree, injunction, rule or
order of any court, Governmental Authority, commission, board, bureau, agency or
arbitrator with respect to the Purchased Business or the National Post Business.
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4.39 TAX MATTERS
(a) No failure, if any, of the Vendors to duly and timely pay all
Taxes, including instalments on account of Taxes for the current
year that are due and payable by it, will result in an
Encumbrance on the Purchased Assets.
(b) There are no actions, suits, proceedings, investigations, audits
or claims now pending or, to the knowledge of the Vendors,
threatened against the Vendors in respect of any Taxes and there
are no matters under discussion, audit or appeal with any
Governmental Authority relating to Taxes, which will result in
an Encumbrance on the Purchased Assets.
(c) The Vendors have duly and timely withheld from any amount paid
or credited by them to or for the account or benefit of any
Person, including any Employees, officers or directors and any
non-resident person, the amount of all Taxes and other
deductions required by any Laws to be withheld from any amount
and have duly and timely remitted the same to the appropriate
Governmental Authority.
4.40 BOOKS AND RECORDS
All Books and Records have been made available to CanWest. Such Books and
Records fairly and correctly set out and disclose in all material respects the
financial position of the Purchased Businesses and all material financial
transactions relating to the Purchased Businesses have been accurately recorded
in such Books and Records. The Vendors have made available to CanWest all books
and records of the Vendors relating to the National Post Business. Such books
and records fairly and correctly set out and disclose in all material respects
the financial position of the National Post Business and all financial
transactions relating to the National Post Business have been accurately
recorded in such books and records.
4.41 MANAGEMENT RECOMMENDATION LETTERS
All management recommendation letters received by the Vendors or their boards of
directors from the Hollinger Auditor during the last 3 years, relating to the
Purchased Businesses or the National Post Business owned by Hollinger or its
Affiliates at the relevant request dates have been made available to CanWest.
4.42 TRADE ALLOWANCES
No customers of the Purchased Businesses or the National Post Business are
entitled to or customarily receive discounts, allowances, volume rebates or
similar reductions in price or other trade terms arising from any agreements or
understandings (whether written or oral) with or concessions granted to any
customer except as are consistent with industry practice. Schedule 4.42 also
includes a summary of all marketing and pricing policies, including promotions
and trade allowances, relating to the Purchased Businesses or the National Post
Business which are currently in effect or which have been in effect during any
of the last 3 years.
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4.43 THIRD PARTY CONSENTS
Schedule 4.43 sets out a complete list of all notifications, approvals and
consents required to be obtained by the Vendors in connection with the
execution, delivery and performance of this Agreement or any other documents and
agreements to be delivered under this Agreement, except where the failure to
obtain such consent would not have a Material Adverse Effect.
4.44 LOCATION OF THE ASSETS
Except as disclosed on Schedule 4.44, all of the Purchased Assets are located on
the Real Property or are in transit to or from the Real Property.
4.45 SUFFICIENCY OF ASSETS
The Purchased Assets together with the Management Services Agreement, the
National Post Affiliation/Services Agreement and the agreements contemplated by
Section 9.30 are sufficient for the continued operation of the Purchased
Businesses and the National Post Business after the Closing Date in the manner
in which the Purchased Businesses and the National Post Business were operated
prior to the Closing Date.
4.46 NO BROKER
The Vendors have carried on all negotiations relating to this Agreement and the
transactions contemplated in this Agreement directly and without intervention on
its behalf of any other party, other than Morgan Stanley Co. Incorporated and
CIBC World Markets Inc., in such manner as to give rise to any valid claim for a
brokerage commission, finder's fee or other like payment. The Vendors shall be
solely responsible for the fees and expenses of Morgan Stanley Co. Incorporated
and CIBC World Markets Inc. with respect to their engagement by the Vendors.
4.47 SHARE OWNERSHIP
None of the Vendors or any of its Affiliates owns any securities of CanWest.
4.48 FULL DISCLOSURE
All information which has been made available to CanWest by Hollinger and the
Vendors relating to the Purchased Businesses and the National Post Business is
true and correct in all material respects and does not omit to state any
material fact or facts necessary to make such information not misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF CANWEST
CanWest hereby represents and warrants to the Vendors the matters set out below
on the basis that those representations and warranties which are qualified by
"Material Adverse Effect",
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"material", "in all material respects" and words or phrases of similar import,
are true and correct and any other representations and warranties which are not
qualified by "Material Adverse Effect", "material", "in all material respects"
and words and phrases of similar import are true and correct in all material
respects, in all cases as at the date hereof.
5.1 DUE AUTHORIZATION
CanWest has all necessary corporate power, authority and capacity to enter into
this Agreement and to carry out its obligations under this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated under this Agreement have been or will be by Closing
duly authorized by all necessary corporate action of CanWest.
5.2 ENFORCEABILITY OF OBLIGATIONS
This Agreement constitutes a valid and binding obligation of CanWest enforceable
against it in accordance with the terms of this Agreement.
5.3 INVESTMENT CANADA
CanWest is Canadian within the meaning of the Investment Canada Act (Canada).
5.4 LITIGATION
There is no suit, action, litigation, investigation, claim, complaint or
proceeding before any Governmental Authority in progress or, to the knowledge of
CanWest, pending or threatened against or relating to CanWest, which, if
determined adversely to CanWest, would:
(a) prevent CanWest from paying the Purchase Price to the Vendors;
(b) enjoin, restrict or prohibit the transfer of all or any part of
the Purchased Assets, Purchased Shares or Purchased National
Post Company Interest as contemplated by this Agreement; or
(c) prevent CanWest from fulfilling all of its obligations set out
in this Agreement or arising from this Agreement,
and CanWest has no knowledge of any existing ground on which any such action,
suit, litigation or proceeding might be commenced with any reasonable likelihood
of success.
5.5 NO BROKER
CanWest has carried on all negotiations relating to this Agreement and the
transactions contemplated in this Agreement directly and without the
intervention on its behalf of any other party, other than CIBC World Markets
Inc., in such manner as to give rise to any valid claim for a brokerage
commission, finder's fee or other like payment. CanWest shall be solely
responsible
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for the fees and expenses of CIBC World Markets Inc. with respect to its
engagement by CanWest.
5.6 CANWEST DISCLOSURE RECORD
The documents constituting the CanWest Disclosure Record, when filed with the
Securities Commissions, conformed in all material respects with the requirements
of Applicable Securities Laws and none of those documents contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.
5.7 ABSENCE OF CHANGES
Neither CanWest nor any of its subsidiaries has sustained since the date of the
CanWest Financial Statements any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labour dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the CanWest Disclosure
Record or as would not individually or in the aggregate result in a Material
Adverse Effect on CanWest and its subsidiaries taken as a whole.
5.8 TITLE TO PROPERTY
Except as disclosed in Schedule 5.8 or as contemplated by this Agreement as
required by the senior secured credit facilities ("Senior Secured Facility") to
finance this transaction, CanWest and/or its subsidiaries has good and
marketable title in fee simple to all real property which it owns and good title
to all personal property which it owns, in each case that is material to the
business of CanWest and its subsidiaries, taken as a whole, free and clear of
all liens, Encumbrances and defects except such as are described in the CanWest
Disclosure Record, non-material commercial mortgages or similar financings
entered into in the ordinary and usual course of business, or such as do not
materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by CanWest and its
subsidiaries; and any real property or building that is material to the business
of CanWest and its subsidiaries, taken as a whole, is either owned (wholly or in
part) or is held under lease by CanWest or one of its subsidiaries and, where
leased, is held by it under a valid, subsisting and enforceable lease with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by CanWest and its
subsidiaries.
5.9 INCORPORATION AND REGISTRATION
CanWest has been duly continued and is validly existing as a corporation under
the federal laws of Canada, with power and authority (corporate or other) to own
its properties and conduct its business as described in the CanWest Disclosure
Record; CanWest and each CanWest Material Subsidiary has been duly qualified as
an extra-provincial or foreign corporation for the transaction of business and
is in good standing under the laws of each other jurisdiction in which it owns
or leases properties or conducts any business so as to require such
qualification, or is
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subject to no liability or disability by reason of the failure to be so
qualified in any such jurisdiction that is material to CanWest and its
subsidiaries, taken as a whole; and each CanWest Material Subsidiary has been
duly incorporated, amalgamated, organized, continued or formed and is validly
existing in good standing under the laws of its jurisdiction of incorporation,
amalgamation, organization, continuance or formation, as the case may be, which
jurisdiction is set forth under Column 3 of Schedule 5.9.
5.10 CAPITALIZATION
The authorized capital of CanWest consists of an unlimited number of Multiple
Voting Shares, an unlimited number of Subordinate Voting Shares, an unlimited
number of Non-Voting Shares and an unlimited number of Preference Shares,
issuable in series, and all of the issued shares in the capital of CanWest have
been duly and validly authorized and issued and are outstanding as fully paid
and non-assessable and as of July 27, 2000, 78,040,908 Multiple Voting Shares,
69,131,115 Subordinate Voting Shares and 2,871,736 Non-Voting Shares were issued
and outstanding; and all of the issued shares in the capital of each CanWest
Material Subsidiary have been duly and validly authorized and issued, are fully
paid and non-assessable and are owned directly or indirectly by CanWest in the
percentages set forth in Column 2 on Schedule 5.9, free and clear of all liens,
encumbrances, equities or claims, except as described in the CanWest Disclosure
Record.
5.11 SHARES
(a) The Preferred Shares and Non-Voting Shares to be issued to the
Vendors pursuant to this Agreement or delivered pursuant to the
Concurrent Share Purchase Agreements will be duly authorized as
of the Closing Date and, when issued and delivered pursuant to
this Agreement and the Concurrent Share Purchase Agreements
will, be duly and validly issued and outstanding as fully paid
and non-assessable shares in the capital of CanWest.
(b) The transactions contemplated by sections 3.2(a), 3.2(b) and
3.3(b) will result in the acquisition by the Vendors of shares
of CanWest which collectively represent not less than 5.68% of
the votes attached to CanWest's outstanding share capital and
not less than 15.11% of CanWest's aggregate equity on a
fully-diluted basis after giving effect to the transactions
contemplated by this Agreement, and CanWest agrees that the
foregoing shall not be subject to the materiality qualification
generally applicable to this Section nor to Sections 8.1(a) and
10.6(c).
5.12 SUBORDINATED DEBENTURES
The Subordinated Debentures to be issued to the Vendors pursuant to this
Agreement have been duly authorized and, when issued and delivered pursuant to
this Agreement and the CanWest Indenture, will have been duly executed,
authenticated, issued and delivered and will constitute valid and legally
binding obligations of Subco and entitled to the benefits provided by the
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CanWest Indenture under which they are to be issued; the CanWest Indenture will,
by the Closing Time, have been duly authorized and, when executed and delivered
by Subco and the trustee will constitute a valid and legally binding instrument,
enforceable against Subco in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
equitable principles; and no registration, filing or recording of the CanWest
Indenture under the federal laws of Canada or the laws of any province is
necessary in order to preserve or protect the validity or enforceability of the
CanWest Indenture or the Subordinated Debentures. No Governmental Authorization
of or with any Governmental Authorities is required to effect payments of
principal of, premium, if any, and interest on the Subordinated Debentures.
5.13 ABSENCE OF CONFLICTS
Neither CanWest nor any of its subsidiaries is (a) in violation of its
constating documents or (b) in default in the performance or observance of any
obligation, covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound, except as would not
result in a Material Adverse Effect on CanWest and its subsidiaries taken as a
whole. The issue and sale of the CanWest Securities and the compliance by
CanWest with all of the provisions of the CanWest Securities, the CanWest
Indenture and this Agreement and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which CanWest or any of the CanWest Material Subsidiaries is a
party or by which CanWest or any of the CanWest Material Subsidiaries is bound
or to which any of the property or assets of CanWest or any of the CanWest
Material Subsidiaries is subject, nor will such action result in any violation
of the provisions of the Articles of Incorporation or by-laws of CanWest (as
amended) or any statute or any order, rule or regulation of any Governmental
Authorities having jurisdiction over CanWest or any of the CanWest Material
Subsidiaries or any of their properties except for the current loan agreements
of CanWest which will be terminated and replaced on the Closing Date with the
Senior Secured Facility, any conflict, breach, violation or default which would
not result in a Material Adverse Effect on CanWest and its subsidiaries taken as
a whole; and no authorization, approval, order, consent, license or permit of or
filing with any such Governmental Authorities is required on the part of CanWest
in connection with the execution, delivery and performance of this Agreement or
any other documents and agreements to be delivered under this Agreement,
including the issue and sale of the CanWest Securities, the payment of principal
of, premium, if any, and interest on the Subordinated Debentures and the
consummation by CanWest of the transactions contemplated by the CanWest
Indenture, other than Competition Act Approval, the approval of The Toronto
Stock Exchange and the filing by CanWest with the Ontario Securities Commission,
within 10 days of the Closing Date, of two copies of a Form 45-501 prepared in
accordance with applicable securities laws together with the prescribed fee.
