SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Livent Inc.
(Name of Issuer)
Common Shares
(Title of Class of Securities)
537902108
(CUSIP Number of Class of Securities)
Eric L. Cochran, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
(212) 735-3000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
June 12, 1998
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the
subject of this Statement because of Rule 13d-1(b)(3) or
(4), check the following: ( )
Check the following box if a fee is being paid with this
Statement: ( )
SCHEDULE 13D
CUSIP No. 537902108
_________________________________________________________________
(1) NAMES OF REPORTING PERSONS - Lynx Ventures L.P.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
_________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) (x)
_________________________________________________________________
(3) SEC USE ONLY
_________________________________________________________________
(4) SOURCE OF FUNDS
BK
_________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
__________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
_________________________________________________________________
(7) SOLE VOTING POWER
NUMBER OF 0
SHARES ___________________________________
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY 5,970,000 (see Item 5)
EACH ___________________________________
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON 0
WITH ___________________________________
(10) SHARED DISPOSITIVE POWER
5,970,000 (see Item 5)
_________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,970,000 (see Item 5)
_________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES ( )
_________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
26.8%
_________________________________________________________________
(14) TYPE OF REPORTING PERSON
PN
_________________________________________________________________
SCHEDULE 13D
CUSIP No. 537902108
_________________________________________________________________
(1) NAMES OF REPORTING PERSONS - Lynx Ventures L.L.C.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
_________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) (x)
_________________________________________________________________
(3) SEC USE ONLY
_________________________________________________________________
(4) SOURCE OF FUNDS
N/A
_________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
__________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
_________________________________________________________________
(7) SOLE VOTING POWER
NUMBER OF 0
SHARES ___________________________________
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY 5,970,000 (see Item 5)
EACH ___________________________________
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON 0
WITH ___________________________________
(10) SHARED DISPOSITIVE POWER
5,970,000 (see Item 5)
_________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,970,000 (see Item 5)
_________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES ( )
_________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
26.8%
_________________________________________________________________
(14) TYPE OF REPORTING PERSON
00
_________________________________________________________________
SCHEDULE 13D
CUSIP No. 537902108
_________________________________________________________________
(1) NAMES OF REPORTING PERSONS - The Ovitz Family Limited Partnership
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
- 95-4547742
_________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) (x)
_________________________________________________________________
(3) SEC USE ONLY
_________________________________________________________________
(4) SOURCE OF FUNDS
N/A
_________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
__________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
__________________________________________________________________
(7) SOLE VOTING POWER
NUMBER OF 990,000 (see Item 5)
SHARES ___________________________________
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY 0
EACH ___________________________________
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON 990,000 (see Item 5)
WITH ___________________________________
(10) SHARED DISPOSITIVE POWER
0
_________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
990,000 (see Item 5)
_________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES ( )
_________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
4.5%
_________________________________________________________________
(14) TYPE OF REPORTING PERSON
PN
_________________________________________________________________
SCHEDULE 13D
CUSIP No. 537902108
_________________________________________________________________
(1) NAMES OF REPORTING PERSONS - The Michael and Judy Ovitz Revocable
Trust
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
- 04-3159375
_________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) (x)
_________________________________________________________________
(3) SEC USE ONLY
_________________________________________________________________
(4) SOURCE OF FUNDS
N/A
_________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
__________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
______________________________________________________________________
(7) SOLE VOTING POWER
NUMBER OF 0
SHARES ___________________________________
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY 990,000 (see Item 5)
EACH ___________________________________
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON 0
WITH ___________________________________
(10) SHARED DISPOSITIVE POWER
990,000 (see Item 5)
_________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
990,000 (see Item 5)
_________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES ( )
_________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
4.5%
_________________________________________________________________
(14) TYPE OF REPORTING PERSON
00
_________________________________________________________________
SCHEDULE 13D
CUSIP No. 537902108
_________________________________________________________________
(1) NAMES OF REPORTING PERSONS - Michael S. Ovitz
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
_________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) (x)
_________________________________________________________________
(3) SEC USE ONLY
_________________________________________________________________
(4) SOURCE OF FUNDS
N/A
_________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
__________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States
___________________________________________________________________
(7) SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY 6,960,000 (see Item 5)
EACH ___________________________________
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON
WITH 0
(10) SHARED DISPOSITIVE POWER
6,960,000 (see Item 5)
_________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,960,000 (see Item 5)
_________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES ( )
_________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
29.9%
_________________________________________________________________
(14) TYPE OF REPORTING PERSON
IN
SCHEDULE 13D
CUSIP No. 537902108
_________________________________________________________________
(1) NAMES OF REPORTING PERSONS - Roy L. Furman
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
_________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) (x)
_________________________________________________________________
(3) SEC USE ONLY
(4) SOURCE OF FUNDS
PF, BK
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
_________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States
(7) SOLE VOTING POWER
NUMBER OF 0
SHARES
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY 1,535,000 (see Item 5)
EACH
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON 0
WITH
(10) SHARED DISPOSITIVE POWER
1,535,000 (see Item 5)
_________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,535,000 (see Item 5)
_________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES ( )
_________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
7.0%
_________________________________________________________________
(14) TYPE OF REPORTING PERSON
IN
_________________________________________________________________
SCHEDULE 13D
CUSIP No. 537902108
_________________________________________________________________
(1) NAME OF REPORTING PERSON - David R. Maisel
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
_________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) (x)
_________________________________________________________________
(3) SEC USE ONLY
_________________________________________________________________
(4) SOURCE OF FUNDS
N/A
_________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
__________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States
_________________________________________________________________
(7) SOLE VOTING POWER
NUMBER OF 0
SHARES ___________________________________
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY 400,000 (see Item 5)
EACH ___________________________________
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON 0
WITH ___________________________________
(10) SHARED DISPOSITIVE POWER
400,000 (see Item 5)
_________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
400,000 (See Item 5)
_________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES ( )
_________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
1.9%
_________________________________________________________________
(14) TYPE OF REPORTING PERSON
IN
_________________________________________________________________
Schedule 13D
Item 1. Security and Issuer
The class of equity securities to which this statement relates is
the common shares, without par value (the "Shares") of Livent Inc., an
Ontario corporation (the "Company"). The principal executive offices of
the Company are located at 165 Avenue Road, Toronto, Ontario M5R 3S4,
Canada.
Item 2. Identity and Background.
(a) - (c) and (f)
This Schedule 13D is being filed jointly on behalf of the
following persons (collectively, the "Reporting Persons"): (1) Lynx
Ventures L.P., a Delaware limited partnership ("Lynx LP"); (2) Lynx
Ventures L.L.C., a Delaware limited liability company ("Lynx LLC"); (3) The
Ovitz Family Limited Partnership, a California limited partnership
("OFLP"); (4) The Michael and Judy Ovitz Revocable Trust, a California
trust ("Ovitz Trust"); (5) Michael S. Ovitz ("Ovitz"), a United States
citizen; (6) Roy L. Furman ("Furman"), a United States citizen; and (7)
David R. Maisel ("Maisel"), a United States citizen.
Neither the present filing nor anything contained herein shall be
construed as an admission that any Reporting Person constitutes a "person"
for any purpose other than Section 13(d) of the Securities Exchange Act of
1934.
The business address of Lynx LP, Lynx LLC, OFLP, Ovitz Trust and
Ovitz is c/o Dreyer, Edmonds & Associates, 355 South Grand Avenue, Suite
4150, Los Angeles, CA 90071. The business address of Furman and Maisel is
that of the principal executive offices of the Company.
Lynx LP is principally engaged in the business of investment in
securities. Lynx LLC, of which Maisel is the Manager and Ovitz is the
Managing Member, is principally engaged in the business of serving as
general partner of Lynx LP. OFLP is principally engaged in the business of
investment in securities. The Ovitz Trust, of which Ovitz and Judy L.
Ovitz, spouse of Ovitz at the same business address, are trustees, is a
grantor revocable trust established for estate planning purposes which
serves as general partner of OFLP. Ovitz's principal occupation is private
investor. Furman's principal occupation is Chairman and Chief Executive
Officer of the Company. Maisel's principal occupation is President of the
Company.
(d) and (e)
None of the Reporting Persons or any of their officers or
trustees has been convicted in a criminal proceeding during the past five
years (excluding traffic violations and similar misdemeanors).
None of the Reporting Persons or any of their officers or
trustees has been party to a civil proceeding of a judicial or
administrative body of competent jurisdiction during the past five years as
a result of which it was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Pursuant to the Lynx Investment Agreement (as defined below in
Item 4), the total consideration paid by Lynx LP in connection with its
purchase of Shares was US$20,000,000. Pursuant to the Furman Investment
Agreement (as defined below in Item 4), the total consideration paid by
Furman in connection with his purchase of Shares was US$2,000,000. The
acquisition of the Shares is described below in Item 4.
OFLP received options in the Company in consideration for its
provision of advisory services to the Company. Furman received options in
consideration for his employment with the Company. Maisel received options
in consideration for his employment with the Company. The grant of such
options is described below in Item 4.
Lynx LP obtained funds to make the purchases described herein
from a preexisting commercial bank revolving line of credit made in the
ordinary course (filed hereto and made a part hereof as Exhibit 20).
Furman obtained funds from his personal accounts to make the purchases
described herein, a portion of which was drawn from a margin account
maintained in the ordinary course with a commercial bank.
Item 4. Purpose of Transaction.
The Reporting Persons entered into the following agreements
described in this Item 4 (collectively, the "Agreements") to purchase the
Shares for investment purposes and to effect certain changes in the
management of the Company. Subject to market conditions and other factors,
the Reporting Persons may acquire or dispose of Shares from time to time in
future open-market, privately negotiated or other transactions, may enter
into agreements with third parties relating to acquisitions of securities
issued or to be issued by the Company, may enter into agreements with the
management of the Company relating to acquisitions of Shares by members of
management, issuance of options to management or their employment by the
Company or may effect other similar agreements or transactions.
Except as otherwise set forth herein, the Reporting Persons do
not have any plans or proposals which would relate to or result in any of
the transactions described in subparagraphs (a) through (j) of Item 4 of
Schedule 13D.
On April 13, 1998, the Company entered into an agreement with
Lynx LP, pursuant to which the Company agreed, subject to shareholder
approval and satisfaction of certain other conditions, to sell 2,500,000
Shares to Lynx LP at US$8.00 per Share for aggregate consideration of
US$20,000,000 (the "Lynx Investment Agreement") (filed hereto and made a
part hereof as Exhibit 2). The Lynx Investment Agreement also contemplated
that the Company would enter into a warrant agreement with Lynx LP (the
"Lynx Warrant Agreement") (filed hereto and made a part hereof as Exhibit
3) pursuant to which the Company would issue to Lynx LP warrants to acquire
1,470,000 Shares of the Company.
Simultaneous with the execution of the Lynx Investment
Agreement, Garth H. Drabinsky ("Drabinsky"), then Chairman and Chief
Executive Officer of the Company, and Myron I. Gottlieb ("Gottlieb"), then
President of the Company, entered into an agreement (the "Executive Option
Agreement") (filed hereto and made a part hereof as Exhibit 4) with Lynx
LP to grant options to Lynx LP (the "Executive Options"), effective as of
the Closing (as defined below), to purchase up to an aggregate 2,000,000
of their Shares. Drabinsky granted to Lynx LP a one year option to
purchase up to 500,000 Shares of the Company held by him at US$8.00 per
Share, and Gottlieb granted to Lynx LP options to purchase 1,500,000
Shares held by him, divided into four tranches, with terms ranging from
two to four years and at exercise prices ranging from US$8.00 per Share to
US$12.00 per Share. The Executive Options terminate in the event Lynx LP
and its affiliates hold less than 500,000 Shares of the Company. The
Executive Option Agreement also provides for a reallocation between
Drabinsky and Gottlieb of proceeds from Shares required to be delivered
pursuant to the agreement in the event Gottlieb is unable to deliver his
portion of Shares under the Voting Trust Agreement (described below).
Simultaneous with the Closing, Lynx LP, Drabinsky and Gottlieb agreed to
a procedure by which Lynx LP would facilitate the delivery by Drabinsky
of Shares required to be delivered under the Executive Option Agreement.
The transactions contemplated by the Lynx Investment Agreement
were approved by the shareholders of the Company on June 5, 1998 and were
consummated on June 12, 1998 (the "Closing"), at which time, pursuant to
the terms of the Lynx Investment Agreement, Lynx LP acquired 2,500,000
Shares for aggregate consideration of $20,000,000. The transactions
contemplated by the Investment Agreement were documented by a number of
additional agreements which were signed simultaneously with the Closing,
descriptions of which follow.
Simultaneous with the Closing and pursuant to the Lynx Investment
Agreement, the Company entered into the Lynx Warrant Agreement, pursuant to
which the Company issued to Lynx LP warrants (the "Lynx Warrants") to
acquire 1,470,000 Shares of the Company. The Lynx Warrants have a term of
three years, are freely transferable and were issued in two series of
735,000 each with exercise prices of US$9.00 and US$10.00, respectively.
Simultaneous with the Closing, the Company entered into an
agreement with Furman, pursuant to which the Company agreed to sell 250,000
Shares to Furman at US$8.00 per Share for aggregate consideration of
US$2,000,000 (the "Furman Investment Agreement") (filed hereto and made a
part hereof as Exhibit 5), and at the Closing, Furman acquired 250,000
Shares pursuant to the terms of the Furman Investment Agreement.
Simultaneous with the Closing and as contemplated by the
Furman Investment Agreement, the Company entered into a Warrant Agreement
with Furman (the "Furman Warrant Agreement") (filed hereto and made a part
hereof as Exhibit 6) pursuant to which the Company issued to Furman
warrants (the "Furman Warrants") (the Lynx Warrants and Furman Warrants
collectively, the "Warrants") to acquire 160,000 Shares of the Company.
The Furman Warrants have a term of three years, are freely transferable and
were issued in two series of 80,000 each with exercise prices of US$9.00
and US$10.00, respectively.
Simultaneous with the Closing, the Reporting Persons and the THL
Entities entered into a Shareholders Agreement (the "Shareholders
Agreement") (filed hereto and made a part hereof as Exhibit 7), pursuant
to which each of them agreed to ensure for the term of the agreement, among
other things, that to the extent permitted by law (i) Ovitz is elected or
appointed to the Board of Directors of the Company (the "Board"), (ii) each
of the Executive, Audit, Compensation and Nominating Committees of the
Board are composed in a manner acceptable to Lynx LP, (iii) Ovitz is
appointed as Chairman of the Executive Committee of the Board, (iv) all
nominees for election to the Board will be acceptable to Lynx LP and Lynx
LP will have the right to propose nominees for election to the Board and
consult with the Company on the identity of nominees and (v) if the
Nominating Committee's nominees are not elected as directors, the Board
will cause them to be appointed.
The Shareholders Agreement will terminate upon the earliest to
occur of: (a) the 30th anniversary of the Closing, (b) the date when Lynx
LP is no longer controlled by Ovitz and (c) the date when Lynx LP no longer
owns 5% or more of the Shares of the Company, such percentage to be reduced
proportionately if the Company, in a single transaction or series of
related transactions, issues Shares in excess of 10% of the previously
outstanding number.
The Company also agreed in the Shareholders Agreement that, to
the extent permitted by law, if requested by Lynx LP at any time during a
period of three years from the Closing, the Company will take all action
required to obtain shareholder approval of the relocation of the Company's
jurisdiction of incorporation from Ontario to another jurisdiction in
Canada to be specified by Lynx LP.
Under the Shareholders Agreement, Lynx LP has the right to
identify one additional individual as a nominee to the Board and the Company
has agreed to expand the size of the Board to accommodate such additional
nominee. In addition, the Company granted pre-emptive rights to Lynx LP, to
subscribe for its pro rata proportion of any new issuance of Shares by the
Company, other than pursuant to existing commitments to issue Shares.
The Shareholders Agreement further provides that, in the event a
bid is made to purchase greater than a majority of the equity of the
Company, which bid is supported by Lynx LP (a "Qualifying Bid"), Furman,
Maisel, Drabinsky and Gottlieb (the "Executives") shall take all such
action necessary to cause such bid to be consummated and shall participate
in such Qualifying Bid on a pro rata basis with Lynx LP. To the extent
Lynx LP proposes to sell in excess of 75% of the Shares then currently
beneficially owned by it otherwise than through a Qualifying Bid, the
Executives may elect to participate in, or be required by Lynx LP to
participate in, such sale on a pro rata basis. Also pursuant to the
Shareholders Agreement, the Executives grant to Lynx LP a right of first
refusal in connection with the sale of any Shares beneficially owned by
such individuals.
Simultaneous with the Closing, Lynx LP and the Executives entered
into a Voting Agreement (filed hereto and made a part hereof as Exhibit 8)
and Voting Trust Agreement, with the Company and Montreal Trust Company of
Canada (filed hereto and made a part hereof as Exhibit 9), pursuant to
which Lynx LP shall have the right to vote the Shares beneficially owned by
each of the Executives on all matters brought before shareholders. Both
agreements terminate in the event Lynx LP and its affiliates hold less than
500,000 Shares. Simultaneous with the Closing, under an Assignment and
Assumption Agreement among Lynx LP, Drabinsky and Gottlieb (the "Assignment
and Assumption") (filed hereto and made a part hereof as Exhibit 10),
Drabinsky and Gottlieb transferred their rights under a previously existing
Management Voting Trust Agreement among the Company, Drabinsky, Gottlieb,
Montreal Trust Company of Canada and certain other management executives of
the Company, dated May 19, 1993 (filed hereto and made a part hereof as
Exhibit 11) in order that Lynx LP may vote the remaining management Shares
held by Daniel D. Brambilla and Gordon Eckstein (the "Additional Management
Shareholders") which are subject thereto.
Simultaneous with the Closing, Lynx LP and the THL entities
entered into a Voting, Right of First Offer and Waiver Agreement (the
"THL Agreement") (filed hereto and made a part hereof as Exhibit 12),
pursuant to which Lynx LP granted to the THL Entities participation rights
on a sale by Lynx LP of Shares similar to the rights in this regard of the
Executives described above with respect to the Shareholders Agreement, and
the THL Entities agreed to waive certain covenants obtained by them from
the Company in 1995 pursuant to the Investors Agreement, dated February 3,
1995, among the Company and the THL Entities (filed hereto and made a part
hereof as Exhibit 13), and the Shareholders Agreement, dated February 3,
1995, among Drabinsky, Gottlieb and the THL Entities (filed hereto and made
a part hereof as Exhibit 14). Under the THL Agreement, each of Lynx LP
and the THL Entities is also required to support the other's choice of
nominees for the Board.
Simultaneous with the Closing, the Company entered into an
advisory agreement with OFLP pursuant to which OFLP and Ovitz will provide
the Company with advisory services in connection with live theater. In
consideration for entering into such advisory agreement and of the services
to be rendered thereunder, the Company granted to OFLP options (the "OFLP
Options") to acquire up to 990,000 Shares of the Company as of the Closing,
pursuant to an Option Agreement between the Company and OFLP (the "OFLP
Option Agreement") (filed hereto and made a part hereof as Exhibit 15).
The OFLP Option Agreement provides that the OFLP Options vest in equal
portions at the ends of one year and two years, have a term of ten years
and will be exercisable at a price of US$8.00. Three equal tranches of
247,500 each of the OFLP Options become exercisable only if the 20 trading
day trailing average closing price of the Shares on the NASDAQ National
Market at any time following April 9, 1998 exceeds the hurdle prices of
US$8.00, US$10.40 and US$12.00, respectively.
Simultaneous with the Closing, the Company entered into
employment agreements with Furman, Maisel, Drabinsky and Gottlieb. Also
simultaneous with the Closing, in consideration for entering into his
employment agreement with the Company, the Company granted options to
Furman (the "Furman Options") to acquire up to 1,025,000 Shares of the
Company, pursuant to an Option Agreement between the Company and Furman
(the "Furman Option Agreement") (filed hereto and made a part hereof as
Exhibit 16). The Furman Option Agreement provides that the Furman Options
vest in three equal annual installments, will have a term of five years and
will be exercisable at a price of US$8.00. Three equal tranches of 256,250
each of the Furman Options will become exercisable only if the 20 trading
day trailing average closing price of the Shares on the NASDAQ National
Market at any time following April 9, 1998 exceeds the hurdle prices of
US$8.80, US$10.40 and US$12.00, respectively. Simultaneous with the
Closing, in consideration for entering into his employment agreement with
the Company, the Company granted options to Maisel (the "Maisel Options")
to acquire up to 400,000 Shares of the Company, pursuant to an Option
Agreement between the Company and Maisel (the "Maisel Option Agreement")
(filed hereto and made a part hereof as Exhibit 17). The Maisel Option
Agreement provides the Maisel Options (the OFLP Options, Furman Options and
Maisel Options collectively, the "Options") vest in three equal annual
installments, have a term of five years and will be exercisable at a price
of US$8.00.
Currently the Board consists of Messrs. Furman, Maisel, Ovitz,
Jerry I. Speyer, Quincy Jones, Robert Cross, Ronald W. Burkle and Heather
Monroe-Blum, who are nominees of Lynx LP; and Messrs. Conrad Black, Daniel
D. Brambilla, Drabinsky, H. Garfield Emerson, Martin Goldfarb, Gottlieb,
Thomas H. Lee, James A. Pattison, Joseph L. Rotman, Scott M. Sperling and
A. Alfred Taubman, each of whom was a member of the Board prior to the
Closing.
Each of the Agreements is filed as an exhibit to this Schedule
13D and is incorporated herein by reference. The foregoing descriptions of
the Agreements are not intended to be complete and are qualified in their
entirety by reference to such exhibits.
Item 5. Interest in Securities of the Issuer.
(a) and (b)
By virtue of the Shareholders Agreement and the THL Agreement,
the Reporting Persons, Drabinsky, Gottlieb and the THL Entities may be
deemed to share voting power with respect to 16,036,885 (59.1%) of the
20,836,610 outstanding Shares of the Company as of June 12, 1998 and the
Closing on the date thereof (the "Outstanding Shares") (assuming the full
exercise of the Warrants, Executive Options, Options, options held by
Drabinsky and Gottlieb and convertible debt securities and options held
by the THL Entities, subject to their complete terms). Each of the
Reporting Persons expressly disclaims the existence of such shared power.
By virtue of the Shareholders Agreement and the THL Agreement,
the Reporting Persons, Drabinsky, Gottlieb and the THL Entities may
constitute a "group" within the meaning of Rule 13d-5(b) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). As a
member of a group, each Reporting Person may be deemed to beneficially own
the Shares beneficially owned by the members of the group as a whole. Each
of the Reporting Persons expressly disclaims beneficial ownership of such
Shares held by any other members of such group.
By virtue of the Shareholders Agreement, the Reporting Persons,
Drabinsky and Gottlieb may be deemed to share voting and dispositive power
with respect to 13,313,250 (51.3%) of the Outstanding Shares (assuming the
full exercise of the Warrants, Executive Options, Options and options held
by Drabinsky and Gottlieb, subject to their complete terms). Each of the
Reporting Persons expressly disclaims the existence of such shared power.
By virtue of the Shareholders Agreement, the Reporting Persons,
Drabinsky and Gottlieb may constitute a "group" within the meaning of Rule
13d-5(b) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). As a member of a group, each Reporting Person may be deemed to
beneficially own the Shares beneficially owned by the members of the group
as a whole. Each of the Reporting Persons expressly disclaims beneficial
ownership of such Shares held by any other members of such group.
By virtue of the Voting Agreement and the Voting Trust
Agreement, the Reporting Persons, Drabinsky and Gottlieb may be deemed to
share voting power with respect to 13,313,250 (51.3%) of the Outstanding
Shares (assuming full exercise of the Warrants, Executive Options, Options
and options held by Drabinsky and Gottlieb subject to their complete
terms). Each of the Reporting Persons expressly disclaims the existence of
such shared power.
By virtue of the Voting Agreement and the Voting Trust Agreement,
the Reporting Persons and Drabinsky and Gottlieb may constitute a "group"
within the meaning of Rule 13d-5(b) under the Exchange Act. As a member of
a group, each Reporting Person may be deemed to beneficially own the Shares
beneficially owned by the members of the group as a whole. Each of the
Reporting Persons expressly disclaims beneficial ownership of such Shares
held by any other members of such group.
By virtue of the Assignment and Assumption and the Management
Voting Trust Agreement, Lynx LP and the Additional Management Shareholders
may be deemed to share voting and dispositive power with respect to
6,126,418 (27.5%) of the Outstanding Shares (assuming full exercise of the
Lynx Warrants subject to their complete terms). As a member of a group,
Lynx LP and the Additional Management Shareholders may be deemed to
beneficially own the Shares beneficially owned by the members of the group
as a whole. Lynx LP expressly disclaims beneficial ownership of such
Shares held by any other members of such group.
By virtue of the THL Agreement, Lynx LP and the THL Entities
may be deemed to share voting power with respect to over 8,693,635 (37.0%)
of the Outstanding Shares (assuming full exercise of the Lynx Warrants and
convertible debt securities and options held by the THL Entities, subject to
their complete terms). Lynx LP expressly disclaims the existence of such
shared power.
By virtue of the THL Agreement, Lynx LP and the THL Entities
may constitute a "group" within the meaning of Rule 13d-5(b) under the
Exchange Act. As a member of a group, Lynx LP may be deemed to
beneficially own the Shares beneficially owned by the members of the group
as a whole. Lynx LP expressly disclaims beneficial ownership of such
Shares held by any other members of such group.
The Reporting Persons may together constitute a "group" within
the meaning of Rule 13d-5(b) under the Exchange Act. As a member of a
group, each Reporting Person may be deemed to beneficially own the Shares
beneficially owned by the members of the group as a whole (collectively,
the "Investor Shares"). Each of the Reporting Persons expressly disclaims
beneficial ownership of those Investor Shares held by any other members of
such group.
Lynx LP has obtained direct beneficial ownership of 2,500,000
Shares pursuant to the Lynx Investment Agreement, representing
approximately 12% of the Outstanding Shares. Subject to the terms thereof,
Lynx LP has also obtained indirect beneficial ownership of 1,470,000 Shares
pursuant to the Lynx Warrant Agreement and 2,000,000 Shares pursuant to the
Executive Option Agreement. Assuming Lynx LP's full exercise of the Lynx
Warrants subject to their complete terms and full exercise of the Executive
Options subject to their complete terms, Lynx LP has obtained beneficial
ownership of approximately 26.8% of the Outstanding Shares. Lynx LP has
shared voting and shared dispositive power with respect to such Shares.
Lynx LLC, as general partner of Lynx LP, may be deemed to share
voting and dispositive power with respect to 5,970,000 Shares beneficially
owned by Lynx LP, which represents approximately 26.8% of the Outstanding
Shares. The filing of this Schedule 13D by Lynx LLC shall not be construed
as an admission that Lynx LLC is, for the purpose of Section 13(d) of the
Exchange Act, the beneficial owner of Shares held by Lynx LP.
Subject to the terms and conditions of the OFLP Option Agreement,
OFLP has obtained indirect beneficial ownership of 990,000 Shares.
Assuming OFLP's full exercise of the OFLP Options subject to their complete
terms, OFLP has gained indirect beneficial ownership of approximately 4.5%
of the Outstanding Shares. Subject to the Agreements, OFLP has sole voting
and dispositive power with respect to such Shares.
The Ovitz Trust, as general partner of OFLP, may be deemed to
share voting and dispositive power with respect to 990,000 Shares
beneficially owned by OFLP. The filing of this Schedule 13D shall not be
construed as an admission that the Ovitz Trust is, for the purpose of
Section 13(d) of the Exchange Act, the beneficial owner of Shares
beneficially owned by OFLP.
Ovitz, as Managing Member of Lynx LLC and trustee of the Ovitz
Trust, may be deemed to share voting and dispositive power with respect to
5,970,000 Shares beneficially owned by Lynx LP and 990,000 Shares
beneficially owned by OFLP. The filing of this Schedule 13D by Ovitz shall
not be construed as an admission that Ovitz is, for the purpose of Section
13(d) of the Exchange Act, the beneficial owner of Shares held by Lynx LP
or OFLP.
Furman has obtained direct beneficial ownership of 250,000 Shares
pursuant to the Furman Investment Agreement and 100,000 Shares which were
held previously representing approximately 1.7% of the Outstanding Shares.
Furman has also obtained indirect beneficial ownership of 160,000 Shares
pursuant to the Furman Warrant Agreement and 1,025,000 Shares pursuant to
the Furman Option Agreement. Assuming Furman's full exercise of the Furman
Warrants subject to their complete terms and full exercise of the Furman
Options subject to their complete terms, Furman has obtained beneficial
ownership of approximately 7.0% of the Outstanding Shares. Subject to the
Agreements, Furman has shared voting and dispositive power with respect to
such Shares.
Maisel has obtained indirect beneficial ownership of 400,000
Shares pursuant to the Maisel Option Agreement. Assuming Maisel's full
exercise of the Maisel Options subject to their complete terms, Maisel has
obtained indirect beneficial ownership of approximately 1.9% of the
Outstanding Shares. Subject to the Agreements, Maisel has shared voting and
dispositive power with respect to such Shares.
Neither the filing of this Schedule 13D nor any of its contents
shall be deemed to constitute an admission that a Reporting Person is the
beneficial owner of any of the Shares other than those which such Reporting
Person has acquired pursuant to the Agreements.
(c) The responses to Items 3 and 4 of this Schedule 13D are
incorporated herein.
(d) No person other than the Reporting Persons, the limited partners
of OFLP and OFLP as limited partner of Lynx LP, or Judy L. Ovitz as trustee
or the beneficiaries of the Ovitz Trust is known to the Reporting Persons
to have the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, Common Shares owned by
such Reporting Person.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer.
The responses to Items 3, 4, and 5 of this Schedule 13D and the
Exhibits to this Schedule 13D are incorporated herein by reference.
Except for the agreements described in the responses to Item 3
and Item 4, to the best of knowledge of the Reporting Persons, there are no
contracts, arrangements, understandings or relationships (legal or
otherwise) between the persons enumerated in Item 2 and any other person
with respect to any securities of Lynx, including, but not limited to,
transfer or voting of any of the securities, finder's fees, joint ventures,
loan or option arrangements, put or calls, guarantees of profits, division
of profits or loss, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
The following are filed herewith as exhibits:
Exhibit 1: Joint Filing Agreement dated as of June 30,
1998 among the Reporting Persons.
Exhibit 2: Investment Agreement, dated as of April 13,
1998, as amended June 12, 1998, between
Lynx LP and the Company.
Exhibit 3: Warrant Agreement, dated as of June 12, 1998,
between the Company and Lynx LP.
Exhibit 4: Option Agreement, dated as of April 13, 1998,
as amended June 12, 1998, among Drabinsky,
Gottlieb and Lynx LP.
Exhibit 5: Investment Agreement, dated as of June 12,
1998, between Furman and the Company.
Exhibit 6: Warrant Agreement, dated as of June 12, 1998,
between the Company and Furman.
Exhibit 7: Shareholders Agreement, dated as of June 12,
1998, among the Company, Executives, the THL
Entities and Lynx LP.
Exhibit 8: Voting Agreement, dated as of June 12, 1998,
among the Executives and Lynx LP.
Exhibit 9: Voting Trust Agreement, dated as of June 12,
1998, among the Executives, Lynx LP, the
Company and Montreal Trust Company of Canada.
Exhibit 10: Assignment and Assumption Agreement, dated as
of June 12, 1998, among Drabinsky, Gottlieb
and Lynx LP.
Exhibit 11: Voting Trust Agreement, dated as of May 19,
1993, among the Company, Drabinsky, Gottlieb,
certain management executives of the Company
and Montreal Trust Company of Canada
(previously filed as Exhibit 2(ii)(f) to the
Form F-1 filed with the Securities and
Exchange Commission (the "SEC") on February
12, 1996 and incorporated herein by reference
thereto).
Exhibit 12: Voting, Right of First Offer and Waiver
Agreement, dated as of June 12, 1998, between
the THL Entities and Lynx LP.
Exhibit 13: Investors Agreement, dated as of February 3,
1995, among the Company and the THL Entities
(previously filed as Exhibit 2(ii)(b) to the
Form F-1, filed with the SEC on February 12,
1996 and incorporated herein by reference
thereto).
Exhibit 14: Shareholders Agreement, dated as of February
3, 1995, among Drabinsky, Gottlieb and the
THL Entities (previously filed as Exhibit
2(ii)(d) to the Form F-1, filed with the SEC
on February 12, 1996 and incorporated herein
by reference thereto).
Exhibit 15: Option Agreement, dated as of June 12, 1998,
between the Company and OFLP.
Exhibit 16: Option Agreement, dated as of June 12, 1998,
between the Company and Furman.
Exhibit 17: Option Agreement, dated as of June 12, 1998,
between the Company and Maisel.
Exhibit 18: Loan Agreement, dated as of February 3, 1997
(Lynx LP, Lynx LLC, OFLP, the Ovitz Trust and
Ovitz have applied for confidential treatment
for portions of this exhibit).
Exhibit 19: Power of Attorney dated as of June 30, 1998
granted by the Reporting Persons in favor of
David R. Maisel.
SIGNATURES
After reasonable inquiry and to the best knowledge and belief of
each of the undersigned, such person certifies that the information set
forth in this Statement with respect to such person is true, complete and
correct.
IN WITNESS WHEREOF, each of the undersigned has executed this
instrument as of the 30th day of June, 1998.
LYNX VENTURES L.P.,
LYNX VENTURES L.L.C.,
THE OVITZ FAMILY LIMITED PARTNERSHIP,
THE MICHAEL AND JUDY OVITZ REVOCABLE TRUST,
MICHAEL S. OVITZ,
ROY L. FURMAN
pursuant to powers of attorney
executed in favor of and granted
and delivered to David R. Maisel, and
DAVID R. MAISEL
By: David R. Maisel, on his own behalf and as
attorney-in-fact for Lynx Ventures L.P., Lynx
Ventures L.L.C., The Ovitz Family Limited
Partnership, The Michael and Judy Ovitz Revocable
Trust, Michael S. Ovitz and Roy L. Furman
By: /s/ David R. Maisel
Name: David R. Maisel
EXHIBIT 1
JOINT FILING AGREEMENT
This Agreement is made and entered into as of June 30, 1998, by
and among each of the undersigned.
In accordance with Rule 13d-1(f) of the Securities Exchange Act
of 1934, as amended, each of the parties hereto agrees with the other
parties that the statement of Schedule 13D pertaining to certain securities
of Livent Inc., to which this agreement is an exhibit, is filed by and on
behalf of each such party and that any amendment thereto will be filed on
behalf of each such party.
LYNX VENTURES L.P.,
LYNX VENTURES L.L.C.,
THE OVITZ FAMILY LIMITED PARTNERSHIP,
THE MICHAEL AND JUDY OVITZ REVOCABLE TRUST,
MICHAEL S. OVITZ and ROY L. FURMAN
pursuant to powers of attorney executed in
favor of and granted and
delivered to David R. Maisel, and
David R. Maisel
By: David R. Maisel, on his own behalf and
as attorney-in-fact for
Lynx Ventures L.P.,
Lynx Ventures L.L.C,
The Ovitz Family Limited Partnership,
The Michael and Judy Ovitz
Revocable Trust, Michael S. Ovitz and
Roy L. Furman
By: /s/ David R. Maisel
Name: David R. Maisel
EXHIBIT 2
INVESTMENT AGREEMENT
BETWEEN
LIVENT, INC.
AND
LYNX VENTURES L.P.
April 13, 1998
TABLE OF CONTENTS
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. PURCHASE AND SALE OF COMMON SHARES . . . . . . . . . . . . . . 7
3. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . 7
4.1 Organization, Good Standing and Qualification . . . . 7
4.2 Capitalization . . . . . . . . . . . . . . . . . . . 8
4.3 Options, Warrants and Reserved Shares . . . . . . . . 8
4.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . 8
4.5 Due Authorization . . . . . . . . . . . . . . . . . . 9
4.6 Valid Issuance of Stock . . . . . . . . . . . . . . . 9
4.7 No Conflicts . . . . . . . . . . . . . . . . . . . . 9
4.8 Compliance . . . . . . . . . . . . . . . . . . . . 10
4.9 No Orders . . . . . . . . . . . . . . . . . . . . . 10
4.10 Litigation . . . . . . . . . . . . . . . . . . . . 10
4.11 Financial Information . . . . . . . . . . . . . . . 11
4.12 Absence of Undisclosed Liabilities . . . . . . . . 11
4.13 Material Adverse Effect . . . . . . . . . . . . . . 12
4.14 Securities Laws . . . . . . . . . . . . . . . . . . 12
4.15 Title and Interest . . . . . . . . . . . . . . . . 12
4.16 Real Property . . . . . . . . . . . . . . . . . . . 12
4.17 Environmental Matters . . . . . . . . . . . . . . . 14
4.18 Property and Assets . . . . . . . . . . . . . . . . 15
4.19 Material Contracts . . . . . . . . . . . . . . . . 15
4.20 Intellectual Property . . . . . . . . . . . . . . . 15
4.21 Labor Relations . . . . . . . . . . . . . . . . . . 17
4.22 Taxes . . . . . . . . . . . . . . . . . . . . . . . 18
4.23 Consents and Approvals . . . . . . . . . . . . . . 19
4.24 Information . . . . . . . . . . . . . . . . . . . . 19
4.25 Common Shares Listing . . . . . . . . . . . . . . . 19
4.26 Board Recommendations . . . . . . . . . . . . . . . 20
4.27 Shareholder Approval . . . . . . . . . . . . . . . 20
5. REPRESENTATIONS AND WARRANTIES OF INVESTOR . . . . . . . . . 20
5.1 Organization, Good Standing and Qualification . . . 20
5.2 Due Authorization . . . . . . . . . . . . . . . . . 20
5.3 No Conflicts . . . . . . . . . . . . . . . . . . . 21
5.4 Investor Status . . . . . . . . . . . . . . . . . . 21
5.5 Accredited Investor . . . . . . . . . . . . . . . . 21
5.6 No General Solicitation . . . . . . . . . . . . . . 21
6. COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . . . . 21
6.1 Affirmative Covenants. . . . . . . . . . . . . . 21
6.2 Restrictions . . . . . . . . . . . . . . . . . . . 25
6.3 No Solicitation . . . . . . . . . . . . . . . . . . 27
6.4 Shareholders' Meeting . . . . . . . . . . . . . . . 28
7. CONDITIONS TO INVESTOR'S OBLIGATIONS AT CLOSING . . . . . . . 29
7.1 Representations and Warranties . . . . . . . . . . 29
7.2 Performance . . . . . . . . . . . . . . . . . . . . 30
7.3 Compliance Certificate . . . . . . . . . . . . . . 30
7.4 No Litigation . . . . . . . . . . . . . . . . . . . 30
7.5 Proceedings and Documents . . . . . . . . . . . . . 30
7.6 [Reserved]. . . . . . . . . . . . . . . . . . . . . 31
7.7 Hart-Scott-Rodino Act . . . . . . . . . . . . . . . 31
7.8 Transaction Documents . . . . . . . . . . . . . . . 31
7.9 Termination of Shareholders Agreements and Rights . 32
7.10 Shareholder Approvals . . . . . . . . . . . . . . . 32
7.11 Required Consents . . . . . . . . . . . . . . . . . 33
7.12 Board of Directors . . . . . . . . . . . . . . . . 33
7.13 Listing . . . . . . . . . . . . . . . . . . . . . . 33
7.14 Opinion of Counsel . . . . . . . . . . . . . . . . 33
7.15 Board Minutes . . . . . . . . . . . . . . . . . . . 33
7.16 Fairness Opinion . . . . . . . . . . . . . . . . . 33
8. CONDITIONS TO THE COMPANY'S
OBLIGATIONS AT CLOSING . . . . . . . . . . . . . . . . . 33
8.1 Representations and Warranties . . . . . . . . . . 33
8.2 Payment of Purchase Price . . . . . . . . . . . . . 34
8.3 Proceedings and Documents . . . . . . . . . . . . . 34
8.4 Hart-Scott-Rodino Act . . . . . . . . . . . . . . . 34
8.5 Shareholder Approvals . . . . . . . . . . . . . . . 34
8.6 Listing . . . . . . . . . . . . . . . . . . . . . . 34
8.7 Fairness Opinion . . . . . . . . . . . . . . . . . 34
8.8 Private Placement Questionnaire. . . . . . . . . . 34
9. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.1 Termination . . . . . . . . . . . . . . . . . . . . 34
9.2 Effect of Termination . . . . . . . . . . . . . . . 35
10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 36
10.1 Survival . . . . . . . . . . . . . . . . . . . . . 36
10.2 Successors and Assigns . . . . . . . . . . . . . . 36
10.3 Governing Law . . . . . . . . . . . . . . . . . . . 36
10.4 Currency . . . . . . . . . . . . . . . . . . . . . 36
10.5 Public Announcements; Confidentiality . . . . . . . 36
10.6 Counterparts . . . . . . . . . . . . . . . . . . . 36
10.7 Time of Essence . . . . . . . . . . . . . . . . . . 36
10.8 Headings . . . . . . . . . . . . . . . . . . . . . 37
10.9 Notices . . . . . . . . . . . . . . . . . . . . . . 37
10.10 No Finder's Fees . . . . . . . . . . . . . . . . . 38
10.11 Costs and Expenses . . . . . . . . . . . . . . . . 39
10.12 Amendments and Waivers . . . . . . . . . . . . . . 39
10.13 Severability . . . . . . . . . . . . . . . . . . . 39
10.14 Entire Agreement . . . . . . . . . . . . . . . . . 39
10.15 Further Assurances . . . . . . . . . . . . . . . . 39
SCHEDULES AND EXHIBITS
Schedule Description
-------- -----------
4.3 Options, Warrants and Reserved Shares
4.4(b) Organizational Chart
4.4(c) Stock Ownership
4.7 Conflicts
4.8 Compliance
4.12 Liabilities
4.13 Material Adverse Effect
4.16(a) Real Property
4.16(b) Permitted Encumbrances
4.19 Material Contracts
4.23 Consents and Approvals
4.27 Shareholder Approval
6.1(a) Writedowns
6.1(i) Insurance
7.9 Shareholder and Investor Agreements
7.11 Required Consents
7.14 Form of Company Legal Opinion
10.10 Finder's Fees
10.11 Other Fees
Exhibit Description
------- -----------
A Employment Agreements Term Sheet
B Transaction Term Sheet
INVESTMENT AGREEMENT
This INVESTMENT AGREEMENT (this "Agreement") is made and entered
into as of the 13th day of April, 1998 by and among Livent, Inc., an
Ontario corporation (the "Company") and Lynx Ventures L.P., a Delaware
limited partnership (the "Investor").
W I T N E S S E T H:
WHEREAS, the Company desires to sell to Investor, and Investor
desires to purchase from the Company, Common Shares of the Company on the
terms and conditions set forth in this Agreement;
WHEREAS, in order to induce Investor to make the investment and
cause its representatives to join the Board of Directors, the Company
desires to issue warrants to the Investor and the Company and Investor
desire to enter into a Warrant Agreement providing for the issuance of such
warrants to Investor to purchase Common Shares (the "Warrant Agreement");
WHEREAS, Garth H. Drabinsky and Myron I. Gottlieb (together, the
"Executives") and Investor are entering into, concurrently with the
execution hereof, an Option Agreement that grants Investor the right to
purchase certain Common Shares from the Executives (the "Option
Agreement");
WHEREAS, the Executives, Roy L. Furman, David R. Maisel (together
with Roy Furman, the "New Executives") and Investor desire to enter into a
Voting Trust Agreement establishing certain terms and conditions concerning
the voting of Common Shares held by the parties (the "Voting Trust
Agreement");
WHEREAS, the Executives, the New Executives and Investor desire
to enter into a Voting Agreement establishing certain terms and conditions
concerning the voting of certain Common Shares held by the parties which
are not subject to the Voting Trust Agreement (the "Voting Agreement").
WHEREAS, the Executives and Investor desire to enter into an
Assignment and Assumption Agreement (the "Assignment and Assumption
Agreement") that assigns all of the Executives' assignable rights under the
voting trust agreement by and among the Company, Executives, certain
management holders of Common Shares and the Depositary (as defined therein)
dated May 19, 1993 (the "Management Voting Trust Agreement");
WHEREAS, the Executives intend to resign as Voting Trustees ( as
defined in the Management Voting Trust Agreement) under the Management
Voting Trust Agreement and to appoint the Investor as the sole Voting
Trustee under such agreement;
WHEREAS, the Company, the Executives, the New Executives and
Investor desire to enter into a Shareholders Agreement providing for
certain rights and restrictions with respect to the Common Shares held by
such parties and establishing certain terms and conditions concerning the
voting of Common Shares held by the parties thereto (the "Shareholders
Agreement");
WHEREAS, Investor, Thomas H. Lee Equity Partners, L.P., a
Delaware limited partnership and THL-CCI Limited Partnership, a
Massachusetts limited partnership (the "THL Entities") will enter into a
Voting Agreement establishing certain terms and conditions concerning the
voting of Common Shares held by the parties thereto (the "THL Voting
Agreement");
WHEREAS, the Company and each of the Executives and the New
Executives desire to enter into individual Employment Agreements providing
for certain employment responsibilities of each of the Executives and the
New Executives (the "Employment Agreements"); and
WHEREAS, the Company and CKE Associates LLC desire to enter into
an Advisory Agreement providing for certain advisory services of Investor
to the Company (the "Advisory Agreement");
WHEREAS, the Company, the Investor, the Executives, the New
Executives and the THL Entities are entering into, concurrently with the
execution hereof, an Omnibus Agreement (the "Omnibus Agreement") which
evidences the intention of such parties to be legally bound to the terms of
the term sheets attached thereto and to enter into the expanded agreements
and documents referred to above, each of which is addressed in the term
sheets attached to the Omnibus Agreement .
NOW, THEREFORE, in consideration of valuable consideration (the
receipt and sufficiency of which is hereby acknowledged by each of the
parties hereto) and the mutual agreements, covenants, representations and
warranties set forth herein, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. DEFINITIONS.