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5.14 LEGAL PROCEEDINGS
Other than as set forth in the CanWest Disclosure Record, there are no legal or
governmental proceedings pending to which CanWest or any of its subsidiaries is
a party or to which any property of CanWest or any of its subsidiaries is
subject which, if determined adversely to CanWest or any of its subsidiaries,
would individually or in the aggregate have a Material Adverse Effect on CanWest
and its subsidiaries taken as a whole, and to CanWest's knowledge, no such
proceedings are threatened by any Governmental Authorities or threatened by
others.
5.15 GOVERNMENT LICENSES
CanWest and each of its subsidiaries have all licenses, franchises, permits,
authorizations, approvals and orders and other concessions (collectively,
"Governmental Licenses") of and from the CRTC and other Governmental Authorities
that are necessary to own, lease, license and use their properties and conduct
their businesses as described in the CanWest Disclosure Record including their
television broadcasting undertakings except where the failure to have such
Governmental License would not constitute a Material Adverse Effect on CanWest
and its subsidiaries, taken as a whole; CanWest and its subsidiaries are in
material compliance with the terms and conditions of all such Governmental
Licenses; all of the Governmental Licenses are valid and in full force and
effect except as would not have a Material Adverse Effect on CanWest and its
subsidiaries, taken as a whole; and neither CanWest nor any of its subsidiaries
has received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavourable decision, ruling or finding, would
result in a Material Adverse Effect on CanWest and its subsidiaries taken as a
whole.
5.16 CANWEST FINANCIAL STATEMENTS
The CanWest Financial Statements, together with any notes, included or
incorporated by reference in the CanWest Disclosure Record, present fairly the
consolidated financial position of CanWest and its subsidiaries as of the dates
indicated therein and the consolidated results of operations and changes in
financial position of CanWest and its subsidiaries for the periods specified.
Such financial statements were prepared in accordance with generally accepted
accounting principles, in each case applied on a consistent basis throughout the
periods involved.
5.17 INTELLECTUAL PROPERTY
CanWest and its subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), Trademarks, service marks,
trade names or other intellectual property (collectively, "CanWest Intellectual
Property") necessary to carry on the business now operated by them, and neither
CanWest nor any of its subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of others with
respect to any CanWest Intellectual Property or of any facts or circumstances
which would render any CanWest Intellectual Property
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invalid or inadequate to protect the interest of CanWest or any of its
subsidiaries therein, and which infringement or conflict (if the subject of any
unfavourable decision, ruling or finding) or invalidity or inadequacy, singly or
in the aggregate, would result in a Material Adverse Effect on CanWest and its
subsidiaries taken as a whole.
5.18 EMPLOYEE MATTERS
No labour dispute with the employees of CanWest or any subsidiary exists or, to
the knowledge of CanWest, is imminent, and CanWest is not aware of any existing
or imminent labour disturbance by the employees of any of its or any
subsidiary's principal suppliers, manufacturers, customers or contractors,
which, in either case, may reasonably be expected to result in a Material
Adverse Effect on CanWest and its subsidiaries taken as a whole.
5.19 SECTION 19 OF THE INCOME TAX ACT
CanWest qualifies as a Person of the kind described in paragraph (e) of the
definition of "Canadian newspaper or periodical" contained in section 19 of the
Income Tax Act (Canada) and interpreted in accordance with that act and related
promulgations.
5.20 ENVIRONMENTAL COMPLIANCE
To the knowledge of CanWest, except as disclosed in the CanWest Disclosure
Record and except as would not individually or in the aggregate have a Material
Adverse Effect on CanWest and its subsidiaries taken as a whole, (A) CanWest and
its subsidiaries are in material compliance with all applicable Environmental
Laws, (B) CanWest and its subsidiaries have permits, authorizations and
approvals required under any applicable Environmental Laws and are each in
compliance in all material respects with their requirements, (C) there are no
pending or threatened Claims against CanWest or its subsidiaries in respect of
Environmental Laws, and (D) there are no conditions with respect to any property
or operations of CanWest or its subsidiaries that could reasonably be expected
to form the basis of a Claim against CanWest or its subsidiaries relating to
Environmental Laws.
ARTICLE 6
NON-WAIVER; SURVIVAL
6.1 NON-WAIVER
(a) No investigations made by or on behalf of CanWest at any time shall
have the effect of waiving, diminishing the scope or otherwise
affecting any representation or warranty made by the Vendors in or
pursuant to this Agreement. No waiver of any condition or other
provisions, in whole or in part, shall constitute as a waiver of any
other condition or provision (whether or not similar) nor shall such
waiver constitute a continuing waiver unless otherwise expressly
provided.
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(b) No investigations made by or on behalf of the Vendors at any time
shall have the effect of waiving, diminishing the scope or otherwise
affecting any representation or warranty made by CanWest in or
pursuant to this Agreement. No waiver of any condition or other
provisions, in whole or in part, shall constitute as a waiver of any
other condition or provision (whether or not similar) nor shall such
waiver constitute a continuing waiver unless otherwise expressly
provided.
6.2 NATURE AND SURVIVAL
(a) Subject to Subsection 6.2(b), all representations, warranties and
covenants contained in this Agreement on the part of each of the
Parties shall survive the Closing, the execution and delivery under
this Agreement of any share or security transfer instruments or other
documents of title to any of the Purchased Shares, Purchased Debt or
Purchased National Post Company Interest and the payment of the
consideration for the Purchased Shares, Purchased Debt or Purchased
National Post Company Interest.
(b) Representations and warranties concerning environmental matters set
out in Sections 4.29 and 5.20, shall survive indefinitely.
Representations and warranties concerning tax matters set out in
Section 4.39 shall survive for a period of one hundred and eighty days
after the relevant authorities shall no longer be entitled to assess
liability for tax against the Vendors for any particular taxation year
ended on or prior to or that includes the Closing Date, having regard,
without limitation, to any waivers given by the Vendors in respect of
any such taxation year. All other representations and warranties shall
only survive until June 30, 2003. If no written Claim shall have been
made under this Agreement against a Party for any incorrectness in or
breach of any representation or warranty made in this Agreement prior
to the expiry of these survival periods, such Party shall have no
further liability under this Agreement with respect to such
representation or warranty.
(c) Notwithstanding the limitations set out in Subsection 6.2(b), any
Claim which is based upon title to the Purchased Assets, the Purchased
Shares, the Purchased National Post Company Interest, the CanWest
Securities, intentional misrepresentation or fraud may be brought at
any time.
ARTICLE 7
CANWEST'S CONDITIONS PRECEDENT
7.1 CONDITIONS PRECEDENT
The obligation of CanWest to complete the purchase of the Purchased Shares,
Purchased Debt and Purchased National Post Company Interest under this Agreement
shall be subject to the satisfaction of, or compliance with, at or before the
Closing Time, each of the following
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conditions precedent (each of which is acknowledged to be inserted for the
exclusive benefit of CanWest and may be waived by it in whole or in part):
(a) TRUTH AND ACCURACY OF REPRESENTATIONS OF VENDORS AT THE CLOSING
TIME -- The representations and warranties of the Vendors made in or
pursuant to this Agreement which are qualified by "Material Adverse
Effect", "material", "in all material respects" and words or phrases
of similar import, shall be true and correct and any other
representations and warranties which are not qualified by "Material
Adverse Effect", "material", "in all material respects" and words and
phrases of similar import shall be true and correct in all material
respects, in all cases as at the Closing Time and with the same effect
as if made at and as of the Closing Time (except as such
representations and warranties may be affected by the occurrence of
events or transactions expressly contemplated and permitted by this
Agreement) and CanWest shall have received a certificate from the
President, Chief Executive Officer of Hollinger, confirming, to his
knowledge the truth and correctness of the representations and
warranties of the Vendors.
(b) PERFORMANCE OF OBLIGATIONS -- The Vendors shall have performed or
complied with, in all material respects, all their obligations,
covenants and agreements under this Agreement.
(c) RECEIPT OF CLOSING DOCUMENTATION -- All documentation relating to the
due authorization and completion of the Reorganization in accordance
with the terms of this Agreement and the sale and purchase of the
Purchased Shares, Purchased Debt and Purchased National Post Company
Interest under this Agreement and all actions and proceedings taken on
or prior to the Closing in connection with the performance by the
Vendors of their obligations under this Agreement, shall be
satisfactory to CanWest, acting reasonably, and CanWest shall have
received copies of all such documentation or other evidence as it may
reasonably request in order to establish the consummation of the
transactions contemplated by this Agreement and the taking of all
corporate proceedings in connection with such transactions in
compliance with these conditions, in form (as to certification and
otherwise) and substance satisfactory to CanWest.
(d) OPINION OF COUNSEL FOR VENDOR -- CanWest and the lenders to CanWest
shall have received an opinion dated the Closing Date from counsel for
the Vendors, Torys and local counsel in relevant jurisdictions on
terms usual and customary for transactions of this nature and
otherwise reasonably satisfactory to CanWest.
(e) CONSENTS TO ASSIGNMENT -- Subject to Section 2.8, all consents or
approvals from or notifications to any landlord, lessor or other
person required under the terms of any of the Material Contracts with
respect to the assignment of such Material Contracts to NewsMediaCo,
Central Services Company or Canada.com Company, as the case may be,
shall have been duly obtained or given, as the case may be, on or
before the Closing Time.
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(f) CONSENTS, AUTHORIZATIONS AND REGISTRATIONS -- All consents, approvals,
orders and authorizations of any person (or registrations,
declarations, filings or recordings with any such authorities),
required in connection with the completion of any of the transactions
contemplated by this Agreement (other than with respect to the Pension
Plans or Benefit Plans), the execution of this Agreement, the Closing
or the performance of any of the terms and conditions of this
Agreement, including (i) Competition Act Approval, (ii) approval of
The Toronto Stock Exchange, (iii) approval of the shareholders of
CanWest, if required, (iv) all clearance certificates required
pursuant to any applicable retail sales tax legislation and (v) a
Purchase Certificate from the Workplace Safety and Insurance Board
(Ontario) and equivalent certificates in the other provinces of Canada
shall have been obtained at or before the Closing Time.
(g) MATERIAL ADVERSE CHANGE -- There shall have been no material adverse
change in the financial condition, business, assets, or prospects of
the Purchased Businesses or the National Post Business, whether or not
as a result of the transactions contemplated by this Agreement.
(h) NO PROCEEDINGS -- There shall be no injunction or restraining order
issued preventing, and no pending or threatened claim, action,
litigation or proceeding, judicial or administrative or investigation
against any Party by any Person, for the purpose of enjoining or
preventing the consummation of the transactions contemplated in this
Agreement or otherwise claiming that this Agreement or the
consummation thereof is improper or would give rise to proceedings
under any statute or rule of law.
(i) ENCUMBRANCES -- CanWest shall have received evidence satisfactory to
it that all Encumbrances other than Permitted Encumbrances have been
discharged and that the Purchased Assets are free and clear of all
Encumbrances other than Permitted Encumbrances in each case other than
any Encumbrances which CanWest has agreed in writing need not be
discharged by Closing.
(j) NON-COMPETITION -- Ravelston, Hollinger Inc., Hollinger, Conrad Black,
David Radler, Jack Boultbee and Peter Atkinson shall each have
executed and delivered a Non-competition Agreement.
(k) ACTUAL POSSESSION -- The Vendors shall have delivered actual
possession of the Print News Media Assets, Central Services Assets and
Canada.com Assets to NewsMediaCo, Central Services Company and
Canada.com Company respectively.
(l) RELEASES -- The Vendors shall have released the Transferred Employees,
from and after the Closing Date in respect of the Southam Employees,
and from and after December 31, 2000 in respect of the Newspaper
Partnership Employees, from any confidentiality agreements with the
Vendors except to the extent that these have
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been assigned to NewsMediaCo, Central Services Company or Canada.com
Company.
(m) REAL ESTATE TITLE WORK -- CanWest shall have received from its
counsel, title opinions relating to the Owned Real Property and such
opinions shall not have disclosed any matter which constitutes a
Material Adverse Effect on any Business Unit or National Post Company.
(n) DIRECTORS AND OFFICERS -- The Board of Directors of NewsMediaCo
Holdco, Central Services Company Holdco and Canada.com Company Holdco
at the Closing Time shall consist of individuals nominated by CanWest
and there shall have been delivered to CanWest on or before the
Closing Time the resignations of all individuals who are prior to the
Closing Time directors or officers of NewsMediaCo Holdco, Central
Services Company Holdco and Canada.com Company Holdco (except to the
extent that the Vendors shall have been notified to the contrary by
CanWest) and duly executed comprehensive releases from each such
individual and from the Vendors of all their claims, respectively,
against NewsMediaCo Holdco, Central Services Company Holdco and
Canada.com Company Holdco.
(o) MANAGEMENT SERVICES AGREEMENT -- Ravelston shall have executed and
delivered the Management Services Agreement.
(p) NATIONAL POST SHAREHOLDERS AGREEMENT -- Southam shall have executed
and delivered the National Post Shareholders Agreement.
(q) NATIONAL POST AFFILIATION/SERVICES AGREEMENT -- National Post Company
shall have executed and delivered the National Post
Affiliation/Services Agreement.
(r) EMPLOYEE INTERIM SERVICES AGREEMENT -- Newspapers Partnership, HCN
Publications and NewsMediaCo shall have executed and delivered the
Employee Interim Services Agreement.
(s) BANK FINANCING -- The lenders to CanWest shall not have exercised
their right to terminate their commitment to provide credit facilities
to CanWest as a result of:
(i) there having occurred and be continuing a material adverse change
in the financial, banking or capital markets generally that
prevents or makes impractical funding or syndication of the
credit facility to be provided to CanWest; or
(ii) there being:
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(A) any suspension or limitation of trading in securities
generally on the Toronto or New York Stock Exchanges, or any
setting of minimum prices for trading on such exchange;
(B) any banking moratorium declared by Canadian Federal, U.S.
Federal or New York authorities;
(C) any outbreak or escalation of major hostilities in which
Canada or the United States is involved, any declaration of
war by Congress or any other substantial national or
international calamity or emergency; or
(D) any other material adverse change in bank or capital market
conditions;
provided that, in the case of circumstances specified in clauses (C)
or (D), that has had and continues to have a material adverse effect
on the syndication of the credit facilities to be provided to CanWest
or the consummation of a high yield offering by CanWest generally.
(t) PENSION AND EMPLOYEE BENEFIT PLANS AGREEMENT -- The Vendors and
Hollinger shall have executed and delivered the Pension and Employee
Benefit Plans Agreement.
(u) NON-COMPETITION AGREEMENTS -- Ravelston, Hollinger Inc., Hollinger,
Conrad Black, David Radler, Jack Boultbee and Peter Atkinson shall
have executed and delivered a Non-Competition Agreement.
7.2 CONSEQUENCES OF A FAILURE TO SATISFY CONDITIONS PRECEDENT
If any of the foregoing conditions in this Article has not been fulfilled by
Closing, CanWest may terminate this Agreement by notice in writing to the
Vendors, in which event CanWest is released from all obligations under this
Agreement, and unless CanWest can show that the condition relied upon could
reasonably have been performed by the Vendors, the Vendors are also released
from all obligations under this Agreement, provided that, in respect of the
conditions specified in Sections 7.1(a), (b), (e) and (i), unless the breach
results in a Material Adverse Effect on the Purchased Businesses or the National
Post Business, CanWest will be required to complete the purchase of the
Purchased Shares, Purchased Debt and Purchased National Post Company Interest
under this Agreement notwithstanding the breach of any representation and
warranty, the failure on the part of the Vendors with respect to any of its
covenants or the failure on the part of the Vendors to obtain all consents or
approvals and CanWest shall have recourse only to a claim for damages in such
event. Any such damages once agreed to or determined by an arbitrator pursuant
to this Agreement may, at CanWest's option, reduce the principal amount of the
Subordinate Debentures. At CanWest's option, if the breach constitutes a
Material Adverse Effect in respect of a Business Unit, in lieu of a claim for
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damages CanWest may elect not to acquire any of the assets of the Business Unit
which are the subject matter of the breach and the Purchase Price shall be
reduced accordingly. However, CanWest may waive compliance with any condition in
whole or in part if it sees fit to do so, without prejudice to its rights of
termination in the event of non-fulfilment of any other condition, in whole or
in part, or to its rights to recover damages for the breach of any
representation, warranty, covenant or condition contained in this Agreement.
ARTICLE 8
VENDORS' CONDITIONS PRECEDENT
8.1 CONDITIONS PRECEDENT
The obligations of the Vendors to complete the sale of the Purchased Shares,
Purchased Debt and Purchased National Post Company Interest under this Agreement
shall be subject to the satisfaction of or compliance with, at or before the
Closing Time, each of the following conditions precedent (each of which is
acknowledged to be inserted for the exclusive benefit of the Vendors and may be
waived by it in whole or in part):
(a) TRUTH AND ACCURACY OF REPRESENTATIONS OF CANWEST AT CLOSING TIME --
The representations and warranties of CanWest made in or pursuant to
this Agreement which are qualified by "Material Adverse Effect",
"material", "in all material respects" and words or phrases of similar
import, shall be true and correct and any other representations and
warranties which are not qualified by "Material Adverse Effect",
"material", "in all material respects" and words and phrases of
similar import shall be true and correct in all material respects, in
all cases as at the Closing Time and with the same effect as if made
at and as of the Closing Time (except as such representations and
warranties may be affected by the occurrence of events or transactions
expressly contemplated and permitted by this Agreement) and the
Vendors shall have received a certificate from the President, Chief
Executive Officer or General Counsel of CanWest confirming to his
knowledge the truth and correctness of such representations and
warranties.
(b) PERFORMANCE OF OBLIGATIONS -- CanWest shall have performed or complied
with, in all material respects, all its obligations, covenants and
agreements under this Agreement.
(c) RECEIPT OF CLOSING DOCUMENTATION -- All documentation relating to the
due authorization and completion of the sale and purchase of the
Purchased Shares, Purchased Debt and Purchased National Post Company
Interest under this Agreement and all actions and proceedings taken on
or prior to the Closing in connection with the performance by CanWest
of its obligations under this Agreement, shall be satisfactory to the
Vendors, acting reasonably, and the Vendors shall have received copies
of all such documentation or other evidence as they may reasonably
request in order to establish the consummation of the transactions
contemplated by this Agreement and the taking of all corporate
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proceedings in connection with such transactions in compliance with
these conditions, in form (as to certification and otherwise) and
substance satisfactory to the Vendors.
(d) OPINION OF COUNSEL FOR CANWEST -- The Vendors shall have received an
opinion dated the Closing Date, from counsel for CanWest, Osler,
Hoskin & Harcourt LLP, on terms usual and customary for transactions
of this nature and otherwise reasonably satisfactory to the Vendors.
(e) CONSENTS, AUTHORIZATIONS AND REGISTRATIONS -- All consents, approvals,
orders and authorizations of any person (or registrations,
declarations, filings or recordings with any such authorities),
required in connection with the completion of any of the transactions
contemplated by this Agreement (other than with respect to the Pension
Plans or Benefit Plans), the execution of this Agreement, the Closing
or the performance of any of the terms and conditions of this
Agreement, including (i) Competition Act Approval, (ii) approval of
The Toronto Stock Exchange, and (iii) approval of the shareholders
of CanWest, if required, shall have been obtained at or before the
Closing Time.
(f) NO PROCEEDINGS -- There shall be no injunction or restraining order
issued preventing, and no pending or threatened claim, action,
litigation or proceeding, judicial or administrative or investigation
against any Party by any person, for the purpose of enjoining or
preventing the consummation of the transactions contemplated in this
Agreement or otherwise claiming that this Agreement or the
consummation thereof is improper or would give rise to proceedings
under any statute or rule of law.
(g) MATERIAL ADVERSE CHANGE -- There shall have been no material adverse
change in the financial condition, business, assets or prospects of
CanWest and its subsidiaries taken as a whole whether or not as a
result of the transactions contemplated by this Agreement.
(h) MANAGEMENT SERVICES AGREEMENT -- CanWest shall have executed and
delivered the Management Services Agreement.
(i) NATIONAL POST SHAREHOLDERS AGREEMENT -- CanWest shall have executed
and delivered the National Post Shareholders Agreement.
(j) NATIONAL POST AFFILIATION/SERVICES AGREEMENT -- CanWest shall have
executed and delivered the National Post Affiliation/Services
Agreement.
(k) REGISTRATION RIGHTS AGREEMENT -- CanWest shall have executed and
delivered the Registration Rights Agreement.
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(l) PENSION AND EMPLOYEE BENEFIT PLANS AGREEMENT -- CanWest shall have
executed and delivered the Pension and Employee Benefit Plans
Agreement.
(m) CANWEST INDENTURE -- CanWest and the trustee under the CanWest
Indenture shall have entered into the CanWest Indenture.
(n) CANWEST FINANCING -- The Vendors shall have been permitted to review
all closing documentation relating to the financings by CanWest used
to partially fund the Purchase Price.
8.2 CONSEQUENCES OF FAILURE TO SATISFY CONDITIONS PRECEDENT
If any of the foregoing conditions in this Article has not been fulfilled by
Closing, the Vendors may terminate this Agreement by notice in writing to
CanWest, in which event the Vendors are released from all obligations under this
Agreement, and unless the Vendors can show that the condition relied upon could
reasonably have been performed by CanWest, CanWest is also released from all
obligations under this Agreement provided that, in respect of the conditions
specified in Sections 8.1(a) and (b), unless the breach results in a Material
Adverse Effect on CanWest, the Vendors will be required to complete the sale of
the Purchased Shares, Purchased Debt and Purchased National Post Company
Interest under this Agreement notwithstanding the breach of any representation
and warranty or the failure on the part of CanWest with respect to any of its
covenants and shall have recourse only to a claim for damages in such event. Any
such damages once agreed to or determined by an arbitrator pursuant to this
Agreement may be used, at the Vendors' option, to increase the amount of the
Subordinated Debentures. However, the Vendors may waive compliance with any
condition in whole or in part if it sees fit to do so, without prejudice to its
rights of termination in the event of non-fulfilment of any other condition in
whole or in part or to its rights to recover damages for the breach of any
representation, warranty, covenant or condition contained in this Agreement.
ARTICLE 9
OTHER COVENANTS OF THE PARTIES
9.1 CONDUCT OF PURCHASED BUSINESSES PRIOR TO CLOSING
During the period from the date of this Agreement to the Closing Time:
(a) CONDUCT BUSINESS IN THE ORDINARY COURSE -- Except as otherwise
contemplated or permitted by this Agreement, the Vendors shall conduct
the Purchased Businesses and the National Post Business in the usual
and ordinary manner and use all reasonable efforts to maintain good
relations with their respective employees, customers and suppliers.
During this period, the Vendors shall not make any commitment with
respect to the acquisition or disposition of any asset comprising part
of the Purchased Assets or enter into, amend or cancel any Material
Contract without the prior written consent of CanWest, in each case
other than in the ordinary course of business.
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(b) EXTRAORDINARY TRANSACTIONS -- The Vendors shall not directly or
indirectly engage in any transaction, make any loan or enter into any
arrangement with any officer, director, partner, shareholder,
employee, consultant, independent contractor or agent of any of the
Vendors relating to the Purchased Business or the National Post
Business except in the ordinary course of business consistent with
past custom and practice and existing arrangements.
(c) CONTINUE INSURANCE -- The Vendors shall continue in force all policies
of insurance maintained by the Vendors in respect of the Purchased
Businesses and the National Post Business and give all notices and
present claims under all insurance policies in a timely fashion.