"Advisory Agreement" has the meaning ascribed thereto in the recitals;
"Agreement" has the meaning ascribed thereto in the preamble;
"Assignment and Assumption Agreement" has the meaning ascribed thereto
in the recitals;
"Board Minutes" has the meaning ascribed thereto in Section 7.15;
"Board of Directors" means the Board of Directors of the Company;
"Board Recommendation" has the meaning ascribed thereto in Section
6.1(g);
"Business Day" means a day on which both the TSE and NASDAQ are open
for trading;
"Closing" and "Closing Date" have the meanings ascribed thereto
respectively in Section 3;
"Commission" shall mean the United States Securities and Exchange
Commission;
"Common Shares" means the common shares of the Company, any shares
resulting from the change of the designation of the common shares, and
any shares into which the common shares may be changed, converted,
exchanged or reclassified;
"Company" has the meaning ascribed thereto in the preamble;
"Confidentiality Agreement" has the meaning ascribed thereto in
Section 10.5 hereto;
"EEOC" has the meaning ascribed thereto in Section 4.21;
"Employee Agreements Term Sheets" shall mean the term sheets attached
hereto as Exhibit A.
"Employment Agreements" has the meaning ascribed thereto in the
recitals;
"Executives" has the meaning ascribed thereto in the recitals;
"First Preferred Shares" means the preferred shares of the Company
designated as First Preferred Shares;
"GAAP" has the meaning ascribed thereto in Section 4.11;
"Hazardous Materials" has the meaning ascribed thereto in Section
4.17;
"HSR Act" has the meaning ascribed to it in Section 6.1(s);
"Intellectual Property" has the meaning ascribed thereto in Section
4.20;
"Investor" has the meaning ascribed thereto in the preamble;
"Investor Nominees" means nominees designated by Investor pursuant to
Section 6.1(b);
"License Agreements" has the meaning ascribed thereto in Section
4.20(a);
"Liens" has the meaning ascribed thereto in Section 4.15;
"Management Voting Trust Agreement" has the meaning ascribed thereto
in the recitals;
"Material Adverse Effect" shall mean a material adverse effect on the
business, results of operations, prospects, assets, liabilities or
condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole;
"1933 Act" means the United States Securities Act of 1933, as amended;
"1934 Act" means the United States Securities Exchange Act of 1934, as
amended;
"1998 Annual Meeting" means the annual meeting of holders of Common
Shares to be held on June 4, 1998 or at such other date as may be
determined hereafter;
"NASDAQ" has the meaning ascribed thereto in Section 4.25;
"New Executives" has the meaning ascribed thereto in the recitals.
"New Stock Option Plan" has the meaning ascribed thereto in Section
6.1(g);
"NLRB" has the meaning ascribed thereto in Section 4.21;
"Option Agreement" has the meaning ascribed thereto in the recitals;
"Organizational Documents" shall mean the articles of incorporation,
certificate of incorporation, by-laws, certificates of formation, or
other constitutional documents.
"Permitted Encumbrances" has the meaning ascribed thereto in Section
4.16(b);
"Person" shall mean any natural person, company, corporation,
association, partnership, organization, business, firm, joint venture,
trust, unincorporated organization or any other entity or
organization, including a government, or any political subdivision,
department or agency of any government;
"Purchase Price" has the meaning as ascribed thereto in Section 2.
"Purchased Shares" has the meaning ascribed thereto in Section 2;
"Real Property" means all of the Company's and its Subsidiaries'
right, title and interest in and to all real property, including,
without limitation, all fee titles, leaseholds, easements, rights of
way and licenses and real property subject to operating or management
agreements and the structures, improvements, buildings and fixtures
located thereon;
"Realty Use Rights" has the meaning ascribed thereto in Section
4.16(c);
"Relocation" has the meaning ascribed thereto in Section 6.1(h);
"Representative" has the meaning ascribed thereto in Section 6.3(a);
"Required Consents" has the meaning ascribed thereto in Section 7.11;
"Shareholder Approval" means the approval by shareholders of the
Company as required by and in accordance with applicable rules,
regulations, statutes or any other pronouncements of the TSE, NASDAQ
or any federal, state, provincial or local governmental authority;
"Shareholders Agreement" has the meaning ascribed thereto in the
recitals;
"Securities Act (Ontario)" means the Securities Act (Ontario), R.S.O.
1990, c. S.5, as the same may be amended, re-enacted or replaced from
time to time;
"Significant Transactions" has the meaning ascribed thereto in Section
6.3(a)(i);
"Software" has the meaning ascribed thereto in Section 4.20;
"Subsidiary" shall mean any Person of which the Company (either alone
or through or together with any other Subsidiary) owns, directly or
indirectly, 50% or more of the capital stock or other equity interest,
the holders of which are generally entitled to vote for the election
of the board of directors or other governing body of such Person;
"THL Voting Agreement" has the meaning ascribed thereto in the
recitals;
"Trade Secrets" has the meaning ascribed thereto in Section 4.20;
"Transaction Documents" has the meaning ascribed thereto in Section
7.8;
"Transaction Term Sheet" means the term sheet attached hereto as
Exhibit B.
"TSE" means the Toronto Stock Exchange;
"Updates" has the meaning ascribed thereto in Section 6.1(n);
"Voting Agreement" has the meaning ascribed thereto in the recitals;
"Voting Trust Agreement" has the meaning ascribed thereto in the
recitals;
"Warrant Agreement" has the meaning ascribed thereto in the recitals;
"Writedown" has the meaning ascribed thereto in Section 6.1(a).
2. PURCHASE AND SALE OF COMMON SHARES. Upon the terms and subject
to the conditions hereof, at the Closing and taking place simultaneously
therewith, the Company shall issue, sell and deliver to Investor, and
Investor shall subscribe for and purchase from the Company, free and clear
of all Liens, 2,500,000 Common Shares (the "Purchased Shares") for an
aggregate purchase price of U.S.$20,000,000 (the "Purchase Price").
3. CLOSING. The closing of the purchase and sale of the Purchased
Shares (the "Closing") shall occur as soon as practicable after the
satisfaction or waiver of the conditions set forth in Sections 7 and 8
hereto, at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, New
York, New York, or at such other place as the Company and Investor may
agree. The time and date upon which the Closing occurs is herein called
the "Closing Date." The Company shall deliver to Investor at the Closing a
duly executed certificate evidencing the Purchased Shares registered in the
name of the Investor and Investor shall deliver to the Company at the
Closing the Purchase Price, payable by interbank transfer of immediately
available funds to accounts designated by the Company in writing at least
two Business Days prior to the Closing Date. In addition, each party to
this Agreement shall execute and deliver each of the Transaction Documents
and such other documents as may be required by this Agreement or that are
reasonable and customary and are requested by the other party.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to Investor that the statements in the
following paragraphs of this Section 4 are, as of the date of this
Agreement, and will be, as of the Closing Date, true and correct:
4.1 Organization, Good Standing and Qualification. The Company
is a corporation duly incorporated and organized and is validly subsisting
under the laws of the Province of Ontario. The Company has all requisite
power and authority to own, lease and operate the property and assets it
now owns, leases and operates and to conduct its business as presently
conducted and as proposed to be conducted and to execute and deliver this
Agreement and the Purchased Shares. The Company is duly qualified and
licensed as a corporation to conduct its business and is in good standing
in each jurisdiction in which the nature of the business conducted by it or
the property owned, leased or operated by it makes such qualification or
licensing necessary, except for such failures to be so duly qualified and
licensed and in good standing which will not in the aggregate have a
Material Adverse Effect.
4.2 Capitalization. The authorized capital of the Company
consists of (i) an unlimited number of Common Shares of which on the date
hereof there are 18,046,235 outstanding, all of which are duly authorized,
validly issued, fully paid and non-assessable and free of pre-emptive
rights, other than those contemplated by the Shareholders Agreement and the
THL Voting Agreement, and (ii) an unlimited number of First Preferred
Shares, of which on the date hereof there are none outstanding.
4.3 Options, Warrants and Reserved Shares. Except as set forth
in Schedule 4.3 hereto, there are no outstanding agreements, warrants,
options, rights or privileges, pre-emptive or contractual, including
convertible or exchangeable securities, to subscribe for, purchase or
otherwise acquire any Common Shares or other equity securities of the
Company or securities convertible into or exchangeable for Common Shares or
other equity securities of the Company. All Common Shares issuable as set
forth in Schedule 4.3, shall be duly authorized, validly issued, fully paid
and non-assessable and free of preemptive rights, other than those
contemplated by the Shareholders Agreement and the THL Voting Agreement,
upon issuance on the terms and conditions specified in the instruments
pursuant to which they are issuable.
4.4 Subsidiaries.
(a) Each Subsidiary of the Company is duly incorporated or
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization. Each of the
Subsidiaries of the Company has the requisite power and authority to
own, lease and operate the properties and assets it now owns, leases
and operates and to conduct its business as presently conducted and as
proposed to be conducted. Each Subsidiary is duly qualified and
licensed and is in good standing to do business in each jurisdiction
in which the property owned, leased or operated by it or the nature of
the business conducted by it makes such qualification or licensing
necessary, except for such failures to be so duly qualified and
licensed and in good standing which will not in the aggregate have a
Material Adverse Effect.
(b) Attached hereto as Schedule 4.4(b) is an organizational
chart of the Company and its Subsidiaries. All of the capital stock,
share capital, securities convertible or exercisable into capital
stock, or other equity interests of each Subsidiary are owned by the
Company or its Subsidiaries, free and clear of all Liens, other than
pledges in favor of Canadian Imperial Bank of Commerce ("CIBC").
(c) Except for its Subsidiaries and as otherwise set forth on
Schedule 4.4(c), the Company owns no stock, securities or equity
interests in any Person.
4.5 Due Authorization. Subject to a requirement to obtain
shareholder approval of this Agreement, the Company has taken all necessary
corporate action to authorize the execution, delivery and performance of
this Agreement and the Transaction Documents to which the Company is and is
to be a party and to issue the Purchased Shares and to consummate the
transactions contemplated hereby and thereby; this Agreement has been, and
upon execution and delivery thereof to Investor will be, duly executed and
delivered on behalf of the Company and will constitute the legal valid and
binding obligation of the Company enforceable against the Company by
Investor in accordance with its terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency or other laws of general
application affecting the enforcement of creditors' rights and subject to
the qualification that specific performance and injunction, being equitable
remedies, may only be granted in the discretion of a court of competent
jurisdiction.
4.6 Valid Issuance of Stock. The Purchased Shares, when issued,
paid for and delivered in accordance with the terms of this Agreement, will
be duly authorized, validly issued, fully paid and nonassessable and free
of preemptive rights, other than those contemplated by the Shareholders
Agreement and the THL Voting Agreement.
4.7 No Conflicts. Except as set forth in Schedule 4.7 attached
hereto, none of: (i) the authorization, execution, delivery and
performance by the Company of this Agreement and the Transaction Documents
to which the Company is a party; (ii) the issuance and sale of the
Securities as provided herein or in the Transaction Documents; or (iii) any
further acquisitions of shares of capital stock of the Company by Investor
(including shares that would be issued by the Company to Investor) results
or would result in the creation or imposition of any Lien upon any of the
properties or assets of the Company or any of its Subsidiaries or is in
conflict with or does or will result in a breach by the Company of or does
or will create a state of facts which after notice or lapse of time or both
will result in a breach by the Company of any of the terms or provisions of
(a) the Organizational Documents of the Company or any of its Subsidiaries,
(b) the resolutions of the directors or shareholders of the Company, (c)
other than with respect to clause (iii) above, any statute, law,
regulation, court order or decision to which the Company is subject or (d)
any material indenture, instrument, agreement or undertaking to which the
Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries or the properties or assets of the Company or any
of its Subsidiaries are or may become bound, excluding from such clauses
(c) and (d), such breaches or violations that, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
4.8 Compliance. Except as set forth in Schedule 4.8, neither
the Company nor any of the Subsidiaries is in violation of any term or
provision of (a) their respective Organizational Documents, (b) any
agreement or instrument to which any of them is a party or by which any of
them or their respective assets are bound, including any existing license
to conduct business, note, bond, mortgage, indenture, contract, lease,
permit, franchise or other instrument, or (c) any applicable law, excluding
from such clauses (b) and (c), such violations that, in the aggregate, have
not had, or could not reasonably be expected to have, a Material Adverse
Effect.
4.9 No Orders. No order suspending the sale or ceasing the
trading of the Common Shares has been issued by any court, securities
commission or regulatory authority in Canada or the United States, and no
proceedings for such purpose are pending or, to the knowledge of the
Company, after reasonable inquiry, threatened.
4.10 Litigation. There is not now pending against the Company or
any of its Subsidiaries or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries, nor has the Company
received notice in respect of, any claim or potential claim which could
lead to any litigation, action, suit or other proceeding by or before any
court, tribunal, governmental agency or authority, securities commission or
regulatory body in Canada or the United States that may seek to enjoin the
transactions contemplated herein or that, if successful, would have in the
aggregate a Material Adverse Effect.
4.11 Financial Information.
(a) The audited consolidated balance sheets of the Company and
its Subsidiaries as of December 31,1996 and the related statements of
income, retained earnings and changes in financial position for the
year then ended, including footnotes thereto, certified by Deloitte &
Touche, independent certified public accountants, all of which have
been delivered to Investor, fairly present the consolidated financial
condition and consolidated results of operations of the Company and
its Subsidiaries as of such dates and for such respective periods in
accordance with generally accepted accounting principles and practices
in Canada applied consistently ("GAAP"). The Investor has been
provided true and complete copies of such financial statements.
(b) The audited consolidated balance sheets of the Company and
the Subsidiaries as of December 31, 1997 and the related statements of
income, retained earnings and changes in financial position for the
year then ended, including footnotes thereto, certified by Deloitte &
Touche, independent certified public accountants, all of which will be
delivered to Investor on April 13, 1998, fairly present the
consolidated financial condition and consolidated results of
operations of the Company and its Subsidiaries as of such dates and
for such respective periods in accordance with GAAP applied in a
manner consistent with the financial statements described in paragraph
(a) above.
(c) The unaudited consolidated balance sheets of the Company and
the Subsidiaries as of September 30, 1997, and the related statements
of income, retained earnings and changes in financial position for the
nine months then ended, including footnotes thereto, which have been
delivered to Investor, fairly present the consolidated financial
condition and consolidated results of operations of the Company and
the Subsidiaries as of such date and for such period in accordance
with GAAP applied in a manner consistent with the financial statements
described in paragraphs (a) & (b) above.
4.12 Absence of Undisclosed Liabilities. Except as set forth in
Schedule 4.12 hereto, neither the Company nor any of its Subsidiaries has
incurred any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) subsequent to December 31, 1996, except
for liabilities or obligations that were incurred in the ordinary course of
business consistent with past practice, which would not, in the aggregate,
have, or be reasonably expected to have, a Material Adverse Effect.
4.13 Material Adverse Effect. Except as set forth in Schedule
4.13 hereto, since December 31, 1996 there has been no change in the
business, results of operations, prospects, assets, liabilities and
condition (financial or otherwise) of the Company and its Subsidiaries,
individually or taken as a whole, which would have or be reasonably
expected to have a Material Adverse Effect.
4.14 Securities Laws. The Company has made all filings required
of it under all applicable securities laws, regulations and rules and none
of such filings contains any untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. Neither the
issuance nor the sale of the Purchased Shares will result in any
contravention by the Company of any securities laws, regulations or rules
applicable to the Company.
4.15 Title and Interest. Each of the Company and its
Subsidiaries has good title to, or a valid leasehold interest in, all of
the property and assets used by it, located on its premises, or shown on
its financial books and records, free and clear of all claims, liens,
charges, restrictions, reservations and agreements, mortgages, pledges,
security interests, guarantees, easements, rights of way and encumbrances
of any kind or character ("Liens") other than the security interests and
other collateral security granted in connection with the credit agreement
made as of December 4, 1996, as amended, between the Company and the
Canadian Imperial Bank of Commerce and the Permitted Encumbrances (as
defined below), and except for properties and assets disposed of in the
ordinary course of business.
4.16 Real Property.
(a) All of the Company's and its Subsidiaries' material Real
Property is described on Schedule 4.16(a). The Company and its
Subsidiaries own or have the right to occupy and use all the Real
Property, whether owned or leased by the Company and its Subsidiaries.
(b) The Company and its Subsidiaries have good title to all the
owned Real Property and to all buildings, structures and other
improvements thereon and all fixtures thereto subject only to Liens
which, individually or taken as a whole, do not materially interfere
with the current use, occupancy or operation of the particular assets
or properties, subject to such Liens, or to the matters described with
respect to each parcel of Real Property on Schedule 4.16(b)
(collectively, the "Permitted Encumbrances").
(c) The Company and its Subsidiaries have sufficient right,
title and interest in and to agreements which relate to or provide
leases, easements, rights of way, licenses, management agreements,
operating agreements and other non-ownership interests to use the Real
Property in the manner in which it has been used in the past
(collectively, the "Realty Use Rights"). The Realty Use Rights are
valid and in full force and effect in accordance with their terms.
There is not under any Realty Use Right (i) any default (or, to the
knowledge of the Company, any claimed default) by the Company or its
Subsidiaries, or any event of default or event which with notice or
lapse of time, or both, would constitute a default by the Company or
its Subsidiaries which remains uncured, or (ii) to the knowledge of
the Company, any existing default by any other party to any Realty Use
Right, or any event of default or event which with notice or lapse of
time, or both, would constitute a default by any other party to any
Realty Use Right.
(d) The Company and its Subsidiaries are lawfully in possession
of all leased Real Property; and are presently occupying the entirety
of each parcel of the leased Real Property for the purposes set forth
in each lease agreement with respect thereto.
(e) All of the Real Property is free from any material use or
occupancy restrictions which would prevent the Company from using or
operating in accordance with past practice, except those imposed by
applicable zoning laws, ordinances and regulations, and from all
special taxes or assessments. No assessment for public improvement or
otherwise which is due and remains unpaid has been made against the
Real Property and the Company is not aware of any currently proposed
or pending assessment for public improvements or otherwise. No options
have been granted to others to purchase, lease or otherwise acquire
any interest in the Real Property.
(f) To the Company's knowledge, the present use of and enjoyment
of material buildings, structures and improvements on the Real
Property are in conformity with all applicable laws, rules,
regulations and ordinances.
(g) The Company and its Subsidiaries have not received any
notice that the owner of any leased Real Property has made any
assignment, pledge or hypothecation of the lease agreement with
respect thereto or the rents or use fees due thereunder.
4.17 Environmental Matters.
(a) As used herein, the term "Environmental Laws" means all
applicable U.S. or Canadian federal, state, provincial, local or any
foreign laws relating to pollution or protection of human health or
the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases
or threatened releases of chemicals, pollutants, contaminants, or
toxic or hazardous substances or wastes ( collectively, "Hazardous
Materials") into the environment, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
applicable authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders,
permits, plans or regulations issued, entered, promulgated or approved
thereunder to the extent applicable to the specific operations or Real
Property of the Company and its Subsidiaries.
(b) There are, with respect to the Company, its Subsidiaries or
any predecessors of the foregoing, no past or present violations of
Environmental Laws, releases of any materials into the environment,
actions, activities, circumstances, conditions, events, incidents, or
contractual obligations which may give rise to any common law
environmental liability or any liability under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 or
similar U.S. or Canadian federal, state, provincial, local or any
foreign laws, other than those which, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect, and none of
the Company and its Subsidiaries has received any notice with respect
to any of the foregoing, nor is any action pending or threatened in
connection with any of the foregoing that, if adversely determined,
could reasonably be expected to have a Material Adverse Effect.
4.18 Property and Assets. Each of the Company and its
Subsidiaries owns or leases all real, personal, tangible and intangible
property and assets (including, without limitation, all production rights)
necessary for the conduct of their respective businesses as such businesses
are presently conducted and are proposed to be conducted. To the knowledge
of the Company, all tangible properties and assets owned or leased by the
Company or any of its Subsidiaries are in good operating condition and
repair, ordinary wear and tear excepted, have been well maintained, and
conform with all applicable laws, statutes, ordinances, rules and
regulations.
4.19 Material Contracts. Except for those agreements listed on
Schedule 4.19, neither the Company nor any of the Subsidiaries is a party
to any agreement not in the ordinary course of business or not made at
arm's length. All of the Company's material agreements, arrangements,
understandings and contracts are valid and binding obligations, in full
force and effect in all respects and are being performed in accordance with
their terms in all material respects and to the knowledge of the Company
the parties to such agreements, arrangements, understandings and contracts
are in compliance in all material respects with the terms thereof.
4.20 Intellectual Property. The Company and its Subsidiaries own
or have the valid right to use all material patents and patent
applications; trademarks, service marks, and trademark or service mark
registrations and applications, trade names, Internet domain names, logos,
designs, slogans, and general intangibles of like nature, together with all
goodwill related to the foregoing; copyrights, copyright and mask works (as
defined in 17 U.S.C. 901, et seq.) registrations, renewals and applications
for copyrights and mask works; computer software, computer programs, and
computer hardware (collectively, "Software"); rights of publicity
(including but not limited to names, images, and biographical materials
concerning individuals) and rights of privacy; technology, trade secrets
and other confidential information, know-how, proprietary processes,
formulae, algorithms, models and methodologies (collectively, "Trade
Secrets"); and license agreements relating to any of the foregoing (all of
the foregoing, collectively, the "Intellectual Property") used in or
necessary to the conduct of the Company and its Subsidiaries' businesses as
currently conducted or planned to be conducted.
(a) All agreements pertaining to the use of or granting any
right to use or practice any rights under any Intellectual Property,
whether the Company or its Subsidiaries is the licensee or licensor
thereunder, and any written settlements relating to any Intellectual
Property, indicating for each the title, the parties, date executed,
and the Intellectual Property covered thereby (collectively, the
"License Agreements") are valid and binding obligations of the Company
or its Subsidiaries, enforceable in accordance with their terms, and
there exists no event or condition which will result in a violation or
breach of, or constitute (with or without due notice or lapse of time
or both) a default by the Company or its Subsidiaries under any such
License Agreement.
(b) The Intellectual Property owned by the Company and its
Subsidiaries is free and clear of all Liens.
(c) There are no settlements, forebearances to sue, consents,
judgments, or orders or similar obligations which (i) restrict the
Company or its Subsidiaries' rights to use any Intellectual Property,
(ii) restrict the Company or its Subsidiaries' business in order to
accommodate a third party's Intellectual Property rights or (iii)
permit third parties to use any Intellectual Property which would
otherwise infringe the Company or its Subsidiaries' Intellectual
Property.
(d) To the best of the Company 's and its Subsidiaries'
knowledge, the conduct of the Company 's and its Subsidiaries'
business as currently conducted or planned to be conducted does not
infringe upon any Intellectual Property owned or controlled by any
third party (either directly or indirectly such as through
contributory infringement or inducement to infringe). There are no
claims or suits pending or, to the Company 's or its Subsidiaries'
knowledge, threatened, and the Company and its Subsidiaries have not
received any notice of a third party claim or suit (i) alleging that
the Company 's or its Subsidiaries' activities or the conduct of its
businesses infringes upon or constitutes the unauthorized use of the
Intellectual Property rights of any third party, (ii) alleging that
the Company 's or its Subsidiaries' activities or the conduct of its
businesses is libelous, slanderous, or otherwise defamatory, (iii)
challenging the ownership, use, validity or enforceability of any
Intellectual Property, or (iv) challenging any Intellectual Property
licensed to the Company or its Subsidiaries.
(e) The consummation of the transactions contemplated hereby
will not result in the loss or impairment of the Company 's or its
Subsidiaries' right to own or use any of the Intellectual Property nor
require the consent of any governmental authority or third party in
respect of any such Intellectual Property.
(f) To the knowledge of the Company, none of the material
Software used or relied on by the Company or by any of its
Subsidiaries in the conduct of their respective businesses will
malfunction, will cease to function, will generate incorrect data or
will provide incorrect results when processing, providing, and/or
receiving (i) date-related data into and between the twentieth and
twenty-first centuries and (ii) date-related data in connection with
any valid date in the twentieth and twenty-first centuries.
4.21 Labor Relations. (i) The Company and its Subsidiaries are
in compliance in all material respects with all federal, state and
provincial laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and has not engaged in any
unfair labor or unfair employment practice, (ii) there is no unlawful
employment practice discrimination charge relating to the Company or any of
its Subsidiaries pending before the Equal Employment Opportunity Commission
("EEOC") or any EEOC recognized state "referral agency" or any comparable
authority in any jurisdiction, (iii) there is no unfair labor practice
charge or complaint against the Company or any of its Subsidiaries pending
before the National Labor Relations Board ("NLRB") or any comparable
authority in any jurisdiction, (iv) there is no labor strike, dispute,
slowdown or stoppage actually pending or, to the knowledge of the Company,
threatened against or involving or affecting the Company or any of its
Subsidiaries, (v) no labor organization or group of employees of the
Company or any of its Subsidiaries has made a pending demand for
recognition or certification, and there are no representation or
certification proceedings presently pending or, to the knowledge of the
Company, threatened to be brought or filed with the NRLB or any other labor
relations tribunal or authority, (vi) no grievance or arbitration
proceeding relating to the Company or any of its Subsidiaries is pending
and no written claim therefor exists, (vii) there is no claim, charge or
complaint relating to the Company or any of its Subsidiaries relating to
violations of applicable human rights laws or regulations, (vii) the
Company and each of its Subsidiaries have complied with all applicable laws
relating to payroll and wage deductions for unemployment insurance, and
(ix) there is no collective bargaining agreement which is binding on the
Company or any of its Subsidiaries.
4.22 Taxes. Each of the Company and its Subsidiaries has filed
all tax returns that it was required to file. All such tax returns were
correct and complete in all material respects. All taxes due and owed by
any of the Company and its Subsidiaries have been paid, except where a
delinquency in payment would not, individually or in the aggregate, have a
Material Adverse Effect. There are no Liens on any of the assets of any of
the Company and its Subsidiaries that arose in connection with any failure
(or alleged failure) to pay any tax, including, without limitation, goods
and services taxes and provincial sales taxes.
Each of the Company and its Subsidiaries have withheld and paid
all taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, consultant, independent contractor,
creditor, shareholder, or other third party.
The Company does not expect any authority to assess any
additional taxes for any period for which tax returns have been filed. The
Company is not aware of any dispute or claim concerning any liability for
taxes of the Company or any of its Subsidiaries. None of the U.S. or
Canadian federal, state, provincial, local, and foreign income tax returns
filed with respect to any of the Company and its Subsidiaries for taxable
periods or taxation years ended on or after December 31, 1993, have been
audited or currently are the subject of audit. The Company has delivered
to Investor correct and complete copies of all U.S. and Canadian federal
income tax returns, letters from Revenue Canada and the U.S. Internal
Revenue Service, and notices of assessment or reassessment in respect of
assessments or reassessments against or agreed to by any of the Company and
its Subsidiaries since December 31, 1993.
None of the Company and its Subsidiaries have waived any statute
of limitations in respect of taxes or agreed to any extension of time with
respect to a tax assessment, reassessment or deficiency other than in
respect of Ontario Provincial sales tax relating to preproduction costs.
The provisions and reserves on the books of the Company and each
Subsidiary in respect of taxes are adequate to cover all accrued and unpaid
taxes of the Company and the Subsidiaries (whether or not disputed). No
reserve has been taken in respect of Ontario Provincial sales tax relating
to preproduction costs.
4.23 Consents and Approvals.
(a) Except as set forth in Schedule 4.23 hereto, the execution,
delivery and performance of this Agreement and the Transaction
Documents, and the consummation of the transactions contemplated
hereby and thereby, the Company does not and will not, require any
consent, approval, authorization, registration, qualification,
declaration, filing, governmental approval or other action by, or
filing with or notification to, any third party or any governmental
authority.
(b) Except as set forth on Schedule 4.23, the execution,
delivery and performance of this Agreement and the Transaction
Documents and the consummation of the transactions contemplated hereby
and thereby shall not trigger any change of control or ownership
provisions or clauses in any agreement, arrangement, understanding or
contract, whether formal or informal, written or oral, or subject the
Company or its Subsidiaries to any predetermined adverse alteration or
modification in any ongoing relationship (without consideration of the
change of control or ownership provision or the provision for the
predetermined adverse alteration or modification as part of the
ongoing relationship).
4.24 Information. The Company has provided to the Investor all
information which a reasonable investor would consider material in
connection with making an informed decision regarding an investment in the
Company of the size, and in the circumstances contemplated by the Investor
(including with respect to share ownership, voting rights and governance).
The information supplied by the Company does not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
4.25 Common Shares Listing. The Common Shares are registered
pursuant to Section 12(g) of the 1934 Act and are listed on the NASDAQ
National Market ("NASDAQ") and the TSE. The Company is a reporting issuer
under the Securities Act (Ontario). The Company has taken no action
designed to cause, or likely to result in, the termination of the
registration of the Common Shares under the 1934 Act or the Company's
reporting issuers status under the Securities Act (Ontario) or the
delisting of the Common Shares from NASDAQ or the TSE, nor has the Company
received any notification that the Commission or its Canadian equivalent or
the National Association of Securities Dealers, Inc. or the TSE is
contemplating the termination of such registration or listing. Prior to
Closing, the Purchased Shares will have been approved for trading on the
TSE, subject to notice of issuance.
4.26 Board Recommendations. The Company has taken all actions
necessary to procure the Board Recommendation for Shareholder Approval with
respect to the transactions contemplated by this Agreement and the
Transaction Documents.
4.27 Shareholder Approval. In order for shareholder approval to
be obtained for any of the matters contemplated by this Agreement to be
submitted to shareholders of the Company, the vote required is a majority
of the votes present, either in person or by proxy, at a duly constituted
meeting of shareholders of the Company and all shareholders other than the
parties identified on Schedule 4.27 are entitled to vote on such matters.
5. REPRESENTATIONS AND WARRANTIES OF INVESTOR. Investor hereby
represents and warrants to the Company that the statements in the following
paragraphs of this Section 5 are, as of the date of this Agreement, and
will be, as of the Closing Date, true and correct:
5.1 Organization, Good Standing and Qualification. Investor is
a limited partnership duly formed and organized and is validly subsisting
under the laws of the State of Delaware. Investor has all necessary
partnership power to own or lease its property and to conduct its business
as presently conducted and as proposed to be conducted and to execute and
deliver this Agreement. Investor is duly qualified as a limited
partnership to conduct its business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
property owned or leased by it makes such qualification necessary.
5.2 Due Authorization. Investor has taken all necessary
partnership action to authorize the execution, delivery and performance of
this Agreement and the Transaction Documents to which Investor is a party
and to consummate the transactions contemplated hereby. This Agreement has
been, and upon execution and delivery thereof to the Company will be, duly
executed and delivered on behalf of Investor and will constitute legal
valid and binding obligations of Investor enforceable against Investor by
the Company in accordance with its terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency or other laws of general
application affecting the enforcement of creditors' rights and subject to
the qualification that specific performance and injunction, being equitable
remedies, may only be granted in the discretion of a court of competent
jurisdiction.
5.3 No Conflicts. The authorization, execution, delivery and
performance by Investor of this Agreement and the Transaction Documents is
not in conflict with and does not and will not result in a breach of and
does not and will not create a state of facts which after notice or lapse
of time or both will result in a breach of any of the terms or provisions
of the Organizational Documents of Investor or any statute, law,
regulation, court order or decision to which Investor is subject, or any
material indenture, instrument, agreement or undertaking to which Investor
is a party or by which Investor or the properties and assets of Investor
are or may become bound or results or would result in the creation or
imposition of any Lien upon any of the properties or assets of Investor.
5.4 Investor Status. Investor has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits
and risks of its investment in the Purchased Shares and is able to bear the
economic risks of such investment.
5.5 Accredited Investor. Investor is an "accredited investor"
as defined in Rule 501(a) under the 1933 Act. Investor is acquiring the
Purchased Shares for its own account and not with a view to any resale,
distribution or other disposition of the Purchased Shares in violation of
the United States securities laws.
5.6 No General Solicitation. Investor acknowledges that it has
not acquired the Purchased Shares as a result of any general solicitation
or general advertising (as those terms are used in Regulation D under the
1933 Act), including advertisements, articles, notices or other
communications published in any newspaper, magazine or similar media or
broadcast over radio or television, or any seminar or meeting whose
attendees have been invited by general solicitation or general advertising.
6. COVENANTS OF THE COMPANY.
6.1 Affirmative Covenants. The Company covenants and agrees
with Investor that it will do or cause to be done the following:
(a) write off the items and in the amounts as set forth in
Schedule 6.1(a) attached hereto (the "Writedown") in the 1997 Audited
Financial Statements;
(b) upon the request of Investor, take all such action as is
required under applicable law to cause to be elected to the Board of
Directors at the 1998 Annual Meeting such nominees for director as the
Investor may designate; provided, however, that the Company shall not
be required to cause more than nine (9) Investor Nominees to be
appointed to the Board of Directors pursuant to the provisions of this
Section 6.1(b);
(c) make no changes to the size of the Board of Directors
without the consent of Investor;
(d) appoint individuals selected by Investor to the offices of
Chief Executive Officer, President or Chief Operating Officer,
effective at or, to the extent identified by Investor, prior to the
Closing Date;
(e) include Garth H. Drabinsky as a nominee for the Board of
Directors at the 1998 Annual Meeting and appoint him, as of the
Closing, to the offices of Vice Chairman of the Board and Chief
Creative Director;
(f) include Myron I. Gottlieb as a nominee for the Board of
Directors at the 1998 Annual Meeting;
(g) upon the request of Investor, take all such action as is
required under applicable law to obtain Shareholder Approval of the
transactions contemplated hereby, including a new Company employee
stock option plan with terms and conditions substantially similar to
those set forth on the Term Sheet (the "New Stock Option Plan") at the
1998 Annual Meeting, including making a recommendation that the
holders of shares of capital stock of the Company approve (a "Board
Recommendation") the adoption of the transactions contemplated hereby,
including the New Stock Option Plan;
(h) upon the request of Investor, take all such action as is
required under applicable law to obtain Shareholder Approval of the
relocation of the province of incorporation of the Company from
Ontario to the Yukon Territory or such other jurisdiction specified by
Investor on the time schedule outlined by Investor (the "Relocation")
at any subsequent annual or special meeting specified by Investor
pursuant to such request, including making a Board Recommendation with
respect to the Relocation;
(i) will maintain appropriate insurance on its assets and
business, including "key man" life insurance policies on the lives of
the employees of the Company set forth in Schedule 6.1(i) attached
hereto of not less than $12,000,000 per policy that may not be pledged
or assigned to any person other than a senior institutional lender to
the company;
(j) use its best efforts to consummate the transactions
contemplated by this Agreement and the Transaction Documents, subject
to the terms and conditions set forth herein and therein;
(k) use its best efforts to obtain shareholder approval of this
Agreement and, the Transaction Documents to which the Company is a
party and the consummation of the transactions contemplated hereby and
thereby, to the extent applicable, including, if necessary,
determining at a meeting duly called and held that this Agreement, the
Transaction Documents and the transactions contemplated hereby and
thereby, taken together, are advisable and in the best interests of
the Company and its shareholders and making a Board Recommendation
with respect to the approval of this Agreement, the Transaction
Documents and the transactions contemplated hereby and thereby;
(l) use its best efforts to obtain all consents, approvals and
authorizations set forth in Schedule 4.23, including without
limitation, the Required Consents and to consult with Investor and
keep Investor appraised of the progress with respect to such consents,
approvals and authorizations;
(m) from the date of this Agreement to the Closing Date, permit
the Investor and any of its Representatives to attend all meetings of
the Board of Directors, provided, that the Investor and its
representatives shall excuse themselves from the meeting of the Board
of Directors in the event that matters presented at a meeting of the
Board of Directors relating to the transactions contemplated by this
Agreement would create a conflict of interest;
(n) promptly provide Investor with written notification of any
event, occurrence or other information of any kind whatsoever which in
any way affects the continued truth, correctness or completeness of
any representation or warranty made by the Company in this Agreement
or would cause any of the conditions to any party's obligations to
consummate the transactions contemplated by this Agreement not to be
fulfilled ("Updates"). All such written notifications shall
specifically identify any and all of the representations or warranties
affected by the event, occurrence or information that necessitated the
giving of such notice. Notwithstanding the foregoing, the Updates
shall not be given effect for the purposes of (i) determining the
accuracy of the representations and warranties contained in this
Agreement, (ii) determining the satisfaction of the conditions
precedent to the obligations of Investor contained in Section 7 of
this Agreement, or (iii) limiting Investor's ability to seek
indemnification from the Company pursuant to the terms of this
Agreement;
(o) will, and will cause its Subsidiaries and each of their
Representatives to, give Investor and its respective Representatives
reasonable access, upon reasonable notice and during normal business
hours, to the offices and other facilities and to the books and
records of the Company and its Subsidiaries and will cause the
Representatives of the Company and the Company's Subsidiaries to
furnish Investor and Representatives of the Investor with such
financial and operating data and such other information with respect
to the business and operations of the Company and its Subsidiaries as
Investor may from time to time reasonably request;
(p) use its best efforts to cause the Purchased Shares to be
listed on the TSE and NASDAQ, including filing notice of the
transactions contemplated herein with the TSE forthwith and seeking
conditional approval of the TSE and NASDAQ to such listing prior to
the Closing Date;
(q) use its best efforts to maintain its status as a registrant
under the 1934 Act and a "reporting issuer" under the Securities Act
(Ontario) that is not in default or contravention of any requirement
of the 1934 Act and Securities Act (Ontario);
(r) use its best efforts to maintain the listing and posting for
trading of the Common Shares (including the Purchased Shares) on the
TSE and NASDAQ;
(s) shall, if required under the HSR Act (the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act")), promptly file any
notification and report forms and related material that it may be
required to file with the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the HSR Act,
shall use its best efforts to obtain an early termination of the
applicable waiting period, and shall make any further filings or
information submissions pursuant thereto that may be necessary, proper
or advisable; and
(t) shall, at the request of Investor, provide such information
and otherwise cooperate with Investor in such consultations with
Investor and Investment Canada as Investor may choose to have in
connection with the transaction contemplated hereunder, or for
purposes of any subsequent acquisition of securities of the Company;
and
(u) use its best efforts to obtain the CIBC Opinion prior to
April 24, 1998.
6.2 Restrictions. Except as contemplated by this Agreement or
as expressly agreed to in writing by Investor, during the period from the
date of this Agreement to the Closing Date, the Company will, and will
cause each of its Subsidiaries to, conduct its operations according to its
ordinary and usual course of business and consistent with past practice and
use its and their respective reasonable best efforts to preserve intact
their current business organizations, keep available the services of their
current officers and employees and preserve their relationships with
customers, suppliers, licensors, licensees, advertisers, distributors and
others having business dealings with them and to preserve goodwill.
Without limiting the generality of the foregoing, and except as otherwise
expressly provided in this Agreement or required by law prior to the
Closing Date, the Company will not, and will cause its Subsidiaries not to,
without the consent of Investor:
(a) adopt or amend in any material respect any bonus, profit
sharing, compensation, severance, termination, stock option, stock
appreciation right, pension, retirement, employment or other employee
benefit agreement, trust, plan or other arrangement for the benefit or
welfare of any director, officer or employee of the Company or any of
its Subsidiaries or increase in any manner the compensation or fringe
benefits of any director, officer or employee of the Company or any of
its Subsidiaries or pay any benefit not required by any existing
agreement or place any assets in any trust for the benefit of any
director, officer or employee of the Company or any of its
Subsidiaries (in each case, except with respect to employees and
directors in the ordinary course of business consistent with past
practice);
(b) incur any indebtedness for borrowed money in excess of
$300,000 in a single transaction (including involving a series of
related incurrences);
(c) expend funds, or commit to expend funds, in excess of
$300,000 in a single transaction (including a series of related
expenditures or commitments) other than preexisting preproduction
commitments or any budgeted expenditures for advertising in place at
January 1, 1998;
(d) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or
assets other than immaterial properties or assets (or immaterial
portions of properties or assets), except in the ordinary course of
business consistent with past practice;
(e) (i) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, (ii)
split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock or (iii)
purchase, redeem or otherwise acquire any shares of capital stock of
the Company or any of its Subsidiaries or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
(f) authorize for issuance, issue, deliver, sell or agree or
commit to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise), pledge or otherwise encumber any shares of its
capital stock or the capital stock of any of its Subsidiaries, any
other voting securities or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, voting
securities or convertible securities or any other securities or equity
equivalents (including without limitation stock appreciation rights);
provided, however, that this covenant shall not restrict the Company
from issuing up to 75,000 stock options pursuant to a resolution of
the Board of Directors at the April 12, 1998 meeting of the Board of
Directors;
(g) propose, authorize or effect any change or amendment to its
articles, by-laws or equivalent Organizational Documents or alter
through merger, liquidation, reorganization, restructuring or in any
other fashion the corporate structure or ownership of any material
Subsidiary of the Company;
(h) make or agree to make any acquisition of assets which is
material to the Company and its Subsidiaries, taken as a whole, except
for (x) purchases of inventory in the ordinary course of business or
(y) pursuant to purchase orders entered into in the ordinary course of
business which do not call for payments in a single transaction
(including in a series of related payments) in excess of $300,000 per
annum, which purchase orders are not preexisting preproduction
commitments or any budgeted expenditures for advertising in place at
January 1, 1998; or
(i) settle, pay or compromise any litigation (whether or not
commenced prior to the date of this Agreement) outside of the ordinary
course of business other than with the prior written consent of
Investor.
6.3 No Solicitation.
(a) From and after the date hereof until the termination of this
Agreement, the Company and its affiliates shall not, and shall
instruct their representative officers, directors, employees, agents
or other representatives (including, without limitation, any
investment banker, attorney or accountant) (each, a "Representative")
not to,
(i) directly or indirectly solicit, initiate, or encourage
(including by way of furnishing non-public information or assistance),
or take any other action to facilitate, any inquiries or proposals
from any person that constitute, or may reasonably be expected to lead
to, an acquisition, purchase, merger, consolidation, share exchange,
recapitalization, business combination or other similar transaction
involving 10% or more of the assets or any securities of, any merger
consolidation or business combination with, or any public announcement
of a proposal, plan, or intention to do any of the foregoing by, the
Company or any of its Subsidiaries (such transactions being referred
to herein as "Significant Transactions"),
(ii) enter into, maintain, or continue discussions or
negotiations with any person in furtherance of such inquiries or to
obtain a proposal for an Significant Transaction,
(iii) agree to or endorse any proposal for an Significant
Transaction, or
(iv) authorize or permit the Company's or any of its
affiliates' Representatives to take any such action.
(b) The Company will promptly notify Investor of the receipt of
any proposal for a Significant Transaction, the terms and conditions
of such proposal and the identity of the person making it. The
Company also will promptly notify Investor of any change to or
modification of such proposal for a Significant Transaction and the
terms and conditions thereof.
(c) The Company shall immediately cease and cause its affiliates
and its and their Representatives to cease any and all existing
activities, discussions or negotiations with any parties (other than
Investor) conducted heretofore with respect to any of the foregoing,
and shall use its reasonable best efforts to cause any such parties in
possession of confidential information about the Company that was
furnished by or on behalf of the Company to return or destroy all such
information in the possession of any such party (other than Investor)
or in the possession of any Representative of any such party.
6.4 Shareholders' Meeting.
(a) The Company, acting through the Board, shall, in accordance
with applicable law:
(i) duly call, give notice of, convene and hold the 1998
Annual Meeting and cause to be presented for consideration and
approval of this Agreement and, if required, the Transaction Documents
and the transactions contemplated hereby and thereby, to the extent
applicable;
(ii) prepare and file with the appropriate regulatory
authorities such disclosure statements relating to this Agreement as
may be required by applicable law, and use its reasonable efforts (A)
to obtain and furnish the information required to be included by such
regulatory authorities in any such disclosure statement and, after
consultation with Investor, to respond promptly to any comments made
by such regulatory authorities with respect to any such disclosure
statement and cause all disclosure statements relating to this
Agreement required to be distributed to its shareholders to be mailed
to its shareholders in accordance with applicable law and (B) to
obtain the necessary approvals, if any, of this Agreement by its
shareholders; and
(iii) include in the disclosure statements to regulatory
authorities and its shareholders the Board Recommendation.
(b) The Company represents that the disclosure statements
required to be delivered to regulatory authorities and its
Shareholders in connection with the consummation of the transactions
contemplated by this Agreement will comply in all material respects
with the provisions of applicable securities laws and, on the date
filed with any such regulatory authority and on the date first
published, sent or given to the Company's shareholders, shall not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under
which they were made, not misleading. Each of the Company, on the one
hand, and Investor, on the other hand, agree promptly to correct any
information provided by either of them for use in any such disclosure
statement if and to the extent that it shall have become false or
misleading, and the Company further agrees to take all steps
necessary, to the extent required by law, to cause a revised
disclosure statement to be filed with the appropriate regulatory
authority and to be disseminated to the holders of Common Shares, in
each case, as and to the extent required by applicable securities
laws.
7. CONDITIONS TO INVESTOR'S OBLIGATIONS AT CLOSING.
The obligations of Investor to effect the transactions to be
effected by it at the Closing shall be subject to the satisfaction, or
waiver, on or prior to the Closing Date of the following conditions:
7.1 Representations and Warranties. Each of the representations
and warranties of the Company contained in Section 4 shall be true and
correct in all material respects (except that they shall be true and
correct in all respects to the extent specifically qualified by materiality
or Material Adverse Effect) on and as of the Closing with the same effect
as though such representations and warranties had been made on and as of
the date of the Closing.
7.2 Performance. The Company shall have performed and complied
in all material respects (except that such performance and compliance shall
be in all respects to the extent such performance and compliance is
specifically qualified by materiality or Material Adverse Effect) with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing
and shall have obtained all approvals, consents and qualifications
necessary to complete the purchase and sale described herein.
7.3 Compliance Certificate. The Company shall have delivered to
Investor at the Closing a certificate signed on its behalf by its Chief
Executive Officer certifying that the conditions specified in Sections 7.1
and 7.2 have been fulfilled.
7.4 No Litigation. There is no action, suit, investigation or
proceeding by any governmental authority or third party before any court,
arbitrator, administrative agency or other governmental authority pending
or threatened against or affecting the Company or any of its Subsidiaries,
any of their properties, revenues or assets, or this Agreement or any
Transaction Document, which could reasonably be expected to have a Material
Adverse Effect or which could reasonably be expected to materially affect
(i) in the opinion of Investor the value of the Common Shares or (ii) the
Company's ability to perform its obligations under the Agreement or the
Transaction Documents.