(d) PERFORM OBLIGATIONS -- The Vendors shall comply in all material
respects with all Laws affecting the operation of the Purchased
Businesses or the National Post Business.
(e) PREVENT CERTAIN CHANGES -- The Vendors shall not, without the prior
written consent of CanWest, take any of the actions, do any of the
things or perform any of the acts described in Sections 4.14(d) - (k).
(f) NO MARKETING COSTS -- The Vendors and their subsidiaries shall not
make any commitments with respect to charitable donations or marketing
(i.e. tickets for sporting and cultural events, etc.) of a nature
accounted for prior to the date of this Agreement as a cost of
providing the Central Services;
(g) APPROVALS -- CanWest shall use all reasonable efforts and diligently
pursue, and the Vendors shall co-operate with CanWest and use all
reasonable efforts and diligently pursue, obtaining Competition Act
Approval.
(h) CONDUCT OF UNION NEGOTIATIONS -- The Vendors shall consult with
CanWest with respect to the conduct of any negotiations with Unions
representing Employees between the date of this Agreement and the
Closing Date. The Vendors will not enter into any agreement or make
any amendments to any agreement with a Union representing Employees of
the Purchased Businesses without the prior consent of CanWest.
9.2 CONDUCT OF PURCHASED BUSINESSES FOLLOWING THE REORGANIZATION DATE
(a) During the period from the Effective Date to the Closing Time:
(i) NewsMediaCo, Central Services Company and Canada.com Company
shall not, directly or indirectly, declare or pay any dividends
or declare or make any other payments or distributions on or in
respect of any of its shares and shall not, directly or
indirectly, purchase or otherwise acquire any of its shares; and
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(ii) the Vendors and their subsidiaries shall allocate to the Business
Units the costs of the Central Services to the Business Units and
shall collect from the Business Units the costs of the Central
Services in each case consistent with prior practice.
(b) Prior to the Effective Date, the Vendors shall cause National Post
Company to make offers of employment to the Southam Employees
identified on Schedule 9.2(b) and assume other costs (which together
shall represent an annual cost of at least $3 million) on terms and
conditions of employment, including salary, incentive compensation and
benefits, substantially similar in the aggregate for each such
Employee to the current terms and conditions of employment of such
Employee.
9.3 ACCESS FOR INVESTIGATION BY CANWEST
(a) The Vendors shall permit CanWest and its representatives, between the
date of this Agreement and the Closing Time, without interference to
the ordinary conduct of the Purchased Businesses or the National Post
Business, to have reasonable access during normal business hours to
(i) all locations where Books and Records or other material relevant
to the Purchased Businesses or the National Post Business is stored;
(ii) to all the Books and Records; (iii) to the properties and assets
used in the Purchased Businesses or the National Post Business (which
shall exclude invasive testing at the properties); and (iv) to senior
employees of the Vendors. The Vendors shall furnish to CanWest copies
of Books and Records (subject to any confidentiality agreements or
covenants relating to any such Books and Records) as CanWest shall
from time to time reasonably request to enable confirmation of the
matters warranted in Article 4.
Without limiting the generality of the foregoing, it is agreed that
the accounting representatives of CanWest shall be afforded reasonable
opportunity to make a full investigation of all aspects of the
financial affairs of the Vendors in connection with the Purchased
Businesses and the National Post Business.
(b) Notwithstanding Subsection 9.3(a), the Vendors shall not be required
to disclose any information, records, files or other data to CanWest
where prohibited by any law. If any consent of any person or
Governmental Authority is required to permit the Vendors to release
any information to CanWest, the Vendors shall make all reasonable
effort to obtain such consent.
(c) The Vendors shall forthwith, upon request by CanWest or CanWest's
Counsel, execute and deliver to CanWest all necessary consents to
permit CanWest to have existing records released to CanWest by the
municipal building and zoning department, fire department, public
works, environmental agencies, the elevator inspections branch of the
provincial department of labour and other appropriate authorities as
CanWest may consider advisable between the date of this
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Agreement and Closing. Such consents will authorize and direct the
release of information to CanWest but, for greater certainty, will not
permit CanWest to request that inspections be made by such
Governmental Authorities.
9.4 ACCESS FOR INVESTIGATION BY THE VENDORS
(a) CanWest shall permit the Vendors and their representatives, between
the date of this Agreement and the Closing Time, without interference
to the ordinary conduct of the business of CanWest, to have reasonable
access during normal business hours to (i) the properties and assets
used in its business (which shall exclude invasive testing at the
properties); and (ii) to senior employees of CanWest. CanWest shall
furnish to the Vendors such information (subject to any
confidentiality agreements or covenants relating to any such Books and
Records) as the Vendors shall from time to time reasonably request to
enable confirmation of the matters warranted in Article 5.
Without limiting the generality of the foregoing, it is agreed that
the accounting representatives of the Vendors shall be afforded
reasonable opportunity to make a full investigation of all aspects of
the financial affairs of CanWest.
(b) Notwithstanding Subsection 9.4(a), CanWest shall not be required to
disclose any information, records, files or other data to the Vendors
where prohibited by any law. If any consent of any person or
Governmental Authority is required to permit CanWest to release any
information to the Vendors, CanWest shall make all reasonable effort
to obtain such consent.
9.5 ACTIONS TO SATISFY CLOSING CONDITIONS
Each of the Parties agrees to take all such commercially reasonable actions as
are within its power to control, and to use its commercially reasonable efforts
to cause other actions to be taken which are not within its power to control, so
as to ensure compliance with each of the conditions and covenants set forth in
Articles 7, 8 or 9 which are for the benefit of any other Party.
9.6 CHANGE VENDOR'S NAME
Forthwith following the completion of the purchase and sale of the Purchased
Shares, Purchased Debt and Purchased National Post Company Interest under this
Agreement, Southam shall discontinue use of the name "Southam", except where
legally required to identify Southam until its name has been changed to another
name. Southam shall deliver at Closing articles of amendment to change the
corporate name of Southam and any Affiliate using the name "Southam" to another
name not including the word "Southam" and otherwise not confusingly similar to
its present name and its consent to the use of the name "Southam" by an
Affiliate of CanWest. Southam shall file such articles of amendment with
Industry Canada immediately following the Closing. In addition, Southam shall
take all necessary steps to cause each of its
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Affiliates whose corporate name includes the name of one of the publications
or Business Units included among the Purchased Assets to change, forthwith
following the Closing, its corporate name to another name not containing the
name of any of the publications or Business Units included among the Purchased
Assets.
9.7 CHANGE NAME OF PURCHASED COMPANIES
Forthwith following the completion of the purchase and sale of the Purchased
Shares, Purchased Debt and Purchased National Post Company Interest under this
Agreement, CanWest shall cause any company acquired by CanWest to discontinue
use of the name "Hollinger", except where legally required to identify such
company until its name has been changed to another name. CanWest shall deliver
at closing articles of amendment to change the corporate name of any company
using the name "Hollinger" to another name not including the word "Hollinger".
CanWest shall file such articles of amendment with Industry Canada immediately
following the Closing.
9.8 EMPLOYEES
(a) At Closing, Newspapers Partnership and HCN Publications shall enter
into an Employee Interim Services Agreement with NewsMediaCo covering
the supply of employee services from the Newspaper Partnership
Employees from the Closing Date to December 31, 2000.
(b) On the Closing Date, NewsMediaCo shall become the successor employer
under the Collective Agreements governing Newspaper Partnership
Employees and shall be bound by and comply with the terms of such
Collective Agreements effective January 1, 2001.
(c) On the Closing Date, NewsMediaCo shall become the successor employer
under the Collective Agreements governing Southam Employees and shall
be bound by and comply with the terms of such Collective Agreements
effective the Closing Date.
(d) The Vendors shall cause NewsMediaCo, Central Services Company or
Canada.com Company to offer employment, for the Southam Employees
effective from the Closing Date and for the Newspaper Partnership
Employees effective January 1, 2001, to all Southam Employees and
Newspapers Partnership Employees whose terms of employment are not
covered by the terms of a current or expired Collective Agreement
("Non-Unionized Employees") on terms and conditions of employment,
including salary, incentive compensation and benefits, determined by
CanWest which shall be substantially similar in the aggregate for each
such Non-Unionized Employee to the current terms and conditions of
employment of such Non-Unionized Employees. The Vendors shall cause
NewsMediaCo, Central Services Company or Canada.com Company to provide
CanWest with a copy of its offer of employment to such Non-Unionized
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Employees. The Vendors and CanWest shall exercise reasonable efforts
to persuade such Non-Unionized Employees to accept such offers of
employment.
(e) The Vendors shall be responsible for all notice of termination,
severance and other obligations to the Employees who do not accept
employment with NewsMediaCo, Central Services Company or Canada.com
Company and the Vendors shall indemnify and save CanWest, NewsMediaCo,
Central Services Company and Canada.com Company harmless in respect of
all such obligations.
(f) The Vendors shall be responsible for and shall indemnify and save
CanWest, NewsMediaCo, Central Services Company, National Post Company,
Canada.com Company and their Affiliates harmless from and against all
Claims in connection with any subsequent termination of employment by
or on behalf of J. Blair MacKenzie ("MacKenzie") and/or Michael
Goldbloom ("Goldbloom") pursuant to the terms of Employment Contracts
they have each entered into with Southam Inc. dated December 17, 1992
in the case of MacKenzie and March 25, 1994 in the case of Goldbloom,
or any similar contracts which NewsMediaCo, Central Services Company
or Canada.com Company reasonably determine must be assumed or entered
into pursuant to or in connection with the offers of employment set
out in Section 9.8(d) of this Agreement or pursuant to any Claims made
by, or entitlement of, any Transferred Employee in connection with any
subsequent termination of employment pursuant to any change of Control
provision under any SERA with, or assumed by, CanWest, NewsMediaCo,
Central Services Company, National Post Company, Canada.com Company or
their Affiliates or under any supplemental pension arrangement which
CanWest, NewsMediaCo, Central Services Company, National Post Company,
Canada.com Company or their Affiliates reasonably determine must be
provided pursuant to or in connection with an offer of employment made
pursuant to Section 9.8(d) of this Agreement and which provides for
benefits which are substantially similar to the benefits provided
under a SERA in the event of a change of control.
(g) For greater certainty, if an Employee ceases within 12 months
following the Closing Date to be an Inactive Employee and is able to
return to work, the Vendors shall notify CanWest that the Employee is
fit to return to work whereupon CanWest shall cause the relevant
Purchased Business to offer the Employee employment on substantially
the same terms as those currently applicable. In the case of an
Inactive Employee who is subject to the terms of a Collective
Agreement, CanWest acknowledges that any such Employee will return to
work in accordance with the terms of any applicable Collective
Agreement.
(h) Notwithstanding any other provision of this Agreement, CanWest will,
if requested by the Vendors to accept a transfer of a Vendors' DB
Pension Plan, as defined in the Pension and Employee Benefit Plans
Agreement, negotiate in good
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faith in relation to the treatment of such Vendors' DB Pension Plan as
a Transferring Pension Plan for the purposes of the Pension and
Employee Benefit Plans Agreement, provided that any such inclusion
will only be done on the basis that such inclusion will not result in
any additional cost to CanWest under this Transaction Agreement or the
Pension and Employee Benefit Plans Agreement and provided further that
if such plans have an unfunded liability as at the Closing Date on
either a going concern or solvency basis as determined in accordance
with the actuarial methods and assumptions, applicable to that
Vendors' DB Pension Plan determined in accordance with Section 2.2 of
the Pension and Employee Benefit Plans Agreement, the Vendors will
make, or provide to CanWest funds to enable it to make such additional
payments to such Vendors' DB Pension Plans as are necessary to ensure
that such plans are fully funded on both a going concern and a
solvency basis as at the Closing Date or such later date as the
Parties may decide.
9.9 PENSION AND OTHER BENEFIT PLANS
CanWest, Hollinger and the Vendors shall enter into the Pension and Employee
Benefit Plans Agreement.
9.10 SALES AND TRANSFER TAXES
The Vendors and CanWest agree that NewsMediaCo, Central Services Company and
Canada.com Company shall pay directly to the appropriate taxing authorities all
sales and transfer taxes, registration charges and transfer fees other than the
goods and services tax/harmonized sales tax imposed under Part IX of the Excise
Tax Act (Canada) payable by it, applicable in respect of the Reorganization in
accordance with the terms of the Transfer Agreement, all of which shall be for
the account of CanWest.
9.11 CANADA PENSION PLAN AND EMPLOYMENT INSURANCE
The Vendors shall be liable for and shall pay to CanWest an amount equal to the
employer contributions to the Canada Pension Plan and the Unemployment Insurance
Commission payable by NewsMediaCo, Central Services Company and Canada.com
Company in respect of Transferred Employees employed by NewsMediaCo, Central
Services Company and Canada.com Company for the period from the Closing Date to
and including December 31, 2000.
9.12 CASH FLOW DURING INTERIM PERIOD
In the event that the Closing shall be completed as contemplated by this
Agreement and the Reorganization Date is after the Effective Date, then (a) the
amount of all cash flow after provision for the payment of Taxes in respect of
the taxable income associated with such cash flow generated or used in the
Purchased Businesses from the Effective Date to the Reorganization Date shall be
for the account of CanWest, and (b) the amount of all cash flow
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generated or used in the Purchased Businesses from the Reorganization Date to
the Closing Date (without regard for the provision of Taxes) shall be for the
account of CanWest. In the event that the Closing shall be completed as
contemplated by this Agreement and the Reorganization Date is on or before the
Effective date, then (a) the amount of all cash flow generated or used in the
Purchased Businesses from the Effective date to the Closing Date (without regard
for the provision of Taxes) shall be for the account of CanWest, and (b) the
Vendors shall pay to CanWest an amount equal to the Taxes payable in respect of
the taxable income of NewsMediaCo, Central Services Company and Canada.com
Company from the period form the Reorganization Date to the Effective Date. The
Vendors shall deliver to CanWest within 30 days of the Closing Date a statement
of the amounts payable pursuant to this Section 9.12 (the "Cashflow Statement").
In the event that CanWest objects in good faith to any aspect of such statement,
CanWest shall so advise the Vendors by delivery to the Vendors of a written
notice (the "Cashflow Objection Notice") within 30 days after the delivery to
CanWest of the Cashflow Statement. The Cashflow Objection Notice shall set out
the reasons for CanWest's objection, as well as the amount under dispute and
reasonable details of the calculation of such amount. In the event that the
parties agree on a resolution of the dispute set out in the Cashflow Objection
Notice, the parties shall confirm this resolution in writing and shall
thereafter be bound by such resolution. In the event that the parties are unable
to settle any dispute with respect to the Cashflow Statement, within 30 days
after the delivery by CanWest to the Vendors of the Cashflow Objection Notice,
the dispute shall forthwith be referred to an international accounting firm with
no connection to either of the Parties to be chosen by lot as arbitrator. The
arbitration shall, except to the extent provided for in this Section 9.12, be
conducted in Toronto, in accordance with the Arbitration Procedures. The
determination of the arbitrator shall be made within 30 days after the date in
which the dispute was referred to it and the determination of the arbitrator
shall be final and binding on all parties. The Cashflow Statement shall be
adjusted in accordance with the determination of the arbitrator within 5 days
after resolution, by agreement of the Parties, of the dispute which was the
subject of the Cashflow Objection Notice or, failing such resolution, within 5
days after the final determination of the arbitrator, the Vendors or CanWest, as
the case may be, shall pay to the other the amount payable in accordance with
this Section 9.12 as a result of such resolution or final determination.
9.13 PRESERVATION OF RECORDS
CanWest shall take all reasonable steps to preserve and keep the records of the
Vendors and the Purchased Businesses delivered to it in connection with the
completion of the transactions contemplated by this Agreement for a period of 6
years from the Closing Date, or for any longer period as may be required by any
Law or Governmental Authority, and shall make such records available to the
Vendors as may be reasonably required by it. The Vendors acknowledge that
CanWest shall not be liable to the Vendors in the event of any accidental
destruction of such records, caused otherwise than by the gross negligence of
CanWest.
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9.14 LITIGATION ASSISTANCE
CanWest shall make available to Hollinger, at Hollinger's expense, and in
response to requests from the Vendors acting reasonably, Books and Records and
such Transferred Employees who are still employed by CanWest at the time of the
request as may be required in connection with the defence of Claims or
proceedings against Hollinger and/or its Affiliates relating to the Purchased
Businesses, including but not limited to proceedings for damages for libel,
contempt, and infringement of Intellectual Property. Upon reasonable request of
the Vendors, CanWest will publish in one or more of requested Business Units, at
Hollinger's expense, such reasonably requested correction notices, apologies or
related statements in connection with the settlement of such proceedings.
9.15 CANWEST'S OPTION IF DAMAGE, ETC.
(a) The Purchased Assets shall be and remain until Closing at the risk of
the Vendors. Pending Closing, the Vendors shall hold all insurance
policies and the proceeds thereof in trust for the Parties as their
interests may appear.
(b) If the Purchased Assets, or a portion of them are damaged or destroyed
or appropriated, expropriated or seized by any Person, on or prior to
the Closing Date, the Vendors shall give CanWest notice thereof
forthwith after such action comes to its attention and CanWest shall
have the option:
(i) to reduce the Purchase Price by an amount equal to the cost of
repair or, if appropriated, expropriated, seized, destroyed or
damaged beyond repair, by an amount equal to the replacement cost
of such assets and to complete the purchase, in which event, the
Vendors shall be entitled to all proceeds of insurance and all
proceeds and claims relating to the applicable event; or
(ii) to terminate this Agreement by notice in writing to the Vendors
but only if such damage, destruction, appropriation,
expropriation or seizure constitutes a Material Adverse Effect on
the Purchased Businesses and the National Post Business taken as
a whole.
9.16 CO-OPERATION OF THE PARTIES REGARDING TAX PLANNING
In connection with the implementation of the transactions contemplated by this
Agreement including, without limitation, those contemplated by the
Reorganization, the Parties agree to cooperate in good faith to accommodate any
reasonable tax planning objectives of a Party provided that any such
accommodation does not adversely affect the commercial or tax position of any
other Party.
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9.17 SALE OF CANADA.COM BUSINESS BY CANWEST
In the event that CanWest sells or otherwise disposes of (including by way of
secondary offering) any or all of the Canada.com Business to a third party,
other than in the ordinary course of business, between the Closing Date and the
third anniversary of the Closing Date, CanWest will pay to the Vendors within 90
days of the closing of such sale, 50% of the amount by which the proceeds to
CanWest of such sale, plus any distributions or return of capital from the
Closing Date to the date of any such sale, exceed the sum of (a) the purchase
price paid by CanWest to the Vendors for the Canada.com Assets, (b) any amount
invested in the Canada.com Business by CanWest since the Closing Date, (c) the
costs to CanWest of carrying its investment in the Canada.com Business using a
rate of return of 9%,(d) any expenses of CanWest incurred in connection with
such sale, and (e) Taxes payable in respect of the sale of the interest in
question without taking into account any tax shelter or tax deferred opportunity
otherwise available to CanWest. The Vendors acknowledge that CanWest may
transfer the Canada.com Assets into a separate company or limited partnership
controlled by CanWest. The Vendors further acknowledge that an initial public
offering or private placement of securities from treasury by any corporation
owning the Canada.com Business will not constitute a sale by CanWest to a third
party of any or all of the Canada.com Business as contemplated by this Section
9.17. In the event that the proceeds to CanWest of any such sale of any or all
of the Canada.com Business includes any non-cash consideration, CanWest shall
deliver to the Vendors, at its option, either 50% of such non-cash consideration
or a certified cheque or bank draft in an amount equal to 50% of the fair market
value of such non-cash consideration as determined by an independent investment
banking firm.
9.18 SALE OF PRINT NEWS MEDIA ASSETS BY CANWEST
In the event that CanWest completes the sale (including by way of secondary
offering) of one or more of the Business Units operated by NewsMediaCo to a
third party (other than the Vendors) during the period between the Closing Date
and the second anniversary of the Closing Date at a price or prices (the "Sale
Price") which, in aggregate, exceeds the greater of the portion of the Purchase
Price allocated in aggregate to such Business Units in accordance with Section
3.15 and 10 times the EBITDA of such Business Unit for its most recently
completed fiscal year (the "Base Price"), CanWest shall pay to the Vendors,
within 90 days of the second anniversary of the Closing Date, an amount equal to
one-half the amount by which the aggregate Sale Price exceeds such Base Price.
For the purpose of this Section 9.18, the Sale Price of any Business Unit shall
be the amount of the gross proceeds of sale less (a) any amount invested in the
Business Unit by CanWest since the Closing Date, (b) the costs to CanWest of
carrying its investment in the Business Unit using a rate of return of 9%, (c)
any expenses of CanWest incurred in connection with such sale, and (d) Taxes
paid or payable in respect of the sale without taking into account any tax
shelter or tax deferred opportunity otherwise available to CanWest. The Vendors
acknowledge that an initial public offering or private placement of securities
from treasury by any Business Unit will not constitute a sale by CanWest to a
third party of the Business Unit as contemplated by this Section 9.18. In the
event that the proceeds to CanWest of any such sale of any or all of the
Business Units operated by NewsMediaCo includes
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any non-cash consideration, CanWest shall deliver to the Vendors, at its option,
either 50% of such non-cash consideration or a certified cheque or bank draft in
an amount equal to 50% of the fair market value of such non-cash consideration
as determined by an independent investment banking firm.
9.19 SUBORDINATED DEBENTURES
Hollinger shall cause each of its subsidiaries which holds Subordinated
Debentures from time to time not to offer, sell, contract to sell, transfer,
assign or otherwise dispose of, directly or indirectly, any Subordinated
Debentures for a period of 30 months following the Closing Date. As long as
Hollinger and its subsidiaries are the holders of more than 50% of the
outstanding aggregate principal amount of Subordinated Debentures, NewsMediaCo
shall not incur capital expenditures or capital investments in excess of $75
million per year other than in the normal course of business consistent with
past practice without the prior consent of Hollinger. Subject to the foregoing,
the Vendors may transfer the Subordinated Debentures to Affiliates of Hollinger.
9.20 RESTRICTIONS ON SALE OF CANWEST STOCK/SUBORDINATED DEBENTURES
(a) The Vendors acknowledge that the Preferred Shares and Non-Voting
Shares delivered to the Vendors in accordance with Section 3.2(a) and
(b) will be subject to resale restrictions under applicable securities
laws. The Vendors agree to enter into an undertaking, addressed to The
Toronto Stock Exchange (the "TSE"), not to dispose of its Preferred
Shares or Non-Voting Shares for such period, if any, as may be
required by the TSE.
(b) In the event that CanWest proposes to offer debt or equity securities
to the public, including as part of a restructuring of outstanding
bank indebtedness, the Vendors agree to co-operate in such financing
by not selling any securities of CanWest from the date of notice of a
proposed financing to the date of closing of such financing, without
CanWest's prior written consent which period may not exceed 90 days.
(c) The Vendors agree that they will not:
(i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, or otherwise
lend, transfer or dispose of, directly or indirectly, any
Preferred Shares or any securities convertible into or
exercisable or exchangeable for Preferred Shares, or
(ii) enter into any swap or other arrangement that transfers to
another in whole or in part any of the consequences of ownership
of the Preferred Shares, whether any such transaction described
in clauses 9.20(c)(i) or (ii) is to be settled by delivery of
Preferred Shares or such other securities or cash or
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otherwise, provided that the restrictions in this Section 9.20(c)
shall not apply to:
(A) the conversion of the Preferred Shares into Non-Voting Shares
in accordance with their terms;
(B) the transfer of Preferred Shares among the Vendors and their
Affiliates, provided that any such Affiliate agrees to be
bound by the restrictions in this Section 9.20; or
(C) the pledge of Preferred Shares by the Vendors to a North
American bank or trust company as security for indebtedness
provided that any such bank or trust company agrees to be
bound by the restrictions in this Section 9.20.
(d) The Vendors agree that they will not convert any Non-Voting Shares
acquired pursuant to the transactions contemplated hereby to
Subordinate Voting Shares in accordance with their terms, except
immediately prior to the sale of such Non-Voting Shares to a Canadian
third party. In no event will the Vendors exercise any of the voting
rights attaching to any Subordinate Voting Shares received upon
conversion of such Non-Voting Shares.