7.5 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
and all documents incident thereto shall be reasonably satisfactory in form
and substance to Investor (and its counsel), and they shall each have
received all such counterpart originals and certified or other copies of
such documents as they may reasonably request. Such documents shall
include (but not be limited to) the following:
(a) Certified Charter Documents. A copy of the articles and by-
laws of the Company (as amended through the Closing Date), certified
by the Secretary of the Company as true and correct copies thereof as
of the Closing.
(b) Corporate Actions. A copy of the resolutions of the Board
of Directors of the Company evidencing the approval of this Agreement,
the Transaction Documents, the issuance of the Purchased Shares, the
New Stock Option Plan, the Relocation, the Board Recommendations with
respect to any Shareholder Approvals with respect thereto and all
transactions contemplated thereby.
7.6 [Reserved].
7.7 Hart-Scott-Rodino Act. All applicable waiting periods (and
all extensions thereof) under the HSR Act shall have expired or otherwise
been terminated.
7.8 Transaction Documents. The following agreements (the
"Transaction Documents"), and any related documents required in connection
therewith, shall have been entered into, executed and delivered, or
adopted, as the case may be, each memorializing the terms set forth in the
Term Sheet and otherwise in form and substance reasonably satisfactory to
Investor:
(i) the Warrant Agreement which is the definitive agreement
that memorializes the terms set forth under the heading "Investment
Agreement Warrants from the Company" in the Transaction Term Sheet;
(ii) the Voting Trust Agreement which is the definitive
agreement that memorializes the terms relating to the Voting Trust
under the heading "Voting Trust; Voting Agreement; Assignment" in the
Transaction Term Sheet;
(iii) the Voting Agreement which is the definitive
agreement that memorializes the terms relating to the Voting Agreement
under the heading "Voting Trust; Voting Agreement; Assignment" in the
Transaction Term Sheet;
(iv) the Assignment and Assumption Agreement which is the
definitive agreement that memorializes the terms relating to the
assignment of existing Voting Trust under the heading "Voting Trust;
Voting Agreement; Assignment" in the Transaction Term Sheet;
(v) the Shareholders Agreement which is the definitive
agreement that memorializes the terms under the heading "Shareholder
Agreement" in the Transaction Term Sheet;
(vi) the Advisory Agreement which is the definitive
agreement that memorializes the terms under the heading "Advisory
Agreement" in the Transaction Term Sheet;
(vii) the THL Voting Agreement which is the definitive
agreement that memorializes the terms under the heading "Arrangements
with Boston";
(viii) the Investment Agreement between Roy Furman and the
Company which is the definitive agreement that memorializes the terms
under the heading "F Investment Agreement" in the Transaction Term
Sheet (other than " Warrants from the Company");
(ix) the Warrant Agreement between Roy Furman and the
Company which is the definitive agreement that memorializes the terms
under the heading "F Investment Agreement Warrants from the Company"
in the Transaction Term Sheet;
(x) the New Stock Option Plan and the stock option
agreements between the Company and the Investor, Roy Furman and David
Maisel, which are the definitive documents and agreements which
memorialize the terms set forth under the heading "New Stock Option
Plan"; and
(xi) the Employment Agreements which are the definitive
agreements that memorialize the terms set forth in the Employee Term
Sheets.
7.9 Termination of Shareholders Agreements and Rights. The
shareholders and investors agreements identified on Schedule 7.9 shall have
been terminated. All pre-emptive rights associated with any Common Shares
shall have been terminated.
7.10 Shareholder Approvals. Shareholder approval of this
Agreement and, if required, the Transaction Documents and the transactions
contemplated hereby and thereby, to the extent required shall have been
obtained and, if requested by Investor, Shareholder Approvals for the New
Stock Option Plan have been received.
7.11 Required Consents. Investor shall have received from the
Company the consents as set forth in Schedule 7.11 (the "Required
Consents").
7.12 Board of Directors. All Investor Nominees shall have been
elected to the Board of Directors.
7.13 Listing. The Purchased Shares shall have been approved for
listing on the TSE, subject to notice of issuance.
7.14 Opinion of Counsel. Investor shall have received from
outside legal counsel for the Company an opinion, dated as of the date of
Closing, in the form and substance acceptable to the Investor and the
substantive provisions of which are set forth on Schedule 7.14.
7.15 Board Minutes. Investor shall have received a copy of the
final minutes of the meeting of the Board of Directors (the "Board
Minutes") at which the transactions contemplated by this Agreement and the
Transaction Documents were authorized and the contents of the Board of
Directors shall be satisfactory to Investor and the matters set forth
therein shall not have been modified from the version of such Board Minutes
previously presented to Investor.
7.16 Fairness Opinion. The Company shall have received an
opinion (the "CIBC Opinion") from CIBC Wood Gundy that the sale of the
Purchased Shares and the delivery of Warrants (as defined in the Warrant
Agreement) to the Investor is fair to, the Company from a financial point
of view.
8. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING.
The obligations of the Company to effect the transactions to be
effected by it at the Closing shall be subject to the satisfaction, or
waiver, on or prior to the Closing Date of the following conditions:
8.1 Representations and Warranties. The representations and
warranties of Investor contained in Section 5 shall be true and correct in
all material respects on the date of the Closing with the same effect as
though such representations and warranties had been made on and as of the
Closing.
8.2 Payment of Purchase Price. Investor shall have delivered to
the Company the Purchase Price for the Purchased Shares specified for
Investor in Section 2 hereof in accordance with the provisions of Section
3.
8.3 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
and all documents incident thereto shall be reasonably satisfactory in form
and substance to the Company and to the Company's legal counsel, and the
Company shall have received all such counterpart originals and certified or
other copies of such documents as it may reasonably request.
8.4 Hart-Scott-Rodino Act. All applicable waiting periods (and
all extensions thereof) under the HSR Act shall have expired or otherwise
been terminated.
8.5 Shareholder Approvals. Shareholder approval of this
agreement and the Transaction Documents to which the Company is a party and
the transactions contemplated hereby and thereby, to the extent required
shall have been obtained.
8.6 Listing. The Purchased Shares shall have been approved for
listing on the TSE, subject to notice of issuance.
8.7 Fairness Opinion. The Company shall have received the CIBC
Opinion.
8.8 Private Placement Questionnaire. Investor shall have
delivered a private placement questionnaire to the Toronto Stock Exchange.
9. TERMINATION.
9.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
(a) at any time, by mutual written consent of the parties
hereto;
(b) by either the Company or Investor, if the Closing shall not
have occurred prior to July 31, 1998;
(c) by either the Company or Investor, if consummation of the
transactions contemplated hereby would violate any nonappealable final
order, decree or judgment of any court or governmental body having
competent jurisdiction; or
(d) by either the Company or Investor if shareholder approval is
not received with respect to the execution and performance of all or
any portion of this Agreement or the Transaction Documents and the
consummation of the transactions contemplated thereby;
(e) by the Investor if the CIBC Opinion is not received by the
Company by April 24, 1998; or
(f) by either party if, after 5 days notice to the other party,
any condition to the terminating party's obligations to consummate the
transactions contemplated by this Agreement are incapable of being
satisfied prior to July 31, 1988;
provided, that, no party may terminate this Agreement pursuant to clauses
(b), (c), (d), (e) or (f) above, if such party is, at the time of any such
attempted termination, in breach of any term hereof.
9.2 Effect of Termination.
(a) In the event of a termination of this Agreement pursuant to
Section 9.1, this Agreement will become void and of no further force
and effect, except for the provisions of Sections 10.1, 10.3, 10.5,
10.9, 10.11, 10.12, 10.13, 10.14 and this Section 9.2; provided,
however, nothing in this Section 9.2 will be deemed to release any
party from any liability for breach by any such party of the terms and
provisions of this Agreement or from the right to seek specific
performance by or seek equitable relief or similar remedies from the
other party of its obligations under this Agreement or any Transaction
Document.
(b) In the event of a termination of this Agreement (i) after
(x) a Significant Transaction has been proposed by a third party, and
(y) the Company fails to obtain Shareholder Approval, if required for
the consummation of the transactions contemplated by this Agreement or
the Transaction Documents, or (ii) after (A) the Company fails to
comply with Section 6.3 and (B) a Significant Transaction has been
proposed by a third party; then the Company will immediately pay to
Investor a fee of $3 million by interbank transfer of immediately
available funds to accounts designated by Investor.
10. MISCELLANEOUS
10.1 Survival. Except for the covenants and agreements contained
in Section 10.11 hereof, which shall survive through the date prescribed in
the applicable statute of limitations, the representations, warranties,
covenants and agreements of the parties set forth in this Agreement shall
not survive the Closing.
10.2 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Neither party may assign this
Agreement without the prior written consent of the other party.
10.3 Governing Law. This Agreement shall be governed by and
construed under the internal laws of the State of New York, without
reference to principles of conflict of laws or choice of laws.
10.4 Currency. Unless otherwise indicated, all dollar amounts
referred to in this Agreement are expressed in U.S. funds.
10.5 Public Announcements; Confidentiality. This Agreement, the
Transaction Documents and any other related documents and the transactions
contemplated hereby and thereby shall be kept confidential by the parties
hereto until the Closing Date and no public announcement, press release or
public filing concerning this Agreement, the Transaction Documents or any
related documents or the transactions contemplated hereby and thereby shall
be made by either party except with the consent of the other party or
except as may be required by law and applicable stock exchange and NASDAQ
regulations. All information furnished pursuant to Section 6.1(i) shall be
subject to the provisions of the confidentiality agreement between the
Company and an affiliate of the Investor entered into during May 1990 (the
"Confidentiality Agreement").]
10.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.7 Time of Essence. Time shall be of the essence of this
Agreement.
10.8 Headings. The headings and captions used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits and schedules shall, unless otherwise provided, refer
to sections and paragraphs hereof and exhibits and schedules attached
hereto, all of which exhibits and schedules are incorporated herein by this
reference.
10.9 Notices. All notices, requests, demands and other
communications shall be in writing and shall be deemed to have been duly
given if personally delivered or sent by United States or Canadian mails or
by telegram or telex confirmed by letter, or by facsimile transmission,
receipt confirmed, to the address set forth below. All notices requiring
timely attention shall be sent by facsimile transmission, telex or
overnight mail. Any notice shall be deemed received, unless earlier
received, (a) if sent by certified or registered mail, return receipt
requested, when actually received, (b) if sent by overnight mail, on the
next Business Day, (c) if sent by telegram or telex, on the date sent, and
(d) if sent by facsimile transmission or delivered by hand, on the date of
receipt.
Notices to the Company shall be addressed as follows:
Livent, Inc.
Suite 600
165 Avenue Road
Toronto, Ontario
Canada M5R 2H7
Fax No.: (416) 324-5535
Attention: Garth H. Drabinsky and
Myron I. Gottlieb
with a copy to:
Shearman & Sterling
Commerce Court West
199 Bay Street
P.O. Box 247, Suite 4405
Toronto, Ontario
Canada M5L 1E8
Fax No.: (416) 360-2958
Attention: Brice T. Voran
Notices to Investor shall be addressed as follows:
Lynx Ventures L.P.
c/o Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
U.S.A.
Fax No: (212) 735-2000
Attention: Eric L. Cochran
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
U.S.A.
Fax No: (212) 735-2000
Attention: Eric L. Cochran
with a courtesy copy to:
Munger, Tolles & Olson
355 South Grand Avenue
Los Angeles, CA 90071-1560
Fax No: (213) 687-3702
Attention: Robert Adler
10.10 No Finder's Fees. Each party represents that it
neither is nor will be obligated for any finder's or broker's fee or
commission in connection with this transaction, other than the anticipated
payments by the Company to the persons and in the amounts as set forth in
Schedule 10.10 attached hereto. Investor agrees to indemnify and to hold
harmless the Company from any liability for any commission or compensation
in the nature of a finders' or broker's fee (and any asserted liability)
for which Investor or any of its officers, partners, employees, or
representatives is responsible. The Company agrees to indemnify and hold
harmless Investor from any liability for any commission or compensation in
the nature of a finder's or broker's fee (and any asserted liability) for
which the Company or any of its officers, employees or representatives is
responsible.
10.11 Costs and Expenses. All costs in connection with the
preparation, execution, delivery and performance of this Agreement and the
transactions contemplated hereby (including, irrespective of whether the
Closing shall have occurred, costs incurred by Investor and its affiliates,
which include, without limitation, reasonable solicitor and attorney fees
and the fees set forth on Schedule 10.11) shall be borne by the Company,
including in the event that the transactions contemplated by this Agreement
fail to be consummated for any reason.
10.12 Amendments and Waivers. Any term of this Agreement may
be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investor.
Any amendment or waiver effected in accordance with this Section shall be
binding upon each holder of any Purchased Shares at the time outstanding,
each future holder of such securities, and the Company.
10.13 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such
provisions shall be excluded from this Agreement and the balance of the
Agreement shall be interpreted as if such provisions were so excluded and
shall be enforceable in accordance with its terms.
10.14 Entire Agreement. This Agreement, together with any
exhibits or schedules hereto, constitutes the entire agreement and
understanding of the parties with respect to the subject matter hereof and
supersedes any and all prior negotiations, correspondence, agreements,
understandings duties or obligations between the parties with respect to
the subject matter hereof.
10.15 Further Assurances. From and after the date of this
Agreement, upon the request of Investor or the Company, the Company and
Investor shall execute and deliver such instruments, documents or other
writings as may be reasonably necessary or desirable to confirm and carry
out and to effectuate fully the
10.16 intent and purposes of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
LIVENT, INC.
By: /s/ Garth H. Drabinsky
---------------------------------
Name: Garth H. Drabinsky
Title: Chairman and
Chief Executive Officer
LYNX VENTURES L.P.
By: Lynx Ventures L.L.C.,
its General Partner
By: /s/ Michael S. Ovitz
---------------------------------
Name: Michael S. Ovitz
Title: Managing Member
AMENDMENT TO
INVESTMENT AGREEMENT
Amendment, dated as of June 12, 1998 (this "Amendment"), to the
Investment Agreement, dated as of April 13, 1998 (the "Agreement") by and
among Livent Inc., an Ontario corporation (the "Company"), and Lynx
Ventures L.P., a Delaware limited partnership (the "Investor").
WHEREAS, the parties wish to amend the Agreement in the manner
set forth below.
NOW, THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. All capitalized terms used herein, unless otherwise defined
herein, shall have the meanings given them in the Agreement, and each
reference in the Agreement to "this Agreement," "hereof," "herein,"
"hereunder," or "hereby," and each other similar reference shall be deemed
to refer to the Agreement as amended hereby.
2. Section 7 of the Agreement is hereby amended by adding
thereto the following conditions to the Investor's obligation to effect the
transactions to be effected by it at the Closing:
"7.17 Acceptance of Proposed Nominees. If, prior to the
Closing, the Investor proposes up to five nominees for
appointment to the Board of Directors in accordance with the
provisions of Section 3.1(c) of the Shareholders Agreement, dated
as of June 12, 1998, by and among the Company, Investor, Garth
H. Drabinsky, Myron I. Gottlieb, Roy L. Furman, David R. Maisel
and the THL Entities, the Board of Directors shall have
determined that such prospective nominees are acceptable to the
Board of Directors and that such persons, subject only to formal
submission by the Investor of such persons to the Board of
Directors for appointment in accordance with Section 3.1(c) of
the Shareholders Agreement, are qualified for appointment to the
Board of Directors."
"7.18 Acceptance of Proposed Committee Composition. If,
prior to the Closing, the Investor proposes members of the Board
of Directors (whether present members or persons intended to be
appointed in accordance with Section 7.17 above) to constitute
each of the Executive Committee, Compensation Committee,
Nominating Committee and Audit Committee of the Board of
Directors following the Closing, the Board of Directors shall
have determined that the respective members proposed by the
Investor to constitute each of the Executive Committee,
Compensation Committee, Nominating Committee and Audit Committee
of the Board of Directors following the Closing, are acceptable
and that the composition of the committees proposed by the
Investor shall, in accordance with Section 3.1(d) of the
Shareholders Agreement, be the composition of each of the
respective committees following the Closing."
3. This Amendment shall be governed by and construed under the
internal laws of the State of New York, without reference to principles of
conflict of laws or choice of laws.
4. This Amendment may be signed in two or more counterparts,
each of which shall be deemed to be an original but all of which shall
together constitute one and the same instrument.
5. The Agreement, as amended by the this Amendment, shall remain
in full force and effect. Any reference to the Agreement in any instrument
or document shall mean the Agreement as amended hereby. Except as
expressly provided herein, there are no other amendments to the Agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment as
of the date and year first above written.
LIVENT INC.
By: /s/ Garth H. Drabinsky
-----------------------------
Name: Garth H. Drabinsky
Title: Chairman and
Chief Executive Officer
LYNX VENTURES L.P.
By: Lynx Ventures L.L.C.,
its General Partner
By: /s/ Michael S. Ovitz
----------------------------
Name: Michael S. Ovitz
Title: Managing Member
EXHIBIT 3
WARRANT AGREEMENT
BETWEEN
LIVENT INC.
AND
LYNX VENTURES L.P.
JUNE 12, 1998
TABLE OF CONTENTS
Page
1. DEFINITIONS........................................................2
Additional Shares of Common Stock............................2
Common Stock.................................................3
Contract.....................................................3
Convertible Securities.......................................3
Exercise Price...............................................3
Expiration Date..............................................3
Fair Market Value............................................3
Holders......................................................4
Liens .......................................................4
Material Adverse Effect......................................4
NASDAQ.......................................................4
1933 Act.....................................................4
Options......................................................4
Organizational Documents.....................................4
Other Securities.............................................4
Person.......................................................4
Series A Exercise Price......................................4
Series B Exercise Price......................................4
Subsidiary...................................................4
Underlying Shares............................................5
Voting Securities............................................5
Warrant Certificates.........................................5
Warrants.....................................................5
2. ISSUE OF WARRANTS..................................................5
2.1 Form of Warrant Certificates...........................5
2.2 Execution and Delivery of Warrant Certificates.........5
3. EXERCISE OF WARRANTS...............................................6
3.1 Exercise Price.........................................6
3.2 Exercise of Warrants...................................6
3.3 Expiration of Warrants.................................6
3.4 Method of Exercise.....................................6
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF
INVESTOR.....................................................6
4.1 Organization, Good Standing and Qualification..........6
4.2 Due Authorization......................................7
4.3 No Conflicts...........................................7
4.4 Consents, Approvals and Notices........................7
4.5 Litigation. ...........................................7
4.6 Investor Status........................................8
4.7 Accredited Investor....................................8
4.8 No General Solicitation................................8
4.9 Brokers................................................8
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................8
5.1 Organization, Good Standing and Qualification..........8
5.2 Capitalization.........................................8
5.3 Due Authorization......................................9
5.4 No Conflicts...........................................9
5.5 Compliance.............................................9
5.6 Consents, Approvals and Notices........................9
5.7 Litigation............................................10
6. RIGHTS OF HOLDERS.................................................10
7. ADJUSTMENT OF COMMON STOCK ISSUABLE UPON EXERCISE.................10
7.1 Adjustment of Exercise Price..........................10
7.1.1 Issuance of Additional Shares of Common Stock...10
7.1.2 Extraordinary Dividends and Distributions.......11
7.2 Treatment of Options and Convertible Securities.......11
7.3 Treatment of Stock Dividends, Stock Splits, etc.......13
7.4 Underwriting Discounts................................14
7.5 Computation of Consideration..........................14
7.6 Adjustments for Combinations, etc.....................15
7.7 Dilution in Case of Other Securities..................15
7.8 Other Dilutive Events.................................15
7.9 Minimum Adjustment of Exercise Price..................16
7.10 Notice of Adjustment..................................16
7.11 Statement on Warrants.................................16
7.12 Fractional Interest...................................16
8. CONSOLIDATION, MERGER, ETC........................................16
8.1 Adjustments for Consolidation, Merger, Sale of
Assets, Reorganization, etc...........................16
8.2 Assumption of Obligations..............................17
8.3 Other Dilutive Events..................................17
9. WARRANT TRANSFER BOOKS............................................18
10. WARRANT HOLDERS...................................................18
10.1 No Voting Rights......................................18
10.2 Right of Action.......................................19
11. COVENANTS.........................................................19
11.1 Reservation of shares of Common Stock.................19
11.2 Determinations by Board of Directors..................19
12. MISCELLANEOUS.....................................................19
12.1 Payment of Taxes......................................19
12.2 Surrender of Certificates.............................19
12.3 Mutilated, Destroyed, Lost and Stolen Warrant
Certificates.........................................20
12.4 Notices. .............................................20
12.5 Applicable Law........................................22
12.6 Obligations Under Investment Agreement................22
12.7 Currency..............................................22
12.8 Persons Benefitting...................................22
12.9 Costs and Expenses....................................22
12.10 Counterparts..........................................22
12.11 Headings..............................................22
WARRANT AGREEMENT
This WARRANT AGREEMENT (this "Agreement") is made and entered
into as of June 12, 1998 between Livent Inc., an Ontario corporation (the
"Company"), and Lynx Ventures L.P., a Delaware limited partnership (the
"Investor").
W I T N E S S E T H:
WHEREAS, the Company and Investor have entered into an
Investment Agreement, dated as of April 13, 1998 (the "Investment
Agreement"), providing for the issuance and sale of shares of Common Stock
by the Company to Investor;
WHEREAS, the Company, Roy L. Furman ("Furman"), David R. Maisel
("Maisel"), Garth H. Drabinsky, Myron I. Gottlieb and Investor have entered
into a Shareholders Agreement as of the date hereof, providing for certain
rights and restrictions with respect to the shares of Common Stock held by
such parties and establishing certain terms and conditions concerning the
voting of shares of Common Stock held by the parties thereto (the
"Shareholders Agreement");
WHEREAS, in connection with the agreements above and the
transactions contemplated thereby, the Company agrees to issue to Investor
(i) warrants entitling Investor to purchase 735,000 shares of Common Stock
of the Company (the "Series A Warrants") at $9.00 per share (the "Series A
Exercise Price") and (ii) warrants entitling Investor to purchase 735,000
shares of Common Stock (the "Series B Warrants") at $10.00 per share (the
"Series B Exercise Price") (the Series A Warrants and Series B Warrants
collectively the "Warrants");
WHEREAS, the Series A Exercise Price and the Series B Exercise
Price (collectively, the "Exercise Prices") are subject to adjustment as
herein provided;
WHEREAS, the certificates evidencing the Series A Warrants (the
"Series A Warrant Certificates") and the Series B Warrants (the "Series B
Warrant Certificates") (collectively, the "Warrant Certificates") are
attached as Exhibits A and B hereto, respectively; and
WHEREAS, the Company has received from Investor $2.00 and other
good and valuable consideration.
NOW, THEREFORE, in consideration of the foregoing, for the
purpose of defining the terms and provisions of the Warrants and the
respective rights and obligations thereunder of the Company and the
recordholders of the Warrants, the Company and Investor hereby agree as
follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
"Additional Shares of Common Stock" means all shares of Common
Stock issued or sold (or, pursuant to Section 7.2 or 7.3,
deemed to be issued) by the Company after the date hereof,
whether or not subsequently reacquired or retired by the
Company, other than
(a) shares issued upon the exercise of the Warrants
and the warrants issued to Furman pursuant to a warrant
agreement between Furman and the Company dated June 12,
1998,
(b) shares not to exceed 2,900,000 (as constituted
on such date) issued upon the exercise of options granted
or to be granted under the Company's stock option plans
as in effect on the date hereof or under any other
employee stock option or purchase plan or plans adopted
or assumed after such date,
(c) shares issued upon the exercise of options to
acquire 990,000, 1,025,000 and 400,000 shares, granted by
the Company to CKE Associates LLC, Furman and Maisel,
(d) shares issued upon the conversion of the
Company's 8.95% Subordinated Convertible Notes due
February 29,
2000,
(e) shares issued upon the conversion of the
Company's 10% Subordinated Convertible Debentures due
July 28,
2003,
(f) such additional number of shares as may become
issuable upon the exercise of any of the securities
referred to in the foregoing clauses (a), (b), (c), (d)
and (e) by reason of adjustments required pursuant to
anti-dilution provisions applicable to such securities as
in effect on the date hereof, but only if and to the
extent that such adjustments are required as the result
of the original issuance of the Warrants, and
(g) such additional number of shares as may become
issuable upon the exercise of any of the securities
referred to in the foregoing clauses (a), (b), (c), (d)
and (e) by reason of adjustments required pursuant to
anti-dilution provisions applicable to such securities as
in effect on the date hereof, in order to reflect any
subdivision or combination of Common Stock, by
reclassification or otherwise, or any dividend on Common
Stock payable in Common Stock.
"Common Stock" means shares of Common Stock, no par value, of
the Company, including any stock into which such Common Stock
shall have been changed or any stock resulting from any
reclassification of such Common Stock, and all other stock of
any class or classes (however designated) of the Company the
holders of which have the right, without limitation as to
amount, either to all or to a share of the balance of current
dividends and liquidating dividends after the payment of
dividends and distributions on any shares entitled to
preference;
"Contract" has the meaning set forth in Section 4.4;
"Convertible Securities" means any evidences of indebtedness,
shares of stock (other than Common Stock) or other securities
directly or indirectly convertible into or exchangeable for
Additional Shares of Common Stock;
"Exercise Price" means the corresponding Exercise Price as
set forth in the recitals;
"Expiration Date" means the third anniversary of this
Agreement;
"Fair Market Value" means, per share of Common Stock (or
equivalent equity interests) on any date specified herein, (a)
the average of the last sale prices, regular way, on the 20
consecutive business days immediately preceding such date or,
if there shall have been no sale on any such day, the average
of the closing bid and asked prices on such date, in each case
as officially reported on the principal national securities
exchange on which such Common Stock is at the time listed or
admitted to trading, or (b) if such common stock is not then
listed or admitted to trading on any national securities
exchange, but is designated as a national market system
security by the NASD, the last trading price of the Common
Stock on such date, or if there shall have been no trading on
such date or if the Common Stock is not so designated, the
average of the reported closing bid and asked prices on such 20
days as shown by the NASD automated quotation system; provided,
however, that if such Common Stock is not then listed or
admitted to trading on any national exchange or designated as a
national market system security or quoted in the
over-the-counter market, the Fair Market Value shall be as
determined by any investment banking firm of recognized
standing mutually acceptable to Investor and the Board of
Directors of the Company;
"Holders" means from time to time, the holders of the Warrants
and, unless otherwise provided or indicated herein, the holders
of the Underlying Shares;
"Liens" means claims, liens, charges, restrictions,
reservations and agreements, mortgages, pledges, security
interests, guarantees, easements, rights of way and
encumbrances of any kind or character;
"Material Adverse Effect" shall mean a material adverse effect
on the business, results of operations, prospects, assets,
liabilities or condition (financial or otherwise) of the
Company and its Subsidiaries, taken as a whole;
"NASDAQ" means the NASDAQ national market;
"1933 Act" means the Securities Act of 1933, as amended;
"Options" means rights, options or warrants to subscribe for,
purchase or otherwise acquire either Additional Shares of
Common Stock or Convertible Securities;
"Organizational Documents" means the articles of
incorporation, certificate of incorporation, by-laws, certificates
of formation, or other constitutional documents;
"Other Securities" means any stock (other than Common Stock)
and other securities of the Company or any other Person
(corporate or otherwise) which the holders of the Warrants at
any time shall be entitled to receive, or shall have received,
upon the exercise of the Warrants, in lieu of or in addition to
Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common
Stock or Other Securities pursuant to Section 8 or otherwise.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or
political subdivision thereof;
"Series A Exercise Price" has the meaning set forth in the
recitals;
"Series B Exercise Price" has the meaning set forth in the
recitals;
"Subsidiary" means any Person of which the Company (either
alone or through or together with any other Subsidiary) owns,
directly or indirectly, 50% or more of the capital stock or
other equity interest, the holders of which are generally
entitled to vote for the election of the board of directors or
other governing body of such Person;
"Underlying Shares" means the shares of Common Stock issuable
or issued upon the exercise of the Warrants;
"Voting Securities" means stock of any class or classes (or
equivalent interests), if the holders of the stock of such
class or classes (or equivalent interests) are ordinarily, in
the absence of contingencies, entitled to vote for the election
of the directors (or persons performing similar functions) of
such business entity, even though the right so to vote has been
suspended by the happening of such a contingency;
"Warrant Certificates" has the meaning set forth in the
recitals; and
"Warrants" has the meaning set forth in the recitals.
Capitalized terms used but not otherwise defined herein shall
have the meanings assigned to them in the Investment Agreement.
2. ISSUE OF WARRANTS.
2.1 Form of Warrant Certificates. The Warrant Certificates
shall be in registered form only, and shall be dated the date on which
executed by the Company and may have such legends and endorsements typed,
stamped, printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with any rule or
regulation pursuant thereto or with any rule or regulation of any
securities exchange on which the Warrants may be listed, or to conform to
usage.
2.2 Execution and Delivery of Warrant Certificates. Warrant
Certificates evidencing Warrants to purchase a number of duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock shall
be executed, on the date of this Agreement, by the Company and delivered to
and issued in the name of Investor. The Warrant Certificates shall be
executed on behalf of the Company by its President or by any of its Vice
Presidents, either manually or by facsimile signature printed thereon. In
case any officer of the Company whose signature shall have been placed upon
any of the Warrant Certificates shall cease to be such officer of the
Company before issue and delivery thereof, such Warrant Certificates may,
nevertheless, be issued and delivered with the same force and effect as
though such person had not ceased to be such officer of the Company.
3. EXERCISE OF WARRANTS.
3.1 Exercise Price. Each Warrant Certificate shall entitle the
Holder thereof, subject to the provisions of this Agreement, to receive one
share of Common Stock for each Warrant represented thereby at the
corresponding Exercise Price, subject to adjustment as herein provided.
3.2 Exercise of Warrants. The Warrants shall be exercisable in
whole or in part on or prior to the Expiration Date.
3.3 Expiration of Warrants. The Warrants shall terminate and
become void at the close of business on the Expiration Date.
3.4 Method of Exercise.
(a) In order to exercise a Warrant the Holder thereof must
surrender the Warrant Certificate evidencing such Warrant to the Company at
its principal office, together with the Exercise Subscription Form on the
reverse of or attached to the Warrant Certificate duly executed,
accompanied by payment, in cash or by certified or by official bank check
payable to the order of the Company, in the amount equal to the Exercise
Price multiplied by the number of Warrants being exercised.
(b) If fewer than all the Warrants represented by a Warrant
Certificate are surrendered for exercise, such Warrant Certificate shall be
surrendered and a new Warrant Certificate of the same tenor and for the
number of Warrants that were not surrendered shall be executed by the
Company. The new Warrant Certificate shall be registered in such name or
names as may be directed in writing by the Holder and delivered to the
Person or Persons entitled to receive the same.
(c) Upon exercise of a Warrant in conformity with the foregoing
provisions, the Company shall issue or cause to be issued in the name of
and delivered to the Holder of such Warrant or, subject to Section 12.1, as
such Holder (upon payment by such Holder of any applicable transfer taxes)
may direct, a certificate or certificates for the number of duly
authorized, validly issued, fully paid and nonassessable shares of Common
Stock to which such Holder shall be entitled upon such exercise together
with an amount in cash in lieu of any fraction of a share as provided in
Section 7.12.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF INVESTOR.
Investor represents and warrants to the Company that:
4.1 Organization, Good Standing and Qualification. Investor is
a limited partnership duly formed and organized and is validly subsisting
under the laws of the State of Delaware. Investor has all necessary
partnership power to own or lease its property and to conduct its business
as presently conducted and as proposed to be conducted and to execute and
deliver this Agreement. Investor is duly qualified as a limited partnership
to conduct its business and is in good standing in each jurisdiction in
which the nature of the business conducted by it or the property owned or
leased by it makes such qualification necessary.
4.2 Due Authorization. Investor has taken all necessary
partnership action to authorize the execution, delivery and performance of
this Agreement and to consummate the transactions contemplated hereby. This
Agreement has been, and upon execution and delivery thereof to the Company
will be, duly executed and delivered on behalf of Investor and will
constitute legal valid and binding obligations of Investor enforceable
against Investor by the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency or other laws
of general application affecting the enforcement of creditors' rights and
subject to the qualification that specific performance and injunction,
being equitable remedies, may only be granted in the discretion of a court
of competent jurisdiction.
4.3 No Conflicts. The authorization, execution, delivery and
performance by Investor of this Agreement is not in conflict with and does
not and will not result in a breach of and does not and will not create a
state of facts which after notice or lapse of time or both will result in a
breach of any of the terms or provisions of the Organizational Documents of
Investor or any statute, law, regulation, court order or decision to which
Investor is subject, or any material indenture, instrument, agreement or
undertaking to which Investor is a party or by which Investor or the
properties and assets of Investor are or may become bound or results or
would result in the creation or imposition of any Lien upon any of the
properties or assets of Investor.
4.4 Consents, Approvals and Notices. The execution and delivery
of this Agreement by Investor and the consummation by Investor of the
transactions contemplated hereby does not require any (a) material consent,
authorization, order or approval of, filing or registration with, or notice
to, any governmental or regulatory authority, which has not otherwise been
obtained or (b) material consent, authorization, approval, waiver, order,
license, certificate or permit or act of or from, or notice to, any party
to any material mortgage, indenture, lease, franchise, license, permit,
agreement or instrument (each, a "Contract") to which Investor is a party
or by which any of its assets or properties are bound, which has not been
otherwise obtained.
4.5 Litigation. There is no action, suit or proceeding pending
or, to the knowledge of Investor, threatened, before any court against
Investor which challenges the validity or the propriety of the transactions
contemplated by this Agreement.
4.6 Investor Status. Investor has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits
and risks of its acquisition of Warrants or purchase of Underlying Shares
and is able to bear the economic risks of such investment.
4.7 Accredited Investor. Investor is an "accredited investor"
as defined in Rule 501(a) under the 1933 Act. Investor is acquiring the
Warrants for its own account and not with a view to any resale,
distribution or other disposition of the Warrants in violation of the
United States securities laws.
4.8 No General Solicitation. Investor acknowledges that it has
not acquired the Warrants as a result of any general solicitation or
general advertising (as those terms are used in Regulation D under the 1933
Act), including advertisements, articles, notices or other communications
published in any newspaper, magazine or similar media or broadcast over
radio or television, or any seminar or meeting whose attendees have been
invited by general solicitation or general advertising.
4.9 Brokers. No broker, investment banker, financial advisor or
other person or entity is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Investor or any of its affiliates except as provided for in
the Investment Agreement.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to Investor that:
5.1 Organization, Good Standing and Qualification. The Company
is a corporation duly incorporated and organized and is validly subsisting
under the laws of the Province of Ontario. The Company has all requisite
power and authority to own, lease and operate the property and assets it
now owns, leases and operates and to conduct its business as presently
conducted and as proposed to be conducted and to execute and deliver this
Agreement. The Company is duly qualified and licensed as a corporation to
conduct its business and is in good standing in each jurisdiction in which
the nature of the business conducted by it or the property owned, leased or
operated by it makes such qualification or licensing necessary, except for
such failures to be so duly qualified and licensed and in good standing
which will not in the aggregate have a Material Adverse Effect.
5.2 Capitalization. The authorized capital of the Company
consists of (i) an unlimited number of shares of Common Stock of which on
the date hereof there are 18,071,235 outstanding, all of which are duly
authorized, validly issued, fully paid and non-assessable and free of
pre-emptive rights, other than those contemplated by the Shareholders
Agreement and the THL Voting Agreement, and (ii) an unlimited number of
First Preferred Shares, of which on the date hereof there are none
outstanding.
5.3 Due Authorization. The Company has taken all necessary
corporate action to authorize the execution, delivery and performance of
this Agreement and to issue and deliver the Warrants and to consummate the
transactions contemplated hereby; this Agreement has been, and upon
execution and delivery thereof to Investor will be, duly executed and
delivered on behalf of the Company and will constitute a legal, valid and
binding obligation of the Company enforceable against the Company by
Investor in accordance with its terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency or other laws of general
application affecting the enforcement of creditors' rights and subject to
the qualification that specific performance and injunction, being equitable
remedies, may only be granted in the discretion of a court of competent
jurisdiction.
5.4 No Conflicts. Except as otherwise required by the
Investment Canada Act, none of: (i) the authorization, execution, delivery
and performance by the Company of this Agreement, or (ii) the issuance and
delivery of the Warrants, results or would result in the creation or
imposition of any Lien upon any of the properties or assets of the Company
or any of its Subsidiaries or is in conflict with or does or will result in
a breach by the Company of or does or will create a state of facts which
after notice or lapse of time or both will result in a breach by the
Company of any of the terms or provisions of (a) the Organizational
Documents of the Company or any of its Subsidiaries, (b) the resolutions of
the directors or shareholders of the Company, (c) any statute, law,
regulation, court order or decision to which the Company is subject or (d)
any material indenture, instrument, agreement or undertaking to which the
Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries or the properties or assets of the Company or any
of its Subsidiaries are or may become bound, excluding from such clauses
(c) and (d), such breaches or violations that, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
5.5 Compliance. Neither the Company nor any of the Subsidiaries
is in violation of any term or provision of (a) their respective
Organizational Documents, (b) any agreement or instrument to which any of
them is a party or by which any of them or their respective assets are
bound, including any existing license to conduct business, note, bond,
mortgage, indenture, contract, lease, permit, franchise or other
instrument, or (c) any applicable law, excluding from such clauses (b) and
(c), such violations that, in the aggregate, have not had, or could not
reasonably be expected to have, a Material Adverse Effect.
5.6 Consents, Approvals and Notices. The execution, delivery
and performance of this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby do not and will not,
require any (a) consent, approval, authorization, registration,
qualification, declaration, filing, governmental approval or other action
by, or filing with or notification to, any third party or any governmental
authority or (b) the execution, delivery and performance of this Agreement
and the acquisition of the Warrants and the consummation of the
transactions contemplated hereby shall not trigger any change of control or
ownership provisions or clauses in any agreement, arrangement,
understanding or contract, whether formal or informal, written or oral, or
subject the Company or its Subsidiaries to any predetermined adverse
alteration or modification in any ongoing relationship (without
consideration of the change of control or ownership provision or the
provision for the predetermined adverse alteration or modification as part
of the ongoing relationship).
5.7 Litigation. There is not now pending against the Company or
any of its Subsidiaries or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries, nor has the Company
received notice in respect of, any claim or potential claim which could
lead to any litigation, action, suit or other proceeding by or before any
court, tribunal, governmental agency or authority, securities commission or
regulatory body in Canada or the United States that may seek to enjoin the
transactions contemplated herein or that, if successful, would have in the
aggregate a Material Adverse Effect.
6. RIGHTS OF HOLDERS.
Each Holder hereby agrees that if such Holder is not a party to
the Shareholders Agreement, then such Holder will take all necessary and
appropriate steps to become a party to the Shareholders Agreement. For this
purpose, the Warrants and such Underlying Shares shall be subject to the
restrictions, and entitled to the benefits, to the extent provided in the
Shareholders Agreement with respect to shares of Common Stock held by a
"Shareholder" (as defined in the Shareholders Agreement).
7. ADJUSTMENT OF COMMON STOCK ISSUABLE UPON EXERCISE.
7.1 Adjustment of Exercise Price.
7.1.1 Issuance of Additional Shares of Common Stock. In
case the Company at any time or from time to time after the date hereof
shall issue or sell Additional Shares of Common Stock (including Additional
Shares of Common Stock deemed to be issued pursuant to Section 7.2 or 7.3)
without consideration or for a consideration per share less than Fair
Market Value, then, and in each such case, subject to Section 7.9, the
Exercise Price shall be reduced, concurrently with such issue or sale, to a
price (calculated to the nearest .001 of a cent) determined by multiplying
such Exercise Price by a fraction
(1) the numerator of which shall be (i) the
number of shares of Common Stock outstanding immediately prior to such issue
or sale plus (ii) the number of shares of Common Stock which the aggregate
consideration received by the Company for the total number of such
Additional Shares of Common Stock so issued or sold would purchase at such
Fair Market Value, and
(2) the denominator of which shall be the
number of shares of Common Stock outstanding immediately after such issue or
sale, provided that, for the purposes of this Section 7.1.1, immediately after
any Additional Shares of Common Stock are deemed to have been issued
pursuant to Section 7.2 or 7.3, such Additional Shares of Common Stock shal
be deemed to be outstanding.
7.1.2 Extraordinary Dividends and Distributions. In case
the Company at any time or from time to time after the date hereof shall
declare, order, pay or make a dividend or other distribution (including,
without limitation, any distribution of other or additional stock or other
securities or property or Options by way of dividend or spin-off,
reclassification, recapitalization or similar corporate rearrangement) on
the Common Stock, other than (a) a dividend payable in Additional Shares of
Common Stock or (b) a regular periodic cash dividend at a rate not in
excess of 110% of the rate of the last regular periodic cash dividend
theretofore paid, then, and in each such case, subject to Section 7.8, the
Exercise Price in effect immediately prior to the close of business on the
record date fixed for the determination of holders of any class of
securities entitled to receive such dividend or distribution shall be
reduced, effective as of the close of business on such record date, to a
price (calculated to the nearest .001 of a cent) determined by multiplying
such Exercise Price by a fraction
(x) the numerator of which shall be the Fair Market Value on
such record date or, if the Common Stock trades on an ex-dividend
basis, on the date prior to the commencement of ex-dividend trading,
less the amount of such dividend or distribution (as determined in
good faith by the Board of Directors of the Company) applicable to
one share of Common Stock, and
(y) the denominator of which shall be such Fair Market Value.
7.2 Treatment of Options and Convertible Securities. In case
the Company at any time or from time to time after the date hereof shall
issue, sell, grant or assume, or shall fix a record date for the
determination of holders of any class of securities entitled to receive,
any Options or Convertible Securities, then, and in each such case, the
maximum number of Additional Shares of Common Stock (as set forth in the
instrument relating thereto, without regard to any provisions contained
therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued
as of the time of such issue, sale, grant or assumption or, in case such a
record date shall have been fixed, as of the close of business on such
record date (or, if the Common Stock trades on an ex-dividend basis, on the
date prior to the commencement of ex-dividend trading), provided that such
Additional Shares of Common Stock shall not be deemed to have been issued
unless the consideration per share (determined pursuant to Section 7.5) of
such shares would be less than Fair Market Value on the date of and
immediately prior to such issue, sale, grant or assumption or immediately
prior to the close of business on such record date (or, if the Common Stock
trades on an ex-dividend basis, on the date prior to the commencement of
ex-dividend trading), as the case may be, and provided, further, that in
any such case in which Additional Shares of Common Stock are deemed to be
issued
(a) no further adjustment of the Exercise Price shall be made
upon the subsequent issue or sale of Convertible Securities or shares
of Common Stock upon the exercise of such Options or the conversion
or exchange of such Convertible Securities, except in the case of any
such Options or Convertible Securities which contain provisions
requiring an adjustment, subsequent to the date of the issue or sale
thereof, of the number of Additional Shares of Common Stock issuable
upon the exercise of such Options or the conversion or exchange of
such Convertible Securities by reason of (x) a change of control of
the Company, (y) the acquisition by any Person or group of Persons of
any specified number or percentage of the Voting Securities of the
Company or (z) any similar event or occurrence, each such case to be
deemed hereunder to involve a separate issuance of Additional Shares
of Common Stock, Options or Convertible Securities, as the case may
be;
(b) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in
the consideration payable to the Company, or decrease in the number
of Additional Shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof (by change of rate or otherwise), the
Exercise Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence of the record date, or
date prior to the commencement of ex-dividend trading, as the case
may be, with respect thereto), and any subsequent adjustments based
thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease insofar
as it affects such Options, or the rights of conversion or exchange
under such Convertible Securities, which are outstanding at such
time;
(c) upon the expiration (or purchase by the Company and
cancellation or retirement) of any such Options which shall not have
been exercised or the expiration of any rights of conversion or
exchange under any such Convertible Securities which (or purchase by
the Company and cancellation or retirement of any such Convertible
Securities the rights of conversion or exchange under which) shall
not have been exercised, the Exercise Price computed upon the origina
issue, sale, grant or assumption thereof (or upon the occurrence of the
record date, or date prior to the commencement of ex-dividend trading,
as the case may be, with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration (or such
cancellation or retirement, as the case may be), be recomputed as if:
(i) in the case of Options for Common Stock or
Convertible Securities, the only Additional Shares of Common
Stock issued or sold were the Additional Shares of Common
Stock, if any, actually issued or sold upon the exercise of
such Options or the conversion or exchange of such Convertible
Securities and the consideration received therefor was the
consideration actually received by the Company for the issue,
sale, grant or assumption of all such Options, whether or not
exercised, plus the consideration actually received by the
Company upon such exercise, or for the issue or sale of all
such Convertible Securities which were actually converted or
exchanged, plus the additional consideration, if any, actually
received by the Company upon such conversion or exchange, and
(ii) in the case of Options for Convertible Securities,
only the Convertible Securities, if any, actually issued or
sold upon the exercise of such Options were issued at the time
of the issue, sale, grant or assumption of such Options, and
the consideration received by the Company for the Additional
Shares of Common Stock deemed to have then been issued was the
consideration actually received by the Company for the issue,
sale, grant or assumption of all such Options, whether or not
exercised, plus the consideration deemed to have been received
by the Company (pursuant to Section 7.5) upon the issue or sale
of such Convertible Securities with respect to which such
Options were actually exercised;
(d) no readjustment pursuant to subdivision (b) or (c) above
shall have the effect of increasing the Exercise Price by an amount
in excess of the amount of the adjustment thereof originally made in
respect of the issue, sale, grant or assumption of such Options or
Convertible Securities; and
(e) in the case of any such Options which expire by their terms
not more than 30 days after the date of issue, sale, grant or
assumption thereof, no adjustment of the Exercise Price shall be made
until the expiration or exercise of all such Options, whereupon such
adjustment shall be made in the manner provided in subdivision (c)
above.
7.3 Treatment of Stock Dividends, Stock Splits, etc. In case
the Company at any time or from time to time after the date hereof shall
declare or pay any dividend on the Common Stock payable in Common Stock, or
shall effect a subdivision of the outstanding shares of Common Stock into a
greater number of shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in Common Stock), then, and in each such
case, Additional Shares of Common Stock shall be deemed to have been issued
(a) in the case of any such dividend, immediately after the close of
business on the record date for the determination of holders of any class
of securities entitled to receive such dividend, or (b) in the case of any
such subdivision, at the close of business on the day immediately prior to
the day upon which such corporate action becomes effective.