(e) The Vendors will not sell any Non-Voting Shares acquired pursuant to
the transactions contemplated hereby unless the Vendors are entitled
to, and upon any sale of such Non-Voting Shares the Vendors shall,
convert in accordance with their terms an equivalent proportion of the
Preferred Shares held by the Vendors and its Affiliates. Upon any
conversion of Preferred Shares in accordance with their terms, the
Vendors will sell an equivalent proportion of the Non-Voting Shares
acquired pursuant to the transactions contemplated hereby.
9.21 RIGHT OF FIRST REFUSAL ON ASSETS
(a) The Vendors shall not sell, transfer or assign or permit the sale,
transfer or assignment of any of the Excluded Assets for cash, other
than pursuant to binding agreements of purchase and sale entered into
on or before November 30, 2000, during the period ending on the fifth
anniversary of the Closing Date unless it has first provided CanWest
with a written offer to sell such Excluded Assets to CanWest in
accordance with procedures to be agreed by the Parties prior to
Closing. For the purpose of this Section 9.21(a), a sale of assets for
cash together with a contemporaneous subscription for securities of
the purchaser of such assets shall not be considered to be a sale of
assets for cash.
(b) CanWest shall not sell, transfer or assign or permit the sale,
transfer or assignment of any of its print media assets, including the
Print News Media Assets, for cash during the period ending on the
fifth anniversary of the Closing Date unless it has
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first provided the Vendors with a written offer to sell such assets to
the Vendors in accordance with the procedures to be agreed by the
Parties prior to Closing. For the purpose of this Section 9.21(b), a
sale of assets for cash together with a contemporaneous subscription
for securities of the purchaser of such assets shall not be considered
to be a sale of assets for cash.
9.22 CANWEST OPERATIONS COMMITTEE
CanWest acknowledges its intention to form an Operations Committee of its board
of directors to oversee the Print News Media Business and that it is proposed
that the members of such Committee shall include two of the Vendors' nominees
and three of CanWest's nominees to the board of directors so long as its equity
position is maintained.
9.23 AFFILIATION AGREEMENTS WITH HOLLINGER AND PURCHASERS OF EXCLUDED ASSETS
In respect of any newspaper business which constitutes an Excluded Asset,
Hollinger will use its reasonable efforts to cause third party purchasers (other
than direct competitors of any of the Print News Media Business) from Hollinger
or any of its Affiliates of any newspaper business which constitutes an Excluded
Asset to enter into an affiliation agreement with CanWest substantially in the
form of Schedule 9.23 providing for mutually acceptable ink, paper and other
supply arrangements and other Central Services which they may require and
providing CanWest, at no additional cost, with complete and non-exclusive access
to the Content of such newspaper provided that the negotiation and execution of
such affiliation agreements with third party purchasers does not materially
impair Hollinger's ability to sell any of the Excluded Assets. Hollinger shall
provide reasonable Notice (and in any event no less than 30 days Notice) of the
closing of the sale of the Excluded Assets and the termination of the existing
affiliations agreement.
9.24 CANWEST FINANCING
The Vendors shall permit CanWest and its representatives to request the
assistance of the senior management employees of Southam, Newspapers Partnership
or National Post Company to assist with respect to the syndication of CanWest's
senior bank credit facilities and any public debt financing to be used for the
purpose of partially financing the Purchase Price. In addition, the Vendors
shall provide CanWest's lenders and their representatives with the same
reasonable access provided to CanWest and its representatives as contemplated by
Section 9.3 of this Agreement.
9.25 CONSENT TO JURISDICTION
Each of the Parties irrevocably attorns and submits to the exclusive
jurisdiction of any Ontario court sitting in Toronto in any action or proceeding
arising out of or related to this Agreement and irrevocably agrees that all
Claims in respect of any such action or proceeding may be heard and determined
in such Ontario court. Each of the Parties irrevocably waives, to the fullest
extent it may effectively do so, the defense of any inconvenient forum to the
maintenance of
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such action or proceeding. CanWest irrevocably appoints Osler, Hoskin & Harcourt
LLP (the "CanWest Process Agent"), with an office on the date hereof at Suite
6600, First Canadian Place, Toronto, Ontario, for the attention of Linda D.
Robinson as its agent to receive on behalf of it and its property service of
copies of the statement of claim and any other process which may be served in
any such action or proceeding. Such service may be made by delivering a copy of
such process to CanWest in care of the CanWest Process Agent at the CanWest
Process Agent's above address, and CanWest irrevocably authorizes and directs
the CanWest Process Agent to accept such service on its behalf. CanWest agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in any other jurisdictions by suit on the judgment or in any
other manner provided by law. Hollinger and the Vendors irrevocably appoint
Torys (the "Vendors' Process Agent"), with an office on the date hereof at 79
Wellington Street West, Toronto, Ontario, M5K 1N2 for the attention of Beth
DeMerchant as its agent to receive on behalf of it and its property service of
copies of the statement of claim and any other process which may be served in
any such action or proceeding. Such service may be made by delivering a copy of
such process to Hollinger or the Vendors in care of the Vendors' Process Agent
at the Vendors' Process Agent's above address, and Hollinger and the Vendors
irrevocably authorize and direct the Vendors' Process Agent to accept such
service on its behalf. Hollinger and the Vendors agree that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in any
other jurisdictions by suit on the judgment or in any other manner provided by
law.
9.26 ASSURANCE BY HOLLINGER
Hollinger shall cause the Vendors to comply with all of their obligations and
perform all of their covenants under this Agreement and shall be jointly and
severally liable to CanWest with each of the Vendors for and in respect of any
breach of any of the representations, warranties and covenants of the Vendors
under this Agreement as if it was the principal obligor.
9.27 OFFERS FOR PURCHASED ASSETS OR EXCLUDED ASSETS
Hollinger will promptly advise CanWest of the substance and details of any
offers and letters of intent that it receives from third parties for the
acquisition of any of the Purchased Assets or the Excluded Assets.
9.28 SCHEDULES
The Parties acknowledge that the Agreement has been executed with certain
Schedules and in draft form and that such Schedules are incomplete and that
certain Schedules have not been provided. The Vendors shall deliver completed
Schedules no later than 30 days prior to Closing, together with all documents to
which such Schedules pertain. The Vendors shall afford CanWest the opportunity
to conduct complete due diligence with respect to the items on the completed
Schedules. To the extent that any amendment to a Schedule or a new Schedule made
or provided after the date hereof (collectively, "New Material") discloses any
matter which CanWest reasonably considers to have a Material Adverse Effect on
the Purchased Businesses and the National Post Business as a whole, CanWest may
terminate the Agreement, or if such New
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Material discloses a Material Adverse Effect on an individual Business Unit,
CanWest may remove the Business Unit from the transactions contemplated in this
Agreement and the Purchase Price shall be reduced by 10 times the amount of the
EBITDA of such Business Unit set forth in Schedule 3.6(b), in the case of the
individual Business Units containing newspaper and magazine publications or by
the amount of the Purchase Price attributed to such Business Unit in the case of
Canada.com Company or National Post Company.
9.29 VICTORIA TIMES COLONIST
In the event that Thompson Canada Limited exercises its right to acquire the
Victoria Times Colonist pursuant to the Right of First Refusal Agreement dated
July 17, 1998 among Southam Publishing (B.C.) Limited, 150275 Canada Inc. and
Thompson Canada Limited, (i) the Vendors may remove the Victoria Times Colonist
from the transactions contemplated in this Agreement, and (ii) CanWest may
remove each Business Unit, including the Victoria Times Colonist, located on
Vancouver Island from the transactions contemplated in this Agreement, and in
each case, the Purchase Price shall be reduced by 10 times the amount of the
EBITDA set forth in Schedule 3.6(b) of any Business Unit so removed.
9.30 SERVICES TO AND FROM EXCLUDED ASSETS
No later than 10 days prior to Closing, the Parties shall have identified those
of the Excluded Assets which will require ongoing services including Central
Services and those services provided by any of the Excluded Assets to the
Purchased Businesses which will be continued post-Closing. The Parties shall
enter into such number of services agreements as is required in order to
continue the services required by each of the Excluded Assets and Purchased
Businesses. The Parties shall also enter into affiliation arrangements providing
for the receipt and use of Content by the Purchased Businesses from the Excluded
Assets and such cross promotion arrangements as the Parties may agree. All such
affiliation arrangements and services shall be on commercial terms which shall
be no less favourable to the Purchased Businesses or the Excluded Businesses
than were previously in effect between the Vendors and the individual Business
Units.
9.31 NATIONAL POST SHAREHOLDERS AGREEMENT
The Parties agree and acknowledge that their respective interest in the National
Post Business will be held by them through a limited partnership structure.
Accordingly, the National Post Shareholders Agreement shall be amended by the
Parties to conform such agreement to a limited partnership agreement maintaining
the essential structure and substantive terms.
9.32 PREEMPTIVE RIGHTS
CanWest shall not issue any Multiple Voting Shares, Non-Voting Shares or
Subordinated Voting Shares ("New Shares") or other equity shares except (a) in
connection with an acquisition transaction; (b) pursuant to the conditions
attached to the Class 1 Preference Shares; or (c) pursuant to the provisions of
an employee stock option or share purchase plan; unless, it uses all
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reasonable commercial efforts to provide to (i) the Vendors the opportunity to
acquire such number and type of shares of CanWest as are necessary to maintain
the voting and equity position represented by those shares acquired pursuant to
this Agreement and held at the date CanWest proposes to issue such New Shares
and (ii) to the majority shareholder of CanWest comparable pre-emptive rights
with respect to its voting and equity shareholdings.
9.33 NO DILUTION PRIOR TO CLOSING
CanWest shall not issue or distribute by stock dividend any shares of CanWest
prior to Closing (except for the issuance of shares of CanWest pursuant to the
current employee stock option or share purchase plan or pursuant to a safe
income dividend of no more than 5.5 million Non-Voting Shares) unless the number
of Non-Voting Shares and Class 1 Preference Shares to be issued to the Vendor on
Closing is increased (with a corresponding reduction in the value to be
attributed to them) to compensate for the dilution.
9.34 SUBSIDIARIES' ASSETS
No later than 30 days prior to Closing, CanWest shall advise the Vendors as to
which, if any, of the shares of the subsidiaries (other than the Purchased
Shares) of the Vendors (other than HCN Publications) holding Purchased Assets
CanWest wishes to acquire directly.
9.35 SOUTHAM NEWS ASSETS AND EMPLOYEES
CanWest, by notice to the Vendors prior to Closing, may advise that it will
acquire the assets of Southam relating to the Southam News division and offer
employment to the employees employed by the Southam News division and such
assets and the employment of such employees who accept such employment shall be
transferred to Central Services Company as if the assets were Purchased Assets
and the employees were Transferred Employees.
9.36 HALIFAX DAILY NEWS
For greater certainty the obligation to pay the deferred purchase price in
respect of the purchase by Hollinger or its Affiliates of the Halifax Daily News
shall not be an obligation of CanWest, or any of the Purchased Businesses, and
Hollinger shall indemnify and save harmless CanWest from any and all Claims with
respect thereto.
9.37 CANWEST SHAREHOLDERS MEETING
In the event that the approval of the shareholders of CanWest is required in
connection with the transactions contemplated by this Agreement, CanWest shall
convene and hold a meeting of shareholders for the purpose of considering the
matter which requires approval prior to the Closing Date.
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ARTICLE 10
INDEMNIFICATION
10.1 INDEMNIFICATION OF CANWEST BY THE VENDORS FOR BREACHES OF COVENANTS AND
REPRESENTATIONS AND WARRANTIES
The Vendors jointly and severally covenant and agree with CanWest (on behalf of
itself, NewsMediaCo, Central Services Company and Canada.com Company), to
indemnify and save harmless on an after-Tax basis, CanWest, its Affiliates,
NewsMediaCo, Central Services Company, Canada.com Company and their respective
directors, officers, shareholders, employees, agents and representatives,
effective as and from the Closing Time, from and against all Claims which may be
made or brought against any such Persons or which they may suffer or incur,
directly or indirectly as a result of or in connection with any non-fulfilment
of any covenant or agreement on the part of the Vendors under this Agreement or
any incorrectness in or breach of any representation or warranty of the Vendors
contained in this Agreement or in any certificate or other document furnished by
the Vendors pursuant to this Agreement. The foregoing obligation of
indemnification in respect of such Claims shall be subject to:
(a) the limitation contained in Section 6.2 respecting the survival of the
representations and warranties of the Vendors;
(b) the requirement that the Vendors shall, in respect of any Claim made
by any third person, be afforded an opportunity at their sole expense
to resist, defend and compromise such Claim provided the Vendors
acknowledge in writing their obligation to indemnify in accordance
with the terms of this Agreement; and
(c) the limitation that, for Claims made in connection with any
representation or warranty, the Vendors shall not be required to pay
any such amount until the aggregate of such Claims exceeds $1 million
and upon the aggregate of such Claims exceeding $1 million the Vendors
shall be required to pay the amount owing in respect of all of such
Claims including the $1 million; the foregoing limitation shall not
apply to wilful breaches of representations and warranties.
10.2 INDEMNITY REGARDING LIABILITIES AND ENCUMBRANCES
The Vendors shall transfer the Print News Media Assets to NewsMediaCo, the
Central Services Assets to Central Services Company and the Canada.com Assets to
Canada.com Company in each case without liabilities or Encumbrances other than
Permitted Encumbrances and the Assumed Liabilities. Accordingly, the Vendors
shall indemnify CanWest its Affiliates, NewsMediaCo, Central Services Company,
Canada.com Company and their respective directors, officers, shareholders,
employees, agents and representatives from and against all Claims which may be
made or brought against any such Persons or which it may suffer or incur by
reason of or in respect of any other liability or Encumbrance assumed by
NewsMediaCo, Central Services Company or Canada.com Company in connection with
the Purchased Businesses. The obligation to indemnify such Persons shall exist
regardless of whether such
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liabilities or Encumbrances were disclosed herein or
in the applicable Transfer Agreement. The Vendors shall pay or cause its
Affiliates to pay the amount of such liability or pay or discharge the
Encumbrance directly, failing which NewsMediaCo, Central Services Company or
Canada.com Company shall pay and the Vendors shall reimburse NewsMediaCo,
Central Services Company or Canada.com Company, as the case may be, for such
payment forthwith after written demand for reimbursement and NewsMediaCo,
Central Services Company or Canada.com Company, as the case may be, at its
option, may set off such payment from any amounts owing by NewsMediaCo, Central
Services Company or Canada.com Company or CanWest to the Vendors. The foregoing
obligation of indemnification shall be subject to the limitation that it shall
survive only until June 30, 2003 and the limitation contained in Section 10.1
(c).
10.3 INDEMNITY REGARDING NATIONAL POST COMPANY
The Vendors shall transfer the Purchased National Post Company Interest without
liabilities or Encumbrances. Accordingly, the Vendors shall indemnify CanWest
its Affiliates, and their respective directors, officers, shareholders,
employees, agents and representatives from and against all Claims which may be
made or brought against any such Persons or which they may suffer or incur by
reason of or in respect of any liability (fixed or contingent) or Encumbrance of
National Post Company existing or incurred prior to the Closing Date other than
those of the Assumed Liabilities relating to the National Post Business. The
obligation to indemnify such Persons shall exist regardless of whether such
liabilities or Encumbrances were disclosed herein. The Vendors shall pay or
cause its Affiliates to pay the amount of such liability or pay or discharge the
Encumbrance directly, failing which CanWest shall pay and the Vendors shall
reimburse CanWest for such payment forthwith after written demand for
reimbursement and, at its option, CanWest may set off such payment from any
amounts owing by CanWest to the Vendors.
10.4 BULK SALES AND RETAIL SALES TAX INDEMNITY
It is agreed that CanWest shall not require the Vendors to comply, or to assist
NewsMediaCo, Central Services Company or Canada.com Company to comply, with the
requirements of the Bulk Sales Act (Ontario), Section 6 of the Retail Sales Tax
Act (Ontario) and any other bulk sales or retail sales tax legislation as may be
applicable in respect of the purchase and sale of the Purchased Assets pursuant
to the Reorganization. Notwithstanding the foregoing, the Vendors agree to
indemnify and save harmless CanWest, NewsMediaCo, Central Services Company or
Canada.com Company from and against any Claims which may be made or brought
against CanWest, NewsMediaCo, Central Services Company or Canada.com Company or
which CanWest, NewsMediaCo, Central Services Company or Canada.com Company may
suffer or incur as a result of, in respect of, or arising out of such
non-compliance.
10.5 ENVIRONMENTAL INDEMNITY
(a) The Vendors covenant and agree to indemnify and save harmless on an
after-Tax basis, CanWest its Affiliates, NewsMediaCo, Canada.com
Company, Central
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Services Company and each of their respective officers, directors,
employees, shareholders, agents and representatives from and against
all Claims which may be made or brought against such Persons or which
they may suffer or incur, directly or indirectly as a result of or in
connection with any Environmental Condition. For greater certainty,
such indemnification shall include indemnification for any Claims as a
result of or in connection with the continuation or worsening
subsequent to the Closing Time of any condition, event or circumstance
existing or occurring at or prior to the Closing Time unless the
negligent act or negligent omission of CanWest, its Affiliates,
NewsMedia Co., Canada.com Company, Central Services Company or any of
their respective officers, directors, employees, shareholders, agents
or representatives, after the Closing Time, has caused or contributed
to the condition, event or circumstance, and, if such negligent act or
negligent omission does occur, then the indemnification does not apply
only to the extent that such negligent act or negligent omission
caused or contributed to the Claims.
(b) In the event any such Environmental Condition is identified by
CanWest, CanWest may notify the Vendors in writing of the existence of
the Environmental Condition and the Vendors shall take all necessary
action at their cost and expense to remedy or address the
Environmental Condition in accordance with the industry standards
applicable at the Closing Time and in accordance with applicable
Environmental Laws (as such laws existed at the Closing Time), and the
Vendors shall make all reasonable efforts to complete such actions as
soon as is reasonably practicable. If such Environmental Condition
requires immediate action or response and the Vendors are not taking
the necessary steps to remedy or address the Environmental Condition
in all of the circumstances, CanWest may take all necessary action to
remedy or address the Environmental Condition, the reasonable costs
and expenses of which shall be for the account of the Vendors. In the
event of any dispute with respect to the scope or nature of the
remedial action required to remedy the Environmental Condition in
accordance with industry standards or the provisions of applicable
Environmental Laws, either CanWest or the Vendors, upon written notice
to the other, may require the matter to be resolved by binding
arbitration before a recognized environmental consultant to be
mutually agreed by the Parties in accordance with the Arbitration
Procedures.
(c) In the event of any dispute as to whether (1) an Environmental
Condition existed at or prior to the Closing Time; (2) was created or
occurred after the Closing Date; or (3) any other matter with respect
to an actual or alleged Environmental Condition, either CanWest or the
Vendors, upon written notice to the other, may require the matter to
be resolved by binding arbitration before a recognized environmental
consultant to be mutually agreed by the Parties in accordance with the
Arbitration Procedures.
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(d) CanWest, its Affiliates, NewsMedia Co., Canada.com Company, Central
Services Company and each of their respective officers, directors,
employees, shareholders, agents and representatives shall at all times
deal with any Governmental Authority, or any third person, regarding
matters that may be subject to a claim under this section 10 in good
faith and in accordance with reasonably prudent business practices as
though CanWest, its Affiliates, NewsMedia Co., Canada.com Company,
Central Services Company and each of their respective officers,
directors, employees, shareholders, agents and representatives did not
have the benefit of the indemnities in this section 10. Without
limiting the foregoing, CanWest, its Affiliates, NewsMedia Co.,
Canada.com Company, Central Services Company and each of their
respective officers, directors, employees, shareholders, agents and
representatives shall not, directly or indirectly, provoke the
issuance of a written directive, instruction, requirement or other
similar request from a Governmental Authority, a Remedial Order or a
Claim by any third person.
10.6 INDEMNIFICATION OF HOLLINGER BY CANWEST FOR BREACHES OF COVENANTS AND
REPRESENTATIONS AND WARRANTIES
CanWest covenants and agrees with Hollinger to indemnify and save harmless on an
after-Tax basis, Hollinger, its Affiliates and their respective directors,
officers, shareholders, employees, agents and representatives, effective as and
from the Closing Time, from and against all Claims which may be made or brought
against any such Persons or which they may suffer or incur, directly or
indirectly as a result of or in connection with any non-fulfilment of any
covenant or agreement on the part of CanWest under this Agreement or any
incorrectness in or breach of any representation or warranty of CanWest
contained in this Agreement or in any certificate or other document furnished by
the pursuant to this Agreement. The foregoing obligation of indemnification in
respect of such Claims shall be subject to:
(a) the limitations contained in Section 6.2 respecting the survival of
the representations and warranties of CanWest;
(b) the requirement that CanWest shall, in respect of any Claim made by
any third person, be afforded an opportunity at its sole expense to
resist, defend and compromise such Claim provided CanWest acknowledges
in writing its obligation to indemnify in accordance with the terms of
this Agreement; and
(c) the limitation that, for Claims made in connection with any
representation or warranty, CanWest shall not be required to pay any
such amount until the aggregate of such Claims exceeds $1 million and
upon the aggregate of such Claims exceeding $1 million CanWest shall
be required to pay the amount owing in respect of all of such Claims
including the $1 million; the foregoing limitation shall not apply to
wilful breaches of representations and warranties.
<PAGE> 103
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10.7 INDEMNIFICATION PROCEDURES FOR THIRD PARTY CLAIMS
(a) In the case of Claims made by a third party with respect to which
indemnification is sought, the Party seeking indemnification (in this
section, the "Indemnified Party") shall give prompt written notice,
and in any event within 20 days, to the other Party (in this section,
the "Indemnifying Party") of any such Claims made upon it. In the
event of a failure to give such notice, such failure shall not
preclude the Party seeking indemnification from obtaining such
indemnification but its right to indemnification may be reduced to the
extent that such delay prejudiced the defence of the Claim or
increased the amount of liability or cost of defence and provided
that, notwithstanding anything else herein contained, no claim for
indemnity in respect of the breach of any representation or warranty
contained herein may be made unless notice of such Claim has been
given prior to the expiry of the survival period applicable to such
representation and warranty pursuant to Section 6.2.
(b) The Indemnifying Party shall have the right, by notice to the
Indemnified Party given not later than 30 days after receipt of the
notice described in Subsection 10.7(a) to assume the control of the
defence, compromise or settlement of the Claim, provided that such
assumption shall, by its terms, be without cost to the Indemnified
Party and provided the Indemnifying Party acknowledges in writing its
obligation to indemnify the Indemnified Party in accordance with the
terms contained in this Section 10.7 in respect of that Claim.
(c) Upon the assumption of control of any Claim by the Indemnifying Party
as set out in Subsection 10.7(b), the Indemnifying Party shall
diligently proceed with the defence, compromise or settlement of the
Claim at its sole expense, including, if necessary, employment of
counsel reasonably satisfactory to the Indemnified Party and, in
connection therewith, the Indemnified Party shall co-operate fully,
but at the expense of the Indemnifying Party with respect to any
out-of-pocket expenses incurred, to make available to the Indemnifying
Party all pertinent information and witnesses under the Indemnified
Party's control, make such assignments and take such other steps as in
the opinion of counsel for the Indemnifying Party are reasonably
necessary to enable the Indemnifying Party to conduct such defence.
The Indemnified Party shall also have the right to participate in the
negotiation, settlement or defence of any Claim at its own expense.
(d) The final determination of any Claim pursuant to this Section 10.7,
including all related costs and expenses, will be binding and
conclusive upon the parties as to the validity or invalidity, as the
case may be of such Claim against the Indemnifying Party.
(e) If the Indemnifying Party does not assume control of a Claim as
permitted in Subsection 10.7(b), the Indemnified Party shall be
entitled to make such
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reasonable settlement of the Claim as in its sole discretion may
appear advisable, and such settlement or any other final determination
of the Claim shall be binding upon the Indemnifying Party.