7.4 Underwriting Discounts. For the purposes of this Section 7,
there shall be no adjustment to the Exercise Price of any Warrant pursuant
to this Section 7 if Additional Shares of Common Stock are issued to an
underwriter at less than current market value due to the application of
ordinary and customary underwriting discounts.
7.5 Computation of Consideration. For the purposes of this
Section 7,
(a) the consideration for the issue or sale of any Additional
Shares of Common Stock shall, irrespective of the accounting
treatment of such consideration,
(i) insofar as it consists of cash, be computed at the
net amount of
cash received by the Company,
(ii) insofar as it consists of property (including
securities) other than cash, be computed at the fair value
thereof at the time of such issue or sale, as determined in
good faith by the Board of Directors of the Company, and
(iii) in case Additional Shares of Common Stock are
issued or sold together with other stock or securities or other
assets of the Company for a consideration which covers both, be
the portion of such consideration so received, computed as
provided in clauses (i) and (ii) above, allocable to such
Additional Shares of Common Stock, all as determined in good
faith by the Board of Directors of the Company;
(b) Additional Shares of Common Stock deemed to have been
issued pursuant to Section 7.2, relating to Options and Convertible
Securities, shall be deemed to have been issued for a consideration
per share determined by dividing
(i) the total amount, if any, received and receivable by
the Company as consideration for the issue, sale, grant or
assumption of the Options or Convertible Securities in
question, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating
thereto, without regard to any provision contained therein for
a subsequent adjustment of such consideration to protect
against dilution) payable to the Company upon the exercise in
full of such Options or the conversion or exchange of such
Convertible Securities or, in the case of Options for
Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such
Convertible Securities, in each case computing such consideration
as provided in the foregoing subdivision (a),
by
(ii) the maximum number of shares of Common Stock (as set
forth in the instruments relating thereto, without regard to
any provision contained therein for a subsequent adjustment of
such number to protect against dilution) issuable upon the
exercise of such Options or the conversion or exchange of such
Convertible Securities; and
(c) Additional Shares of Common Stock deemed to have been
issued pursuant to Section 7.3, relating to stock dividends, stock
splits, etc., shall be deemed to have been issued for no
consideration.
7.6 Adjustments for Combinations, etc. In case the outstanding
shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common
Stock, the Exercise Price in effect immediately prior to such combination
or consolidation shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.
7.7 Dilution in Case of Other Securities. In case any Other
Securities shall be issued or sold or shall become subject to issue or sale
upon the conversion or exchange of any stock (or Other Securities) of the
Company or to subscription, purchase or other acquisition pursuant to any
Options issued or granted by the Company (or any such other issuer or
Person) for a consideration such as to dilute, on a basis consistent with
the standards established in the other provisions of this Section 7, the
purchase rights granted by this Agreement, then, and in each such case, the
computations, adjustments and readjustments provided for in this Section 7
with respect to the Exercise Price shall be made as nearly as possible in
the manner so provided and applied to determine the amount of Other
Securities from time to time receivable upon the exercise of the Warrants,
so as to protect the Holders of the Warrants against the effect of such
dilution.
7.8 Other Dilutive Events. In case any event shall occur as to
which the provisions of this Section 7 are not strictly applicable but the
failure to make any adjustment would not fairly protect the purchase rights
represented by this Agreement in accordance with the essential intent and
principles of such Section, then, in each such case, the Company shall
appoint a firm of independent certified public accountants of recognized
national standing (which may be the regular auditors of the Company), which
shall give their opinion upon the adjustment, if any, on a basis consistent
with the essential intent and principles established in this Section 7,
necessary to preserve, without dilution, the purchase rights represented by
each Warrant. Upon receipt of such opinion, the Company will promptly mail
a copy thereof to the Holder of each Warrant and shall make the adjustments
described therein.
7.9 Minimum Adjustment of Exercise Price. If the amount of any
adjustment of the Exercise Price required pursuant to this Section 7 would
be less than one tenth (1/10) of one percent (1%) of the Exercise Price in
effect at the time such adjustment is otherwise so required to be made,
such amount shall be carried forward and adjustment with respect thereto
made at the time of and together with any subsequent adjustment which,
together with such amount and any other amount or amounts so carried
forward, shall aggregate at least one tenth (1/10) of one percent (1%) of
such Exercise Price.
7.10 Notice of Adjustment. Whenever the number of shares of
Common Stock issuable upon the exercise of a Warrant is adjusted, as herein
provided, the Company shall mail by first class mail, postage prepaid, to
each Holder, notice of such adjustment or adjustments setting forth the
number of shares of Common Stock or other stock or property issuable upon
the exercise of each Warrant after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made. Notwithstanding the
foregoing, the Company's failure to send notice to each Holder pursuant to
this Section 7.10 shall under no circumstances be interpreted to mean that
an adjustment is not required.
7.11 Statement on Warrants. Irrespective of any adjustment in
the number or kind of shares issuable upon the exercise of the Warrants,
Warrants theretofore or thereafter issued may continue to express the same
price and number and kind of shares as are stated in the Warrants initially
issuable pursuant to this Agreement.
7.12 Fractional Interest. The Company shall not be required to
issue fractional shares of Common Stock on the exercise of Warrants. If
more than one Warrant shall be presented for exercise in full at the same
time by the same Holder, the number of full shares of Common Stock which
shall be issuable upon such exercise thereof shall be computed on the basis
of the aggregate number of shares of Common Stock acquirable on exercise of
the Warrants so presented. If any fraction of a share of Common Stock
would, except for the provisions of this Section, be issuable on the
exercise of any Warrant (or specified portion thereof), the Company shall
pay an amount in cash calculated by it to be equal to the Fair Market Value
per Share, multiplied by such fraction computed to the nearest whole cent.
8. CONSOLIDATION, MERGER, ETC.
8.1 Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, etc. In case the Company after the date hereof (a) shall
consolidate with or merge into any other Person and shall not be the
continuing or surviving corporation of such consolidation or merger, or (b)
shall permit any other Person to consolidate with or merge into the Company
and the Company shall be the continuing or surviving Person but, in
connection with such consolidation or merger, the Common Stock or Other
Securities shall be changed into or exchanged for stock or other securities
of any other Person or cash or any other property, or (c) shall transfer
all or substantially all of its properties or assets to any other Person,
or (d) shall effect a capital reorganization or reclassification of the
Common Stock or Other Securities (other than a capital reorganization or
reclassification resulting in the issue of Additional Shares of Common
Stock for which adjustment in the Warrant Price is provided in Section
7.1.1 or 7.1.2), then, and in the case of each such transaction, proper
provision shall be made so that, upon the basis and the terms and in the
manner provided in this Agreement, the Holder of a Warrant, upon the
exercise thereof at any time after the consummation of such transaction,
shall be entitled to receive (at the aggregate Exercise Price in effect at
the time of such consummation for all Common Stock or Other Securities
issuable upon such exercise immediately prior to such consummation), in
lieu of the Common Stock or Other Securities issuable upon such exercise
prior to such consummation, the stock and other securities, cash and
property to which such Holder would have been entitled upon such
consummation if such Holder had exercised the rights represented by this
Warrant immediately prior thereto, subject to adjustments (subsequent to
such corporate action) as nearly equivalent as possible to the adjustments
provided for in Section 7 and this Section 8.
8.2 Assumption of Obligations. Notwithstanding anything
contained in the Warrants or in the Investment Agreement to the contrary,
the Company will not effect any of the transactions described in clauses
(a) through (d) of Section 8.1 unless, prior to the consummation thereof,
each Person (other than the Company) which may be required to deliver any
stock, securities, cash or property upon the exercise of a Warrant as
provided herein shall assume, by written instrument delivered to, and
reasonably satisfactory to, the Holder of such Warrant, (a) the obligations
of the Company under the Warrant (and if the Company shall survive the
consummation of such transaction, such assumption shall be in addition to,
and shall not release the Company from, any continuing obligations of the
Company under the Warrant) and (b) the obligation to deliver to such Holder
such shares of stock, securities, cash or property as, in accordance with
the foregoing provisions of this Section 8, such Holder may be entitled to
receive, and such Person shall have similarly delivered to such Holder an
opinion of counsel for such Person, which counsel shall be reasonably
satisfactory to such Holder, stating that this Agreement shall thereafter
continue in full force and effect and the terms hereof (including, without
limitation, all of the provisions of this Section 8) shall be applicable to
the stock, securities, cash or property which such Person may be required
to deliver upon any exercise of a Warrant or the exercise of any rights
pursuant thereto.
8.3 Other Dilutive Events. In case any event shall occur as to
which the provisions of this Section 8 are not strictly applicable but the
failure to make any 2adjustment would not fairly protect the purchase
rights represented by this Agreement in accordance with the essential
intent and principles of such Section, then, in each such case, the Company
shall appoint an investment banking firm of recognized national standing
(which may be the regular auditors of the Company), which shall give their
opinion upon the adjustment, if any, on a basis consistent with the
essential intent and principles established in this Section 8, necessary to
preserve, without dilution, the purchase rights represented by this
Agreement. Upon receipt of such opinion, the Company will promptly mail a
copy thereof to the Holder and shall make the adjustments described
therein.
9. WARRANT TRANSFER BOOKS.
The Warrant Certificates shall be issued in registered form
only. The Company shall keep a register at its office in which, subject to
such reasonable regulations as it may prescribe, it shall provide for the
registration of Warrant Certificates and of transfers or exchanges of
Warrant Certificates as herein provided. At the option of the Holder,
Warrant Certificates may be exchanged at such office, and upon payment of
the charges hereinafter provided. Whenever any Warrant Certificates are so
surrendered for exchange, the Company shall execute the Warrant
Certificates that the Holder making the exchange is entitled to receive.
All Warrant Certificates issued upon any registration of transfer or
exchange of Warrant Certificates shall be the valid obligations of the
Company, evidencing the same obligations, and entitled to the same benefits
under this Agreement, as the Warrant Certificates surrendered for such
registration of transfer or exchange. Every Warrant Certificate surrendered
for registration of transfer or exchange shall (if so required by the
Company) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and duly executed by the
Holder thereof or his attorney duly authorized in writing. No service
charge shall be made for any registration of transfer or exchange of
Warrant Certificates. The Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Warrant
Certificates. Any Warrant Certificate when duly endorsed in blank shall be
deemed negotiable and when a Warrant Certificate shall have been so
endorsed, the Holder thereof may be treated by the Company and all other
persons dealing therewith as the absolute owner thereof for any purpose and
as the Person entitled to exercise the rights represented thereby, or to
the transfer thereof on the register of the Company, any notice to the
contrary notwithstanding; but until such transfer on such register, the
Company may treat the registered Holder thereof as the owner for all
purposes.
10. WARRANT HOLDERS.
10.1 No Voting Rights. Prior to the exercise of the Warrants,
no Holder of a Warrant Certificate, as such, shall be entitled to any
rights of a stockholder of the Company, including, without limitation, the
right to vote, to consent, to exercise any preemptive right, to receive any
notice of meetings of shareholders for the election of directors of the
Company or any other matter or to receive any notice of any proceedings of
the Company, except as may be specifically provided for herein.
10.2 Right of Action. All rights of action in respect of this
Agreement are vested in the Holders of the Warrants, and any Holder of any
Warrant, without the consent of the Holder of any other Warrant, may, in
such Holder's own behalf and for such Holder's own benefit, enforce, and
may institute and maintain any suit, action or proceeding against the
Company suitable to enforce, or otherwise in respect of, such Holder's
right to exercise, exchange or tender for purchase such Holder's Warrants
in the manner provided in this Agreement.
11. COVENANTS.
11.1 Reservation of shares of Common Stock. The Company
covenants that it will at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued shares of Common
Stock, solely for the purpose of issuing upon exercise of Warrants as
herein provided, such number of shares of voting Common Stock or non-voting
Common Stock as shall then be issuable upon the exercise of all outstanding
Warrants. The Company covenants that all shares of Common Stock which shall
be so issuable shall, upon such issue, be duly and validly issued and fully
paid and nonassessable.
11.2 Determinations by Board of Directors. All determinations
by the Board of Directors of the Company under the provisions of this
Agreement shall be made in good faith with due regard to the interests of
the Holder of a Warrant, and in accordance with good financial practice.
12. MISCELLANEOUS.
12.1 Payment of Taxes. The Company shall pay all issuance or
transfer taxes and similar governmental charges that may be imposed on the
Company in connection with the issuance of the Warrants or any securities
deliverable upon exercise of Warrants with respect thereto. The Company
shall not be required, however, to pay any tax or other governmental charge
imposed in connection with any transfer involved in the issue of any
certificate for Underlying Shares or payment of cash to any Person other
than the Holder of a Warrant Certificate surrendered upon the exercise of a
Warrant, and in case of such transfer or payment, the Company shall not be
required to issue any stock certificate or pay any cash until such tax or
governmental charge has been paid or it has been established to the
Company's satisfaction that no such tax or other governmental charge is
due.
12.2 Surrender of Certificates. Any Warrant Certificate
surrendered for exercise shall be delivered to the Company, promptly
cancelled and not reissued by the Company. The Company shall destroy such
cancelled Warrant Certificates.
12.3 Mutilated, Destroyed, Lost and Stolen Warrant
Certificates.
(a) If (i) any mutilated Warrant Certificate is surrendered to
the Company or (ii) the Company receives evidence to its satisfaction of
the destruction, loss or theft of any Warrant Certificate, and there is
delivered to the Company such security or indemnity as may be required by
it to save it harmless, then, in the absence of notice to the Company that
such Warrant Certificate has been acquired by a bona fide purchaser, the
Company shall execute, in exchange for any such mutilated Warrant
Certificate or in lieu of any such destroyed, lost or stolen Warrant
Certificate, a new Warrant Certificate of like tenor and for a like
aggregate number of Warrants.
(b) Upon the issuance of any new Warrant Certificate under this
Section 12.3. the Company may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and other expenses (including the reasonable fees and expenses of
counsel to the Company) in connection therewith.
(c) Every new Warrant Certificate executed and delivered
pursuant to this Section 12.3 in lieu of any destroyed, lost or stolen
Warrant Certificate shall constitute an original contractual obligation of
the Company, whether or not the destroyed, lost or stolen Warrant
Certificate shall be at any time enforceable by anyone, and shall be
entitled to the benefits of this Agreement equally and proportionately with
any and all other Warrant Certificates duly executed and delivered
hereunder.
(d) The provisions of this Section 12.3 are exclusive and shall
preclude (to the extent lawful) all other rights or remedies with respect
to the replacement of mutilated, destroyed, lost or stolen Warrant
Certificates.
12.4 Notices. All notices and other communications necessary or
contemplated under this Agreement shall be in writing and shall be
delivered in the manner specified herein. All notices shall be deemed to
have been duly given upon confirmation by telecopy if delivered by telecopy
or by hand, or one day after sending by overnight delivery service, or five
days after sending by certified mail, postage prepaid, return receipt
requested to the respective addresses of the parties set forth below:
Notice to the Company shall be addressed as follows:
Livent Inc.
Suite 600
165 Avenue Road
Toronto, Ontario
Canada M5R 2H7
Fax No.: (416) 324-5535
Attention: Garth H. Drabinsky and
Myron I. Gottlieb
with a copy to:
Shearman & Sterling
Commerce Court West
199 Bay Street
P.O. Box 247, Suite 4405
Toronto, Ontario
Canada M5L 1E8
Fax No.: (416) 360-2958
Attention: Brice T. Voran
Notices to Investor shall be addressed as follows:
Lynx Ventures L.P.
c/o Dreyer, Edmonds & Associates
355 South Grand Avenue
Suite 4150
Los Angeles, CA 90071-3103
U.S.A.
Fax No.: (310) 271-8860
Attention: Michael Dreyer
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
U.S.A.
Fax No.: (212) 735-2000
Attention: Eric L. Cochran
with a courtesy copy to:
Munger, Tolles & Olson
355 South Grand Avenue
Los Angeles, CA 90071-1560
U.S.A.
Fax No.: (213) 687-3702
Attention: Robert L. Adler
By notice complying with the foregoing provisions of this Section 12.4,
each party shall have the right to change the notice address for future
notices and communications to such party.
12.5 Applicable Law. This Agreement and each Warrant issued
hereunder and all rights arising hereunder shall be governed by the laws of
the State of New York without regard to principles of conflicts of law.
12.6 Obligations under Investment Agreement. Nothing in this
Agreement shall be deemed to modify any of the Company's obligations under
the Investment Agreement.
12.7 Currency. All amounts are in U.S. dollars unless
otherwise noted.
12.8 Persons Benefitting. This Agreement shall be binding upon
and inure to the benefit of the Company and its respective successors,
assigns, beneficiaries, executors and administrators, and the Holders from
time to time of the Warrants. Nothing in this Agreement is intended or
shall be construed to confer upon any Person, other than the Company and
the Holders of the Warrants, any right, remedy or claim under or by reason
of this Agreement or any part hereof.
12.9 Costs and Expenses. Any costs and expenses incurred in
connection with services provided by any (i) independent public accountant
pursuant to section 7.8 of this Agreement or (ii) investment banking firm
pursuant to sections 7.1, 7.2 and 8.3 of this Agreement, shall be borne by
the parties hereto in equal amounts.
12.10 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all
of which together constitute one and the same instrument.
12.11 Headings. The descriptive headings of the several
Sections of this Agreement are inserted for convenience and shall not
control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duty executed as of the day and year first above written.
LIVENT INC.
By: /s/ Garth H. Drabinsky
-------------------------
Name: Garth H. Drabinsky
Title: Chairman and Chief
Executive Officer
LYNX VENTURES L.P.
By: Lynx Ventures L.L.C.,
its General Partner
By: /s/ Michael S. Ovitz
-----------------------
Name: Michael S. Ovitz
Title: Managing Member
EXHIBIT A
FORM OF FACE OF WARRANT CERTIFICATE
SERIES A
WARRANTS TO PURCHASE SHARES
OF LIVENT INC. COMMON STOCK
No. 1 Certificate for 735,000 Warrants
This certifies that Lynx Ventures L.P., or registered assigns,
is the registered holder of the number of Warrants set forth above. Each
Warrant entitles the holder thereof (a "Holder"), subject to the provisions
contained herein and in the Warrant Agreement referred to below, to receive
from Livent Inc., an Ontario corporation (the "Company"), one common share
("Common Share") of the Company ("Shares"), at the exercise price (the
"Exercise Price") of US$9.00 per share, subject to adjustment upon the
occurrence of certain events.
This Warrant Certificate is issued under and in accordance with
the Warrant Agreement, dated as of June 12, 1998 (the "Warrant Agreement"),
between the Company and the Investor as named therein, and is subject to
the terms and provisions contained in the Warrant Agreement, to all of
which terms and provisions the Holder of this Warrant Certificate consents
by acceptance hereof. The Warrant Agreement is hereby incorporated herein
by reference and made a part hereof. Reference is hereby made to the
Warrant Agreement for a full statement of the respective rights,
limitations of rights, duties, obligations and immunities thereunder of the
Company and the Holders of the Warrants.
The Warrants represented by this Warrant Certificate shall be
exercisable prior to the close of business on the Expiration Date.
The Exercise Price and the number of Shares issuable upon the
exercise of each Warrant are subject to adjustment as provided in the
Warrant Agreement.
All Shares issuable by the Company upon the exercise of
Warrants shall, upon such issue, be duly and validly issued and fully paid
and nonassessable.
In order to exercise a Warrant, the registered holder hereof
must surrender this Warrant Certificate at the office of the Company, with
the Exercise Subscription Form on the reverse hereof duly executed by the
Holder hereof, with signature guaranteed as therein specified, together
with any required payment in full of the Exercise Price then in effect for
the Underlying Shares as to which the Warrant(s) represented by this
Warrant Certificate are submitted for exercise, all subject to the terms
and conditions hereof and of the Warrant Agreement. Any such payment of the
Exercise Price shall be in accordance with Section 3.4(a) of the Warrant
Agreement.
The Company shall pay all issuance and transfer taxes and
similar governmental charges that may be imposed on the Company in
connection with the issuance of the Warrants or any securities deliverable
upon exercise of Warrants. The Company shall not be required, however, to
pay any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for Underlying Shares or payment
of cash to any person other than the Holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and in case of such transfer or
payment, the Company shall not be required to issue any stock certificate
or pay any cash until such tax or other charge has been paid or it has been
established to the Company's satisfaction that no such tax or other charge
is due.
Subject to compliance with the Warrant Agreement, this Warrant
Certificate and all rights hereunder are transferable by the registered
holder hereof, in whole or in part, on the register of the Company, upon
surrender of this Warrant Certificate for registration of transfer at the
office of the Company, duly endorsed by, or accompanied by a written
instrument of transfer substantially in the form of the attached Form of
Assignment or otherwise in a form satisfactory to the Company duly executed
by, the Holder hereof or his attorney duly authorized in writing, with
signature guaranteed. Upon any partial transfer, the Company will issue and
deliver to such Holder a new Warrant Certificate or Certificates with
respect to any portion not so transferred.
No service charge shall be made for any registration of
transfer or exchange of the Warrant Certificates, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
Each Holder of this Warrant Certificate by taking or holding
the same consents and agrees that this Warrant Certificate when duly
endorsed in blank shall be deemed negotiable and that when this Warrant
Certificate shall have been so endorsed, the Holder hereof may be treated
by the Company and all other Persons dealing with this Warrant Certificate
as the absolute owner hereof for any purpose and as the Person entitled to
exercise the rights represented hereby, or to the transfer hereof on the
register of the Company maintained by a Warrant agent, any notice to the
contrary notwithstanding, but until such transfer on such register, the
Company may treat the registered Holder hereof as owner for all purposes.
This Warrant Certificate and the Warrant Agreement are subject
to amendment as provided in the Warrant Agreement.
All terms used in this Warrant Certificate and not defined
herein that are defined in the Warrant Agreement shall have the meanings
assigned to them in the Warrant
Agreement.
Dated: June , 1998
LIVENT INC.
By:_____________________________
Name: Garth H. Drabinsky
Title:Chairman and
Chief Executive Officer
FORM OF REVERSE OF SERIES A WARRANT CERTIFICATE
EXERCISE SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
To: LIVENT INC.
The undersigned irrevocably exercises of the Warrants for the
acquisition of one Common Share (subject to adjustment), no par value, (a
"Share"), of Livent Inc. (the "Company"), for each Warrant represented by
the Warrant Certificate and herewith makes payment of $____ (such payment
being in cash or by certified or official bank check payable to the order
of the Company), all at the Exercise Price and on the terms and conditions
specified in this Warrant Certificate and the Warrant Agreement therein
referred to, surrenders this Warrant Certificate and all right, title and
interest therein to the Company and directs that the Shares deliverable
upon the exercise of such Warrants be registered or placed in the name and
at the address specified below and delivered thereto.
Date:
_______________________________(1)
(Signature of Owner)
---------------------------------
(Street Address)
---------------------------------
(City) State) (Zip Code)
Signature Guaranteed by:
---------------------------------
(1) Signature must correspond with the name as written upon the
face of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatever, and must be guaranteed
by a financial institution satisfactory to the Company.
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants evidenced by the within Warrant Certificate to be
issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned registered holder of the
enclosed Warrant Certificate hereby sells, assigns, and transfers unto the
Assignee(s) named below (including the undersigned with respect to any
Warrants constituting a part of the Warrants evidenced by the enclosed
Warrant Certificate not being assigned hereby) all of the rights of the
undersigned under the enclosed Warrant Certificate, with respect to the
number of Warrants set forth below:
SOCIAL SECURITY
OR OTHER
IDENTIFYING
NAME OF NUMBER OF NAME OF
ASSIGNEES ADDRESS ASSIGNEE(S) WARRANTS
- --------- ------- --------------- --------
and does hereby irrevocably constitute and appoint Livent Inc.
the undersigned's attorney to make such transfer on the books of Livent
Inc. maintained for that purpose, with full power of substitution in the
premises.
Date:
----------------------------(1)
(Signature of Owner)
-----------------------------
(Street Address)
-----------------------------
(City) (State) (Zip Code)
SIGNATURE GUARANTEED BY:
-----------------------------
______________
(1) The signature must correspond with the name as written upon
the face of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatever.
EXHIBIT B
FORM OF FACE OF WARRANT CERTIFICATE
SERIES B
WARRANTS TO PURCHASE SHARES
OF LIVENT INC. COMMON STOCK
No. 1 Certificate for 735,000 Warrants
This certifies that Lynx Ventures L.P., or registered assigns,
is the registered holder of the number of Warrants set forth above. Each
Warrant entitles the holder thereof (a "Holder"), subject to the provisions
contained herein and in the Warrant Agreement referred to below, to receive
from Livent Inc., an Ontario corporation (the "Company"), one common share
("Common Share") of the Company ("Shares"), at the exercise price (the
"Exercise Price") of US$10.00 per share, subject to adjustment upon the
occurrence of certain events.
This Warrant Certificate is issued under and in accordance with
the Warrant Agreement, dated as of June 12, 1998 (the "Warrant Agreement"),
between the Company and the Investor as named therein, and is subject to
the terms and provisions contained in the Warrant Agreement, to all of
which terms and provisions the Holder of this Warrant Certificate consents
by acceptance hereof. The Warrant Agreement is hereby incorporated herein
by reference and made a part hereof. Reference is hereby made to the
Warrant Agreement for a full statement of the respective rights,
limitations of rights, duties, obligations and immunities thereunder of the
Company and the Holders of the Warrants.
The Warrants represented by this Warrant Certificate shall be
exercisable prior to the close of business on the Expiration Date.
The Exercise Price and the number of Shares issuable upon the
exercise of each Warrant are subject to adjustment as provided in the
Warrant Agreement.
All Shares issuable by the Company upon the exercise of
Warrants shall, upon such issue, be duly and validly issued and fully paid
and nonassessable.
In order to exercise a Warrant, the registered holder hereof
must surrender this Warrant Certificate at the office of the Company, with
the Exercise Subscription Form on the reverse hereof duly executed by the
Holder hereof, with signature guaranteed as therein specified, together
with any required payment in full of the Exercise Price then in effect for
the Underlying Shares as to which the Warrant(s) represented by this
Warrant Certificate are submitted for exercise, all subject to the terms
and conditions hereof and of the Warrant Agreement. Any such payment of the
Exercise Price shall be in accordance with Section 3.4(a) of the Warrant
Agreement.
The Company shall pay all issuance and transfer taxes and
similar governmental charges that may be imposed on the Company in
connection with the issuance of the Warrants or any securities deliverable
upon exercise of Warrants. The Company shall not be required, however, to
pay any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for Underlying Shares or payment
of cash to any person other than the Holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and in case of such transfer or
payment, the Company shall not be required to issue any stock certificate
or pay any cash until such tax or other charge has been paid or it has been
established to the Company's satisfaction that no such tax or other charge
is due.
Subject to compliance with the Warrant Agreement, this Warrant
Certificate and all rights hereunder are transferable by the registered
holder hereof, in whole or in part, on the register of the Company, upon
surrender of this Warrant Certificate for registration of transfer at the
office of the Company, duly endorsed by, or accompanied by a written
instrument of transfer substantially in the form of the attached Form of
Assignment or otherwise in a form satisfactory to the Company duly executed
by, the Holder hereof or his attorney duly authorized in writing, with
signature guaranteed. Upon any partial transfer, the Company will issue and
deliver to such Holder a new Warrant Certificate or Certificates with
respect to any portion not so transferred.
No service charge shall be made for any registration of
transfer or exchange of the Warrant Certificates, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
Each Holder of this Warrant Certificate by taking or holding
the same consents and agrees that this Warrant Certificate when duly
endorsed in blank shall be deemed negotiable and that when this Warrant
Certificate shall have been so endorsed, the Holder hereof may be treated
by the Company and all other Persons dealing with this Warrant Certificate
as the absolute owner hereof for any purpose and as the Person entitled to
exercise the rights represented hereby, or to the transfer hereof on the
register of the Company maintained by a Warrant agent, any notice to the
contrary notwithstanding, but until such transfer on such register, the
Company may treat the registered Holder hereof as owner for all purposes.
This Warrant Certificate and the Warrant Agreement are subject
to amendment as provided in the Warrant Agreement.
All terms used in this Warrant Certificate and not defined
herein that are defined in the Warrant Agreement shall have the meanings
assigned to them in the Warrant Agreement.
Dated: June , 1998
LIVENT INC.
By:_____________________________
Name: Garth H. Drabinsky
Title: Chairman and
Chief Executive Officer
FORM OF REVERSE OF SERIES B WARRANT CERTIFICATE
EXERCISE SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
To: LIVENT INC.
The undersigned irrevocably exercises of the Warrants for the
acquisition of one Common Share (subject to adjustment), no par value, (a
"Share"), of Livent Inc. (the "Company"), for each Warrant represented by
the Warrant Certificate and herewith makes payment of $____ (such payment
being in cash or by certified or official bank check payable to the order
of the Company), all at the Exercise Price and on the terms and conditions
specified in this Warrant Certificate and the Warrant Agreement therein
referred to, surrenders this Warrant Certificate and all right, title and
interest therein to the Company and directs that the Shares deliverable
upon the exercise of such Warrants be registered or placed in the name and
at the address specified below and delivered thereto.
Date:
_______________________________(1)
(Signature of Owner)
---------------------------------
(Street Address)
---------------------------------
(City) (State)
(Zip Code)
Signature Guaranteed by:
---------------------------------
- ------------
(1) Signature must correspond with the name as written upon the
face of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatever, and must be guaranteed
by a financial institution satisfactory to the Company.
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants evidenced by the within Warrant Certificate to be
issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned registered holder of the
enclosed Warrant Certificate hereby sells, assigns, and transfers unto the
Assignee(s) named below (including the undersigned with respect to any
Warrants constituting a part of the Warrants evidenced by the enclosed
Warrant Certificate not being assigned hereby) all of the rights of the
undersigned under the enclosed Warrant Certificate, with respect to the
number of Warrants set forth below:
SOCIAL SECURITY
OR OTHER
IDENTIFYING
NAME OF NUMBER OF NAME OF
ASSIGNEES ADDRESS ASSIGNEE(S) WARRANTS
- --------- ------- --------------- --------
and does hereby irrevocably constitute and appoint Livent Inc.
the undersigned's attorney to make such transfer on the books of Livent
Inc. maintained for that purpose, with full power of substitution in the
premises.
Date:
-----------------------------(1)
(Signature of Owner)
-----------------------------
(Street Address)
-----------------------------
(City) (State) (Zip Code)
SIGNATURE GUARANTEED BY:
-----------------------------
- --------
(1) The signature must correspond with the name as written upon
the face of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatever.
EXHIBIT 4
OPTION AGREEMENT
This OPTION AGREEMENT is dated as of April 13, 1998 (this "Option
Agreement"), by and among Garth H. Drabinsky ("Drabinsky"), Myron I.
Gottlieb ("Gottlieb"), Lynx Ventures L.P., a Delaware limited partnership
(the "Investor") and Livent Inc., a corporation existing under the laws of
the Province of Ontario (the "Corporation").
WHEREAS, Drabinsky has agreed to grant the Investor an option to
purchase 500,000 shares of common stock, no par value, of the Corporation
(the "Common Shares"), subject to the terms and conditions set forth
herein;
WHEREAS, Gottlieb has agreed to grant the Investor an option to
purchase 1,500,000 Common Shares, subject to the terms and conditions set
forth herein;
WHEREAS, the Corporation and the Investor have entered into an
Investment Agreement dated as of the date hereof (the "Investment
Agreement"); and
WHEREAS, the execution of this Option Agreement by Drabinsky,
Gottlieb and the Investor is a condition to the Investor's obligations to
consummate the transactions contemplated by the Investment Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Option
Agreement, intending to be legally bound, hereby agree as follows:
1. Options to Purchase Common Shares
(a) Drabinsky hereby grants the Investor an option (the
"Drabinsky Option") to purchase, at the discretion of the Investor all or
part of up to 500,000 Common Shares owned by Drabinsky at a purchase price
of $8.00 per share. The Drabinsky Option may be exercised at any time,
commencing on the Effective Date (as defined herein) and terminating on the
one year anniversary of the Effective Date.
(b) Gottlieb hereby grants the Investor options (the
"Gottlieb Options") to purchase, at the discretion of the Investor all or
part of up to 1,500,000 Common Shares owned by Gottlieb. The Gottlieb
Options shall be comprised of four option tranches as follows:
i. An option to purchase 75,000 Common Shares which may be
exercised at any time, commencing on the Effective Date and
terminating on the two year anniversary of the Effective
Date (the "Tranche 1 Gottlieb Option"). The purchase price
of the Tranche 1 Gottlieb Option is $8.00 per share.
ii. An option to purchase 425,000 Common Shares which may be
exercised at any time, commencing on the Effective Date and
terminating on the two year anniversary of the Effective
Date (the "Tranche 2 Gottlieb Option"). The purchase price
of the Tranche 2 Gottlieb Option is $9.00 per share.
iii. An option to purchase 500,000 Common Shares which may be
exercised at any time, commencing on the Effective Date and
terminating on the three year anniversary of the Effective
Date (the "Tranche 3 Gottlieb Option"). The purchase price
of the Tranche 3 Gottlieb Option is $10.50 per share.
iv. An option to purchase 500,000 Common Shares which may be
exercised at any time, commencing on the Effective Date and
terminating on the four year anniversary of the Effective
Date (the "Tranche 4 Gottlieb Option"). The purchase price
of the Tranche 4 Gottlieb Option is $12.00 per share.
(c) As used herein the term "Effective Date" shall mean the
date on which the earlier of either of the following events, if any, shall
have occurred: (i) the closing of the transactions contemplated by the
Investment Agreement; or (ii) the occurrence of both a proposal for a
Significant Transaction (as defined in the Investment Agreement) by a third
party involving the Company and a breach of Section 6.3 of the Investment
Agreement (the no solicitation clause).
2. Manner of Exercise.
(a) The Drabinsky Option or the Gottlieb Options (either,
an "Option") may be exercised by the Investor by delivery of written notice
to either Drabinsky or Gottlieb, as the case may be. Such notice shall
include the whole number of Common Shares that the Investor has elected to
purchase.
(b) The closing date for the sale of the shares pursuant to
any Option shall be on a date mutually acceptable to the parties; provided,
however, that the closing shall be within 15 days of the date of the notice
at the offices of the Company.
(c) The payment of the purchase price shall be made by
certified or official bank check payable to either Drabinsky or Gottlieb,
as the case may be, in the amount obtained by multiplying (x) the number of
Common Shares to be purchased, times (y) the purchase price per share of
the Option.
(d) In the event that an Option is exercised in part only,
the Investor shall have the right to purchase additional Common Shares, up
to the number granted pursuant to the applicable Option, through the end of
the term of the applicable Option.
3. Option Adjustment. In the event of any change in the number
of Common Shares outstanding, whether by recapitalization, declaration of a
stock split, payment of a stock dividend or otherwise, the number of shares
delivered upon exercise and the purchase price shall be appropriately
adjusted. Any dividend (in excess of normal dividends, if any) or other
distribution (cash, stock or otherwise) on the Common Shares with a record
date after the date of this Agreement will be for the account of the
Investor and will delivered to the Investor on the date of receipt thereof.
4. Representation and Warranty of Drabinsky and Gottlieb.
Drabinsky and Gottlieb, jointly and severally, represent and warrant to the
Investor that, as of the date hereof and each closing date, the following
are true and correct:
(a) Title to the Shares. Each of Drabinsky and Gottlieb
has the complete and unrestricted power and the unqualified right to sell,
assign, transfer and deliver to the Investor and the Investor will acquire
at the closing date good and valid title to the purchased Common Shares
free and clear of all liens, security interest, mortgages, options, rights
or other encumbrances.
(b) Authorization. Each of Drabinsky and Gottlieb has all
requisite right, power and authority and full legal capacity to enter into
this Option Agreement, to carry out its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and
delivery of this Option Agreement by each of Drabinsky and Gottlieb, and
the consummation by each of Drabinsky and Gottlieb of the transactions
contemplated hereby have been duly authorized by all necessary action on
the part of each of Drabinsky and Gottlieb and, no other proceedings on the
part of any of Drabinsky and Gottlieb or any other Person are necessary to
authorize this Option Agreement or to consummate the transactions
contemplated hereby. This Option Agreement constitutes a valid and binding
agreement of each of Drabinsky and Gottlieb, enforceable in accordance with
its terms.
(c) No Violations. The execution, delivery and performance
of this Option Agreement by each of Drabinsky and Gottlieb or the
consummation of the transactions contemplated hereby do not and will not
(i) conflict with or violate any applicable law, (ii) result in the
creation of any lien or encumbrance on the Optioned Shares (as defined
herein) or (iii) result in any breach of, or constitute a default (or event
which with the giving of notice or lapse of time, or both, would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument to which Drabinsky, Gottlieb or the Corporation is a party or by
which any of the Common Shares subject to the Options may be bound.
(d) Consents and Approvals. The execution, delivery and
performance of this Option Agreement by each of Drabinsky and Gottlieb does
not and will not, require any consent, approval, authorization,
governmental approval or other action by, or filing with or notification
to, any third party or any governmental authority.
5. Covenants.
(a) Drabinsky and Gottlieb shall surrender to the
Corporation certificates representing the number of Common Shares which are
subject to this Option Agreement within 5 days of the date hereof (the
"Optioned Shares"). The Company will issue new certificates to Drabinsky
and Gottlieb bearing the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER, PURSUANT TO AN OPTION AGREEMENT, DATED AS OF APRIL 13, 1998. A
COPY OF THE OPTION AGREEMENT IS ON FILE AT THE COMPANY. THE TRANSFER OF
THESE SHARES IS SPECIFICALLY FORBIDDEN BY THE TERMS OF SUCH AGREEMENT."
(b) During the term of this Option Agreement, Drabinsky and
Gottlieb hereby jointly and severally covenant and agree that, except for
encumbrances which exist as of the date hereof, they shall not, without the
prior written consent of the Investor, sell, transfer, assign, pledge or
otherwise encumber or dispose of, including without limitation, grant any
option or similar right to purchase (each a "Transfer") any Optioned Shares
to any other third party. Drabinsky and Gottlieb hereby jointly and
severally covenant and agree to use their best efforts to cause all
encumbrances on the Optioned Shares existing as of the date hereof to be
removed on or before the date of the closing of the transactions
contemplated by the Investment Agreement.
(c) During the term of this Option Agreement, the
Corporation hereby covenants and agrees that it shall not, and shall cause
its Transfer Agent to not, recognize any Transfer of Common Shares by
Drabinsky and Gottlieb which would leave either Drabinsky and Gottlieb,
individually or collectively, beneficially and of record with less than the
number of Common Shares necessary to fulfill their obligations under the
Options.
(d) To the extent the approval of the shareholders of the
Corporation is required in connection with the transactions contemplated by
the Investment Agreement, Drabinsky and Gottlieb hereby agree to vote all
Common Shares for which they have the authority to vote on matters
presented to the shareholders of the Corporation in favor of each such
proposed transaction.
(e) In the event that at any time after the one month
anniversary of the closing of the transactions contemplated by the
Investment Agreement the market price for Common Shares is in excess of
$8.00 per share for the trailing 20 trading days prior thereto, the
Investor shall, within 30 days after receipt of written notice thereof from
Gottlieb, exercise the Tranche 1 Gottlieb Option to purchase the Common
Shares subject thereto. Neither Gottlieb nor Drabinsky will take action to
manipulate the market price for Common Shares such that it exceeds $8 per
share.
6. Early Termination. The Options shall terminate if at
anytime following the closing of the transactions contemplated by the
Investment Agreement the Investor and its affiliates (as defined in the
federal securities laws) collectively beneficially own less than 500,000
Common Shares (as such amount shall be appropriately adjusted from time to
time in the event of a distribution of securities by the Corporation
requiring an adjustment to the Options pursuant to Section 3 hereof).
7. Reallocation of Optioned Shares. In the event that Gottlieb
is incapable of delivering 1,500,000 unencumbered Common Shares to the
depositary under the Voting Trust Agreement (as defined in the Investment
Agreement) upon the closing of the transactions contemplated by the
Investment Agreement, the Common Shares subject to the Options shall be
automatically reallocated in the following manner (the "Reallocation"):
(i) the number of Common Shares owned by Gottlieb which shall be
subject to the Gottlieb Options (A) shall be reduced to the
number of unencumbered Common Shares delivered to the depositary
by Gottlieb under the Voting Trust Agreement and (B) such
reduction in Optioned Shares subject to the Gottlieb Options
shall be equally allocated among tranches 2 through 4 of the
Gottlieb Options; and
(ii) additional Common Shares owned by Drabinsky (A) shall become
subject to this Option Agreement to the extent of the shortfall
resulting from the reduction in the number of Common Shares
subject to the Gottlieb Options and (B) all such additional
Common Shares shall be subject to the terms and conditions
applicable to the purchase of Common Shares included in tranches
2 through 4 of the Gottlieb Options, equally allocated among
tranches 2 through 4.
The Investor shall, upon the exercise of Options for Common Shares subject
to the Reallocation, deliver the entire exercise price for such reallocated
Options to Gottlieb. Any redistribution of such proceeds required to be
made to Drabinsky by Gottlieb shall be subject to an agreement between
Drabinsky and Gottlieb. Each of Drabinsky and Gottlieb hereby waive any
claim either of them may have against the Investor in connection with the
Reallocation process. Drabinsky and Gottlieb agree to use their best
efforts to avoid a Reallocation or minimize the number of Common Shares
subject to a Reallocation.
8. Specific Performance. Without limiting the rights of each
party hereto to pursue all other legal and equitable rights available to
such party for the other parties' failure to perform their obligations
under this Option Agreement, the parties hereto acknowledge and agree that
the remedy at law for any failure to perform their obligations hereunder
would be inadequate and that each of them, respectively, shall be entitled
to specific performance, injunctive relief or other equitable remedies in
the event of any such failure.
9. Successors and Assigns.
(a) Except as otherwise provided herein, this Option
Agreement will bind and inure to the benefit of the respective successors
and assigns of the parties hereto whether so expressed or not.
(b) Neither Drabinsky nor Gottlieb may assign their rights
or obligations under this Option Agreement, without the prior written
consent of the Investor. The Investor may freely assign its rights or
obligations under this Option Agreement.
10. Amendment and Waiver. The provisions of this Option
Agreement may be amended and waived only through a written instrument, duly
executed by the parties to this Option Agreement.
11. Further Assurances. Each of the parties to this Option
Agreement shall do all such acts and things and shall execute and deliver,
or cause to be executed and delivered, all such documents, instruments and
agreements as may be necessary or desirable to give effect to the
provisions of and the intent of this Option Agreement.
12. Survival of Representations and Warranties. All
representations and warranties made by any party contained in this Option
Agreement or made in writing in connection with the transactions
contemplated by this Option Agreement shall survive the termination of this
Option Agreement through the date prescribed by the applicable statute of
limitations, regardless of any investigation made by the Investor or on its
behalf.
13. Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for
any reason, the parties shall negotiate in good faith with a view to the
substitution therefor of a suitable and equitable solution in order to
carry out, so far as may be valid and enforceable, the intent and purpose
of such invalid provision, provided, however, that the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
14. Notices. Any notice or other document required or permitted
to be given pursuant to this Option Agreement shall be validly given if
delivered or sent by registered mail, postage prepaid, to the address of
the addressee as follows:
i. in the case of Drabinsky:
Livent Inc.
165 Avenue Road, Suite 600
Toronto, Ontario
M5R 2H7
Attention: Garth H. Drabinsky
ii. in the case of Gottlieb:
Livent Inc.
165 Avenue Road, Suite 600
Toronto, Ontario
M5R 2H7
Attention: Myron I. Gottlieb
iii. in the case of the Investor:
Lynx Ventures L.P.
c/o Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Eric L. Cochran
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Eric L. Cochran
iv. in the case of the Corporation:
Livent Inc.
165 Avenue Road, Suite 600
Toronto, Ontario
M5R 2H7
Attention: The Secretary
Any notice or other document given by mail as aforesaid shall be
deemed to have been received on the second business day following the date
on which such notice or document was mailed.
In lieu of notice by mail as aforesaid, any notice or other
document required or permitted to be given pursuant to this Option
Agreement may be validly given if delivered to the address of the
addressees set forth above and any such notice or document so delivered
shall be deemed to have been given at the time of delivery.
If by reason of a strike, lockout or other work stoppage, actual
or threatened, of postal employees or other disruption of normal postal
services, any notice to be given hereunder would reasonably be unlikely to
reach its destination, such notice shall be valid and effective only if
delivered to the appropriate address in accordance with this Section 8 or
by telecopy, telegram, telex or other means of prepaid transmitted or
recorded communication.
Any party may change its address for service from time to time by
notice given in accordance with the foregoing provisions.
15. GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS OPTION AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE PROVINCE OF
ONTARIO, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW
PROVISION OR RULE (WHETHER OF THE PROVINCE OF ONTARIO OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE PROVINCE OF ONTARIO.
16. Counterparts. This Option Agreement may be executed in
separate counterparts each of which shall be an original and all of which
taken together shall constitute one and the same agreement.
17. Descriptive Headings. The descriptive headings of this
Option Agreement are inserted for convenience only and do not constitute a
part of this Option Agreement.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
GARTH H. DRABINSKY
By: /s/ Garth H. Drabinsky
MYRON I. GOTTLIEB
By: /s/ Myron I. Gottlieb
LYNX VENTURES L.P.
By: Lynx Ventures L.L.C.,
its General Partner
By: /s /Michael S. Ovitz
Name: Michael S. Ovitz
Title: Managing Member
THIS OPTION AMENDING AGREEMENT made as of the 12th day of June, 1998.
A M O N G:
GARTH H. DRABINSKY,
an individual residing
in the City of Toronto, in the Province of Ontario
- and -
MYRON I. GOTTLIEB,
an individual residing
in the City of Toronto, in the Province of Ontario
- and -
LYNX VENTURES L.P.,
a limited partnership
organized under the laws of Delaware
WHEREAS Lynx Ventures L.P. ("Lynx"), Garth H. Drabinsky ("GHD")
and Myron I. Gottlieb ("MIG") have entered into an option agreement dated
April 13, 1998 (the "Option Agreement") pursuant to which, among other
things, GHD has granted to Lynx an option (the "Lynx Option") exercisable
until the first anniversary of the date hereof to purchase from GHD 500,000
common shares of Livent Inc. (the "Lynx Optioned Shares") at U.S. $8.00 per
share;
AND WHEREAS the purpose of this agreement is to record certain
amendments to the Option Agreement relating to the Lynx Optioned Shares.
NOW THEREFORE in consideration of the covenants herein and the
sum of $2.00 now paid by each of the parties to each of the others (the
receipt and sufficiency of all of which is hereby acknowledged by each of
the parties) the parties agree as follows:
1. GHD represents and warrants to Lynx that at the date hereof GHD
holds valid and exercisable options ("GHD Employee Options") to purchase
common shares of Livent Inc. ("GHD SOP Shares") pursuant to the provisions
of the Livent Inc. Stock Option Plan, the particulars of which are set out
on the accompanying chart.
2. GHD has asked Lynx to provide the following loan arrangement to
facilitate the exercise by GHD of the GHD Employee Options and the delivery
of the Lynx Optioned Shares pursuant to the Lynx Option. GHD covenants
that, notwithstanding this amending agreement, he will honour the rights of
Lynx pursuant to the Option Agreement in accordance with its terms and
will, if the Lynx Option is exercised, deliver unencumbered shares in
satisfaction thereof. The parties have made the following agreement with
respect to the giving of financial assistance by Lynx to GHD to enable GHD
to exercise the GHD Employee Options.
3. At such time as Lynx gives notice to GHD of Lynx's exercise of
the Lynx Option, if GHD is unable to honour the Lynx Option except by
exercising GHD Employee Options, then Lynx will lend to GHD an amount of
United States dollars (the "Loan Amount") equal to the amount required to
enable GHD to purchase that number of Canadian dollars representing the
exercise price pursuant to the GHD Employee Options of that number of GHD
SOP Shares equal to the number of Lynx Optioned Shares in respect of which
Lynx is exercising its option. The loan from Lynx to GHD will be repayable
on demand and shall bear interest at a rate of 10% per annum commencing on
the second business day after the Loan Amount is advanced, compounded on
each anniversary date of the making of the loan.
4. Forthwith upon receiving the Loan Amount, GHD will exercise its
options on the appropriate number of GHD SOP Shares and will deliver to
Lynx a certificate or certificates properly endorsed in blank representing
the appropriate number of Lynx Optioned Shares. The Loan Amount will be
set off against the exercise price of the Lynx Option and the Loan
cancelled in that amount. In the event the Loan Amount exceeds the
exercise price of the Lynx Option, GHD shall forthwith pay an amount equal
to the excess to Lynx. In the event the exercise price of the Lynx Option
exceeds the Loan Amount, Lynx shall forthwith pay an amount equal to the
excess to GHD.
5. In respect of 193,750 of the Lynx Optioned Shares, the expiry
date of the Lynx Option shall be May 14, 1999, rather than one year from
the date hereof.
6. The parties hereto acknowledge their mutual understanding that
the GHD Employee Options are by their terms non-assignable and non-
transferable. This amendment to the Option Agreement is not intended to
create proprietary rights in Lynx in the GHD Employee Options.
7. In the event GHD fails, at any time, to deliver the requisite
number of Lynx Optioned Shares upon the exercise by Lynx of the Lynx Option
and Lynx shall have used all reasonable efforts to cause GHD to deliver
such shares, MIG shall, within 15 days after receipt of notice of the
foregoing from Lynx, deliver to Lynx against payment to MIG of the exercise
price of the Lynx Option, such number of common shares of Livent as shall
be necessary to satisfy the Lynx Option.
8. Except as amended hereby, the Option Agreement is confirmed in
all respects.
IN WITNESS WHEREOF the parties hereto have caused this Agreement
to be executed on the date first set forth herein.
SIGNED, SEALED AND DELIVERED )
in the presence of )
) /s/ Garth H. Drabinsky
) __________________________
) Garth H. Drabinsky
)
)
) /s/ Myron I. Gottlieb
) __________________________
) Myron I. Gottlieb
LYNX VENTURES L.P.,
by Lynx Ventures L.L.C., its general partner
by /S/ David R. Maisel
________________________
Name: David R. Maisel
Title: Manager
<TABLE>
<CAPTION>
LIVENT OPTIONS - GHD
VESTED EXERCISE
GRANT NO. OF MAY PRICE CDN. $ EXERCISE
TRANCHE DATE SHARES 1999 & VALUE EXPIRY UNTIL
- ------------ --------------- ----------- ------------- ------------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1. May 17, 1993 193,750 193,750 $9.00 $1,743,750 May 16, 1998 May 15, 1999
2. May 24, 1994 275,000 275,000 $12.625 $3,471,875 May 23, 1999 May 22, 2000
3. Nov. 13, 1996 190,000 31,250 of available $14.50 $453,125 Nov. 12, 2001 Nov. 11, 2002
------- ------ 47,500) --------
658,750 500,000 Cdn. $5,668,750
------- -------
U.S. (.69) $3,911,437
</TABLE>
EXHIBIT 5
INVESTMENT AGREEMENT
BETWEEN
LIVENT INC.
AND
ROY L. FURMAN
JUNE 12, 1998
TABLE OF CONTENTS
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. PURCHASE AND SALE OF COMMON SHARES . . . . . . . . . . . . . 6
3. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 Organization, Good Standing and Qualification . . . . 7
4.2 Capitalization . . . . . . . . . . . . . . . . . . . . 7
4.3 Options, Warrants and Reserved Shares . . . . . . . . 7
4.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . 8
4.5 Due Authorization . . . . . . . . . . . . . . . . . . 8
4.6 Valid Issuance of Stock . . . . . . . . . . . . . . . 9
4.7 No Conflicts . . . . . . . . . . . . . . . . . . . . . 9
4.8 Compliance . . . . . . . . . . . . . . . . . . . . . . 9
4.9 No Orders . . . . . . . . . . . . . . . . . . . . . . 10
4.10 Litigation . . . . . . . . . . . . . . . . . . . . . . 10
4.11 Financial Information . . . . . . . . . . . . . . . . 10
4.12 Absence of Undisclosed Liabilities . . . . . . . . . . 11
4.13 Material Adverse Effect . . . . . . . . . . . . . . . 11
4.14 Securities Laws . . . . . . . . . . . . . . . . . . . 11
4.15 Title and Interest . . . . . . . . . . . . . . . . . . 12
4.16 Real Property . . . . . . . . . . . . . . . . . . . . 12
4.17 Environmental Matters . . . . . . . . . . . . . . . . 13
4.18 Property and Assets . . . . . . . . . . . . . . . . . 14
4.19 Material Contracts . . . . . . . . . . . . . . . . . . 14
4.20 Intellectual Property . . . . . . . . . . . . . . . . 14
4.21 Labor Relations . . . . . . . . . . . . . . . . . . . 16
4.22 Taxes . . . . . . . . . . . . . . . . . . . . . . . . 17
4.23 Consents and Approvals . . . . . . . . . . . . . . . . 18
4.24 Information . . . . . . . . . . . . . . . . . . . . . 18
4.25 Common Shares Listing . . . . . . . . . . . . . . . . 19
4.26 Board Recommendations . . . . . . . . . . . . . . . . 19
4.27 Shareholder Approval . . . . . . . . . . . . . . . . . 19
5. REPRESENTATIONS AND WARRANTIES OF FURMAN
5.1 Due Authorization . . . . . . . . . . . . . . . . . . 19
5.2 No Conflicts . . . . . . . . . . . . . . . . . . . . . 20
5.3 Investor Status . . . . . . . . . . . . . . . . . . . 20
5.4 Accredited Investor . . . . . . . . . . . . . . . . . 20
5.5 No General Solicitation . . . . . . . . . . . . . . . 20
6. COVENANTS OF THE COMPANY
6.1 Affirmative Covenants. . . . . . . . . . . . . . . . 20
6.2 Restrictions . . . . . . . . . . . . . . . . . . . . . 23
6.3 No Solicitation . . . . . . . . . . . . . . . . . . . 25
6.4 Shareholders' Meeting . . . . . . . . . . . . . . . . 26
7. CONDITIONS TO FURMAN'S OBLIGATIONS AT CLOSING
7.1 Representations and Warranties . . . . . . . . . . . . 28
7.2 Performance . . . . . . . . . . . . . . . . . . . . . 28
7.3 Compliance Certificate . . . . . . . . . . . . . . . . 28
7.4 No Litigation . . . . . . . . . . . . . . . . . . . . 28
7.5 Proceedings and Documents . . . . . . . . . . . . . . 28
7.6 Transaction Documents . . . . . . . . . . . . . . . . 29
7.8 Board of Directors . . . . . . . . . . . . . . . . . . 29
7.9 Listing . . . . . . . . . . . . . . . . . . . . . . . 29
7.10 Opinion of Counsel . . . . . . . . . . . . . . . . . . 30
7.11 Closing of Other Investment . . . . . . . . . . . . . 30
8. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING
8.1 Representations and Warranties . . . . . . . . . . . . 30
8.2 Payment of Purchase Price . . . . . . . . . . . . . . 30
8.3 Proceedings and Documents . . . . . . . . . . . . . . 30
8.4 Shareholder Approvals . . . . . . . . . . . . . . . . 30
8.5 Listing . . . . . . . . . . . . . . . . . . . . . . . 30
8.6 Fairness Opinion . . . . . . . . . . . . . . . . . . . 31
8.7 Private Placement Questionnaire. . . . . . . . . . . . 31
9. TERMINATION
9.1 Termination . . . . . . . . . . . . . . . . . . . . . 31
9.2 Effect of Termination . . . . . . . . . . . . . . . . 31
10. MISCELLANEOUS
10.1 Survival . . . . . . . . . . . . . . . . . . . . . . . 31
10.2 Successors and Assigns . . . . . . . . . . . . . . . . 32
10.3 Governing Law . . . . . . . . . . . . . . . . . . . . 32
10.4 Currency . . . . . . . . . . . . . . . . . . . . . . . 32
10.5 Public Announcements; Confidentiality . . . . . . . . 32
10.6 Counterparts . . . . . . . . . . . . . . . . . . . . . 32
10.7 Time of Essence . . . . . . . . . . . . . . . . . . . 32
10.8 Headings . . . . . . . . . . . . . . . . . . . . . . . 32
10.9 Notices . . . . . . . . . . . . . . . . . . . . . . . 32
10.10 No Finder's Fees . . . . . . . . . . . . . . . . . . . 34
10.11 Costs and Expenses . . . . . . . . . . . . . . . . . . 34
10.12 Amendments and Waivers . . . . . . . . . . . . . . . . 35
10.13 Severability . . . . . . . . . . . . . . . . . . . . . 35
10.14 Entire Agreement . . . . . . . . . . . . . . . . . . . 35
10.15 Further Assurances . . . . . . . . . . . . . . . . . . 35
SCHEDULES AND EXHIBITS
Schedule Description
-------- -----------
4.3 Options, Warrants and Reserved Shares
4.4(b) Organizational Chart
4.4(c) Stock Ownership
4.7 Conflicts
4.8 Compliance
4.12 Liabilities
4.13 Material Adverse Effect
4.16(a) Real Property
4.16(b) Permitted Encumbrances
4.19 Material Contracts
4.23 Consents and Approvals
4.27 Shareholder Approval
6.1(a) Writedowns
6.1(e) Insurance
7.10 Form of Company Legal Opinion
10.10 Finder's Fees
Exhibit Description
------- -----------
A Employment Agreement Term Sheet
B Stock Option Term Sheet
INVESTMENT AGREEMENT
This INVESTMENT AGREEMENT (this "Agreement") is made and entered
into as of the 12th day of June, 1998 by and among Livent Inc., an Ontario
corporation (the "Company") and Roy L. Furman ("Furman").
W I T N E S S E T H:
WHEREAS, the Company desires to sell to Furman, and Furman
desires to purchase from the Company, Common Shares of the Company on the
terms and conditions set forth in this Agreement;
WHEREAS, in order to induce Furman to make the investment, join
the Board of Directors and become Chairman and Chief Executive Officer of
the Company, the Company desires to issue warrants to Furman and the
Company and Furman agree to enter into a Warrant Agreement concurrently
herewith providing for the issuance of such warrants to Furman to purchase
Common Shares (the "Warrant Agreement");
WHEREAS, Garth H. Drabinsky and Myron I. Gottlieb (the
"Executives"), Lynx Ventures L.P., a Delaware limited partnership ("LV"),
David R. Maisel ("Maisel") and Furman have entered into a Voting Trust
Agreement, dated as of the date hereof, establishing certain terms and
conditions concerning the voting of Common Shares held by the parties (the
"Voting Trust Agreement");
WHEREAS, the Executives, LV, Maisel and Furman have entered into
a Voting Agreement, dated as of the date hereof, establishing certain terms
and conditions concerning the voting of certain Common Shares held by the
parties which are not subject to the Voting Trust Agreement (the "Voting
Agreement").
WHEREAS, the Executives and LV have entered into an Assignment
and Assumption Agreement, dated as of the date hereof (the "Assignment and
Assumption Agreement"), that assigns all of the Executives' assignable
rights under the voting trust agreement by and among the Company,
Executives, certain management holders of Common Shares and the Depositary
(as defined therein) dated May 19, 1993 (the "Management Voting Trust
Agreement");
WHEREAS, the Executives intend to resign as Voting Trustees ( as
defined in the Management Voting Trust Agreement) under the Management
Voting Trust Agreement and to appoint LV as the sole Voting Trustee under
such agreement;
WHEREAS, the Company, the Executives, Maisel, LV, Furman and the
THL Entities (as defined below), have entered into a Shareholders
Agreement, dated as of the date hereof, providing for certain rights and
restrictions with respect to the Common Shares held by such parties and
establishing certain terms and conditions concerning the voting of Common
Shares held by the parties thereto (the "Shareholders Agreement");
WHEREAS, LV, Thomas H. Lee Equity Partners, L.P., a Delaware
limited partnership and THL-CCI Limited Partnership, a Massachusetts
limited partnership (the "THL Entities") have entered into a Voting, Right
of First Offer and Waiver Agreement, dated as of the date hereof,
establishing, among other things, certain terms and conditions concerning
the voting of Common Shares held by the parties thereto (the "THL Voting
Agreement");
WHEREAS, the Company and each of the Executives, Maisel and
Furman desire to enter into individual Employment Agreements providing for
certain employment responsibilities of each of the Executives, Maisel and
Furman (the "Employment Agreements");
WHEREAS, the Company and CKE Associates LLC have entered into an
Advisory Agreement, dated as of the date hereof, providing for certain
advisory services of LV to the Company (the "Advisory Agreement"); and
WHEREAS, the Company, LV, the Executives, Maisel, Furman and the
THL Entities have entered into, an Omnibus Agreement, dated as of April 13,
1998 (the "Omnibus Agreement"), which evidences the intention of such
parties to be legally bound to the terms of the term sheets attached
thereto and to enter into the expanded agreements and documents referred to
above, each of which is addressed in the term sheets attached to the
Omnibus Agreement .
NOW, THEREFORE, in consideration of valuable consideration (the
receipt and sufficiency of which is hereby acknowledged by each of the
parties hereto) and the mutual agreements, covenants, representations and
warranties set forth herein, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. DEFINITIONS.
"Advisory Agreement" has the meaning ascribed thereto in the recitals;
"Agreement" has the meaning ascribed thereto in the preamble;
"Assignment and Assumption Agreement" has the meaning ascribed thereto
in the recitals;
"Board of Directors" means the Board of Directors of the Company;
"Board Recommendation" has the meaning ascribed thereto in Section
6.1(d);
"Business Day" means a day on which both the TSE and NASDAQ are open
for trading;
"Closing" and "Closing Date" have the meanings ascribed thereto
respectively in Section 3;
"Commission" shall mean the United States Securities and Exchange
Commission;
"Common Shares" means the common shares of the Company, any shares
resulting from the change of the designation of the common shares, and
any shares into which the common shares may be changed, converted,
exchanged or reclassified;
"Company" has the meaning ascribed thereto in the preamble;
"EEOC" has the meaning ascribed thereto in Section 4.21;
"Employment Agreement Term Sheet" shall mean the term sheets attached
hereto as Exhibit A;
"Employment Agreements" has the meaning ascribed thereto in the
recitals;
"Executives" has the meaning ascribed thereto in the recitals;
"First Preferred Shares" means the preferred shares of the Company
designated as First Preferred Shares;
"Furman" has the meaning ascribed thereto in the preamble;
"GAAP" has the meaning ascribed thereto in Section 4.11;
"Hazardous Materials" has the meaning ascribed thereto in Section
4.17;
"Intellectual Property" has the meaning ascribed thereto in Section
4.20;
"License Agreements" has the meaning ascribed thereto in Section
4.20(a);
"Liens" has the meaning ascribed thereto in Section 4.15;
"Management Voting Trust Agreement" has the meaning ascribed thereto
in the recitals;
"Material Adverse Effect" shall mean a material adverse effect on the
business, results of operations, prospects, assets, liabilities or
condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole;
"1933 Act" means the United States Securities Act of 1933, as amended;
"1934 Act" means the United States Securities Exchange Act of 1934, as
amended;
"1998 Annual Meeting" means the annual meeting of holders of Common
Shares to be held on June 4, 1998 or at such other date as may be
determined hereafter;
"NASDAQ" has the meaning ascribed thereto in Section 4.25;
"New Stock Option Plan" has the meaning ascribed thereto in Section
6.1(d);
"NLRB" has the meaning ascribed thereto in Section 4.21;
"Organizational Documents" shall mean the articles of incorporation,
certificate of incorporation, by-laws, certificates of formation, or
other constitutional documents;
"Permitted Encumbrances" has the meaning ascribed thereto in Section
4.16(b);
"Person" shall mean any natural person, company, corporation,
association, partnership, organization, business, firm, joint venture,
trust, unincorporated organization or any other entity or
organization, including a government, or any political subdivision,
department or agency of any government;
"Purchase Price" has the meaning as ascribed thereto in Section 2;
"Purchased Shares" has the meaning ascribed thereto in Section 2;
"Real Property" means all of the Company's and its Subsidiaries'
right, title and interest in and to all real property, including,
without limitation, all fee titles, leaseholds, easements, rights of
way and licenses and real property subject to operating or management
agreements and the structures, improvements, buildings and fixtures
located thereon;
"Realty Use Rights" has the meaning ascribed thereto in Section
4.16(c);
"Representative" shall mean a representative officer, director,
employee, agent or other representative (including, without
limitation, any investment banker, attorney or accountant);
"Shareholder Approval" means the approval by shareholders of the
Company as required by and in accordance with applicable rules,
regulations, statutes or any other pronouncements of the TSE, NASDAQ
or any federal, state, provincial or local governmental authority;
"Shareholders Agreement" has the meaning ascribed thereto in the
recitals;
"Securities Act (Ontario)" means the Securities Act, R.S.O. 1990,
c. S.5, as the same may be amended, re-enacted or replaced from time
to time;
"Software" has the meaning ascribed thereto in Section 4.20;
"Subsidiary" shall mean any Person of which the Company (either alone
or through or together with any other Subsidiary) owns, directly or
indirectly, 50% or more of the capital stock or other equity interest,
the holders of which are generally entitled to vote for the election
of the board of directors or other governing body of such Person;
"THL Voting Agreement" has the meaning ascribed thereto in the
recitals;
"Trade Secrets" has the meaning ascribed thereto in Section 4.20;
"Transaction Documents" means, collectively, each of the agreements
referenced in Section 7.6;
"Stock Option Term Sheet" means the term sheet attached hereto as
Exhibit B;
"TSE" means the Toronto Stock Exchange;
"Updates" has the meaning ascribed thereto in Section 6.1(j);
"Voting Agreement" has the meaning ascribed thereto in the recitals;
"Voting Trust Agreement" has the meaning ascribed thereto in the
recitals;
"Warrant Agreement" has the meaning ascribed thereto in the recitals;
"Writedown" has the meaning ascribed thereto in Section 6.1(a).
2. PURCHASE AND SALE OF COMMON SHARES. Upon the terms and subject
to the conditions hereof, at the Closing and taking place simultaneously
therewith, the Company shall issue, sell and deliver to Furman, and Furman
shall subscribe for and purchase from the Company, free and clear of all
Liens, 250,000 Common Shares (the "Purchased Shares") for an aggregate
purchase price of U.S.$2,000,000 (the "Purchase Price").
3. CLOSING. The closing of the purchase and sale of the Purchased
Shares (the "Closing") shall occur as soon as practicable after the
satisfaction or waiver of the conditions set forth in Sections 7 and 8
hereto, at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, New
York, New York, or at such other place as the Company and Furman may agree.
The time and date upon which the Closing occurs is herein called the
"Closing Date." The Company shall deliver to Furman at the Closing a duly
executed certificate evidencing the Purchased Shares registered in the name
of Furman and Furman shall deliver to the Company at the Closing the
Purchase Price, payable by interbank transfer of immediately available
funds to accounts designated by the Company in writing at least two
Business Days prior to the Closing Date. In addition, each party to this
Agreement shall execute and deliver each of the Transaction Documents and
such other documents as may be required by this Agreement or that are
reasonable and customary and are requested by the other party.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to Furman that the statements in the
following paragraphs of this Section 4 are, as of the date of this
Agreement, and will be, as of the Closing Date, true and correct:
4.1 Organization, Good Standing and Qualification. The Company
is a corporation duly incorporated and organized and is validly subsisting
under the laws of the Province of Ontario. The Company has all requisite
power and authority to own, lease and operate the property and assets it
now owns, leases and operates and to conduct its business as presently
conducted and as proposed to be conducted and to execute and deliver this
Agreement and the Purchased Shares. The Company is duly qualified and
licensed as a corporation to conduct its business and is in good standing
in each jurisdiction in which the nature of the business conducted by it or
the property owned, leased or operated by it makes such qualification or
licensing necessary, except for such failures to be so duly qualified and
licensed and in good standing which will not in the aggregate have a
Material Adverse Effect.
4.2 Capitalization. The authorized capital of the Company
consists of (i) an unlimited number of Common Shares of which on the date
hereof there are 18,071,235 outstanding, all of which are duly authorized,
validly issued, fully paid and non-assessable and free of pre-emptive
rights, other than those contemplated by the Shareholders Agreement and the
THL Voting Agreement, and (ii) an unlimited number of First Preferred
Shares, of which on the date hereof there are none outstanding.
4.3 Options, Warrants and Reserved Shares. Except as set forth
in Schedule 4.3 hereto, there are no outstanding agreements, warrants,
options, rights or privileges, pre-emptive or contractual, including
convertible or exchangeable securities, to subscribe for, purchase or
otherwise acquire any Common Shares or other equity securities of the
Company or securities convertible into or exchangeable for Common Shares or
other equity securities of the Company. All Common Shares issuable as set
forth in Schedule 4.3, shall be duly authorized, validly issued, fully paid
and non-assessable and free of preemptive rights, other than those
contemplated by the Shareholders Agreement and the THL Voting Agreement,
upon issuance on the terms and conditions specified in the instruments
pursuant to which they are issuable.
4.4 Subsidiaries.
(a) Each Subsidiary of the Company is duly incorporated or
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization. Each of the
Subsidiaries of the Company has the requisite power and authority to
own, lease and operate the properties and assets it now owns, leases
and operates and to conduct its business as presently conducted and as
proposed to be conducted. Each Subsidiary is duly qualified and
licensed and is in good standing to do business in each jurisdiction
in which the property owned, leased or operated by it or the nature of
the business conducted by it makes such qualification or licensing
necessary, except for such failures to be so duly qualified and
licensed and in good standing which will not in the aggregate have a
Material Adverse Effect.
(b) Attached hereto as Schedule 4.4(b) is an organizational
chart of the Company and its Subsidiaries. All of the capital stock,
share capital, securities convertible or exercisable into capital
stock, or other equity interests of each Subsidiary are owned by the
Company or its Subsidiaries, free and clear of all Liens, other than
pledges in favor of Canadian Imperial Bank of Commerce ("CIBC").
(c) Except for its Subsidiaries and as otherwise set forth on
Schedule 4.4(c), the Company owns no stock, securities or equity
interests in any Person.
4.5 Due Authorization. Subject to a requirement to obtain
shareholder approval of this Agreement, the Company has taken all necessary
corporate action to authorize the execution, delivery and performance of
this Agreement and the Transaction Documents to which the Company is and is
to be a party and to issue the Purchased Shares and to consummate the
transactions contemplated hereby and thereby; this Agreement has been, and
upon execution and delivery thereof to Furman will be, duly executed and
delivered on behalf of the Company and will constitute the legal valid and
binding obligation of the Company enforceable against the Company by Furman
in accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency or other laws of general application
affecting the enforcement of creditors' rights and subject to the
qualification that specific performance and injunction, being equitable
remedies, may only be granted in the discretion of a court of competent
jurisdiction.
4.6 Valid Issuance of Stock. The Purchased Shares, when issued,
paid for and delivered in accordance with the terms of this Agreement, will
be duly authorized, validly issued, fully paid and nonassessable and free
of preemptive rights, other than those contemplated by the Shareholders
Agreement and the THL Voting Agreement.
4.7 No Conflicts. Except as set forth in Schedule 4.7 attached
hereto, none of: (i) the authorization, execution, delivery and
performance by the Company of this Agreement and the Transaction Documents
to which the Company is a party; (ii) the issuance and sale of the
Securities as provided herein or in the Transaction Documents; or (iii) any
further acquisitions of shares of capital stock of the Company by Furman
(including shares that would be issued by the Company to Furman) results or
would result in the creation or imposition of any Lien upon any of the
properties or assets of the Company or any of its Subsidiaries or is in
conflict with or does or will result in a breach by the Company of or does
or will create a state of facts which after notice or lapse of time or both
will result in a breach by the Company of any of the terms or provisions of
(a) the Organizational Documents of the Company or any of its Subsidiaries,
(b) the resolutions of the directors or shareholders of the Company, (c)
other than with respect to clause (iii) above, any statute, law,
regulation, court order or decision to which the Company is subject or (d)
any material indenture, instrument, agreement or undertaking to which the
Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries or the properties or assets of the Company or any
of its Subsidiaries are or may become bound, excluding from such clauses
(c) and (d), such breaches or violations that, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
4.8 Compliance. Except as set forth in Schedule 4.8, neither
the Company nor any of the Subsidiaries is in violation of any term or
provision of (a) their respective Organizational Documents, (b) any
agreement or instrument to which any of them is a party or by which any of
them or their respective assets are bound, including any existing license
to conduct business, note, bond, mortgage, indenture, contract, lease,
permit, franchise or other instrument, or (c) any applicable law, excluding
from such clauses (b) and (c), such violations that, in the aggregate, have
not had, or could not reasonably be expected to have, a Material Adverse
Effect.
4.9 No Orders. No order suspending the sale or ceasing the
trading of the Common Shares has been issued by any court, securities
commission or regulatory authority in Canada or the United States, and no
proceedings for such purpose are pending or, to the knowledge of the
Company, after reasonable inquiry, threatened.
4.10 Litigation. There is not now pending against the Company
or any of its Subsidiaries or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries, nor has the Company
received notice in respect of, any claim or potential claim which could
lead to any litigation, action, suit or other proceeding by or before any
court, tribunal, governmental agency or authority, securities commission or
regulatory body in Canada or the United States that may seek to enjoin the
transactions contemplated herein or that, if successful, would have in the
aggregate a Material Adverse Effect.
4.11 Financial Information.
(a) The audited consolidated balance sheets of the Company and
its Subsidiaries as of December 31,1996 and the related statements of
income, retained earnings and changes in financial position for the
year then ended, including footnotes thereto, certified by Deloitte &
Touche, independent certified public accountants, all of which have
been delivered to Furman, fairly present the consolidated financial
condition and consolidated results of operations of the Company and
its Subsidiaries as of such dates and for such respective periods in
accordance with generally accepted accounting principles and practices
in Canada applied consistently ("GAAP"). Furman has been provided
true and complete copies of such financial statements.
(b) The audited consolidated balance sheets of the Company and
the Subsidiaries as of December 31, 1997 and the related statements of
income, retained earnings and changes in financial position for the
year then ended, including footnotes thereto, certified by Deloitte &
Touche, independent certified public accountants, all of which were
delivered to Furman on April 13, 1998, fairly present the consolidated
financial condition and consolidated results of operations of the
Company and its Subsidiaries as of such dates and for such respective
periods in accordance with GAAP applied in a manner consistent with
the financial statements described in paragraph (a) above.
(c) The unaudited consolidated balance sheets of the Company and
the Subsidiaries as of September 30, 1997, and the related statements
of income, retained earnings and changes in financial position for the
nine months then ended, including footnotes thereto, which have been
delivered to Furman, fairly present the consolidated financial
condition and consolidated results of operations of the Company and
the Subsidiaries as of such date and for such period in accordance
with GAAP applied in a manner consistent with the financial statements
described in paragraphs (a) & (b) above.
4.12 Absence of Undisclosed Liabilities. Except as set forth in
Schedule 4.12 hereto, neither the Company nor any of its Subsidiaries has
incurred any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) subsequent to December 31, 1996, except
for liabilities or obligations that were incurred in the ordinary course of
business consistent with past practice, which would not, in the aggregate,
have, or be reasonably expected to have, a Material Adverse Effect.
4.13 Material Adverse Effect. Except as set forth in Schedule
4.13 hereto, since December 31, 1996 there has been no change in the
business, results of operations, prospects, assets, liabilities and
condition (financial or otherwise) of the Company and its Subsidiaries,
individually or taken as a whole, which would have or be reasonably
expected to have a Material Adverse Effect.
4.14 Securities Laws. The Company has made all filings required
of it under all applicable securities laws, regulations and rules and none
of such filings contains any untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. Neither the
issuance nor the sale of the Purchased Shares will result in any
contravention by the Company of any securities laws, regulations or rules
applicable to the Company.
4.15 Title and Interest. Each of the Company and its
Subsidiaries has good title to, or a valid leasehold interest in, all of
the property and assets used by it, located on its premises, or shown on
its financial books and records, free and clear of all claims, liens,
charges, restrictions, reservations and agreements, mortgages, pledges,
security interests, guarantees, easements, rights of way and encumbrances
of any kind or character ("Liens") other than the security interests and
other collateral security granted in connection with the credit agreement
made as of December 4, 1996, as amended, between the Company and the
Canadian Imperial Bank of Commerce and the Permitted Encumbrances (as
defined below), and except for properties and assets disposed of in the
ordinary course of business.
4.16 Real Property.
(a) All of the Company's and its Subsidiaries' material Real
Property is described on Schedule 4.16(a). The Company and its
Subsidiaries own or have the right to occupy and use all the Real
Property, whether owned or leased by the Company and its Subsidiaries.
(b) The Company and its Subsidiaries have good title to all the
owned Real Property and to all buildings, structures and other
improvements thereon and all fixtures thereto subject only to Liens
which, individually or taken as a whole, do not materially interfere
with the current use, occupancy or operation of the particular assets
or properties, subject to such Liens, or to the matters described with
respect to each parcel of Real Property on Schedule 4.16(b)
(collectively, the "Permitted Encumbrances").
(c) The Company and its Subsidiaries have sufficient right,
title and interest in and to agreements which relate to or provide
leases, easements, rights of way, licenses, management agreements,
operating agreements and other non-ownership interests to use the Real
Property in the manner in which it has been used in the past
(collectively, the "Realty Use Rights"). The Realty Use Rights are
valid and in full force and effect in accordance with their terms.
There is not under any Realty Use Right (i) any default (or, to the
knowledge of the Company, any claimed default) by the Company or its
Subsidiaries, or any event of default or event which with notice or
lapse of time, or both, would constitute a default by the Company or
its Subsidiaries which remains uncured, or (ii) to the knowledge of
the Company, any existing default by any other party to any Realty Use
Right, or any event of default or event which with notice or lapse of
time, or both, would constitute a default by any other party to any
Realty Use Right.
(d) The Company and its Subsidiaries are lawfully in possession
of all leased Real Property; and are presently occupying the entirety
of each parcel of the leased Real Property for the purposes set forth
in each lease agreement with respect thereto.
(e) All of the Real Property is free from any material use or
occupancy restrictions which would prevent the Company from using or
operating in accordance with past practice, except those imposed by
applicable zoning laws, ordinances and regulations, and from all
special taxes or assessments. No assessment for public improvement or
otherwise which is due and remains unpaid has been made against the
Real Property and the Company is not aware of any currently proposed
or pending assessment for public improvements or otherwise. No options
have been granted to others to purchase, lease or otherwise acquire
any interest in the Real Property.
(f) To the Company's knowledge, the present use of and enjoyment
of material buildings, structures and improvements on the Real
Property are in conformity with all applicable laws, rules,
regulations and ordinances.
(g) The Company and its Subsidiaries have not received any
notice that the owner of any leased Real Property has made any
assignment, pledge or hypothecation of the lease agreement with
respect thereto or the rents or use fees due thereunder.
4.17 Environmental Matters.
(a) As used herein, the term "Environmental Laws" means all
applicable U.S. or Canadian federal, state, provincial, local or any
foreign laws relating to pollution or protection of human health or
the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases
or threatened releases of chemicals, pollutants, contaminants, or
toxic or hazardous substances or wastes ( collectively, "Hazardous
Materials") into the environment, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
applicable authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders,
permits, plans or regulations issued, entered, promulgated or approved
thereunder to the extent applicable to the specific operations or Real
Property of the Company and its Subsidiaries.
(b) There are, with respect to the Company, its Subsidiaries or
any predecessors of the foregoing, no past or present violations of
Environmental Laws, releases of any materials into the environment,
actions, activities, circumstances, conditions, events, incidents, or
contractual obligations which may give rise to any common law
environmental liability or any liability under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 or
similar U.S. or Canadian federal, state, provincial, local or any
foreign laws, other than those which, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect, and none of
the Company and its Subsidiaries has received any notice with respect
to any of the foregoing, nor is any action pending or threatened in
connection with any of the foregoing that, if adversely determined,
could reasonably be expected to have a Material Adverse Effect.
4.18 Property and Assets. Each of the Company and its
Subsidiaries owns or leases all real, personal, tangible and intangible
property and assets (including, without limitation, all production rights)
necessary for the conduct of their respective businesses as such businesses
are presently conducted and are proposed to be conducted. To the knowledge
of the Company, all tangible properties and assets owned or leased by the
Company or any of its Subsidiaries are in good operating condition and
repair, ordinary wear and tear excepted, have been well maintained, and
conform with all applicable laws, statutes, ordinances, rules and
regulations.
4.19 Material Contracts. Except for those agreements listed on
Schedule 4.19, neither the Company nor any of the Subsidiaries is a party
to any agreement not in the ordinary course of business or not made at
arm's length. All of the Company's material agreements, arrangements,
understandings and contracts are valid and binding obligations, in full
force and effect in all respects and are being performed in accordance with
their terms in all material respects and to the knowledge of the Company
the parties to such agreements, arrangements, understandings and contracts
are in compliance in all material respects with the terms thereof.
4.20 Intellectual Property. The Company and its Subsidiaries own
or have the valid right to use all material patents and patent
applications; trademarks, service marks, and trademark or service mark
registrations and applications, trade names, Internet domain names, logos,
designs, slogans, and general intangibles of like nature, together with all
goodwill related to the foregoing; copyrights, copyright and mask works (as
defined in 17 U.S.C. 901, et seq.) registrations, renewals and applications
for copyrights and mask works; computer software, computer programs, and
computer hardware (collectively, "Software"); rights of publicity
(including but not limited to names, images, and biographical materials
concerning individuals) and rights of privacy; technology, trade secrets
and other confidential information, know-how, proprietary processes,
formulae, algorithms, models and methodologies (collectively, "Trade
Secrets"); and license agreements relating to any of the foregoing (all of
the foregoing, collectively, the "Intellectual Property") used in or
necessary to the conduct of the Company and its Subsidiaries' businesses as
currently conducted or planned to be conducted.
(a) All agreements pertaining to the use of or granting any
right to use or practice any rights under any Intellectual Property,
whether the Company or its Subsidiaries is the licensee or licensor
thereunder, and any written settlements relating to any Intellectual
Property, indicating for each the title, the parties, date executed,
and the Intellectual Property covered thereby (collectively, the
"License Agreements") are valid and binding obligations of the Company
or its Subsidiaries, enforceable in accordance with their terms, and
there exists no event or condition which will result in a violation or
breach of, or constitute (with or without due notice or lapse of time
or both) a default by the Company or its Subsidiaries under any such
License Agreement.
(b) The Intellectual Property owned by the Company and its
Subsidiaries is free and clear of all Liens.
(c) There are no settlements, forebearances to sue, consents,
judgments, or orders or similar obligations which (i) restrict the
Company or its Subsidiaries' rights to use any Intellectual Property,
(ii) restrict the Company or its Subsidiaries' business in order to
accommodate a third party's Intellectual Property rights or (iii)
permit third parties to use any Intellectual Property which would
otherwise infringe the Company or its Subsidiaries' Intellectual
Property.
(d) To the best of the Company 's and its Subsidiaries'
knowledge, the conduct of the Company 's and its Subsidiaries'
business as currently conducted or planned to be conducted does not
infringe upon any Intellectual Property owned or controlled by any
third party (either directly or indirectly such as through
contributory infringement or inducement to infringe). There are no
claims or suits pending or, to the Company 's or its Subsidiaries'
knowledge, threatened, and the Company and its Subsidiaries have not
received any notice of a third party claim or suit (i) alleging that
the Company 's or its Subsidiaries' activities or the conduct of its
businesses infringes upon or constitutes the unauthorized use of the
Intellectual Property rights of any third party, (ii) alleging that
the Company 's or its Subsidiaries' activities or the conduct of its
businesses is libelous, slanderous, or otherwise defamatory, (iii)
challenging the ownership, use, validity or enforceability of any
Intellectual Property, or (iv) challenging any Intellectual Property
licensed to the Company or its Subsidiaries.
(e) The consummation of the transactions contemplated hereby
will not result in the loss or impairment of the Company 's or its
Subsidiaries' right to own or use any of the Intellectual Property nor
require the consent of any governmental authority or third party in
respect of any such Intellectual Property.
(f) To the knowledge of the Company, none of the material
Software used or relied on by the Company or by any of its
Subsidiaries in the conduct of their respective businesses will
malfunction, will cease to function, will generate incorrect data or
will provide incorrect results when processing, providing, and/or
receiving (i) date-related data into and between the twentieth and
twenty-first centuries and (ii) date-related data in connection with
any valid date in the twentieth and twenty-first centuries.
4.21 Labor Relations. (i) The Company and its Subsidiaries
are in compliance in all material respects with all federal, state and
provincial laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and has not engaged in any
unfair labor or unfair employment practice, (ii) there is no unlawful
employment practice discrimination charge relating to the Company or any of
its Subsidiaries pending before the Equal Employment Opportunity Commission
("EEOC") or any EEOC recognized state "referral agency" or any comparable
authority in any jurisdiction, (iii) there is no unfair labor practice
charge or complaint against the Company or any of its Subsidiaries pending
before the National Labor Relations Board ("NLRB") or any comparable
authority in any jurisdiction, (iv) there is no labor strike, dispute,
slowdown or stoppage actually pending or, to the knowledge of the Company,
threatened against or involving or affecting the Company or any of its
Subsidiaries, (v) no labor organization or group of employees of the
Company or any of its Subsidiaries has made a pending demand for
recognition or certification, and there are no representation or
certification proceedings presently pending or, to the knowledge of the
Company, threatened to be brought or filed with the NRLB or any other labor
relations tribunal or authority, (vi) no grievance or arbitration
proceeding relating to the Company or any of its Subsidiaries is pending
and no written claim therefor exists, (vii) there is no claim, charge or
complaint relating to the Company or any of its Subsidiaries relating to
violations of applicable human rights laws or regulations, (vii) the
Company and each of its Subsidiaries have complied with all applicable laws
relating to payroll and wage deductions for unemployment insurance, and
(ix) there is no collective bargaining agreement which is binding on the
Company or any of its Subsidiaries.
4.22 Taxes. Each of the Company and its Subsidiaries has filed
all tax returns that it was required to file. All such tax returns were
correct and complete in all material respects. All taxes due and owed by
any of the Company and its Subsidiaries have been paid, except where a
delinquency in payment would not, individually or in the aggregate, have a
Material Adverse Effect. There are no Liens on any of the assets of any of
the Company and its Subsidiaries that arose in connection with any failure
(or alleged failure) to pay any tax, including, without limitation, goods
and services taxes and provincial sales taxes.
Each of the Company and its Subsidiaries have withheld and paid
all taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, consultant, independent contractor,
creditor, shareholder, or other third party.
The Company does not expect any authority to assess any
additional taxes for any period for which tax returns have been filed. The
Company is not aware of any dispute or claim concerning any liability for
taxes of the Company or any of its Subsidiaries. None of the U.S. or
Canadian federal, state, provincial, local, and foreign income tax returns
filed with respect to any of the Company and its Subsidiaries for taxable
periods or taxation years ended on or after December 31, 1993, have been
audited or currently are the subject of audit. The Company has delivered
to Furman correct and complete copies of all U.S. and Canadian federal
income tax returns, letters from Revenue Canada and the U.S. Internal
Revenue Service, and notices of assessment or reassessment in respect of
assessments or reassessments against or agreed to by any of the Company and
its Subsidiaries since December 31, 1993.
None of the Company and its Subsidiaries have waived any statute
of limitations in respect of taxes or agreed to any extension of time with
respect to a tax assessment, reassessment or deficiency other than in
respect of Ontario Provincial sales tax relating to preproduction costs.
The provisions and reserves on the books of the Company and each
Subsidiary in respect of taxes are adequate to cover all accrued and unpaid
taxes of the Company and the Subsidiaries (whether or not disputed). No
reserve has been taken in respect of Ontario Provincial sales tax relating
to preproduction costs.
4.23 Consents and Approvals.
(a) Except as set forth in Schedule 4.23 hereto, the execution,
delivery and performance of this Agreement and the Transaction
Documents, and the consummation of the transactions contemplated
hereby and thereby, the Company does not and will not, require any
consent, approval, authorization, registration, qualification,
declaration, filing, governmental approval or other action by, or
filing with or notification to, any third party or any governmental
authority.
(b) Except as set forth on Schedule 4.23, the execution,
delivery and performance of this Agreement and the Transaction
Documents and the consummation of the transactions contemplated hereby
and thereby shall not trigger any change of control or ownership
provisions or clauses in any agreement, arrangement, understanding or
contract, whether formal or informal, written or oral, or subject the
Company or its Subsidiaries to any predetermined adverse alteration or
modification in any ongoing relationship (without consideration of the
change of control or ownership provision or the provision for the
predetermined adverse alteration or modification as part of the
ongoing relationship).
4.24 Information. The Company has provided to Furman all
information which a reasonable investor would consider material in
connection with making an informed decision regarding an investment in the
Company of the size, and in the circumstances contemplated by Furman
(including with respect to share ownership, voting rights and governance).
The information supplied by the Company does not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
4.25 Common Shares Listing. The Common Shares are registered
pursuant to Section 12(g) of the 1934 Act and are listed on the NASDAQ
National Market ("NASDAQ") and the TSE. The Company is a reporting issuer
under the Securities Act (Ontario). The Company has taken no action
designed to cause, or likely to result in, the termination of the
registration of the Common Shares under the 1934 Act or the Company's
reporting issuer status under the Securities Act (Ontario) or the delisting
of the Common Shares from NASDAQ or the TSE, nor has the Company received
any notification that the Commission or its Canadian equivalent or the
National Association of Securities Dealers, Inc. or the TSE is
contemplating the termination of such registration or listing. Prior to
Closing, the Purchased Shares will have been approved for trading on the
TSE, subject to notice of issuance.
4.26 Board Recommendations. The Company has taken all actions
necessary to procure the Board Recommendation for Shareholder Approval with
respect to the transactions contemplated by this Agreement and the
Transaction Documents.
4.27 Shareholder Approval. In order for shareholder approval
to be obtained for any of the matters contemplated by this Agreement to be
submitted to shareholders of the Company, the vote required is a majority
of the votes present, either in person or by proxy, at a duly constituted
meeting of shareholders of the Company and all shareholders other than the
parties identified on Schedule 4.27 are entitled to vote on such matters.
5. REPRESENTATIONS AND WARRANTIES OF FURMAN. Furman hereby
represents and warrants to the Company that the statements in the following
paragraphs of this Section 5 are, as of the date of this Agreement, and
will be, as of the Closing Date, true and correct:
5.1 Due Authorization. Furman has taken all necessary action to
authorize the execution, delivery and performance of this Agreement and the
Transaction Documents to which Furman is a party and to consummate the
transactions contemplated hereby. This Agreement has been, and upon
execution and delivery thereof to the Company will be, duly executed and
delivered on behalf of Furman and will constitute legal valid and binding
obligations of Furman enforceable against Furman by the Company in
accordance with its terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency or other laws of general application affecting
the enforcement of creditors' rights and subject to the qualification that
specific performance and injunction, being equitable remedies, may only be
granted in the discretion of a court of competent jurisdiction.
5.2 No Conflicts. The authorization, execution, delivery and
performance by Furman of this Agreement and the Transaction Documents is
not in conflict with and does not and will not result in a breach of and
does not and will not create a state of facts which after notice or lapse
of time or both will result in a breach of any statute, law, regulation,
court order or decision to which Furman is subject, or any material
indenture, instrument, agreement or undertaking to which Furman is a party
or by which Furman or the properties and assets of Furman are or may become
bound or results or would result in the creation or imposition of any Lien
upon any of the properties or assets of Furman.
5.3 Investor Status. Furman has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits
and risks of its investment in the Purchased Shares and is able to bear the
economic risks of such investment.
5.4 Accredited Investor. Furman is an "accredited investor" as
defined in Rule 501(a) under the 1933 Act. Furman is acquiring the
Purchased Shares for his own account and not with a view to any resale,
distribution or other disposition of the Purchased Shares in violation of
the United States securities laws.
5.5 No General Solicitation. Furman acknowledges that he has
not acquired the Purchased Shares as a result of any general solicitation
or general advertising (as those terms are used in Regulation D under the
1933 Act), including advertisements, articles, notices or other
communications published in any newspaper, magazine or similar media or
broadcast over radio or television, or any seminar or meeting whose
attendees have been invited by general solicitation or general advertising.