ARTICLE 11
GENERAL
11.1 PUBLIC NOTICES
All public notices to third parties and all other publicity concerning the
transactions contemplated by this Agreement shall be jointly planned and
co-ordinated by the Vendors and CanWest and no Party shall act unilaterally in
this regard without the prior approval of the other Party, such approval not to
be unreasonably withheld, except where required to do so by law or by the
applicable regulations or policies of any provincial or Canadian or other
regulatory agency of competent jurisdiction or any stock exchange in
circumstances where prior consultation with the other Party is not practicable.
11.2 EXPENSES
Each of the Parties shall pay their respective legal, accounting, and other
professional advisory fees, costs and expenses incurred in connection with the
purchase and sale of the Purchased Businesses and the Purchased Assets and the
preparation, execution and delivery of this Agreement and all documents and
instruments executed pursuant to this Agreement and any other costs and expenses
incurred.
11.3 NOTICES
Any notice or other writing required or permitted to given under this Agreement
or for the purposes of this Agreement (in this Section referred to as a
"Notice") shall be in writing and shall be sufficiently given if delivered, or
if sent by prepaid courier or if transmitted by facsimile or other form of
recorded communication tested prior to transmission to such Party:
(a) in the case of a Notice to the Vendors at:
10 Toronto Street
Toronto, Ontario
M5C 2B7
Attention: Executive Vice-President and General Counsel with a copy
to the Chief Executive Officer
Facsimile: (416) 364-2088
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(b) in the case of a Notice to CanWest at:
31st Floor, Toronto-Dominion Centre
201 Portage Avenue
Winnipeg, Manitoba R3B 3C7
Attention: Vice-President and General Counsel
with a copy to the Chief Executive Officer
Facsimile: (204) 947-9841
or at such other address as the Party to whom such Notice is to be given shall
have last notified the Party giving the same in the manner provided in this
Section 11.3. Any Notice delivered to the Party to whom it is addressed as
provided above shall be deemed to have been given and received on the day it is
so delivered at such address, provided that if such day is not a Business Day
then the Notice shall be deemed to have been given and received on the next
Business Day. Any Notice sent by prepaid courier shall be deemed to have been
given and received on the second Business Day following the date of its sending.
Any Notice transmitted by facsimile or other form of recorded communication
shall be deemed given and received on the first Business Day after its
transmission.
11.4 ASSIGNMENT
CanWest shall be entitled, upon giving written notice to the Vendors at any time
whether before or after Closing, upon no less than three (3) Business Days
Notice, to assign all of its rights and obligations under and the benefits of
this Agreement to an Affiliate or Affiliates of CanWest. In such case, for so
long as the assignee is an Affiliate of CanWest, such assignee shall have and
may exercise all the rights, and shall assume all of the obligations, of CanWest
under this Agreement, and any reference to CanWest in this Agreement shall be
deemed to refer to such assignee. In the event of such an assignment, the
Vendors and such assignee shall execute an agreement confirming such assignment
and such assumption of obligations and benefits shall be on the basis that no
such assignment shall release CanWest from liability for its obligations as
purchaser of the Purchased Assets under this Agreement. Except as hereinbefore
provided, neither this Agreement nor any benefits or burdens under this
Agreement shall be assignable by any Party without the prior written consent of
each of the other Parties, which consent may be withheld in the sole discretion
of the consenting Party. Subject to the foregoing, this Agreement shall enure to
the benefit of and be binding upon the Parties and their respective successors
(including any successor by reason of amalgamation of any Party) and permitted
assigns.
11.5 ARBITRATION
In the event that the Parties are unable to settle any dispute relating to this
Agreement or the transactions contemplated by this Agreement, the dispute shall
forthwith be referred to arbitration in accordance with the Arbitration
Procedures.
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11.6 PLANNING ACT (ONTARIO) AND SIMILAR LEGISLATION
This Agreement shall only be effective to create an interest in the Real
Property if the subdivision control provisions of the Planning Act (Ontario), as
amended, and similar legislation in any other province are complied with by the
Vendors on or before the Closing and the Vendors covenant to proceed diligently
at their expense to obtain any necessary consent on or before Closing. The
Vendors have no knowledge that completion of the transactions provided for in
this Agreement will require any consent under the Planning Act (Ontario) or
similar legislation in any other province and if any consent is required the
Vendors will obtain such consent prior to the Closing, at their sole cost and
expense.
11.7 FURTHER ASSURANCES
The Parties shall, with reasonable diligence, do all such things and provide all
such reasonable assurances as may be required to consummate the transactions
contemplated by this Agreement, and each Party shall provide such further
documents or instruments required by any other Party as may be reasonably
necessary or desirable to effect the purpose of this Agreement and carry out its
provisions, whether before or after the Closing.
11.8 COUNTERPARTS
This Agreement may be executed by the Parties in separate counterparts
(including by facsimile transmission) each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument.
(THIS SPACE INTENTIONALLY LEFT BLANK)
<PAGE> 107
IN WITNESS OF WHICH the Parties have duly executed this Agreement.
HOLLINGER INTERNATIONAL INC.
By: "J. BOULTBEE"
----------------------------------------------
Name:
Title:
By: "P.Y. ATKINSON"
----------------------------------------------
Name:
Title:
SOUTHAM INC.
By: "J. BOULTBEE"
----------------------------------------------
Name:
Title:
By: "P.Y. ATKINSON"
----------------------------------------------
Name:
Title:
HOLLINGER CANADIAN NEWSPAPERS,
LIMITED PARTNERSHIP
BY ITS GENERAL PARTNER, HOLLINGER
CANADIAN NEWSPAPERS G.P.
By: "J. BOULTBEE"
----------------------------------------------
Name:
Title:
By: "P.Y. ATKINSON"
----------------------------------------------
Name:
Title:
<PAGE> 108
HCN PUBLICATIONS COMPANY
By: "J. BOULTBEE"
----------------------------------------------
Name:
Title:
By: "P.Y. ATKINSON"
----------------------------------------------
Name:
Title:
CANWEST GLOBAL
COMMUNICATIONS CORPORATION
By: "ISRAEL H. ASPER"
----------------------------------------------
Name: Israel Asper
Title: Executive Chairman
By: "LEONARD ASPER"
----------------------------------------------
Name: Leonard Asper
Title: President and Chief Executive Officer
<PAGE> 109
LIST OF SCHEDULES
SCHEDULE 1.1(A) ASSUMPTIONS AND METHODS RELATING TO ACCRUED LIABILITIES
SCHEDULE 1.1 (B) ARBITRATION PROCEDURES
SCHEDULE 1.1(C) BUSINESS UNITS
SCHEDULE 1.1(D) EXCLUDED ASSETS
SCHEDULE 1.1(E) EXCLUDED BUSINESSES
SCHEDULE 2.1-1 REORGANIZATION STEPS
SCHEDULE 2.1-2 FORM OF TRANSFER AGREEMENT
SCHEDULE 3.1(A) CENTRAL SERVICES
SCHEDULE 3.2(A) TERMS OF CLASS 1 PREFERENCE SHARES
SCHEDULE 3.2(E) PRINCIPAL TERMS OF SUBORDINATED DEBENTURES
SCHEDULE 3.3(A)-1 CANWEST OPERATIONS
SCHEDULE 3.3(A)-2 DESCRIPTION OF CALCULATION OF CANWEST 2001 EBITDA
SCHEDULE 3.6(B) INDICATIVE CALCULATION OF PRINT NEWS MEDIA BUSINESS EBITDA
SCHEDULE 3.6(C) ESTIMATED TAX SHIELD REDUCTION AMOUNT
SCHEDULE 3.7 WORKING CAPITAL PROCEDURES
SCHEDULE 3.15 ALLOCATION OF PURCHASE PRICE
SCHEDULE 4.3 SUBSIDIARIES
SCHEDULE 4.4 PERMITTED ENCUMBRANCES
SCHEDULE 4.6 CAPITALIZATION
SCHEDULE 4.11(A) FINANCIAL STATEMENTS
SCHEDULE 4.11(B) NATIONAL POST FINANCIAL STATEMENTS
SCHEDULE 4.12 PRINT NEWS MEDIA FINANCIAL FORECAST
SCHEDULE 4.13 UNDISCLOSED LIABILITIES
SCHEDULE 4.14(E) UNUSUAL TRANSACTIONS
SCHEDULE 4.15 JOINT VENTURE INTERESTS
SCHEDULE 4.17 FIXED ASSETS
SCHEDULE 4.22 LICENSES, PERMITS ETC.
SCHEDULE 4.23 RESTRICTIVE COVENANTS
SCHEDULE 4.24 INTELLECTUAL PROPERTY
SCHEDULE 4.25 EQUIPMENT CONTRACTS
SCHEDULE 4.26 OWNED REAL PROPERTY
SCHEDULE 4.27 LEASED REAL PROPERTY
SCHEDULE 4.28 REAL PROPERTY GENERALLY
SCHEDULE 4.29 ENVIRONMENTAL MATTERS
SCHEDULE 4.30(A) EMPLOYEE MATTERS
SCHEDULE 4.30(B) EMPLOYMENT CONTRACTS
SCHEDULE 4.30(C) EMPLOYMENT POLICIES
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SCHEDULE 4.30(H) INDEPENDENT CONTRACTORS
SCHEDULE 4.31 COLLECTIVE AGREEMENTS
SCHEDULE 4.32 PENSION/ BENEFIT PLANS
SCHEDULE 4.34 MATERIAL CONTRACTS
SCHEDULE 4.36 INTER-AFFILIATE ARRANGEMENTS
SCHEDULE 4.38 LITIGATION
SCHEDULE 4.42 TRADE ALLOWANCE
SCHEDULE 4.43 THIRD-PARTY CONSENTS
SCHEDULE 4.44 LOCATION OF THE ASSETS
SCHEDULE 5.8 TITLE TO PROPERTY
SCHEDULE 5.9 INCORPORATION AND REGISTRATION
SCHEDULE 7.1(J) FORM OF NON-COMPETITION AGREEMENT
SCHEDULE 7.1(P) FORM OF MANAGEMENT SERVICES AGREEMENT
SCHEDULE 7.1(Q) FORM OF NATIONAL POST SHAREHOLDERS AGREEMENT
SCHEDULE 7.1(R) FORM OF NATIONAL POST AFFILIATION/SERVICES AGREEMENT
SCHEDULE 7.1(S) FORM OF EMPLOYEE INTERIM SERVICES AGREEMENT
SCHEDULE 7.1(V) FORM OF PENSION AND EMPLOYEE BENEFIT PLANS AGREEMENT
SCHEDULE 8.1(J) FORM OF REGISTRATION RIGHTS AGREEMENT
<PAGE> 111
SCHEDULE 4.4
PERMITTED ENCUMBRANCES
"PERMITTED ENCUMBRANCES" means:
Applicable municipal by-laws, development agreements, subdivision agreements,
site plan agreements and building restrictions which do not in the aggregate
materially adversely affect the current use or value of the Real Property
affected thereby and provided the same have been complied with in all material
respects to the Closing Date including the posting of any required security for
performance of obligations thereunder.
Any easements, servitudes, rights-of-way, licenses, restrictions that run with
the land and other minor Encumbrances (including easements, rights-of-way and
agreements for sewers, drains, gas and water mains or electric light and power
or telephone, telecommunications or cable conduits, poles, wires and cables)
which do not materially adversely affect the current use or value of the Real
Property affected thereby and provided the same have been complied with in all
material respects to the Closing Date.
Defects or irregularities in title to the Real Property which are of a minor
nature and do not materially adversely affect the current use or value of the
Real Property affected thereby and provided the same have been complied with in
all material respects to the Closing Date.
Inchoate liens for taxes, assessments, governmental charges or levies not due as
at the Closing Date.
Inchoate liens for public utilities not due as at the Closing Date.
Rights of equipment lessors under Equipment Contracts provided the terms of such
Equipment Contracts have been fully performed to the Closing Date.
The reservations in any original grants from the Crown of any land or interests
therein and statutory exceptions to title.
Any privilege in favour of any lessor, licensor or permitter for rent to become
due or for other obligations or acts, the performance of which is required under
Contracts, or Real Property Leases, so long as the payment of such or the
performance of such other obligation or act is not delinquent and provided that
such liens or privileges do not materially adversely effect the use or value of
the Purchased Assets affected thereby