6. COVENANTS OF THE COMPANY.
6.1 Affirmative Covenants. The Company covenants and agrees
with Furman that it will do or cause to be done the following:
(a) write off the items and in the amounts as set forth in
Schedule 6.1(a) attached hereto (the "Writedown") in the 1997 Audited
Financial Statements;
(b) upon the request of Furman, take all such action as is
required under applicable law to cause Furman to be elected Chairman
of the Board of Directors at the 1998 Annual Meeting;
(c) appoint Furman to the office of Chief Executive Officer of
the Company effective as of the Closing Date;
(d) upon the request of Furman, take all such action as is
required under applicable law to obtain Shareholder Approval of the
transactions contemplated hereby, including a new Company employee
stock option plan with terms and conditions substantially similar to
those set forth on the Stock Option Term Sheet (the "New Stock Option
Plan") at the 1998 Annual Meeting, including making a recommendation
that the holders of shares of capital stock of the Company approve (a
"Board Recommendation") the adoption of the transactions contemplated
hereby, including the New Stock Option Plan;
(e) will maintain appropriate insurance on its assets and
business, including "key man" life insurance policies on the lives of
the employees of the Company set forth in Schedule 6.1(e) attached
hereto of not less than $12,000,000 per policy that may not be pledged
or assigned to any person other than a senior institutional lender to
the Company;
(f) use its best efforts to consummate the transactions
contemplated by this Agreement and the Transaction Documents, subject
to the terms and conditions set forth herein and therein;
(g) use its best efforts to obtain shareholder approval of this
Agreement and, the Transaction Documents to which the Company is a
party and the consummation of the transactions contemplated hereby and
thereby, to the extent applicable, including, if necessary,
determining at a meeting duly called and held that this Agreement, the
Transaction Documents and the transactions contemplated hereby and
thereby, taken together, are advisable and in the best interests of
the Company and its shareholders and making a Board Recommendation
with respect to the approval of this Agreement, the Transaction
Documents and the transactions contemplated hereby and thereby;
(h) use its best efforts to obtain all consents, approvals and
authorizations set forth in Schedule 4.23, including without
limitation, the Required Consents and to consult with Furman and keep
Furman appraised of the progress with respect to such consents,
approvals and authorizations;
(i) from the date of this Agreement to the Closing Date, permit
Furman to attend all meetings of the Board of Directors, provided,
that Furman shall excuse himself from the meeting of the Board of
Directors in the event that matters presented at a meeting of the
Board of Directors relating to the transactions contemplated by this
Agreement would create a conflict of interest;
(j) promptly provide Furman with written notification of any
event, occurrence or other information of any kind whatsoever which in
any way affects the continued truth, correctness or completeness of
any representation or warranty made by the Company in this Agreement
or would cause any of the conditions to any party's obligations to
consummate the transactions contemplated by this Agreement not to be
fulfilled ("Updates"). All such written notifications shall
specifically identify any and all of the representations or warranties
affected by the event, occurrence or information that necessitated the
giving of such notice. Notwithstanding the foregoing, the Updates
shall not be given effect for the purposes of (i) determining the
accuracy of the representations and warranties contained in this
Agreement, (ii) determining the satisfaction of the conditions
precedent to the obligations of Furman contained in Section 7 of this
Agreement, or (iii) limiting Furman's ability to seek indemnification
from the Company pursuant to the terms of this Agreement;
(k) will, and will cause its Subsidiaries and each of their
Representatives to, give Furman and his respective Representatives
reasonable access, upon reasonable notice and during normal business
hours, to the offices and other facilities and to the books and
records of the Company and its Subsidiaries and will cause the
Representatives of the Company and the Company's Subsidiaries to
furnish Furman and Representatives of Furman with such financial and
operating data and such other information with respect to the business
and operations of the Company and its Subsidiaries as Furman may from
time to time reasonably request;
(l) use its best efforts to cause the Purchased Shares to be
listed on the TSE and NASDAQ, including filing notice of the
transactions contemplated herein with the TSE forthwith and seeking
conditional approval of the TSE and NASDAQ to such listing prior to
the Closing Date;
(m) use its best efforts to maintain its status as a registrant
under the 1934 Act and a "reporting issuer" under the Securities Act
(Ontario) that is not in default or contravention of any requirement
of the 1934 Act and Securities Act (Ontario);
(n) use its best efforts to maintain the listing and posting for
trading of the Common Shares (including the Purchased Shares) on the
TSE and NASDAQ;
(o) shall, at the request of Furman, provide such information
and otherwise cooperate with Furman in such consultations with Furman
and Investment Canada as Furman may choose to have in connection with
the transaction contemplated hereunder, or for purposes of any
subsequent acquisition of securities of the Company; and
(p) use its best efforts to obtain the CIBC Opinion prior to
April 24, 1998.
6.2 Restrictions. Except as contemplated by this Agreement or
as expressly agreed to in writing by Furman, during the period from the
date of this Agreement to the Closing Date, the Company will, and will
cause each of its Subsidiaries to, conduct its operations according to its
ordinary and usual course of business and consistent with past practice and
use its and their respective reasonable best efforts to preserve intact
their current business organizations, keep available the services of their
current officers and employees and preserve their relationships with
customers, suppliers, licensors, licensees, advertisers, distributors and
others having business dealings with them and to preserve goodwill.
Without limiting the generality of the foregoing, and except as otherwise
expressly provided in this Agreement or required by law prior to the
Closing Date, the Company will not, and will cause its Subsidiaries not to,
without the consent of Furman and LV:
(a) adopt or amend in any material respect any bonus, profit
sharing, compensation, severance, termination, stock option, stock
appreciation right, pension, retirement, employment or other employee
benefit agreement, trust, plan or other arrangement for the benefit or
welfare of any director, officer or employee of the Company or any of
its Subsidiaries or increase in any manner the compensation or fringe
benefits of any director, officer or employee of the Company or any of
its Subsidiaries or pay any benefit not required by any existing
agreement or place any assets in any trust for the benefit of any
director, officer or employee of the Company or any of its
Subsidiaries (in each case, except with respect to employees and
directors in the ordinary course of business consistent with past
practice);
(b) incur any indebtedness for borrowed money in excess of
$300,000 in a single transaction (including involving a series of
related incurrences);
(c) expend funds, or commit to expend funds, in excess of
$300,000 in a single transaction (including a series of related
expenditures or commitments) other than preexisting preproduction
commitments or any budgeted expenditures for advertising in place at
January 1, 1998;
(d) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or
assets other than immaterial properties or assets (or immaterial
portions of properties or assets), except in the ordinary course of
business consistent with past practice;
(e) (i) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, (ii)
split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock or (iii)
purchase, redeem or otherwise acquire any shares of capital stock of
the Company or any of its Subsidiaries or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
(f) authorize for issuance, issue, deliver, sell or agree or
commit to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise), pledge or otherwise encumber any shares of its
capital stock or the capital stock of any of its Subsidiaries, any
other voting securities or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, voting
securities or convertible securities or any other securities or equity
equivalents (including without limitation stock appreciation rights);
provided, however, that this covenant shall not restrict the Company
from issuing up to 75,000 stock options pursuant to a resolution of
the Board of Directors at the April 12, 1998 meeting of the Board of
Directors;
(g) propose, authorize or effect any change or amendment to its
articles, by-laws or equivalent Organizational Documents or alter
through merger, liquidation, reorganization, restructuring or in any
other fashion the corporate structure or ownership of any material
Subsidiary of the Company;
(h) make or agree to make any acquisition of assets which is
material to the Company and its Subsidiaries, taken as a whole, except
for (x) purchases of inventory in the ordinary course of business or
(y) pursuant to purchase orders entered into in the ordinary course of
business which do not call for payments in a single transaction
(including in a series of related payments) in excess of $300,000 per
annum, which purchase orders are not preexisting preproduction
commitments or any budgeted expenditures for advertising in place at
January 1, 1998; or
(i) settle, pay or compromise any litigation (whether or not
commenced prior to the date of this Agreement) outside of the ordinary
course of business other than with the prior written consent of
Furman.
6.3 No Solicitation.
(a) From and after the date hereof until the termination of this
Agreement, the Company and its affiliates shall not, and shall
instruct their representative officers, directors, employees, agents
or other representatives (including, without limitation, any
investment banker, attorney or accountant) (each, a "Representative")
not to,
(i) directly or indirectly solicit, initiate, or encourage
(including by way of furnishing non-public information or assistance),
or take any other action to facilitate, any inquiries or proposals
from any person that constitute, or may reasonably be expected to lead
to, an acquisition, purchase, merger, consolidation, share exchange,
recapitalization, business combination or other similar transaction
involving 10% or more of the assets or any securities of, any merger
consolidation or business combination with, or any public announcement
of a proposal, plan, or intention to do any of the foregoing by, the
Company or any of its Subsidiaries (such transactions being referred
to herein as "Significant Transactions"),
(ii) enter into, maintain, or continue discussions or
negotiations with any person in furtherance of such inquiries or to
obtain a proposal for an Significant Transaction,
(iii) agree to or endorse any proposal for an Significant
Transaction, or
(iv) authorize or permit the Company's or any of its
affiliates' Representatives to take any such action.
(b) The Company will promptly notify Furman of the receipt of
any proposal for a Significant Transaction, the terms and conditions
of such proposal and the identity of the person making it. The
Company also will promptly notify Furman of any change to or
modification of such proposal for a Significant Transaction and the
terms and conditions thereof.
(c) The Company shall immediately cease and cause its affiliates
and its and their Representatives to cease any and all existing
activities, discussions or negotiations with any parties (other than
LV and Furman) conducted heretofore with respect to any of the
foregoing, and shall use its reasonable best efforts to cause any such
parties in possession of confidential information about the Company
that was furnished by or on behalf of the Company to return or destroy
all such information in the possession of any such party (other than
Investor) or in the possession of any Representative of any such
party.
6.4 Shareholders' Meeting.
(a) The Company, acting through the Board, shall, in accordance
with applicable law:
(i) duly call, give notice of, convene and hold the 1998
Annual Meeting and cause to be presented for consideration and
approval this Agreement and, if required, the Transaction Documents
and the transactions contemplated hereby and thereby, to the extent
applicable;
(ii) prepare and file with the appropriate regulatory
authorities such disclosure statements relating to this Agreement as
may be required by applicable law, and use its reasonable efforts (A)
to obtain and furnish the information required to be included by such
regulatory authorities in any such disclosure statement and, after
consultation with Furman, to respond promptly to any comments made by
such regulatory authorities with respect to any such disclosure
statement and cause all disclosure statements relating to this
Agreement required to be distributed to its shareholders to be mailed
to its shareholders in accordance with applicable law and (B) to
obtain the necessary approvals, if any, of this Agreement by its
shareholders; and
(iii) include in the disclosure statements to regulatory
authorities and its shareholders the Board Recommendation..
(b) The Company represents that the disclosure statements
required to be delivered to regulatory authorities and its
Shareholders in connection with the consummation of the transactions
contemplated by this Agreement will comply in all material respects
with the provisions of applicable securities laws and, on the date
filed with any such regulatory authority and on the date first
published, sent or given to the Company's shareholders, shall not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under
which they were made, not misleading. Each of the Company, on the one
hand, and Furman, on the other hand, agree promptly to correct any
information provided by either of them for use in any such disclosure
statement if and to the extent that it shall have become false or
misleading, and the Company further agrees to take all steps
necessary, to the extent required by law, to cause a revised
disclosure statement to be filed with the appropriate regulatory
authority and to be disseminated to the holders of Common Shares, in
each case, as and to the extent required by applicable securities
laws.
7. CONDITIONS TO FURMAN'S OBLIGATIONS AT CLOSING.
The obligations of Furman to effect the transactions to be
effected by it at the Closing shall be subject to the satisfaction, or
waiver, on or prior to the Closing Date of the following conditions:
7.1 Representations and Warranties. Each of the representations
and warranties of the Company contained in Section 4 shall be true and
correct in all material respects (except that they shall be true and
correct in all respects to the extent specifically qualified by materiality
or Material Adverse Effect) on and as of the Closing with the same effect
as though such representations and warranties had been made on and as of
the date of the Closing.
7.2 Performance. The Company shall have performed and complied
in all material respects (except that such performance and compliance shall
be in all respects to the extent such performance and compliance is
specifically qualified by materiality or Material Adverse Effect) with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing
and shall have obtained all approvals, consents and qualifications
necessary to complete the purchase and sale described herein.
7.3 Compliance Certificate. The Company shall have delivered to
Furman at the Closing a certificate signed on its behalf by its Chief
Executive Officer certifying that the conditions specified in Sections 7.1
and 7.2 have been fulfilled.
7.4 No Litigation. There is no action, suit, investigation or
proceeding by any governmental authority or third party before any court,
arbitrator, administrative agency or other governmental authority pending
or threatened against or affecting the Company or any of its Subsidiaries,
any of their properties, revenues or assets, or this Agreement or any
Transaction Document, which could reasonably be expected to have a Material
Adverse Effect or which could reasonably be expected to materially affect
(i) in the opinion of Furman the value of the Common Shares or (ii) the
Company's ability to perform its obligations under the Agreement or the
Transaction Documents.
7.5 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
and all documents incident thereto shall be reasonably satisfactory in form
and substance to Furman (and its counsel), and they shall each have
received all such counterpart originals and certified or other copies of
such documents as they may reasonably request. Such documents shall
include (but not be limited to) the following:
(a) Certified Charter Documents. A copy of the articles and by-
laws of the Company (as amended through the Closing Date), certified
by the Secretary of the Company as true and correct copies thereof as
of the Closing.
(b) Corporate Actions. A copy of the resolutions of the Board
of Directors of the Company evidencing the approval of this Agreement
and, the Transaction Documents and all transactions contemplated
thereby and, the issuance of the Purchased Shares.
7.6 Transaction Documents.
(a) The Voting Trust Agreement, the Voting Agreement, the
Shareholders Agreement and the Warrant Agreement, shall continue to be
in full force and effect.
(b) Each of the agreements described below, shall have been
adopted or executed and delivered by the Persons party thereto, as the
case may be, on or before the Closing:
(i) the New Stock Option Plan and the stock option
agreements between the Company and CKE Associates LLC, Furman and
Maisel, which are the definitive documents and agreements which
memorialize the terms set forth on the Stock Option Term Sheet; and
(ii) the Employment Agreement between Furman and the
Company which is one of the definitive agreements that memorialize the
terms set forth on the Employment Agreement Term Sheet.
7.7 Shareholder Approvals. Shareholder approval of this
Agreement and, if required, the Transaction Documents and the transactions
contemplated hereby and thereby, to the extent required shall have been
obtained and, if requested by Investor, Shareholder Approvals for the New
Stock Option Plan shall have been received.
7.8 Board of Directors. Furman shall have been elected Chairman
of the Board of Directors.
7.9 Listing. The Purchased Shares shall have been approved for
listing on the TSE, subject to notice of issuance.
7.10 Opinion of Counsel. Furman shall have received from outside
legal counsel for the Company an opinion, dated as of the date of Closing,
in the form and substance acceptable to Furman and the substantive
provisions of which are set forth on Schedule 7.10.
7.11 Closing of Other Investment. The closing of the
transactions contemplated by the Investment Agreement between the Company
and LV, dated April 13, 1998 (the "LV Investment Agreement"), shall occur
simultaneously with the Closing under this Agreement.
8. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING.
The obligations of the Company to effect the transactions to be
effected by it at the Closing shall be subject to the satisfaction, or
waiver, on or prior to the Closing Date of the following conditions:
8.1 Representations and Warranties. The representations and
warranties of Furman contained in Section 5 shall be true and correct in
all material respects on the date of the Closing with the same effect as
though such representations and warranties had been made on and as of the
Closing.
8.2 Payment of Purchase Price. Furman shall have delivered to
the Company the Purchase Price for the Purchased Shares specified for
Furman in Section 2 hereof in accordance with the provisions of Section 3.
8.3 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
and all documents incident thereto shall be reasonably satisfactory in form
and substance to the Company and to the Company's legal counsel, and the
Company shall have received all such counterpart originals and certified or
other copies of such documents as it may reasonably request.
8.4 Shareholder Approvals. Shareholder approval of this
agreement and the Transaction Documents to which the Company is a party and
the transactions contemplated hereby and thereby, to the extent required
shall have been obtained.
8.5 Listing. The Purchased Shares shall have been approved for
listing on the TSE, subject to notice of issuance.
8.6 Fairness Opinion. The Company shall have received the CIBC
Opinion.
8.7 Private Placement Questionnaire. Furman shall have
delivered a private placement questionnaire to the Toronto Stock Exchange.
9. TERMINATION.
9.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
(a) by either the Company or Furman, if the Closing shall not
have occurred prior to September 30, 1998;
(b) by either the Company or Investor, if consummation of the
transactions contemplated hereby would violate any nonappealable final
order, decree or judgment of any court or governmental body having
competent jurisdiction; or
(c) by Furman if either the Company or LV terminates this
Agreement pursuant to the LV Investment Agreement.
9.2 Effect of Termination. In the event of a termination of
this Agreement pursuant to Section 9.1, this Agreement will become void and
of no further force and effect, except for the provisions of Sections 10.1,
10.3, 10.5, 10.9, 10.11, 10.12, 10.13, 10.14 and this Section 9.2;
provided, however, nothing in this Section 9.2 will be deemed to release
any party from any liability for breach by any such party of the terms and
provisions of this Agreement or from the right to seek specific performance
by or seek equitable relief or similar remedies from the other party of its
obligations under this Agreement or any Transaction Document.
10. MISCELLANEOUS
10.1 Survival. Except for the covenants and agreements contained
in Section 10.11 hereof, which shall survive through the date prescribed in
the applicable statute of limitations, the representations, warranties,
covenants and agreements of the parties set forth in this Agreement shall
not survive the Closing.
10.2 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Neither party may assign this
Agreement without the prior written consent of the other party, except that
Furman may assign his rights under this Agreement to trusts and other
entities for bona fide estate planning purposes without the Company's
consent.
10.3 Governing Law. This Agreement shall be governed by and
construed under the internal laws of the State of New York, without
reference to principles of conflict of laws or choice of laws.
10.4 Currency. Unless otherwise indicated, all dollar amounts
referred to in this Agreement are expressed in U.S. funds.
10.5 Public Announcements; Confidentiality. This Agreement, the
Transaction Documents and any other related documents and the transactions
contemplated hereby and thereby shall be kept confidential by the parties
hereto until the Closing Date and no public announcement, press release or
public filing concerning this Agreement, the Transaction Documents or any
related documents or the transactions contemplated hereby and thereby shall
be made by either party except with the consent of the other party or
except as may be required by law and applicable stock exchange and NASDAQ
regulations.
10.6 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10.7 Time of Essence. Time shall be of the essence of this
Agreement.
10.8 Headings. The headings and captions used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits and schedules shall, unless otherwise provided, refer
to sections and paragraphs hereof and exhibits and schedules attached
hereto, all of which exhibits and schedules are incorporated herein by this
reference.
10.9 Notices. All notices, requests, demands and other
communications shall be in writing and shall be deemed to have been duly
given if personally delivered or sent by United States or Canadian mails or
by telegram or telex confirmed by letter, or by facsimile transmission,
receipt confirmed, to the address set forth below. All notices requiring
timely attention shall be sent by facsimile transmission, telex or
overnight mail. Any notice shall be deemed received, unless earlier
received, (a) if sent by certified or registered mail, return receipt
requested, when actually received, (b) if sent by overnight mail, on the
next Business Day, (c) if sent by telegram or telex, on the date sent, and
(d) if sent by facsimile transmission or delivered by hand, on the date of
receipt.
Notices to the Company shall be addressed as follows:
Livent Inc.
Suite 600
165 Avenue Road
Toronto, Ontario
Canada M5R 2H7
Fax No.: (416) 324-5535
Attention: Garth H. Drabinsky and
Myron I. Gottlieb
with a copy to:
Shearman & Sterling
Commerce Court West
199 Bay Street
P.O. Box 247, Suite 4405
Toronto, Ontario
Canada M5L 1E8
Fax No.: (416) 360-2958
Attention: Brice T. Voran
Notices to Furman shall be addressed as follows:
c/o Schulte, Roth & Zabel
900 Third Avenue
New York, NY 10022
U.S.A.
Fax No.: (212) 593-5955
Attention: Burton Lehman
with a courtesy copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
U.S.A.
Fax No.: (212) 735-2000
Attention: Eric L. Cochran
10.10 No Finder's Fees. Each party represents that it
neither is nor will be obligated for any finder's or broker's fee or
commission in connection with this transaction, other than the anticipated
payments by the Company to the persons and in the amounts as set forth in
Schedule 10.10 attached hereto. Furman agrees to indemnify and to hold
harmless the Company from any liability for any commission or compensation
in the nature of a finders' or broker's fee (and any asserted liability)
for which Furman or any of its officers, partners, employees, or
representatives is responsible. The Company agrees to indemnify and hold
harmless Furman from any liability for any commission or compensation in
the nature of a finder's or broker's fee (and any asserted liability) for
which the Company or any of its officers, employees or representatives is
responsible.
10.11 Costs and Expenses. All costs in connection with the
preparation, execution, delivery and performance of this Agreement and the
transactions contemplated hereby (including, irrespective of whether the
Closing shall have occurred, costs incurred by Furman, which include,
without limitation, reasonable solicitor and attorney fees) shall be borne
by the Company, including in the event that the transactions contemplated
by this Agreement fail to be consummated for any reason.
10.12 Amendments and Waivers. Any term of this Agreement may
be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Furman.
Any amendment or waiver effected in accordance with this Section shall be
binding upon each holder of any Purchased Shares at the time outstanding,
each future holder of such securities, and the Company.
10.13 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such
provisions shall be excluded from this Agreement and the balance of the
Agreement shall be interpreted as if such provisions were so excluded and
shall be enforceable in accordance with its terms.
10.14 Entire Agreement. This Agreement, together with any
exhibits or schedules hereto, constitutes the entire agreement and
understanding of the parties with respect to the subject matter hereof and
supersedes any and all prior negotiations, correspondence, agreements,
understandings duties or obligations between the parties with respect to
the subject matter hereof.
10.15 Further Assurances. From and after the date of this
Agreement, upon the request of Furman or the Company, the Company and
Furman shall execute and deliver such instruments, documents or other
writings as may be reasonably necessary or desirable to confirm and carry
out and to effectuate fully the
intent and purposes of this A
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
LIVENT INC.
By: /s/ Garth H. Drabinsky
------------------------------
Name: Garth H. Drabinsky
Title: Chairman and
Chief Executive Officer
By: /s/ Roy L. Furman
------------------------------
Roy L. Furman
EXHIBIT 6
WARRANT AGREEMENT
BETWEEN
LIVENT INC.
AND
ROY L. FURMAN
June 12th, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. DEFINITIONS....................................................................2
Additional Shares of Common Stock.......................................2
Common Stock............................................................3
Contract................................................................3
Convertible Securities..................................................3
Exercise Price..........................................................3
Expiration Date.........................................................3
Fair Market Value.......................................................3
Holders.................................................................4
Liens .................................................................4
Material Adverse Effect.................................................4
NASDAQ .................................................................4
1933 Act................................................................4
Options.................................................................4
Organizational Documents................................................4
Other Securities........................................................4
Person .................................................................4
Series A Exercise Price.................................................4
Series B Exercise Price.................................................4
Subsidiary..............................................................4
Underlying Shares.......................................................5
Voting Securities.......................................................5
Warrant Certificates....................................................5
Warrants................................................................5
2. ISSUE OF WARRANTS..............................................................5
2.1 Form of Warrant Certificates.....................................5
2.2 Execution and Delivery of Warrant Certificates...................5
3. EXERCISE OF WARRANTS...........................................................6
3.1 Exercise Price...................................................6
3.2 Exercise of Warrants.............................................6
3.3 Expiration of Warrants...........................................6
3.4 Method of Exercise...............................................6
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF
FURMAN........................................................................6
4.1 Due Authorization................................................6
4.2 No Conflicts.....................................................7
4.3 Consents, Approvals and Notices..................................7
4.4 Litigation. .....................................................7
4.5 Investor Status..................................................7
4.6 Accredited Investor..............................................7
4.7 No General Solicitation..........................................8
4.8 Brokers..........................................................8
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................8
5.1 Organization, Good Standing and Qualification....................8
5.2 Capitalization...................................................8
5.3 Due Authorization................................................8
5.4 No Conflicts.....................................................9
5.5 Compliance.......................................................9
5.6 Consents, Approvals and Notices..................................9
5.7 Litigation......................................................10
6. RIGHTS OF HOLDERS.............................................................10
7. ADJUSTMENT OF COMMON STOCK ISSUABLE UPON EXERCISE.............................10
7.1 Adjustment of Exercise Price....................................10
7.1.1 Issuance of Additional Shares of Common Stock............10
7.1.2 Extraordinary Dividends and Distributions...............11
7.2 Treatment of Options and Convertible Securities.................11
7.3 Treatment of Stock Dividends, Stock Splits, etc.................13
7.4 Underwriting Discounts..........................................13
7.5 Computation of Consideration....................................14
7.6 Adjustments for Combinations, etc...............................15
7.7 Dilution in Case of Other Securities............................15
7.8 Other Dilutive Events...........................................15
7.9 Minimum Adjustment of Exercise Price............................15
7.10 Notice of Adjustment............................................16
7.11 Statement on Warrants...........................................16
7.12 Fractional Interest.............................................16
8. CONSOLIDATION, MERGER, ETC....................................................16
8.1 Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, etc.............................................17
8.2 Assumption of Obligations.......................................17
8.3 Other Dilutive Events...........................................17
9. WARRANT TRANSFER BOOKS........................................................17
10. WARRANT HOLDERS...............................................................18
10.1 No Voting Rights................................................18
10.2 Right of Action.................................................18
11. COVENANTS.....................................................................19
11.1 Reservation of shares of Common Stock...........................19
11.2 Determinations by Board of Directors............................19
12. MISCELLANEOUS.................................................................19
12.1 Payment of Taxes................................................19
12.2 Surrender of Certificates.......................................19
12.3 Mutilated, Destroyed, Lost and Stolen Warrant Certificates......19
12.4 Notices. .......................................................20
12.5 Applicable Law..................................................21
12.6 Obligations Under Investment Agreement..........................22
12.7 Currency........................................................22
12.8 Persons Benefitting.............................................22
12.9 Costs and Expenses..............................................22
12.10 Counterparts....................................................22
12.11 Headings........................................................22
</TABLE>
WARRANT AGREEMENT
This WARRANT AGREEMENT (this "Agreement") is made and
entered into as of June 12, 1998 between Livent Inc., an Ontario corporation
(the "Company"), and Roy L. Furman ("Furman").
W I T N E S S E T H:
WHEREAS, the Company and Furman have entered into an
Investment Agreement, dated as of June , 1998 (the "Investment Agreement"),
providing for the issuance and sale of shares of Common Stock by the
Company to Furman;
WHEREAS, the Company, Garth H. Drabinsky, Myron I. Gottlieb,
David R. Maisel ("Maisel"), Lynx Ventures L.P. ("LV") and Furman desire to
enter into a Shareholders Agreement providing for certain rights and
restrictions with respect to the Common Stock held by such parties and
establishing certain terms and conditions concerning the voting of Common
Stock held by the parties thereto (the "Shareholders Agreement");
WHEREAS, in connection with the agreements above and the
transactions contemplated thereby, the Company agrees to issue to Furman
(i) warrants entitling Furman to purchase 80,000 shares of Common Stock of
the Company (the "Series A Warrants") at $9.00 per share (the "Series A
Exercise Price") and (ii) warrants entitling Furman to purchase 80,000
shares of Common Stock (the "Series B Warrants") at $10.00 per share (the
"Series B Exercise Price") (the Series A Warrants and Series B Warrants
collectively the "Warrants");
WHEREAS, the Series A Exercise Price and the Series B
Exercise Price (collectively, the "Exercise Prices") are subject to
adjustment as herein provided;
WHEREAS, the certificates evidencing the Series A Warrants
(the "Series A Warrant Certificates") and the Series B Warrants (the
"Series B Warrant Certificates") (collectively, the "Warrant Certificates")
are attached as Exhibits A and B hereto, respectively; and
WHEREAS, the Company has received from Furman $2.00 and
other good and valuable consideration.
NOW, THEREFORE, in consideration of the foregoing, for the
purpose of defining the terms and provisions of the Warrants and the
respective rights and obligations thereunder of the Company and the
recordholders of the Warrants, the Company and Furman hereby agree as
follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have
the following meanings:
"Additional Shares of Common Stock" means all shares of
Common Stock issued or sold (or, pursuant to Section 7.2 or
7.3, deemed to be issued) by the Company after the date
hereof, whether or not subsequently reacquired
or retired by the Company, other than
(a) shares issued upon the exercise of the
Warrants and the warrants issued to LV pursuant to a
warrant agreement between LV and the Company dated
June 12th, 1998,
(b) shares not to exceed 2,900,000 (as
constituted on such date) issued upon the exercise of
options granted or to be granted under the Company's
stock option plans as in effect on the date hereof or
under any other employee stock option or purchase
plan or plans adopted or assumed after such date,
(c) shares issued upon the exercise of options
to acquire 990,000, 1,025,000 and 400,000 shares,
granted by the Company to CKE Associates LLC, Furman
and Maisel,
(d) shares issued upon the conversion of the
Company's 8.95% Subordinated Convertible Notes due
February 29, 2000,
(e) shares issued upon the conversion of the
Company's 10% Subordinated Convertible Debentures due
July 28, 2003,
(f) such additional number of shares as may
become issuable upon the exercise of any of the
securities referred to in the foregoing clauses (a),
(b), (c), (d) and (e) by reason of adjustments
required pursuant to anti-dilution provisions
applicable to such securities as in effect on the
date hereof, but only if and to the extent that such
adjustments are required as the result of the
original issuance of the Warrants, and
(g) such additional number of shares as may
become issuable upon the exercise of any of the
securities referred to in the foregoing clauses (a),
(b), (c), (d) and (e) by reason of adjustments
required pursuant to anti-dilution provisions
applicable to such securities as in effect on the
date hereof, in order to reflect any subdivision or
combination of Common Stock, by reclassification or
otherwise, or any dividend on Common Stock payable in
Common Stock.
"Common Stock" means shares of Common Stock, no par value,
of the Company, including any stock into which such Common
Stock shall have been changed or any stock resulting from
any reclassification of such Common Stock, and all other
stock of any class or classes (however designated) of the
Company the holders of which have the right, without
limitation as to amount, either to all or to a share of the
balance of current dividends and liquidating dividends after
the payment of dividends and distributions on any shares
entitled to preference;
"Contract" has the meaning set forth in Section 4.3;
"Convertible Securities" means any evidences of
indebtedness, shares of stock (other than Common Stock) or
other securities directly or indirectly convertible into or
exchangeable for Additional Shares of Common Stock;
"Exercise Price" means the corresponding Exercise Price as
set forth in the recitals;
"Expiration Date" means the third anniversary of this
Agreement;
"Fair Market Value" means, per share of Common Stock (or
equivalent equity interests) on any date specified herein,
(a) the average of the last sale prices, regular way, on the
20 consecutive business days immediately preceding such date
or, if there shall have been no sale on any such day, the
average of the closing bid and asked prices on such date, in
each case as officially reported on the principal national
securities exchange on which such Common Stock is at the
time listed or admitted to trading, or (b) if such common
stock is not then listed or admitted to trading on any
national securities exchange, but is designated as a
national market system security by the NASD, the last
trading price of the Common Stock on such date, or if there
shall have been no trading on such date or if the Common
Stock is not so designated, the average of the reported
closing bid and asked prices on such 20 days as shown by the
NASD automated quotation system; provided, however, that if
such Common Stock is not then listed or admitted to trading
on any national exchange or designated as a national market
system security or quoted in the over-the-counter market,
the Fair Market Value shall be as determined by any
investment banking firm of recognized standing mutually
acceptable to Furman and the Board of Directors of the
Company;
"Holders" means from time to time, the holders of the
Warrants and, unless otherwise provided or indicated herein,
the holders of the Underlying Shares;
"Liens" means claims, liens, charges, restrictions,
reservations and agreements, mortgages, pledges, security
interests, guarantees, easements, rights of way and
encumbrances of any kind or character;
"Material Adverse Effect" shall mean a material adverse
effect on the business, results of operations, prospects,
assets, liabilities or condition (financial or otherwise) of
the Company and its Subsidiaries, taken as a whole;
"NASDAQ" means the NASDAQ national market;
"1933 Act" means the Securities Act of 1933, as amended;
"Options" means rights, options or warrants to subscribe
for, purchase or otherwise acquire either Additional Shares
of Common Stock or Convertible Securities;
"Organizational Documents" means the articles of
incorporation, certificate of incorporation, by-laws,
certificates of formation, or other constitutional
documents;
"Other Securities" means any stock (other than Common Stock)
and other securities of the Company or any other Person
(corporate or otherwise) which the holders of the Warrants
at any time shall be entitled to receive, or shall have
received, upon the exercise of the Warrants, in lieu of or
in addition to Common Stock, or which at any time shall be
issuable or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities pursuant to
Section 8 or otherwise.
"Person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or
political subdivision thereof;
"Series A Exercise Price" has the meaning set forth in the
recitals;
"Series B Exercise Price" has the meaning set forth in the
recitals;
"Subsidiary" means any Person of which the Company (either
alone or through or together with any other Subsidiary)
owns, directly or indirectly, 50% or more of the capital
stock or other equity interest, the holders of which are
generally entitled to vote for the election of the board of
directors or other governing body of such Person;
"Underlying Shares" means the shares of Common Stock
issuable or issued upon the exercise of the Warrants;
"Voting Securities" means stock of any class or classes (or
equivalent interests), if the holders of the stock of such
class or classes (or equivalent interests) are ordinarily,
in the absence of contingencies, entitled to vote for the
election of the directors (or persons performing similar
functions) of such business entity, even though the right so
to vote has been suspended by the happening of such a
contingency;
"Warrant Certificates" has the meaning set forth in the
recitals; and
"Warrants" has the meaning set forth in the recitals.
Capitalized terms used but not otherwise defined herein
shall have the meanings assigned to them in the Investment Agreement.
2. ISSUE OF WARRANTS.
2.1 Form of Warrant Certificates. The Warrant Certificates
shall be in registered form only, and shall be dated the date on which
executed by the Company and may have such legends and endorsements typed,
stamped, printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with any rule or
regulation pursuant thereto or with any rule or regulation of any
securities exchange on which the Warrants may be listed, or to conform to
usage.
2.2 Execution and Delivery of Warrant Certificates. Warrant
Certificates evidencing Warrants to purchase a number of duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock shall
be executed, on the date of this Agreement, by the Company and delivered to
and issued in the name of Furman. The Warrant Certificates shall be
executed on behalf of the Company by its President or by any of its Vice
Presidents, either manually or by facsimile signature printed thereon. In
case any officer of the Company whose signature shall have been placed upon
any of the Warrant Certificates shall cease to be such officer of the
Company before issue and delivery thereof, such Warrant Certificates may,
nevertheless, be issued and delivered with the same force and effect as
though such person had not ceased to be such officer of the Company.
3. EXERCISE OF WARRANTS.
3.1 Exercise Price. Each Warrant Certificate shall entitle
the Holder thereof, subject to the provisions of this Agreement, to receive
one share of Common Stock for each Warrant represented thereby at the
corresponding Exercise Price, subject to
adjustment as herein provided.
3.2 Exercise of Warrants. The Warrants shall be exercisable
in whole or in part on or prior to the Expiration Date.
3.3 Expiration of Warrants. The Warrants shall terminate and
become void at the close of business on the Expiration Date.
3.4 Method of Exercise.
(a) In order to exercise a Warrant the Holder thereof must
surrender the Warrant Certificate evidencing such Warrant to the Company at
its principal office, together with the Exercise Subscription Form on the
reverse of or attached to the Warrant Certificate duly executed,
accompanied by payment, in cash or by certified or by official bank check
payable to the order of the Company, in the amount equal to the Exercise
Price multiplied by the number of Warrants being exercised.
(b) If fewer than all the Warrants represented by a Warrant
Certificate are surrendered for exercise, such Warrant Certificate shall be
surrendered and a new Warrant Certificate of the same tenor and for the
number of Warrants that were not surrendered shall be executed by the
Company. The new Warrant Certificate shall be registered in such name or
names as may be directed in writing by the Holder and delivered to the
Person or Persons entitled to receive the same.
(c) Upon exercise of a Warrant in conformity with the
foregoing provisions, the Company shall issue or cause to be issued in the
name of and delivered to the Holder of such Warrant or, subject to Section
12.1, as such Holder (upon payment by such Holder of any applicable
transfer taxes) may direct, a certificate or certificates for the number of
duly authorized, validly issued, fully paid and nonassessable shares of
Common Stock to which such Holder shall be entitled upon such exercise
together with an amount in cash in lieu of any fraction of a share as
provided in Section 7.12.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF FURMAN.
Furman represents and warrants to the Company that:
4.1 Due Authorization. Furman has taken all necessary action
to authorize the execution, delivery and performance of this Agreement and
to consummate the transactions contemplated hereby. This Agreement has
been, and upon execution and delivery thereof to the Company will be, duly
executed and delivered on behalf of Furman and will constitute legal valid
and binding obligations of Furman enforceable against Furman by the Company
in accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency or other laws of general application
affecting the enforcement of creditors' rights and subject to the
qualification that specific performance and injunction, being equitable
remedies, may only be granted in the discretion of a court of competent
jurisdiction.
4.2 No Conflicts. The authorization, execution, delivery and
performance by Furman of this Agreement is not in conflict with and does
not and will not result in a breach of and does not and will not create a
state of facts which after notice or lapse of time or both will result in a
breach of any of the terms or provisions of any statute, law, regulation,
court order or decision to which Furman is subject, or any material
indenture, instrument, agreement or undertaking to which Furman is a party
or by which Furman or the properties and assets of Furman are or may become
bound or results or would result in the creation or imposition of any Lien
upon any of the properties or assets of Furman.
4.3 Consents, Approvals and Notices. The execution and
delivery of this Agreement by Furman and the consummation by Furman of the
transactions contemplated hereby does not require any (a) material consent,
authorization, order or approval of, filing or registration with, or notice
to, any governmental or regulatory authority, which has not otherwise been
obtained or (b) material consent, authorization, approval, waiver, order,
license, certificate or permit or act of or from, or notice to, any party
to any material mortgage, indenture, lease, franchise, license, permit,
agreement or instrument (each, a "Contract") to which Furman is a party or
by which any of his assets or properties are bound, which has not been
otherwise obtained.
4.4 Litigation. There is no action, suit or proceeding
pending or, to the knowledge of Furman, threatened, before any court
against Furman which challenges the validity or the propriety of the
transactions contemplated by this Agreement.
4.5 Investor Status. Furman has such knowledge and
experience in financial and business matters as to be capable of evaluating
the merits and risks of his acquisition of Warrants or purchase of
Underlying Shares and is able to bear the economic risks of such
investment.
4.6 Accredited Investor. Furman is an "accredited investor"
as defined in Rule 501(a) under the 1933 Act. Furman is acquiring the
Warrants for its own account and not with a view to any resale,
distribution or other disposition of the Warrants in violation of the
United States securities laws.
4.7 No General Solicitation. Furman acknowledges that he has
not acquired the Warrants as a result of any general solicitation or
general advertising (as those terms are used in Regulation D under the 1933
Act), including advertisements, articles, notices or other communications
published in any newspaper, magazine or similar media or broadcast over
radio or television, or any seminar or meeting whose attendees have been
invited by general solicitation or general advertising.
4.8 Brokers. No broker, investment banker, financial advisor
or other person or entity is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Furman or any of its affiliates except as provided for in
the Investment Agreement.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to Furman that:
5.1 Organization, Good Standing and Qualification. The
Company is a corporation duly incorporated and organized and is validly
subsisting under the laws of the Province of Ontario. The Company has all
requisite power and authority to own, lease and operate the property and
assets it now owns, leases and operates and to conduct its business as
presently conducted and as proposed to be conducted and to execute and
deliver this Agreement. The Company is duly qualified and licensed as a
corporation to conduct its business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
property owned, leased or operated by it makes such qualification or
licensing necessary, except for such failures to be so duly qualified and
licensed and in good standing which will not in the aggregate have a
Material Adverse Effect.
5.2 Capitalization. The authorized capital of the Company
consists of (i) an unlimited number of shares of Common Stock of which on
the date hereof there are 18,071,235 outstanding, all of which are duly
authorized, validly issued, fully paid and non-assessable and free of
pre-emptive rights, other than those contemplated by the Shareholders
Agreement and the THL Voting Agreement, and (ii) an unlimited number of
First Preferred Shares, of which on the date hereof there are none
outstanding.
5.3 Due Authorization. The Company has taken all necessary
corporate action to authorize the execution, delivery and performance of
this Agreement and to issue and deliver the Warrants and to consummate the
transactions contemplated hereby; this Agreement has been, and upon
execution and delivery thereof to Furman will be, duly executed and
delivered on behalf of the Company and will constitute a legal, valid and
binding obligation of the Company enforceable against the Company by Furman
in accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency or other laws of general application
affecting the enforcement of creditors' rights and subject to the
qualification that specific performance and injunction, being equitable
remedies, may only be granted in the discretion of a court of competent
jurisdiction.
5.4 No Conflicts. Except as otherwise required by the
Investment Canada Act, none of: (i) the authorization, execution, delivery
and performance by the Company of this Agreement, or (ii) the issuance and
delivery of the Warrants, results or would result in the creation or
imposition of any Lien upon any of the properties or assets of the Company
or any of its Subsidiaries or is in conflict with or does or will result in
a breach by the Company of or does or will create a state of facts which
after notice or lapse of time or both will result in a breach by the
Company of any of the terms or provisions of (a) the Organizational
Documents of the Company or any of its Subsidiaries, (b) the resolutions of
the directors or shareholders of the Company, (c) any statute, law,
regulation, court order or decision to which the Company is subject or (d)
any material indenture, instrument, agreement or undertaking to which the
Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries or the properties or assets of the Company or any
of its Subsidiaries are or may become bound, excluding from such clauses
(c) and (d), such breaches or violations that, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
5.5 Compliance. Neither the Company nor any of the
Subsidiaries is in violation of any term or provision of (a) their
respective Organizational Documents, (b) any agreement or instrument to
which any of them is a party or by which any of them or their respective
assets are bound, including any existing license to conduct business, note,
bond, mortgage, indenture, contract, lease, permit, franchise or other
instrument, or (c) any applicable law, excluding from such clauses (b) and
(c), such violations that, in the aggregate, have not had, or could not
reasonably be expected to have, a Material Adverse Effect.
5.6 Consents, Approvals and Notices. The execution, delivery
and performance of this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby do not and will not,
require any (a) consent, approval, authorization, registration,
qualification, declaration, filing, governmental approval or other action
by, or filing with or notification to, any third party or any governmental
authority or (b) the execution, delivery and performance of this Agreement
and the acquisition of the Warrants and the consummation of the
transactions contemplated hereby shall not trigger any change of control or
ownership provisions or clauses in any agreement, arrangement,
understanding or contract, whether formal or informal, written or oral, or
subject the Company or its Subsidiaries to any predetermined adverse
alteration or modification in any ongoing relationship (without
consideration of the change of control or ownership provision or the
provision for the predetermined adverse alteration or modification as part
of the ongoing relationship).
5.7 Litigation. There is not now pending against the Company
or any of its Subsidiaries or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries, nor has the Company
received notice in respect of, any claim or potential claim which could
lead to any litigation, action, suit or other proceeding by or before any
court, tribunal, governmental agency or authority, securities commission or
regulatory body in Canada or the United States that may seek to enjoin the
transactions contemplated herein or that, if successful, would have in the
aggregate a Material Adverse Effect.
6. RIGHTS OF HOLDERS.
Each Holder hereby agrees that if such Holder is not a party
to the Shareholders Agreement, then such Holder will take all necessary and
appropriate steps to become a party to the Shareholders Agreement. For this
purpose, the Warrants and such Underlying Shares shall be subject to the
restrictions, and entitled to the benefits, to the extent provided in the
Shareholders Agreement with respect to shares of Common Stock held by a
"Shareholder" (as defined in the Shareholders Agreement).
7. ADJUSTMENT OF COMMON STOCK ISSUABLE UPON EXERCISE.
7.1 Adjustment of Exercise Price.
7.1.1 Issuance of Additional Shares of Common Stock.
In case the Company at any time or from time to time after the date hereof
shall issue or sell Additional Shares of Common Stock (including Additional
Shares of Common Stock deemed to be issued pursuant to Section 7.2 or 7.3)
without consideration or for a consideration per share less than Fair
Market Value, then, and in each such case, subject to Section 7.9, the
Exercise Price shall be reduced, concurrently with such issue or sale, to a
price (calculated to the nearest .001 of a cent) determined by multiplying
such Exercise Price by a fraction
(1) the numerator of which shall be (i) the
number of shares of Common Stock outstanding immediately prior to such
issue or sale plus (ii) the number of shares of Common Stock which the
aggregate consideration received by the Company for the total number of
such Additional Shares of Common Stock so issued or sold would purchase at
such Fair Market Value, and
(2) the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such issue or sale,
provided that, for the purposes of this Section 7.1.1, immediately after
any Additional Shares of Common Stock are deemed to have been issued
pursuant to Section 7.2 or 7.3, such Additional Shares of Common Stock
shall be deemed to be outstanding.
7.1.2 Extraordinary Dividends and Distributions. In
case the Company at any time or from time to time after the date hereof
shall declare, order, pay or make a dividend or other distribution
(including, without limitation, any distribution of other or additional
stock or other securities or property or Options by way of dividend or
spin-off, reclassification, recapitalization or similar corporate
rearrangement) on the Common Stock, other than (a) a dividend payable in
Additional Shares of Common Stock or (b) a regular periodic cash dividend
at a rate not in excess of 110% of the rate of the last regular periodic
cash dividend theretofore paid, then, and in each such case, subject to
Section 7.8, the Exercise Price in effect immediately prior to the close of
business on the record date fixed for the determination of holders of any
class of securities entitled to receive such dividend or distribution shall
be reduced, effective as of the close of business on such record date, to a
price (calculated to the nearest .001 of a cent) determined by multiplying
such Exercise Price by a fraction
(x) the numerator of which shall be the Fair Market Value on
such record date or, if the Common Stock trades on an ex-dividend
basis, on the date prior to the commencement of ex-dividend
trading, less the amount of such dividend or distribution (as
determined in good faith by the Board of Directors of the Company)
applicable to one share of Common Stock, and
(y) the denominator of which shall be such Fair Market
Value.
7.2 Treatment of Options and Convertible Securities. In case
the Company at any time or from time to time after the date hereof shall
issue, sell, grant or assume, or shall fix a record date for the
determination of holders of any class of securities entitled to receive,
any Options or Convertible Securities, then, and in each such case, the
maximum number of Additional Shares of Common Stock (as set forth in the
instrument relating thereto, without regard to any provisions contained
therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued
as of the time of such issue, sale, grant or assumption or, in case such a
record date shall have been fixed, as of the close of business on such
record date (or, if the Common Stock trades on an ex-dividend basis, on the
date prior to the commencement of ex-dividend trading), provided that such
Additional Shares of Common Stock shall not be deemed to have been issued
unless the consideration per share (determined pursuant to Section 7.5) of
such shares would be less than Fair Market Value on the date of and
immediately prior to such issue, sale, grant or assumption or immediately
prior to the close of business on such record date (or, if the Common Stock
trades on an ex-dividend basis, on the date prior to the commencement of
ex-dividend trading), as the case may be, and provided, further, that in
any such case in which Additional Shares of Common Stock are deemed to be
issued
(a) no further adjustment of the Exercise Price shall be
made upon the subsequent issue or sale of Convertible Securities or
shares of Common Stock upon the exercise of such Options or the
conversion or exchange of such Convertible Securities, except in
the case of any such Options or Convertible Securities which
contain provisions requiring an adjustment, subsequent to the date
of the issue or sale thereof, of the number of Additional Shares of
Common Stock issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities by reason of
(x) a change of control of the Company, (y) the acquisition by any
Person or group of Persons of any specified number or percentage of
the Voting Securities of the Company or (z) any similar event or
occurrence, each such case to be deemed hereunder to involve a
separate issuance of Additional Shares of Common Stock, Options or
Convertible Securities, as the case may be;
(b) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in
the consideration payable to the Company, or decrease in the number
of Additional Shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof (by change of rate or otherwise),
the Exercise Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence of the record date, or
date prior to the commencement of ex-dividend trading, as the case
may be, with respect thereto), and any subsequent adjustments based
thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease
insofar as it affects such Options, or the rights of conversion or
exchange under such Convertible Securities, which are outstanding
at such time;
(c) upon the expiration (or purchase by the Company and
cancellation or retirement) of any such Options which shall not
have been exercised or the expiration of any rights of conversion
or exchange under any such Convertible Securities which (or
purchase by the Company and cancellation or retirement of any such
Convertible Securities the rights of conversion or exchange under
which) shall not have been exercised, the Exercise Price computed
upon the original issue, sale, grant or assumption thereof (or upon
the occurrence of the record date, or date prior to the
commencement of ex-dividend trading, as the case may be, with
respect thereto), and any subsequent adjustments based thereon,
shall, upon such expiration (or such cancellation or retirement, as
the case may be), be recomputed as if:
(i) in the case of Options for Common Stock or
Convertible Securities, the only Additional Shares of Common
Stock issued or sold were the Additional Shares of Common
Stock, if any, actually issued or sold upon the exercise of
such Options or the conversion or exchange of such
Convertible Securities and the consideration received
therefor was the consideration actually received by the
Company for the issue, sale, grant or assumption of all such
Options, whether or not exercised, plus the consideration
actually received by the Company upon such exercise, or for
the issue or sale of all such Convertible Securities which
were actually converted or exchanged, plus the additional
consideration, if any, actually received by the Company upon
such conversion or exchange, and
(ii) in the case of Options for Convertible
Securities, only the Convertible Securities, if any,
actually issued or sold upon the exercise of such Options
were issued at the time of the issue, sale, grant or
assumption of such Options, and the consideration received
by the Company for the Additional Shares of Common Stock
deemed to have then been issued was the consideration
actually received by the Company for the issue, sale, grant
or assumption of all such Options, whether or not exercised,
plus the consideration deemed to have been received by the
Company (pursuant to Section 7.5) upon the issue or sale of
such Convertible Securities with respect to which such
Options were actually exercised;
(d) no readjustment pursuant to subdivision (b) or (c) above
shall have the effect of increasing the Exercise Price by an amount
in excess of the amount of the adjustment thereof originally made
in respect of the issue, sale, grant or assumption of such Options
or Convertible Securities; and
(e) in the case of any such Options which expire by their
terms not more than 30 days after the date of issue, sale, grant or
assumption thereof, no adjustment of the Exercise Price shall be
made until the expiration or exercise of all such Options,
whereupon such adjustment shall be made in the manner provided in
subdivision (c) above.
7.3 Treatment of Stock Dividends, Stock Splits, etc. In case
the Company at any time or from time to time after the date hereof shall
declare or pay any dividend on the Common Stock payable in Common Stock, or
shall effect a subdivision of the outstanding shares of Common Stock into a
greater number of shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in Common Stock), then, and in each such
case, Additional Shares of Common Stock shall be deemed to have been issued
(a) in the case of any such dividend, immediately after the close of
business on the record date for the determination of holders of any class
of securities entitled to receive such dividend, or (b) in the case of any
such subdivision, at the close of business on the day immediately prior to
the day upon which such corporate action becomes effective.
7.4 Underwriting Discounts. For the purposes of this Section
7, there shall be no adjustment to the Exercise Price of any Warrant
pursuant to this Section 7 if Additional Shares of Common Stock are issued
to an underwriter at less than current market value due to the application
of ordinary and customary underwriting discounts.
7.5 Computation of Consideration. For the purposes of this
Section 7,
(a) the consideration for the issue or sale of any
Additional Shares of Common Stock shall, irrespective of the
accounting treatment of such consideration,
(i) insofar as it consists of cash, be computed at
the net amount of cash received by the Company,
(ii) insofar as it consists of property (including
securities) other than cash, be computed at the fair value
thereof at the time of such issue or sale, as determined in
good faith by the Board of Directors of the Company, and
(iii) in case Additional Shares of Common Stock are
issued or sold together with other stock or securities or
other assets of the Company for a consideration which covers
both, be the portion of such consideration so received,
computed as provided in clauses (i) and (ii) above,
allocable to such Additional Shares of Common Stock, all as
determined in good faith by the Board of Directors of the
Company;
(b) Additional Shares of Common Stock deemed to have been
issued pursuant to Section 7.2, relating to Options and Convertible
Securities, shall be deemed to have been issued for a consideration
per share determined by dividing
(i) the total amount, if any, received and receivable
by the Company as consideration for the issue, sale, grant
or assumption of the Options or Convertible Securities in
question, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating
thereto, without regard to any provision contained therein
for a subsequent adjustment of such consideration to protect
against dilution) payable to the Company upon the exercise
in full of such Options or the conversion or exchange of
such Convertible Securities or, in the case of Options for
Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of
such Convertible Securities, in each case computing such
consideration as provided in the foregoing subdivision (a),
by
(ii) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without
regard to any provision contained therein for a subsequent
adjustment of such number to protect against dilution)
issuable upon the exercise of such Options or the conversion
or exchange of such Convertible Securities; and
(c) Additional Shares of Common Stock deemed to have been
issued pursuant to Section 7.3, relating to stock dividends, stock
splits, etc., shall be deemed to have been issued for no
consideration.
7.6 Adjustments for Combinations, etc. In case the
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common
Stock, the Exercise Price in effect immediately prior to such combination
or consolidation shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.
7.7 Dilution in Case of Other Securities. In case any Other
Securities shall be issued or sold or shall become subject to issue or sale
upon the conversion or exchange of any stock (or Other Securities) of the
Company or to subscription, purchase or other acquisition pursuant to any
Options issued or granted by the Company (or any such other issuer or
Person) for a consideration such as to dilute, on a basis consistent with
the standards established in the other provisions of this Section 7, the
purchase rights granted by this Agreement, then, and in each such case, the
computations, adjustments and readjustments provided for in this Section 7
with respect to the Exercise Price shall be made as nearly as possible in
the manner so provided and applied to determine the amount of Other
Securities from time to time receivable upon the exercise of the Warrants,
so as to protect the Holders of the Warrants against the effect of such
dilution.
7.8 Other Dilutive Events. In case any event shall occur as
to which the provisions of this Section 7 are not strictly applicable but
the failure to make any adjustment would not fairly protect the purchase
rights represented by this Agreement in accordance with the essential
intent and principles of such Section, then, in each such case, the Company
shall appoint a firm of independent certified public accountants of
recognized national standing (which may be the regular auditors of the
Company), which shall give their opinion upon the adjustment, if any, on a
basis consistent with the essential intent and principles established in
this Section 7, necessary to preserve, without dilution, the purchase
rights represented by each Warrant. Upon receipt of such opinion, the
Company will promptly mail a copy thereof to the Holder of each Warrant and
shall make the adjustments described therein.
7.9 Minimum Adjustment of Exercise Price. If the amount of
any adjustment of the Exercise Price required pursuant to this Section 7
would be less than one tenth (1/10) of one percent (1%) of the Exercise
Price in effect at the time such adjustment is otherwise so required to be
made, such amount shall be carried forward and adjustment with respect
thereto made at the time of and together with any subsequent adjustment
which, together with such amount and any other amount or amounts so carried
forward, shall aggregate at least one tenth (1/10) of one percent (1%) of
such Exercise Price.
7.10 Notice of Adjustment. Whenever the number of shares of
Common Stock issuable upon the exercise of a Warrant is adjusted, as herein
provided, the Company shall mail by first class mail, postage prepaid, to
each Holder, notice of such adjustment or adjustments setting forth the
number of shares of Common Stock or other stock or property issuable upon
the exercise of each Warrant after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made. Notwithstanding the
foregoing, the Company's failure to send notice to each Holder pursuant to
this Section 7.10 shall under no circumstances be interpreted to mean that
an adjustment is not required.
7.11 Statement on Warrants. Irrespective of any adjustment
in the number or kind of shares issuable upon the exercise of the Warrants,
Warrants theretofore or thereafter issued may continue to express the same
price and number and kind of shares as are stated in the Warrants initially
issuable pursuant to this Agreement.
7.12 Fractional Interest. The Company shall not be required
to issue fractional shares of Common Stock on the exercise of Warrants. If
more than one Warrant shall be presented for exercise in full at the same
time by the same Holder, the number of full shares of Common Stock which
shall be issuable upon such exercise thereof shall be computed on the basis
of the aggregate number of shares of Common Stock acquirable on exercise of
the Warrants so presented. If any fraction of a share of Common Stock
would, except for the provisions of this Section, be issuable on the
exercise of any Warrant (or specified portion thereof), the Company shall
pay an amount in cash calculated by it to be equal to the Fair Market Value
per Share, multiplied by such fraction computed to the nearest whole cent.
8. CONSOLIDATION, MERGER, ETC.
8.1 Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, etc. In case the Company after the date hereof (a) shall
consolidate with or merge into any other Person and shall not be the
continuing or surviving corporation of such consolidation or merger, or (b)
shall permit any other Person to consolidate with or merge into the Company
and the Company shall be the continuing or surviving Person but, in
connection with such consolidation or merger, the Common Stock or Other
Securities shall be changed into or exchanged for stock or other securities
of any other Person or cash or any other property, or (c) shall transfer
all or substantially all of its properties or assets to any other Person,
or (d) shall effect a capital reorganization or reclassification of the
Common Stock or Other Securities (other than a capital reorganization or
reclassification resulting in the issue of Additional Shares of Common
Stock for which adjustment in the Warrant Price is provided in Section
7.1.1 or 7.1.2), then, and in the case of each such transaction, proper
provision shall be made so that, upon the basis and the terms and in the
manner provided in this Agreement, the Holder of a Warrant, upon the
exercise thereof at any time after the consummation of such transaction,
shall be entitled to receive (at the aggregate Exercise Price in effect at
the time of such consummation for all Common Stock or Other Securities
issuable upon such exercise immediately prior to such consummation), in
lieu of the Common Stock or Other Securities issuable upon such exercise
prior to such consummation, the stock and other securities, cash and
property to which such Holder would have been entitled upon such
consummation if such Holder had exercised the rights represented by this
Warrant immediately prior thereto, subject to adjustments (subsequent to
such corporate action) as nearly equivalent as possible to the adjustments
provided for in Section 7 and this Section 8.
8.2 Assumption of Obligations. Notwithstanding anything
contained in the Warrants or in the Investment Agreement to the contrary,
the Company will not effect any of the transactions described in clauses
(a) through (d) of Section 8.1 unless, prior to the consummation thereof,
each Person (other than the Company) which may be required to deliver any
stock, securities, cash or property upon the exercise of a Warrant as
provided herein shall assume, by written instrument delivered to, and
reasonably satisfactory to, the Holder of such Warrant, (a) the obligations
of the Company under the Warrant (and if the Company shall survive the
consummation of such transaction, such assumption shall be in addition to,
and shall not release the Company from, any continuing obligations of the
Company under the Warrant) and (b) the obligation to deliver to such Holder
such shares of stock, securities, cash or property as, in accordance with
the foregoing provisions of this Section 8, such Holder may be entitled to
receive, and such Person shall have similarly delivered to such Holder an
opinion of counsel for such Person, which counsel shall be reasonably
satisfactory to such Holder, stating that this Agreement shall thereafter
continue in full force and effect and the terms hereof (including, without
limitation, all of the provisions of this Section 8) shall be applicable to
the stock, securities, cash or property which such Person may be required
to deliver upon any exercise of a Warrant or the exercise of any rights
pursuant thereto.
8.3 Other Dilutive Events. In case any event shall occur as
to which the provisions of this Section 8 are not strictly applicable but
the failure to make any adjustment would not fairly protect the purchase
rights represented by this Agreement in accordance with the essential
intent and principles of such Section, then, in each such case, the Company
shall appoint an investment banking firm of recognized national standing
(which may be the regular auditors of the Company), which shall give their
opinion upon the adjustment, if any, on a basis consistent with the
essential intent and principles established in this Section 8, necessary to
preserve, without dilution, the purchase rights represented by this
Agreement. Upon receipt of such opinion, the Company will promptly mail a
copy thereof to the Holder and shall make the adjustments described
therein.
9. WARRANT TRANSFER BOOKS.
The Warrant Certificates shall be issued in registered form
only. The Company shall keep a register at its office in which, subject to
such reasonable regulations as it may prescribe, it shall provide for the
registration of Warrant Certificates and of transfers or exchanges of
Warrant Certificates as herein provided. At the option of the Holder,
Warrant Certificates may be exchanged at such office, and upon payment of
the charges hereinafter provided. Whenever any Warrant Certificates are so
surrendered for exchange, the Company shall execute the Warrant
Certificates that the Holder making the exchange is entitled to receive.
All Warrant Certificates issued upon any registration of transfer or
exchange of Warrant Certificates shall be the valid obligations of the
Company, evidencing the same obligations, and entitled to the same benefits
under this Agreement, as the Warrant Certificates surrendered for such
registration of transfer or exchange. Every Warrant Certificate surrendered
for registration of transfer or exchange shall (if so required by the
Company) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and duly executed by the
Holder thereof or his attorney duly authorized in writing. No service
charge shall be made for any registration of transfer or exchange of
Warrant Certificates. The Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Warrant
Certificates. Any Warrant Certificate when duly endorsed in blank shall be
deemed negotiable and when a Warrant Certificate shall have been so
endorsed, the Holder thereof may be treated by the Company and all other
persons dealing therewith as the absolute owner thereof for any purpose and
as the Person entitled to exercise the rights represented thereby, or to
the transfer thereof on the register of the Company, any notice to the
contrary notwithstanding; but until such transfer on such register, the
Company may treat the registered Holder thereof as the owner for all
purposes.
10. WARRANT HOLDERS.
10.1 No Voting Rights. Prior to the exercise of the
Warrants, no Holder of a Warrant Certificate, as such, shall be entitled to
any rights of a stockholder of the Company, including, without limitation,
the right to vote, to consent, to exercise any preemptive right, to receive
any notice of meetings of shareholders for the election of directors of the
Company or any other matter or to receive any notice of any proceedings of
the Company, except as may be specifically provided for herein.
10.2 Right of Action. All rights of action in respect of
this Agreement are vested in the Holders of the Warrants, and any Holder of
any Warrant, without the consent of the Holder of any other Warrant, may,
in such Holder's own behalf and for such Holder's own benefit, enforce, and
may institute and maintain any suit, action or proceeding against the
Company suitable to enforce, or otherwise in respect of, such Holder's
right to exercise, exchange or tender for purchase such Holder's Warrants
in the manner provided in this Agreement.
11. COVENANTS.
11.1 Reservation of shares of Common Stock. The Company
covenants that it will at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued shares of Common
Stock, solely for the purpose of issuing upon exercise of Warrants as
herein provided, such number of shares of voting Common Stock or non-voting
Common Stock as shall then be issuable upon the exercise of all outstanding
Warrants. The Company covenants that all shares of Common Stock which shall
be so issuable shall, upon such issue, be duly and validly issued and fully
paid and nonassessable.
11.2 Determinations by Board of Directors. All
determinations by the Board of Directors of the Company under the
provisions of this Agreement shall be made in good faith with due regard to
the interests of the Holder of a Warrant, and in accordance
with good financial practice.
12. MISCELLANEOUS.
12.1 Payment of Taxes. The Company shall pay all issuance or
transfer taxes and similar governmental charges that may be imposed on the
Company in connection with the issuance of the Warrants or any securities
deliverable upon exercise of Warrants with respect thereto. The Company
shall not be required, however, to pay any tax or other governmental charge
imposed in connection with any transfer involved in the issue of any
certificate for Underlying Shares or payment of cash to any Person other
than the Holder of a Warrant Certificate surrendered upon the exercise of a
Warrant, and in case of such transfer or payment, the Company shall not be
required to issue any stock certificate or pay any cash until such tax or
governmental charge has been paid or it has been established to the
Company's satisfaction that no such tax or other governmental charge is
due.
12.2 Surrender of Certificates. Any Warrant Certificate
surrendered for exercise shall be delivered to the Company, promptly
cancelled and not reissued by the Company. The Company shall destroy such
cancelled Warrant Certificates.
12.3 Mutilated, Destroyed, Lost and Stolen Warrant
Certificates.
(a) If (i) any mutilated Warrant Certificate is surrendered
to the Company or (ii) the Company receives evidence to its satisfaction of
the destruction, loss or theft of any Warrant Certificate, and there is
delivered to the Company such security or indemnity as may be required by
it to save it harmless, then, in the absence of notice to the Company that
such Warrant Certificate has been acquired by a bona fide purchaser, the
Company shall execute, in exchange for any such mutilated Warrant
Certificate or in lieu of any such destroyed, lost or stolen Warrant
Certificate, a new Warrant Certificate of like tenor and for a like
aggregate number of Warrants.
(b) Upon the issuance of any new Warrant Certificate under
this Section 12.3. the Company may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in
relation thereto and other expenses (including the reasonable fees and
expenses of counsel to the Company) in connection therewith.
(c) Every new Warrant Certificate executed and delivered
pursuant to this Section 12.3 in lieu of any destroyed, lost or stolen
Warrant Certificate shall constitute an original contractual obligation of
the Company, whether or not the destroyed, lost or stolen Warrant
Certificate shall be at any time enforceable by anyone, and shall be
entitled to the benefits of this Agreement equally and proportionately with
any and all other Warrant Certificates duly executed and delivered
hereunder.
(d) The provisions of this Section 12.3 are exclusive and
shall preclude (to the extent lawful) all other rights or remedies with
respect to the replacement of mutilated, destroyed, lost or stolen Warrant
Certificates.
12.4 Notices. All notices and other communications necessary
or contemplated under this Agreement shall be in writing and shall be
delivered in the manner specified herein. All notices shall be deemed to
have been duly given upon confirmation by telecopy if delivered by telecopy
or by hand, or one day after sending by overnight delivery service, or five
days after sending by certified mail, postage prepaid, return receipt
requested to the respective addresses of the parties set forth below:
Notice to the Company shall be addressed as follows:
Livent Inc.
Suite 600
165 Avenue Road
Toronto, Ontario
Canada M5R 2H7
Fax No.: (416) 324-5535
Attention: Garth H. Drabinsky and
Myron I. Gottlieb
with a copy to:
Shearman & Sterling
Commerce Court West
199 Bay Street
P.O. Box 247, Suite 4405
Toronto, Ontario
Canada M5L 1E8
Fax No.: (416) 360-2958
Attention: Brice T. Voran
Notices to Furman shall be addressed as follows:
c/o Schulte, Roth & Zabel
900 Third Avenue
New York, NY 10022
U.S.A.
Fax No.: (212) 593-5955
Attention: Burton Lehman
with a courtesy copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
U.S.A.
Fax No.: (212) 735-2000
Attention: Eric L. Cochran
By notice complying with the foregoing provisions of this Section 12.4,
each party shall have the right to change the notice address for future
notices and communications to such party.
12.5 Applicable Law. This Agreement and each Warrant issued
hereunder and all rights arising hereunder shall be governed by the laws of
the State of New York without regard to principles of conflicts of law.
12.6 Obligations under Investment Agreement. Nothing in this
Agreement shall be deemed to modify any of the Company's obligations under
the Investment Agreement.
12.7 Currency. All amounts are in U.S. dollars unless
otherwise noted.
12.8 Persons Benefitting. This Agreement shall be binding
upon and inure to the benefit of the Company and its respective successors,
assigns, beneficiaries, executors and administrators, and the Holders from
time to time of the Warrants. Nothing in this Agreement is intended or
shall be construed to confer upon any Person, other than the Company and
the Holders of the Warrants, any right, remedy or claim under or by reason
of this Agreement or any part hereof.
12.9 Costs and Expenses. Any costs and expenses incurred in
connection with services provided by any (i) independent public accountant
pursuant to section 7.8 of this Agreement or (ii) investment banking firm
pursuant to sections 7.1, 7.2 and 8.3 of this Agreement, shall be borne by
the parties hereto in equal amounts.
12.10 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all
of which together constitute one and the same instrument.
12.11 Headings. The descriptive headings of the several
Sections of this Agreement are inserted for convenience and shall not
control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duty executed, as of the day and year first above written.
LIVENT INC.
By: /s/ Garth H. Drabinsky
------------------------------
Name: Garth H. Drabinsky
Title: Chairman and
Chief Executive Officer
By: /s/ Roy L. Furman
------------------------------
Roy L. Furman
EXHIBIT A
FORM OF FACE OF WARRANT CERTIFICATE
SERIES A
WARRANTS TO PURCHASE SHARES
OF LIVENT INC. COMMON STOCK
No. 1 Certificate for 80,000 Warrants
This certifies that Roy L. Furman, or registered assigns, is
the registered holder of the number of Warrants set forth above. Each
Warrant entitles the holder thereof (a "Holder"), subject to the provisions
contained herein and in the Warrant Agreement referred to below, to receive
from Livent Inc., an Ontario corporation (the "Company"), one common share
("Common Share") of the Company ("Shares"), at the exercise price (the
"Exercise Price") of US$9.00 per share, subject to adjustment upon the
occurrence of certain events.
This Warrant Certificate is issued under and in accordance
with the Warrant Agreement, dated as of June 12th, 1998 (the "Warrant
Agreement"), between the Company and Furman as named therein, and is
subject to the terms and provisions contained in the Warrant Agreement, to
all of which terms and provisions the Holder of this Warrant Certificate
consents by acceptance hereof. The Warrant Agreement is hereby incorporated
herein by reference and made a part hereof. Reference is hereby made to the
Warrant Agreement for a full statement of the respective rights,
limitations of rights, duties, obligations and immunities thereunder of the
Company and the Holders of the Warrants.
The Warrants represented by this Warrant Certificate shall
be exercisable prior to the close of business on the Expiration Date.
The Exercise Price and the number of Shares issuable upon
the exercise of each Warrant are subject to adjustment as provided in the
Warrant Agreement.
All Shares issuable by the Company upon the exercise of
Warrants shall, upon such issue, be duly and validly issued and fully paid
and nonassessable.
In order to exercise a Warrant, the registered holder hereof
must surrender this Warrant Certificate at the office of the Company, with
the Exercise Subscription Form on the reverse hereof duly executed by the
Holder hereof, with signature guaranteed as therein specified, together
with any required payment in full of the Exercise Price then in effect for
the Underlying Shares as to which the Warrant(s) represented by this
Warrant Certificate are submitted for exercise, all subject to the terms
and conditions hereof and of the Warrant Agreement. Any such payment of the
Exercise Price shall be in accordance with Section 3.4(a) of the Warrant
Agreement.
The Company shall pay all issuance and transfer taxes and
similar governmental charges that may be imposed on the Company in
connection with the issuance of the Warrants or any securities deliverable
upon exercise of Warrants. The Company shall not be required, however, to
pay any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for Underlying Shares or payment
of cash to any person other than the Holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and in case of such transfer or
payment, the Company shall not be required to issue any stock certificate
or pay any cash until such tax or other charge has been paid or it has been
established to the Company's satisfaction that no such tax or other charge
is due.
Subject to compliance with the Warrant Agreement, this
Warrant Certificate and all rights hereunder are transferable by the
registered holder hereof, in whole or in part, on the register of the
Company, upon surrender of this Warrant Certificate for registration of
transfer at the office of the Company, duly endorsed by, or accompanied by
a written instrument of transfer substantially in the form of the attached
Form of Assignment or otherwise in a form satisfactory to the Company duly
executed by, the Holder hereof or his attorney duly authorized in writing,
with signature guaranteed. Upon any partial transfer, the Company will
issue and deliver to such Holder a new Warrant Certificate or Certificates
with respect to any portion not so transferred.
No service charge shall be made for any registration of
transfer or exchange of the Warrant Certificates, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
Each Holder of this Warrant Certificate by taking or holding
the same consents and agrees that this Warrant Certificate when duly
endorsed in blank shall be deemed negotiable and that when this Warrant
Certificate shall have been so endorsed, the Holder hereof may be treated
by the Company and all other Persons dealing with this Warrant Certificate
as the absolute owner hereof for any purpose and as the Person entitled to
exercise the rights represented hereby, or to the transfer hereof on the
register of the Company maintained by a Warrant agent, any notice to the
contrary notwithstanding, but until such transfer on such register, the
Company may treat the registered Holder hereof as owner for all purposes.
This Warrant Certificate and the Warrant Agreement are
subject to amendment as provided in the Warrant Agreement.
All terms used in this Warrant Certificate and not defined
herein that are defined in the Warrant Agreement shall have the meanings
assigned to them in the Warrant Agreement.
Dated: June __, 1998
LIVENT INC.
By:_____________________________
Name: Garth H. Drabinsky
Title: Chairman and
Chief Executive Officer
FORM OF REVERSE OF SERIES A WARRANT CERTIFICATE
EXERCISE SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
To: LIVENT INC.
The undersigned irrevocably exercises ________ of the
Warrants for the acquisition of one Common Share (subject to adjustment),
no par value, (a "Share"), of Livent Inc. (the "Company"), for each Warrant
represented by the Warrant Certificate and herewith makes payment of $____
(such payment being in cash or by certified or official bank check payable
to the order of the Company), all at the Exercise Price and on the terms
and conditions specified in this Warrant Certificate and the Warrant
Agreement therein referred to, surrenders this Warrant Certificate and all
right, title and interest therein to the Company and directs that the
Shares deliverable upon the exercise of such Warrants be registered or
placed in the name and at the address specified below and delivered
thereto.
Date: ________________, ___
_______________________________(1)
(Signature of Owner)
_________________________________
(Street Address)
_________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
__________________________________
_______________
(1) Signature must correspond with the name as written upon the face
of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatever, and must be
guaranteed by a financial institution satisfactory to the Company.
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants evidenced by the within Warrant Certificate to be
issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned registered holder of the
enclosed Warrant Certificate hereby sells, assigns, and transfers unto the
Assignee(s) named below (including the undersigned with respect to any
Warrants constituting a part of the Warrants evidenced by the enclosed
Warrant Certificate not being assigned hereby) all of the rights of the
undersigned under the enclosed Warrant Certificate, with respect to the
number of Warrants set forth below:
SOCIAL SECURITY
OR OTHER
IDENTIFYING
NAME OF NUMBER OF NAME OF
ASSIGNEES ADDRESS ASSIGNEE(S) WARRANTS
- ---------- ------- --------------- --------
and does hereby irrevocably constitute and appoint Livent Inc. the
undersigned's attorney to make such transfer on the books of Livent Inc.
maintained for that purpose, with full power of substitution in the
premises.
Date: _________________, ___
__________________________________(1)
(Signature of Owner)
____________________________________
(Street Address)
___________________________________
(City) (State) (Zip Code)
SIGNATURE GUARANTEED BY:
__________________________________
______________
(1) The signature must correspond with the name as written upon the
face of the within Warrant Certificate in every particular,
without alteration or enlargement or any change whatever.
EXHIBIT B
FORM OF FACE OF WARRANT CERTIFICATE
SERIES B
WARRANTS TO PURCHASE SHARES
OF LIVENT INC. COMMON STOCK
No. 1 Certificate for 80,000 Warrants
This certifies that Roy L. Furman, or registered assigns, is
the registered holder of the number of Warrants set forth above. Each
Warrant entitles the holder thereof (a "Holder"), subject to the provisions
contained herein and in the Warrant Agreement referred to below, to receive
from Livent Inc., an Ontario corporation (the "Company"), one common share
("Common Share") of the Company ("Shares"), at the exercise price (the
"Exercise Price") of US$10.00 per share, subject to adjustment upon the
occurrence of certain events.
This Warrant Certificate is issued under and in accordance
with the Warrant Agreement, dated as of June 12th, 1998 (the "Warrant
Agreement"), between the Company and Furman as named therein, and is
subject to the terms and provisions contained in the Warrant Agreement, to
all of which terms and provisions the Holder of this Warrant Certificate
consents by acceptance hereof. The Warrant Agreement is hereby incorporated
herein by reference and made a part hereof. Reference is hereby made to the
Warrant Agreement for a full statement of the respective rights,
limitations of rights, duties, obligations and immunities thereunder of the
Company and the Holders of the Warrants.
The Warrants represented by this Warrant Certificate shall
be exercisable prior to the close of business on the Expiration Date.
The Exercise Price and the number of Shares issuable upon
the exercise of each Warrant are subject to adjustment as provided in the
Warrant Agreement.
All Shares issuable by the Company upon the exercise of
Warrants shall, upon such issue, be duly and validly issued and fully paid
and nonassessable.
In order to exercise a Warrant, the registered holder hereof
must surrender this Warrant Certificate at the office of the Company, with
the Exercise Subscription Form on the reverse hereof duly executed by the
Holder hereof, with signature guaranteed as therein specified, together
with any required payment in full of the Exercise Price then in effect for
the Underlying Shares as to which the Warrant(s) represented by this
Warrant Certificate are submitted for exercise, all subject to the terms
and conditions hereof and of the Warrant Agreement. Any such payment of the
Exercise Price shall be in accordance with Section 3.4(a) of the Warrant
Agreement.
The Company shall pay all issuance and transfer taxes and
similar governmental charges that may be imposed on the Company in
connection with the issuance of the Warrants or any securities deliverable
upon exercise of Warrants. The Company shall not be required, however, to
pay any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for Underlying Shares or payment
of cash to any person other than the Holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and in case of such transfer or
payment, the Company shall not be required to issue any stock certificate
or pay any cash until such tax or other charge has been paid or it has been
established to the Company's satisfaction that no such tax or other charge
is due.
Subject to compliance with the Warrant Agreement, this
Warrant Certificate and all rights hereunder are transferable by the
registered holder hereof, in whole or in part, on the register of the
Company, upon surrender of this Warrant Certificate for registration of
transfer at the office of the Company, duly endorsed by, or accompanied by
a written instrument of transfer substantially in the form of the attached
Form of Assignment or otherwise in a form satisfactory to the Company duly
executed by, the Holder hereof or his attorney duly authorized in writing,
with signature guaranteed. Upon any partial transfer, the Company will
issue and deliver to such Holder a new Warrant Certificate or Certificates
with respect to any portion not so transferred.
No service charge shall be made for any registration of
transfer or exchange of the Warrant Certificates, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
Each Holder of this Warrant Certificate by taking or holding
the same consents and agrees that this Warrant Certificate when duly
endorsed in blank shall be deemed negotiable and that when this Warrant
Certificate shall have been so endorsed, the Holder hereof may be treated
by the Company and all other Persons dealing with this Warrant Certificate
as the absolute owner hereof for any purpose and as the Person entitled to
exercise the rights represented hereby, or to the transfer hereof on the
register of the Company maintained by a Warrant agent, any notice to the
contrary notwithstanding, but until such transfer on such register, the
Company may treat the registered Holder hereof as owner for all purposes.
This Warrant Certificate and the Warrant Agreement are
subject to amendment as provided in the Warrant Agreement.
All terms used in this Warrant Certificate and not defined
herein that are defined in the Warrant Agreement shall have the meanings
assigned to them in the Warrant Agreement.
Dated: June ___, 1998
LIVENT INC.
By:_____________________________
Name: Garth H. Drabinsky
Title: Chairman and
Chief Executive Officer
FORM OF REVERSE OF SERIES B WARRANT CERTIFICATE
EXERCISE SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
To: LIVENT INC.
The undersigned irrevocably exercises __________ of the
Warrants for the acquisition of one Common Share (subject to adjustment),
no par value, (a "Share"), of Livent Inc. (the "Company"), for each Warrant
represented by the Warrant Certificate and herewith makes payment of $____
(such payment being in cash or by certified or official bank check payable
to the order of the Company), all at the Exercise Price and on the terms
and conditions specified in this Warrant Certificate and the Warrant
Agreement therein referred to, surrenders this Warrant Certificate and all
right, title and interest therein to the Company and directs that the
Shares deliverable upon the exercise of such Warrants be registered or
placed in the name and at the address specified below and delivered
thereto.
Date: ________________, __
_______________________________(1)
(Signature of Owner)
_______________________________
(Street Address)
________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
________________________________
___________
(1) Signature must correspond with the name as written upon the
face of the within Warrant Certificate in every particular,
without alteration or enlargement or any change whatever, and must
be guaranteed by a financial institution satisfactory to the
Company.
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants evidenced by the within Warrant Certificate to be
issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned registered holder of the
enclosed Warrant Certificate hereby sells, assigns, and transfers unto the
Assignee(s) named below (including the undersigned with respect to any
Warrants constituting a part of the Warrants evidenced by the enclosed
Warrant Certificate not being assigned hereby) all of the rights of the
undersigned under the enclosed Warrant Certificate, with respect to the
number of Warrants set forth below:
SOCIAL SECURITY
OR OTHER
IDENTIFYING
NAME OF NUMBER OF NAME OF
ASSIGNEES ADDRESS ASSIGNEE(S) WARRANTS
- --------- ------- --------------- --------
and does hereby irrevocably constitute and appoint Livent Inc. the
undersigned's attorney to make such transfer on the books of Livent Inc.
maintained for that purpose, with full power of substitution in the
premises.
Date: _________________, __
________________________(1)
(Signature of Owner)
__________________________
(Street Address)
___________________________
(City) (State) (Zip Code)
SIGNATURE GUARANTEED BY:
_____________________________
_____________
(1) The signature must correspond with the name as written upon the
face of the within Warrant Certificate in every particular,
without alteration or enlargement or any change whatever.
EXHIBIT 7
SHAREHOLDERS AGREEMENT
THIS AGREEMENT made as of the 12 day of June, 1998.
BY AND AMONG:
GARTH H. DRABINSKY,
of the City of Toronto in the
Province of Ontario,
(hereinafter referred to as "Drabinsky"),
OF THE FIRST PART,
- and -
MYRON I. GOTTLIEB,
of the City of Toronto in the
Province of Ontario,
(hereinafter referred to as "Gottlieb"),
OF THE SECOND PART,
- and -
ROY L. FURMAN,
of the City of New York in the
State of New York,
(hereinafter referred to as "Furman"),
OF THE THIRD PART,
- and -
DAVID R. MAISEL,
of the City of Beverly Hills in the
State of California,
(hereinafter referred to as "Maisel"),
OF THE FOURTH PART,
- and -
LYNX VENTURES L.P.,
a limited partnership existing under the laws of
the State of Delaware,
(hereinafter referred to as the "Investor"),
OF THE FIFTH PART,
- and -
LIVENT INC.,
a corporation incorporated under the laws of
the Province of Ontario,
(hereinafter referred to as the "Corporation"),
OF THE SIXTH PART,
- and -
THOMAS H. LEE EQUITY PARTNERS, L.P.,
a limited partnership existing under the laws
of the State of Delaware,
for purposes of Section 4.4 only,
(hereinafter referred to as "THL"),
OF THE SEVENTH PART,
- and -
THL-CCI LIMITED PARTNERSHIP,
a limited partnership existing under the
laws of the Commonwealth of Massachusetts,
for purposes of Section 4.4 only,
(hereinafter referred to as "THL-CCI"),
OF THE EIGHTH PART.
WHEREAS the Shareholders (as defined below) have purchased, or
have rights to purchase, shares of common stock, no par value, of the
Corporation (the "Common Shares");
WHEREAS the Shareholders, the Corporation and Montreal Trust
Company of Canada, as depositary (the "Depositary"), have entered into a
Voting Trust Agreement, dated as of the date hereof (the "Voting Trust
Agreement"), pursuant to which each of the Executives (as defined below)
have agreed to deposit all Common Shares beneficially owned by him which
are free and clear of any encumbrances with the Depositary to allow such
securities to be voted by the Investor, in its capacity as Voting Trustee
(as defined therein), pursuant to the terms thereof;
WHEREAS the Shareholders and the Investor have each entered into
a Voting Agreement, dated as of the date hereof, pursuant to which all
Common Shares or voting securities beneficially owned by the Shareholders
and not subject to the Voting Trust Agreement are subject to the voting
arrangement set forth therein;
WHEREAS THL, THL-CCI and the Investor have each entered into a
Voting, Right of First Offer and Waiver Agreement, dated as of the date
hereof, pursuant to which each of the parties, among other things, have
agreed to vote Common Shares owned by it in favor of certain director
nominees;
WHEREAS the execution and delivery of this Shareholders Agreement
is a condition precedent to the closing of the transactions contemplated by
the Investment Agreement, dated as of April 13, 1998 (the "Investment
Agreement"), between the Corporation and the Investor; and
WHEREAS the parties hereto wish to establish their respective
rights and obligations in respect of certain matters pertaining to the
Corporation, the transfer and disposition of securities of the Corporation
and various other matters, on the terms and conditions hereinafter set
forth.
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of
the respective covenants and agreements of the parties contained herein and
for other good and valuable consideration (the receipt and sufficiency of
which are hereby acknowledged by each of the parties hereto), the parties,
intending to be legally bound, hereby agree as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
Where used in this Agreement, unless there is something in the
context or the subject matter inconsistent therewith, the following terms
shall have the following meanings, respectively:
"ANTIDILUTION ADJUSTMENTS" shall mean appropriate adjustments made
from time to time to the Common Shares in question in order to take
into account dilutive effects resulting from changes in the number of
shares of common stock outstanding subsequent to the Closing Date,
whether by recapitalization, declaration of a stock split, payment of
a stock dividend or otherwise;
"AUDIT COMMITTEE" means the Audit Committee of the Board which has the
power and authority to review the financial statements of the
Corporation and to report thereon to the Board.
"BOARD" means the board of directors of the Corporation;
"BUSINESS" means the Corporation's business of live entertainment
production and theatre management;
"BUSINESS DAY" means a day on which both the TSE and the NASDAQ are
open for trading;
"BUYER" has the meaning attributed to that term in Section 4.4(f);
"CLOSING DATE" has the meaning attributed to that term in the
Investment Agreement;
"COMMON SHARES" has the meaning attributed to that term in the
recitals;
"COMPENSATION COMMITTEE" means the Compensation Committee of the Board
which has the power and authority to determine compensation of
officers and directors of the Corporation;
"CONVERTIBLE SECURITIES" means, collectively, (i) the 8.95%
Subordinated Convertible Notes of the Corporation in the aggregate
principal amount of $15,000,000 owned by Thomas H. Lee Equity
Partners, L.P. and THL-CCI Limited Partnership and (ii) the 10%
Subordinated Convertible Debentures of the Corporation in an aggregate
amount of $8,500,000;
"DEBT", with respect to the Corporation and its subsidiaries,
determined on a consolidated basis, means (i) all indebtedness for
borrowed money, (ii) that portion of obligations with respect to
capital leases that is properly classified as a liability on a balance
sheet in conformity with Canadian generally acceptable accounting
principles, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for
borrowed money (other than accounts payable incurred in the ordinary
course of business and accrued expenses incurred in the ordinary
course of business), (iv) any obligation owed for all or any part of
the deferred purchase price of property or services, which obligation
is due more than one year from the date of incurrence of the
obligation, and (v) all indebtedness secured by any lien on any
property or asset owned or held by the Corporation regardless of
whether the indebtedness secured thereby shall have been assumed by
the Corporation or is nonrecourse to the credit of the Corporation,
but excluding deferred performance revenues attributable to advance
ticket sales and letters of credit in respect thereof;
"DEPOSITED SHARES" has the meaning attributed to that term in the
Voting Trust Agreement;
"DISPOSITION PERIOD" has the meaning attributed to that term in
Section 4.5(h);
"DRAG-ALONG NOTICE" has the meaning attributed to that term in Section
4.5(b);
"DRAG-ALONG PURCHASER" has the meaning attributed to that term in
Section 4.5(c);
"DRAG-ALONG SALE" has the meaning attributed to that term in Section
4.5(c);
"EXECUTIVES" means, collectively, Drabinsky, Gottlieb, Furman and
Maisel;
"EXECUTIVE COMMITTEE" means the Executive Committee of the Board which
has the full delegated power and authority of the Board (to the extent
Permitted By Law) in the absence of a meeting of the full Board;
"FULLY DILUTED BASIS" means, with respect to the ownership of Common
Shares by a Shareholder at any particular time, such ownership
determined on the assumption that immediately prior to such time all
existing rights to acquire Common Shares (whether through options,
warrants, rights of conversion, rights of exchange or otherwise,
including, without limitation, the conversion rights attached to the
Convertible Securities, and including the purchase rights attached to
options issued under the Corporation's Stock Option Plan (other than
to the extent that any such option is not exercisable by the
optionholder at that time and the exercise price of which is higher
than the closing price of the Common Shares on the NASDAQ on the
Business Day immediately prior to such time), but excluding the Pre-
emptive Opportunity) will be exercised by all holders of such rights
including the Shareholders;
"INVESTMENT AGREEMENT" has the meaning attributed to that term in the
recitals;
"MANAGEMENT VOTING TRUST AGREEMENT" has the meaning attributed to that
term in Section 2.2(b);
"MARKET PRICE", as of a particular date, means the closing price of
the Common Shares on the NASDAQ on the last Business Day preceding the
date in question on which the Common Shares were traded; provided,
however, that if the Common Shares are not then listed and posted on
the NASDAQ (or any other stock exchange on which the Common Shares are
actively traded and from which a Market Price can be determined), the
Market Price shall be the fair market value of the Common Shares as
determined by such firm or corporation having substantial experience
in business valuation as may be agreed upon by the Shareholders;
"MARKET TRANSACTION" has the meaning attributed to that term in
Section 4.3(f);
"NASDAQ" means the NASDAQ National Market;
"NET INCOME" means, for any fiscal year, consolidated net income of
the Corporation for such year, calculated after taxes but before
extraordinary items of income (loss) and determined on a basis
consistent with prior periods and in accordance with accounting
principles and practices generally accepted in Canada, as set forth in
the audited consolidated financial statements for the Corporation for
such fiscal year;
"1993 SHAREHOLDERS AGREEMENT" has the meaning attributed to that term
in Section 2.2(a);
"1995 INVESTMENT AGREEMENT" means the Investment Agreement, dated
February 3, 1995, among the Corporation, Thomas H. Lee Equity
Partners, L.P. and THL-CCI Limited Partnership;
"1995 SHAREHOLDERS AGREEMENT" means the Shareholders Agreement, dated
February 3, 1995, among Drabinsky, Gottlieb, Thomas H. Lee Equity
Partners, L.P. and THL-CCI Limited Partnership;
"NOMINATING COMMITTEE" means the Nominating Committee of the Board
which has the power and authority to nominate candidates for election
to the Board;
"NOTICE PARTY" has the meaning attributed to that term in Section
4.4(g);
"OPTION AGREEMENT" has the meaning attributed to that term in the
recitals;
"OPTIONED SHARES" has the meaning attributed to that term in the
Option Agreement;
"PARTICIPANT" has the meaning attributed to that term in Section
4.4(b);
"PARTICIPATING OFFER" has the meaning attributed to that term in
Section 4.4(c);
"PARTICIPATING SHARES" has the meaning attributed to that term in
Section 4.4(b);
"PARTICIPATION ELECTION" has the meaning attributed to that term in
Section 4.4(b);
"PERMITTED BY LAW" means the Corporation shall cause an event to
happen to the extent that a failure to take such action will give rise
to an action against the Corporation at law or in equity;
"PERMITTED ENCUMBRANCE" means, collectively, any mortgage, pledge,
charge, hypothecation or other encumbrance on Shares granted to a bank
or other bona fide financial institution as collateral security for
bone fide indebtedness incurred by the owner of such Shares;
"PERMITTED TRANSFEREE" means, in relation to any particular
Shareholder:
(a) a corporation or other entity of which all of the outstanding
voting securities or interests are beneficially owned, directly
or indirectly, by such Shareholder, or
(b) the spouse or children of such Shareholder, or a
corporation, trust or partnership of which none of the
shareholders, beneficiaries or partners, as the case may be, is
a Person other than such Shareholder, his spouse or his
children for bona fide estate planning purposes;
"PERSON" includes an individual, a firm, a corporation, a syndicate, a
partnership, a trust, an association, a joint venture, an incorporated
or unincorporated organization, a government, a governmental authority
or other entity;
"PRE-EMPTIVE OPPORTUNITY" has the meaning attributed to that term in
Section 3.1(f);
"QUALIFYING BID" means a bid by any party, which is supported by the
Investor, to purchase more than a majority of the Common Shares of the
Corporation;
"RESPONSE PERIOD" has the meaning attributed to that term in Section
4.3(g);
"RESTRICTED PERIOD" means the period commencing from the Closing Date
and ending on the earlier of (i) the first anniversary of the Closing
Date and (ii) a Qualifying Bid;
"SALE NOTICE" has the meaning attributed to that term in Section
4.4(a);
"SALE PERCENTAGE" has the meaning attributed to that term in Section
4.5(a);
"SHAREHOLDERS" means, collectively, Drabinsky, Gottlieb, Furman,
Maisel, the Investor and any Permitted Transferee of any of the
foregoing that complies with Article 4 hereof;
"SHARE LIMIT" has the meaning attributed to that term in Section
6.1(b);
"SHARES" means any and all Common Shares beneficially owned by such
Shareholder, whether presently owned or acquired following the Closing
Date;
"TAG-ALONG SALE" has the meaning attributed to that term in Section
4.4(f);
"TRANSACTION DOCUMENT" has the meaning attributed to that term in the
Investment Agreement;
"TRANSFER" of a security includes any sale, exchange, transfer,
assignment, gift, pledge, encumbrance, hypothecation, alienation,
disposition or other transaction, whether voluntary, involuntary or by
operation of law, by which the legal or beneficial ownership of, or
any security interest or other right, title or interest in, such
security passes from one Person to another or to the same Person in a
different capacity, whether or not for value, and any change of
control of the legal or beneficial owner of the security or of any
Person which controls, directly or indirectly, in any manner
whatsoever, such legal or beneficial owner of the security, and "to
transfer", "transferred" and similar expressions shall have
corresponding meanings;
"TSE" means The Toronto Stock Exchange;
"U.S. EXCHANGE" means any of NASDAQ, the New York Stock Exchange or
the American Stock Exchange; and
"VOTING TRUST AGREEMENT" has the meaning attributed to that term in
the recitals.
1.2 GENDER/NUMBERS
Words importing the singular number only shall include the plural
and vice versa and words importing the use of any gender shall include both
genders.
1.3 HEADINGS
The article and section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.
1.4 PROPER LAW
This Agreement and all documents ancillary hereto shall be
governed by and interpreted in accordance with the laws of the Province of
Ontario and the federal laws of Canada applicable therein.
1.5 BUSINESS DAYS
If any act is required hereunder to be done, any notice is
required hereunder to be given or any period of time is to expire hereunder
on any day that is not a Business Day, such act shall be required to be
done or notice shall be required to be given or time shall expire on the
next succeeding Business Day.
1.6 RECLASSIFICATION OF SHARES
The provisions of this Agreement shall apply, mutatis mutandis,
to any shares or securities of any nature into which the Common Shares or
any of them may be converted, exchanged, reclassified, redivided,
redesignated, subdivided or consolidated, to any shares or securities of
any nature that are received by a Shareholder as a stock dividend or
distribution payable in shares, securities, warrants, rights or options of
any nature of the Corporation, to any shares, securities, warrants, rights
or options of any nature of the Corporation or any successor, continuing
company or corporation of the Corporation that may be received by a
Shareholder on a reorganization, amalgamation, arrangement, consolidation
or merger, statutory or otherwise, and to any shares, securities, warrants,
rights or options hereafter issued or allotted by the Corporation to a
Shareholder including, without limitation, Common Shares issued to a
Shareholder upon conversion or exercise of any other security, warrant
right or option, all of which shares, securities, warrants, rights or
options shall be deemed to be Shares for all purposes of this Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTEES
2.1 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each Shareholder hereby represents and warrants to each other
Shareholder as follows and acknowledges that each such other Shareholder is
relying upon such representations and warranties in connection with the
entering into of this Agreement:
(a) the Shareholder has all necessary capacity, power and
authority to enter into this Agreement and perform his or its
obligations hereunder;
(b) all necessary action has been taken by the Shareholder to
authorize the execution and delivery of this Agreement by the
Shareholder and the performance by the Shareholder of his or its
obligations hereunder, and this Agreement has been duly executed
and delivered by the Shareholder and constitutes a legal, valid
and binding obligation of the Shareholder, enforceable against
the Shareholder in accordance with its terms;
(c) neither the execution and delivery of this Agreement by the
Shareholder nor the performance by the Shareholder of his or its
obligations hereunder will conflict with or result in the
violation, in the case of the Investor, of any of the terms and
provisions of its organizational documents and, in the case of
each Shareholder, of any agreement, obligation, contract,
commitment, law or regulation to which such Shareholder is a
party or by which he or it is bound;
(d) that the Shareholder is free to enter into this Agreement and is
not subject to any obligations or agreements which will or might
prevent or interfere with the performance of his or its
obligations hereunder; and
(e) that the Shareholder has had the opportunity to seek, and was not
prevented or discouraged from seeking, independent legal advice
prior to the execution and delivery of this Agreement and that,
in the event that he or it did not avail himself or itself of
that opportunity prior to signing this Agreement, he or it did so
voluntarily without any undue duress or pressure and agrees that
this failure to obtain legal advice shall not be used by him or
it as a defense as to the enforcement of his or its obligations
under this Agreement.
2.2 REPRESENTATIONS AND WARRANTIES OF DRABINSKY AND GOTTLIEB
Each of Drabinsky and Gottlieb hereby represents and warrants to
each other Shareholder as follows and acknowledges that each such other
Shareholder is relying upon such representations and warranties in
connection with the entering into of this Agreement:
(a) the Shareholders Agreement, dated May 17, 1993, between Drabinsky
and Gottlieb (the "1993 Shareholders Agreement") will, effective
as of the Closing Date, pursuant to Section 5.1 hereof, be
terminated and the operative provisions thereof shall have no
further force and effect thereafter;
(b) as of the date hereof, Drabinsky and Gottlieb possess no rights
of first refusal or first offer with respect to any Common
Shares, other than those held (i) pursuant to the Voting Trust
Agreement, dated May 19, 1993 (the "Management Voting Trust
Agreement"), among Drabinsky, Gottlieb and the Management
Shareholders (as defined therein), which have been effectively
assigned to the Investor contemporaneously herewith pursuant to
an Assignment and Assumption Agreement, dated as of the date
hereof, by and among Gottlieb, Drabinsky and the Investor and
(ii) pursuant to Sections 4.5 and 4.6 of the 1995 Shareholders
Agreement which have been effectively assigned to the Investor
contemporaneously herewith pursuant to Section 5.2 hereof; and
(c) other than the Option Agreement, the 1993 Shareholders Agreement,
the 1995 Shareholders Agreement and the Management Voting Trust
Agreement, neither Drabinsky nor Gottlieb were party to any other
agreements with shareholders of the Corporation (or persons who
have rights to acquire Common Shares in the Corporation), that
was in effect on or after April 13, 1998, pertaining to the
Business and affairs of the Corporation or the transfer and
disposition of securities of the Corporation.
ARTICLE 3
COVENANTS
3.1 COVENANTS OF THE SHAREHOLDERS AND THE CORPORATION
The Corporation agrees and covenants that, and each of the
Shareholders, in his or its capacity as a shareholder of the Corporation,
agrees to vote or cause to be voted all Shares and any other voting
securities in the Corporation beneficially owned by him or it (including
any Common Shares and voting securities acquired after the date hereof),
and to exercise his or its influence in respect of the Corporation
(including with respect to his or its nominees who are directors of the
Corporation) in an effort to ensure that, unless otherwise agreed to in
writing by the Investor:
(a) Michael S. Ovitz shall, to the extent Permitted By Law, be
elected or appointed as a member of the Board and Chairman of
each of the Executive Committee;
(b) a Nominating Committee shall be formed which shall have the
authority to nominate candidates for election to the Board and
thereafter, to the extent that nominees for election as directors
approved from time to time by the Nominating Committee are not
otherwise elected by shareholders to the Board, the Corporation
shall, to the extent Permitted By Law, cause each such nominee to
be appointed to the Board;
(c) up to five qualified persons identified by the Investor shall be
appointed as members of the Board promptly following the 1998
annual meeting of the shareholders of the Corporation and
thereafter the Investor shall have the right to propose nominees
for election as directors and consult with the Corporation on the
identity of such proposed nominees, and, to the extent Permitted
By Law, all individuals nominated by the Nominating Committee
shall be acceptable to the Investor;
(d) the Executive Committee, Compensation Committee, Nominating
Committee and Audit Committee of the Board shall to the extent
Permitted By Law be composed of members acceptable to the
Investor;
(e) in the event of a tie with respect to any vote of the Executive
Committee, the Chairman of the committee shall be entitled to
break the tie;
(f) if the Corporation proposes to issue any Common Shares or any
securities convertible into or exchangeable for Common Shares,
whether to the public or to private investors, the Corporation
will give the Investor as much prior notice thereof as is
practicable in the circumstances and will give the Investor a
reasonable and equal opportunity (the "Pre-emptive Opportunity")
to purchase up to that number of Common Shares or such other
securities that will enable him or it, after giving effect to
such issue of Common Shares or other securities (including the
issue of Common Shares upon the exercise of any conversion or
exchange rights attached to any such other securities by all
holders of any such securities), to maintain his or its pro rata
ownership of Common Shares; provided that the Corporation shall
ensure that (i) the Investor will have a period of not less than
five calendar days following notice of any such issue within
which to decide whether to exercise its rights under any Pre-
emptive Opportunity and (ii) the Investor will not be required to
pay the purchase price for any securities it elects to purchase
under any Pre-emptive Opportunity until not earlier than the
tenth Business Day following expiry of the period referred to in
clause (i) of this paragraph; and provided further that the Pre-
emptive Opportunity shall not apply with respect to the issue of
any Common Shares or securities pursuant to (A) the Investment
Agreement, (B) any Transaction Document, (C) the Convertible
Securities, or (D) the stock option plans of the Corporation or
the exercise of options issued pursuant to the stock option plans
of the Corporation; and further provided that for purposes of
this paragraph 3.1(f) the Investor's pro rata ownership of Common
Shares at any time shall be determined on a fully diluted basis;
(g) the Corporation will register any Shares beneficially owned by
the Shareholders for resale under Canadian or U.S. securities
laws in accordance with Schedule A;
(h) the Corporation shall not adopt or otherwise create any
restriction or limitation on the ability of the Investor to
purchase additional Common Shares; and
(i) if requested by the Investor, to the extent Permitted By Law, the
Corporation shall take all such action as is required under
applicable law to obtain shareholder approval of the relocation
of the jurisdiction of incorporation of the Corporation from the
Province of Ontario to the Yukon Territory or such other
jurisdiction in Canada specified by the Investor on the time
schedule outlined by the Investor at an annual or special meeting
of the shareholders as specified in such request, including
making a Board recommendation with respect to such relocation;
provided, however, that the Corporation's and the Shareholders'
obligation to cause the above mentioned relocation to occur shall
terminate if the relocation is not commenced prior the third
anniversary of the Closing Date.
With respect to the matters set forth in subsections (a), (b),
(c), (d) and (i) above, Investor acknowledges that such provisions do not
require the members of the Board of Directors to take action in derogation
of their fiduciary duties under the then applicable corporate statute.
Such acknowledgement shall not, however, excuse the Corporation from its
obligations under such provisions to the extent that such obligations are
Permitted By Law.
ARTICLE 4
TRANSFER OF SHARES
4.1 RESTRICTIONS ON TRANSFER
(a) Notwithstanding anything to the contrary contained herein, under
no circumstance shall an Executive, a Permitted Transferee of
such Executive or any affiliate of either of them transfer
Shares, without the prior written consent of the Investor, unless
such transfer is in compliance with each of the following:
(i) if the proposed transfer involves Deposited Shares, the
terms and conditions set forth in the Voting Trust
Agreement regarding the transfer of Deposited Shares must
be complied with to the extent any such Deposited Shares
are to be transferred;
(ii) if the proposed transfer involves Optioned Shares, the
terms and conditions set forth in the Option Agreement
regarding the transfer of Optioned Shares must be
complied with to the extent any such Optioned Shares are
to be transferred; and
(iii) except in the case of a transfer (A) in connection with
the incurrence of, or a foreclosure pursuant to, a
Permitted Encumbrance which complies with the
provisions of clauses (i) and (ii) above or (B) to a
Permitted Transferee in accordance with Section 4.2,
the provisions of Section 4.3 shall have been complied
with.
(b) Subject to compliance with the provisions of Section 4.1(a),
during the Restricted Period, neither of the Executives nor their
affiliates shall transfer any Shares except in accordance with
one of the following:
(i) a transfer of Shares to a Permitted Transferee in
accordance with the provisions of Section 4.2;
(ii) a transfer of Shares, which are not Optioned Shares,
pursuant to a foreclosure on Shares subject to a Permitted
Encumbrance;
(iii) transfers by Drabinsky which aggregate to no more than
100,000 Shares, which are not Optioned Shares, during
the Restricted Period; or
(iv) transfers by Gottlieb which aggregate to no more than
100,000 Shares, which are not Optioned Shares, during the
Restricted Period.
(c) In the event of the death of an Executive, the transfer
restrictions set out in this Section 4.1 shall apply and be
binding against the estate of such deceased Executive.
4.2 PERMITTED TRANSFERS
In order for a transfer to a Permitted Transferee to be in
compliance with provisions of Section 4.1, the Executive shall have
provided the other Shareholders with written notice of such proposed
transfer at least 15 days prior to consummating such transfer stating the
name and address of the Permitted Transferee, the relationship between the
transferring Shareholder and the Permitted Transferee, and the Permitted
Transferee shall have executed a copy of this Agreement as an assignee of
such Executive with respect to the transferred Shares and such Permitted
Transferee shall assume all of the obligations of such Executive, with
respect to the transferred Shares. If any Permitted Transferee to whom
Shares have been transferred pursuant to this Section 4.2 by an Executive
ceases to be a Permitted Transferee, unless the transfer restrictions set
forth in Section 4.1 shall have otherwise been complied with on or before
such Person ceases to be a Permitted Transferee of such Executive, all
such Shares shall be transferred back to the transferring Executive
immediately prior to the time such Person ceases to be a Permitted
Transferee. The transferring Executive and such Permitted Transferee shall
be jointly and severally liable for any breach of this Agreement by such
Permitted Transferee.
4.3 RIGHTS OF FIRST REFUSAL
(a) Subject to compliance with the provisions of Section 4.1 hereof,
if an Executive, his Permitted Transferee or an affiliate of
either of them (each, a "Selling Shareholder") desires to
transfer all or some of his Shares to any Person (the "Proposed
Transferee") other than (x) to a Permitted Transferee in
accordance with Section 4.2 or (y) pursuant to a foreclosure on
Shares subject to a Permitted Encumbrance, such Selling
Shareholder shall, prior to consummating any such Transfer, give
written notice (a "Sale Offer") to the Investor, containing (i)
the number of Shares proposed to be transferred (the "Offered
Shares") pursuant to a bona fide written offer or a Market
Transaction (as defined below), (ii) where such sale is other
than pursuant to a Market Transaction, the name and address of
the Proposed Transferee, (iii) the proposed purchase price
(which, in the case of a Market Transaction, shall not be less
than the average closing price on the applicable stock exchange
for the five preceding trading days), terms and payment and other
material terms and conditions of the Proposed Transferee's offer
and (iv) an offer to sell the Offered Shares set forth in the
Sale Offer at the same price and on the same terms and conditions
as offered to the Proposed Transferee.
(b) The Investor shall have the right, during the applicable Response
Period (as defined below), to purchase all of the Offered Shares
pursuant to the Sale Offer, exercisable by delivering a written
notice to the Selling Shareholder, within the applicable Response
Period. The provision of such notice shall be deemed to create a
binding agreement between the Investor and the Selling
Shareholder with respect to the purchase and sale of the Offered
Shares.
(c) In the event that the Investor shall have notified the Selling
Shareholder within the applicable Response Period that the
Investor desires to purchase all of the Offered Shares, the
Investor shall have 20 days from the last day of the Response
Period to complete such purchase. In the event that the Investor
shall not have completed such purchase within such 20 day period,
then the Selling Shareholder shall have the right to sell such
Shares without the restrictions set forth in this Section 4.3.
(d) If at the end of the applicable Response Period the Investor has
not given notice of its decision to purchase all of the Offered
Shares, then the Selling Shareholder shall be entitled to sell
not less than all of the Offered Shares to the Proposed
Transferee during the applicable Disposition Period (as defined
below) at a price not lower than that contained in the Sale
Offer and on terms not more favorable to the Proposed Transferee
than were contained in the Sale Offer. Promptly after any sale
pursuant to this Section 4.3, the Selling Shareholder shall
notify the Corporation and the Investor of the consummation
thereof and shall furnish such evidence of the completion
(including time of completion) of such sale and of the terms
thereof as the Corporation or the Investor may request. Shares
sold to a Proposed Transferee in compliance with the provisions
of this Section 4.3 shall thereafter not be subject to the terms
of this Agreement.
(e) If at the end of the applicable Disposition Period the Selling
Shareholder has not completed the sale of all of the Offered
Shares to the Proposed Transferee, the Selling Shareholder shall
no longer be permitted to sell such Offered Shares pursuant to
this Section 4.3 without again fully complying with the
provisions of this Section 4.3 and all the restrictions on sale,
transfer, assignment or other disposition contained in this
Agreement shall again be in effect.
(f) As used herein, the term "Market Transaction" shall mean a sale
of Shares through the facilities of the TSE, NASDAQ or any other
stock exchange on which the Common Shares are actively traded.
(g) As used herein, the term "Response Period" shall mean: (i) in the
case where the proposed sale is not a Market Transaction and the
Offered Shares amount to less than or equal to 250,000 Common
Shares (which shall be subject to appropriate Antidilution
Adjustments), a period of 7 days after receipt the Sale Offer;
(ii) in the case where the proposed sale is not a Market
Transaction and the Offered Shares amount to more than 250,000
Common Shares (which shall be subject to appropriate Antidilution
Adjustments), a period of 12 days after receipt of the Sale
Offer; and (iii) in the case where the proposed sale is a Market
Transaction, a period of 3 Business Days after receipt of the
Sale Offer.
(h) As used herein, the term "Disposition Period" shall mean: (i) in
the case of a Market Transaction, a period of 10 trading days
following the end of the applicable response period; and (ii) in
the case of sales other than pursuant to a Market Transaction, a
period of 30 days following the end of the applicable response
period.
(i) Notwithstanding anything to the contrary contained herein, the
provisions of this Section 4.3 shall not apply to (i) sales of
Shares by a Shareholder pursuant the Shareholder's exercise of
its right to have such Shares included in a registration
statement filed by the Corporation on the Investor's behalf in
accordance with the provisions of Section 1(a) of Schedule A
hereto and (ii) bona fide charitable contributions by Furman of
up to 250,000 Common Shares.
4.4 SHAREHOLDER, THL AND THL-CCI "TAG-ALONG" RIGHTS
(a) In the event that the Investor determines to sell Shares pursuant
to a proposed Tag- Along Sale (as defined below), the Investor
shall give written notice of such intention (a "Sale Notice") to
each Notice Party (as defined below), specifying the number of
Shares intended to be sold, identifying the Buyer and describing,
in reasonable detail, the terms of the intended sale.
(b) Each Notice Party desiring to participate with the Investor in
such Tag-Along Sale may elect to sell Shares to the buyer
pursuant to this Section 4.4 by giving written notice (the
"Participation Election") of such election (each such Notice
Party, a "Participant") to the Investor not later than 5:00 p.m.
(Eastern Time) on the fifth Business Day after having received
the Sale Notice, specifying the number of Shares such Participant
wishes to sell to the Buyer (the "Participating Shares").
(c) Following receipt of a Participation Election, the Investor shall
use reasonable efforts to cause the Buyer to make an offer (the
"Participating Offer") to the Participants to purchase, in
addition to Shares being sold by the Investor, the Participating
Shares on the same terms (including the purchase price per share)
on which Shares owned by the Investor are to be sold to the
Buyer.
(d) If the Buyer is unwilling to make a Participating Offer, the
Investor shall not sell any Shares to the Buyer unless the Buyer
agrees to permit the Shares it desires to purchase to be
allocated among the Investor and the Participants, as a group, on
the basis that the number of Shares to be sold by each
Participant shall be the lesser of (i) the number of
Participating Shares and (ii) such Participant's pro rata portion
of the Shares to be purchased based on the proportionate
ownership of Shares by such Participant, the other Participants
and the Investor, determined on a fully diluted basis.
(e) Each Participant, by giving a Participant Election, shall be
deemed to have made an irrevocable election to sell to the buyer
all or some of the Participating Shares either pursuant to a
Participating Offer or clause (d) of this section unless, in
either case, the Tag-Along Sale is not completed in which case
the Investor may cause the buyer and all Participants to
terminate any transaction between them involving Shares by
written notice given to the buyer or the Participants prior to
the completion of any such transaction.
(f) As used herein, a "Tag-Along Sale" shall mean an intended sale of
Shares by the Investor to any Person who is not a Permitted
Transferee (a "Buyer") where (i) the proposed sale is in
connection with a Qualifying Bid or (ii) the number of Shares to
be sold by the Investor is in excess of 75% of the Shares then
currently beneficially owned by the Investor.
(g) As used herein, the term "Notice Party" shall refer to each of
Maisel, Furman, Gottlieb, Drabinsky, THL and THL-CCI.
(h) For purposes of this Section 4.4 only, the term "Shares" shall
include Common Shares owned by THL and THL-CCI.
4.5 DRAG-ALONG RIGHTS
(a) Each Shareholder hereby agrees, if requested by the Investor, to
participate in a Drag- Along Sale (as defined below) by selling
the equivalent Sale Percentage (as defined below) of Shares owned
by such Shareholder as that being sold by the Investor in such
Drag-Along Sale to the Drag-Along Purchaser (as defined below)
in the manner and on the terms set forth in this Section 4.5. As
used herein, the term "Sale Percentage" shall mean the percentage
that the Shares being sold by a Shareholder represents of the
total Shares beneficially owned by such Shareholder.
(b) If the Investor elects to exercise its rights under this Section
4.5, a notice (the "Drag- Along Notice") of such election shall
be furnished by the Investor to the other Shareholders. The
Drag-Along Notice shall set forth the principal terms of the
Drag- Along Sale, the purchase price, the Sale Percentage of
Shares being sold by the Investor and the name and address of the
Drag-Along Purchaser. If the Investor consummates the sale
referred to in the Drag-Along Notice, each Shareholder shall be
bound and obligated to sell its Sale Percentage of Shares in the
Drag-Along Sale on the same terms and conditions. If at the end
of the 90th day following the date of the effectiveness of the
Drag-Along Notice the Investor has not completed the Drag- Along
Sale, the other Shareholders shall be released from their
obligations under the Drag-Along Notice, the Drag-Along Notice
shall be null and void, and it shall be necessary for a separate
Drag-Along Notice to have been furnished and the terms and
provisions of this Section 4.5 separately complied with, in order
to consummate such Drag-Along Sale pursuant to this Section 4.5,
unless the failure to complete such sale resulted from any
failure by the other Shareholders to comply in any material
respect with the terms of this Section 4.5.
(c) As used herein, a "Drag-Along Sale" shall mean an intended sale
of Shares by the Investor to any Person who is not a Permitted
Transferee (the "Drag-Along Purchaser") where (i) the proposed
sale is in connection with a Qualifying Bid or (ii) the number of
Shares to be sold by the Investor is in excess of 75% of the
Shares then currently beneficially owned by the Investor.
4.6 LEGEND
Each certificate representing the Shares beneficially owned by an
Executive shall be stamped with or otherwise imprinted with a legend in the
following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER, PURSUANT TO A SHAREHOLDERS AGREEMENT,
DATED AS OF JUNE 12, 1998. A COPY OF SUCH SHAREHOLDERS
AGREEMENT IS ON FILE AT THE COMPANY. ANY ATTEMPTED TRANSFER OF
THESE SHARES, OTHER THAN IN COMPLIANCE WITH THE TERMS OF THE
SHAREHOLDERS AGREEMENT SHALL BE NULL AND VOID."
Each Executives shall, within 5 days after the Closing, cause
such legend to be stamped or otherwise imprinted on all certificates
representing Shares beneficially held by him in accordance with the
preceding sentence.
4.7 EFFECT
Any purported transfer of Shares that is inconsistent with the
provisions of this Article 4 shall be null and void and of no force and
effect and will not be registered on the stock transfer books of the
Corporation.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 TERMINATION OF 1993 SHAREHOLDERS AGREEMENT
Each of Gottlieb and Drabinsky hereby agree that the 1993
Shareholders Agreement is hereby, subject to and effective upon Closing,
terminated and the provisions thereof shall, upon Closing, be superceded in
all respects by this Agreement.
5.2 ASSIGNMENT OF CERTAIN RIGHTS
Subject to and effective upon Closing, each of Gottlieb and
Drabinsky hereby assign to the Investor all of their rights to purchase
securities of the Corporation pursuant to the exercise of the rights of
first offer set forth in Sections 4.5 and 4.6 of the 1995 Shareholders
Agreement. Drabinsky and Gottlieb shall promptly deliver to the Investor
any notices they receive pursuant to Section 4.5 or 4.6 of the 1995
Shareholders Agreement regarding a proposed transfer of securities of the
Corporation. Each of Drabinsky and Gottlieb agree that, except as may be
required in order to effectuate the exercise by the Investor of the rights
of first offer assigned to the Investor pursuant to this Section 5.2,
neither of them shall, for so long as this Agreement remains in effect,
seek to exercise, whether directly or indirectly, any of the rights granted
to them under the 1995 Shareholders Agreement and each of them further
agree to waive any and all such rights during the term of this Agreement.
5.3 SUPPORT QUALIFYING BIDS
In the event of a Qualifying Bid, each of the Shareholders hereby
agrees to take all actions necessary to cause such bid to be consummated,
including, without limitation, voting or causing to be voted all Shares and
any other voting securities in the Corporation beneficially owned by him or
it in favor of the Qualifying Bid and to exercise his or its influence in
respect of the Corporation (including with respect to his or its nominees
who are directors of the Corporation) to cause the Corporation to take such
actions as shall be appropriate in furtherance of the consummation of the
Qualifying Bid. For greater certainty, the covenants contained in this
Section 5.3 binds each of the Executives in his capacity as a shareholder
of the Corporation only and do not apply to actions take by any such
Executive in his capacity as a director of the Corporation.
ARTICLE 6
GENERAL PROVISIONS
6.1 TERM AND TERMINATION
(a) This Agreement shall become effective as of the Closing Date and
shall remain in full force and effect, unless otherwise
terminated in accordance with the terms of this Agreement,
through to the thirtieth (30th) anniversary of the Closing Date.
(b) This Agreement shall automatically terminate if at any time
following the Closing Date the Investor and its affiliates
beneficially own (as determined in accordance with the provisions
of Rule 13d(3) of the 1934 Securities Exchange Act, as amended
from time to time) less than the Share Limit (as defined below).
As used herein, the term "Share Limit" shall mean initially 5% of
the Common Shares issued and outstanding and shall be adjusted in
the following manner from time to time in the event that the
Corporation issues, pursuant to a single transaction or a series
of related transactions, Common Shares amounting to more than 10%
of the Common Shares then outstanding: the new Share Limit shall
be the Share Limit in effect prior to the issuance of Common
Shares by the Corporation multiplied by the quotient of which the
numerator is the number of Common Shares outstanding immediately
prior to such issuance and the denominator of which is the number
of Common Shares outstanding immediately following such issuance.
(c) This Agreement shall automatically terminate six months after the
death of Michael S. Ovitz, or, if at any time following the
Closing Date, Mr. Ovitz ceases, as a result of circumstances
other than the death of Mr. Ovitz, to control the Investor.
Notwithstanding the foregoing, the covenants and agreements of
the parties set forth in Sections 3.1(a),3.1(b), 3.1(c), 3.1(d),
3.1(e), 4.3, 4.4, 4.5 and 5.3 hereof shall terminate and cease to
be in force and effect upon Mr. Ovitz's death; provided, however,
that no party hereto shall, without the consent of the Investor,
take any action to cause the composition of the Board or any
committee thereof to change during the six month period following
Mr. Ovitz's death except to the extent that such change is in
furtherance of a request made to the Board by Mr. Ovitz prior to
his death in accordance with the provisions of Sections 3.1(b),
3.1(c) and 3.1(d) hereof.
6.2 NOTICE
All notices, requests, demands and other communications shall be
in writing and shall be deemed to have been duly given if personally
delivered or sent by United States or Canadian mails or by telegram or
telex confirmed by letter, or by facsimile transmission, receipt confirmed,
to the address set forth below:
(i) in the case of Drabinsky:
Livent Inc.
165 Avenue Road, Suite 600
Toronto, Ontario
Canada M5R 2H7
Fax No.: (416) 324-5535
Attention: Garth H. Drabinsky
(ii) in the case of Gottlieb:
Livent Inc.
165 Avenue Road, Suite 600
Toronto, Ontario
Canada M5R 2H7
Fax No.: (416) 324-5535
Attention: Myron I. Gottlieb
(iii) in the case of Furman:
c/o Schulte, Roth & Zabel
900 Third Avenue
New York, NY 10022
U.S.A.
Fax No.: (212) 593-5955
Attention: Burton Lehman
(iv) in the case of Maisel:
Lynx Ventures L.P.
9465 Wilshire Boulevard
Suite 510
Beverly Hills, CA 90212
U.S.A.
Fax No.: (310) 271-8860
Attention: David R. Maisel
(v) in the case of the Investor:
Lynx Ventures L.P.
c/o Dreyer, Edmonds & Associates
355 South Grand Avenue
Suite 4150
Los Angeles, CA 90071
U.S.A.
Fax No.: (213) 617-1806
Attention: Michael Dreyer
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022-3897
U.S.A.
Fax No.: (212) 735-2000
Attention: Eric L. Cochran
with a courtesy copy to:
Munger, Tolles & Olson
355 South Grand Avenue
Los Angeles, CA 90071-1560
U.S.A.
Fax No.: (213) 687-3702
Attention: Robert L. Adler
(vi) in the case of THL or THL-CCI:
Thomas H. Lee Company
75 State Street
Boston, MA 02109
U.S.A.
Fax No.: (617) 227-3514
Attention: Scott M. Sperling
with a copy to:
Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, MA 02110
U.S.A.
Fax No.: (617) 951-1295
Attention: Charles W. Robins
(vii) in the case of the Corporation:
Livent Inc.
165 Avenue Road, Suite 600
Toronto, Ontario
Canada M5R 2H7
Fax No.: (416) 324-5535
Attention: The Secretary
All notices requiring timely attention shall be sent by facsimile
transmission, telex or overnight mail. Any notice shall be deemed
received, unless earlier received, (a) if sent by certified or registered
mail, return receipt requested, when actually received, (b) if sent by
overnight mail, on the next Business Day, (c) if sent by telegram or telex,
on the date sent, and (d) if sent by facsimile transmission or delivered by
hand, on the date of receipt. Any party may change its address for service
from time to time by notice given in accordance with the foregoing
provisions.
6.3 ENTIRE AGREEMENT
This Agreement sets forth the entire agreement among the parties
pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions of the parties,
whether oral or written, including without limitation, the 1993
Shareholders Agreement, and there are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as specifically set forth herein.
6.4 SEVERABILITY
In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the parties shall
negotiate in good faith with a view to the substitution therefor of a
suitable and equitable solution in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid provision,
provided, however, that the validity, legality and enforceability of any
such provision in every other respect and of the remaining provisions
contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the parties hereto shall
be enforceable to the fullest extent permitted by law.
6.5 FURTHER ASSURANCES
Each of the parties to this Agreement shall do all such acts and
things and shall execute and deliver, or cause to be executed and
delivered, all such documents, instruments and agreements as may be
necessary or desirable to give effect to the provisions of and the intent
of this Agreement.
6.6 NO INCONSISTENT ARRANGEMENTS
Each of the parties hereby covenants and agrees that, except as
expressly provided in this Agreement, he or it shall not take any action
that would in any way restrict, limit or interfere with the performance of
his or its obligations hereunder or the transactions contemplated hereby.
6.7 AMENDMENT
No supplement, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by all of the parties
hereto or by their respective successors or permitted assigns.
6.8 WAIVER
No waiver of any of the provisions of this Agreement shall be
deemed to be or shall constitute a waiver of any other provision, nor shall
such waiver constitute a continuing waiver unless otherwise expressly
provided.
6.9 TIME
Time shall be of the essence of this Agreement.
6.10 BENEFIT OF THE AGREEMENT
This Agreement shall enure to the benefit of and be binding upon
the parties hereto, all Persons who subsequently become Shareholders and
become bound hereby and their respective heirs, executors, administrators,
legal personal representatives, successors and permitted assigns.
6.11 ASSIGNMENT
Except in the case of an assignment to a Permitted Transferee in
accordance with the provisions of Section 4.2 hereof, neither this
Agreement nor any of the rights or obligations hereunder shall be assigned
by any of the parties hereto without the prior written consent of the other
parties hereto.
6.12 INJUNCTIVE RELIEF
Each of the Shareholders acknowledges that their interests in the
business and affairs of the Corporation vis-a-vis each other may only be
protected through the enforcement of the terms, conditions and other
provisions of this Agreement. Accordingly, each of the Shareholders agree
that in the event of any breach of the provisions of this agreement, the
non-breaching Shareholder, in addition to any other right or relief to
which it may be entitled, shall be entitled to an injunction restraining
further breaches of this Agreement.
6.13 COUNTERPARTS
This Agreement may be executed in any number of counterparts by
any one or more of the parties to be bound hereby. Each executed
counterpart shall be deemed to be an original and such counterparts shall
together constitute one and the same agreement.
IN WITNESS WHEREOF the parties hereto have executed this
Agreement.
/s/ Garth H. Drabinsky /s/ Myron I. Gottlieb
------------------------------ ---------------------------
Garth H. Drabinsky Myron I. Gottlieb
/s/ Roy L. Furman /s/ David R. Maisel
------------------------------ ---------------------------
Roy L. Furman David R. Maisel
LYNX VENTURES L.P.
By: Lynx Ventures L.L.C.,
its General Partner
By /s/ Michael S. Ovitz
---------------------------
Name: Michael S. Ovitz
Title: Managing Member
LIVENT INC.
By /s/ Garth H. Drabinsky
---------------------------
Name: Garth H. Drabinsky
Title: Chairman and
Chief Executive Officer
THOMAS H. LEE EQUITY
PARTNERS, L.P.
By: THL Equity Advisors Limited
Partnership, its General Partner
By: THL Equity Trust,
its General Partner
By /s/ Scott M. Sperling
----------------------------------
Name: Scott M. Sperling
Title: Managing Director and Trustee
THL-CCI LIMITED PARTNERSHIP
By: THL Investment Management Corp.,
its General Partner
By /s/ Scott M. Sperling
----------------------------------
Name: Scott M. Sperling
Title: Managing Director
SCHEDULE A
REGISTRATION OF SHARES
This Schedule A is the schedule referenced in Section 3.1(g) of
the Shareholders Agreement, dated as of June 12, 1998 (the "Shareholders
Agreement"), by and among Garth H. Drabinsky, Myron I. Gottlieb, Roy L.
Furman, David R. Maisel, Lynx Ventures L.P., Thomas H. Lee Equity Partners,
L.P., THL-CCI Limited Partnership and Livent Inc. Defined terms used
herein and not defined herein shall have the meaning ascribed thereto in
the Shareholders Agreement.
1. REQUIRED REGISTRATION.
(a) If the Investor at any time and from time to time in connection
with the sale of any Shares beneficially owned by the Investor requests in
writing that the Corporation register such Shares under the Securities Act
of 1933, as amended, of the United States or any other statute in effect
from time to time corresponding to such Act (the "1933 Act"), the
Corporation shall promptly (and in any event not later than 60 days after
the date of such request) prepare and file a registration statement under
the 1933 Act covering the Shares which are subject to such request and
shall use its best efforts to cause such registration statement to become
effective as soon as practicable so as to permit the sale of the Shares
specified in such request in such manner as the Investor may designate.
Except for the registration of Shares of other Shareholders pursuant to
subsection 1(b), neither the Corporation nor any other person shall have
any right to sell Shares or other securities of the Corporation under any
such registration statement except with the prior written consent of the
Investor and on such terms and conditions as the Investor may require.
(b) The Corporation shall, upon receipt of a request from the
Investor to register Shares pursuant to subsection 1(a), give written
notice as promptly as possible of such proposed registration to the other
Shareholders and, subject the terms hereof, use all reasonable efforts to
include in such registration the sale of such number of Shares held by the
other Shareholders as each such Shareholder shall request (by giving notice
thereof to the Corporation within fifteen Business Days after being
notified of the proposed registration) upon the same terms (including the
method of distribution) as such offering; provided, that if either the
Investor or the Corporation is advised in writing by the managing
underwriters that the inclusion of all of the Shares in the registration
may, in their opinion, interfere with the orderly sale and distribution of
the Shares being offered for sale by the Investor, the Corporation shall
only be required to include in such registration the maximum number of
Shares that the managing underwriters advise can be sold, allocated (a)
first, to all of the Shares requested to be included in such registration
by the Investor and (b) second, among the Shares requested to be included
in such registration by each of the other Shareholders, which shall be
allocated pro rata among the other Shareholders according to the number of
Shares beneficially owned by each of them on a fully diluted basis.
(c) The obligations of the Corporation pursuant to subsection 1(a) to
file a registration statement under the 1933 Act are subject to the
limitation that the Corporation shall be entitled to postpone for a
reasonable period of time (not to exceed six months) the filing of any
registration statement otherwise required to be prepared and filed by it
pursuant hereto if, at the time it receives a request for such
registration, the Corporation determines in its reasonable judgment that,
as a result of a pending acquisition or disposition by the Corporation or a
similar event involving the Corporation, such registration and sale would
be seriously detrimental to the Corporation or its shareholders and gives
prompt written notice of such determination to the Investor; provided,
however, that the Corporation shall not obtain such a deferral more than
once in any 12-month period. If the Corporation shall so postpone the
filing of a registration statement, the Investor shall have the right to
withdraw the demand for registration by giving written notice to the
Corporation within 30 days after receipt of the notice of postponement and,
in the event of such withdrawal, such request shall not be counted as a
request for registration hereunder.
(d) If the Corporation shall, at any time and from time to time,
propose the registration under the 1933 Act of an underwritten offering for
cash of any of the Common Shares, the Corporation shall give written notice
as promptly as possible of such proposed registration to the Investor and
the other Shareholders and shall use all reasonable efforts to include in
such registration the sale of such number of Shares held by the
Shareholders as each such Shareholder shall request (by giving notice
thereof to the Corporation within fifteen Business Days after being
notified of the proposed registration) upon the same terms (including the
method of distribution) as such offering; provided that (i) if the
Corporation is advised in writing by the managing underwriters that the
inclusion of all of the Shares in the registration may, in their opinion,
interfere with the orderly sale and distribution of the Shares being
offered for sale by the Corporation, the Corporation shall only be required
to include in such registration the maximum number of securities that the
managing underwriters advise can be sold, allocated (a) first, to all
securities the Corporation proposes to sell for its own account ("Company
Securities"), (b) second, up to the full number of Shares requested to be
included in such registration by the Investor and any other holder of
Common Shares other than the Shareholders who, based upon its respective
registration rights, is entitled to participate in such registration pari
passu with the Investor, which, in the good faith opinion of such firm, can
be so sold without so materially and adversely affecting such offering (and
if less than the full number of Common Shares requested to be included in
such registration by the Investor and each such additional registrant,
allocated pro rata among the Investor and each such additional registrant
on the basis according to the number of Shares beneficially owned by each
of them on a fully diluted basis) and (c) third, up to the full number of
Shares requested to be included in such registration by each other
Shareholder, which, in the good faith opinion of such firm, can be so sold
without so materially and adversely affecting such offering (and if less
than the full number of such Shares requested to be included in such
registration by the other Shareholders, allocated pro rata among the other
Shareholders on the basis according to the number of Shares beneficially
owned by each of them on a fully diluted basis); and (ii) the Corporation
may at any time prior to the effectiveness of any such registration
statement at its sole discretion and without the consent of the
Shareholders, withdraw such registration statement and abandon the proposed
offering in which the Shareholders had requested to participate.
(e) It shall be a condition precedent to the obligations of the
Corporation to take any action pursuant to this Section 1 that the
Shareholders shall furnish to the Corporation such information regarding
itself, the Shares, the intended method of sale or other disposition of
such Shares and the intended purchasers as the Corporation shall reasonably
request in connection with the registration of the Shares.
2. REGISTRATION PROCEDURES. If and whenever the Corporation is required
by the provisions of Section 1 hereof to effect the registration of
Shares under the 1933 Act, the Corporation shall:
(a) promptly prepare and file with the Securities and Exchange
Commission (the "SEC") a registration statement with respect to such
Shares, and use its best efforts to cause such registration statement to
become and remain effective for such period as may be reasonably necessary
to effect the sale of such Shares in the manner reasonably designated by
the Investor;
(b) prepare and file with the SEC amendments to such registration
statement and supplements to the prospectus contained therein as may be
necessary to keep such registration statement effective for such period as
may be reasonably necessary to effect the sale of such Shares in the manner
reasonably designated by the Investor;
(c) furnish to the Investor and to the underwriters (if any) and the
other Shareholders of the Shares being registered a reasonable number of
copies of the registration statement, preliminary prospectus, final
prospectus, and other such documents as such underwriters or the Investor
or the other Shareholders may reasonably request in order to facilitate the
sale or other disposition of such Shares;
(d) notify the Investor and the other Shareholders (to the extent
their Shares are registered), promptly after the Corporation shall receive
notice thereof, of the time when such registration statement or amendment
thereof has become effective or a supplement to any prospectus forming a
part of such registration statement has been filed;
(e) notify the Investor and the other Shareholders (to the extent
their Shares are registered) promptly of any request by the SEC for the
amending or supplementing of such registration statement or prospectus or
for additional information;
(f) prepare and file with the SEC, promptly upon the request of the
Investor and the other Shareholders (to the extent their Shares are
registered), any amendment or supplement to such registration statement or
prospectus which is required under the 1933 Act or the rules and
regulations thereunder in connection with the sale or other disposition of
the Shares by the Investor and the other Shareholders;
(g) prepare and promptly file with the SEC and promptly notify the
Investor and the other Shareholders (to the extent their Shares are
registered) of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
Shares is required to be delivered under the 1933 Act, any event shall have
occurred as the result of which any such prospectus or any other prospectus
as then in effect would include any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
(h) advise the Investor and the other Shareholders (to the extent
their Shares are registered), promptly after the Corporation shall receive
notice or obtain knowledge thereof, of the issuance of any stop order by
the SEC suspending the effectiveness of such registration statement or the
initiation or threatening of any proceeding for such purpose and promptly
use its best efforts to prevent the issuance of any stop order or to obtain
its withdrawal if such stop order should be issued;
(i) at least three days prior to the filing of any amendment or
supplement to such registration statement or prospectus, furnish copies
thereof to the Investor and the other Shareholders (to the extent their
Shares are registered) and refrain from filing any such amendment or
supplement to which the Investor or the other Shareholders shall have
reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the 1933 Act
or the rules and regulations thereunder, unless, in the opinion of counsel
for the Corporation, the filing of such amendment or supplement is
reasonably necessary to protect the Corporation from any liabilities under
any applicable federal or state law and such filing will not violate
applicable law;
(j) at the request of the Investor, furnish on the date or dates
provided for in any underwriting agreement entered into pursuant to
subsection 2(k): (i) an opinion of counsel satisfactory to the Investor,
addressed to the underwriters (if any) and to the Investor, opining as to
such matters as such underwriters and the Investor may reasonably request;
and (ii) a letter or letters from the independent auditors of the
Corporation, addressed to the underwriter (if any) and to the Investor,
covering such matters as such underwriters and the Investor may reasonably
request;
(k) enter into an underwriting agreement containing representations,
warranties, indemnities, provisions relating to contribution and agreements
then customarily included by an issuer in underwriting agreements with
respect to secondary distributions;
(l) use its best efforts to register or qualify the Shares for sale
under such securities or blue sky laws of such states of the United States
of America as the Investor or the other Shareholders may reasonably request
and do such other acts which may be reasonably required to enable the
Investor or the other Shareholders to consummate the disposition of the
Shares in such jurisdictions; provided, however, that the Corporation shall
not be obligated to qualify as a foreign corporation to do business or to
file a general consent to service or process in any such jurisdictions; and
(m) list such Shares on any stock exchange on which any Shares are
then listed.
3. EXPENSES. With respect to any registration pursuant to Section 1
hereof, the Corporation shall bear all fees, costs and expenses
thereof including, without limitation, all registration, filing and
National Association of Securities Dealers fees, printing expenses,
transfer fees, fees and disbursements of counsel and accountants for
the Corporation, reasonable fees and disbursements of one firm of
counsel for the Investor, and all legal fees and disbursements and
other expense of complying with the 1933 Act and state securities or
blue sky laws; except that the Shareholders shall pay all underwriting
discounts and commissions attributable to Shares proposed to be sold
or otherwise disposed of by it.
4. INDEMNIFICATION.
(a) The Corporation shall indemnify and hold harmless the
Shareholders, their directors and officers, and any underwriter
participating in an offering for the Shareholders and each person (if any)
who controls the Shareholders or such underwriter within the meaning of
control as defined in the 1933 Act, and their respective directors and
officers, from and against any and all loss, damage, liability, cost and
expense to which they or any of them may become subject under the 1933 Act
or otherwise, and shall reimburse them for any legal or other expenses
incurred by them in connection with investigating any claims and defending
any actions, insofar as such losses, damages, liabilities, costs or
expenses shall arise out of or shall be based upon any untrue statement or
alleged untrue statement of a material fact contained in the registration
statement relating to the sale or other disposition of such Shares, any
prospectus contained therein or any amendment or supplement thereto, or
shall arise out of or be based upon the omission or alleged omission to
state therein, a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the
Corporation will not be liable in any such case to the extent that any such
loss, damage, liability, cost or expense arises out of or is based upon the
grossly negligent or wilful action of (except to the extent there is
contributory negligence or wilful action by the Corporation), or an untrue
statement or alleged untrue statement or omission or alleged omission so
made in reliance upon written information furnished specifically for use in
the preparation thereof by, the Shareholders, such underwriter or such
controlling person.
(b) Each Shareholder shall indemnify and hold harmless the
Corporation, its directors and officers, and any underwriter for the
Corporation and each person (if any) who controls the Corporation or such
underwriter within the meaning of control as defined in the 1933 Act, and
their respective directors and officers, from and against any and all loss,
damage, liability, cost or expense to which they or any of them may become
subject under the 1933 Act or otherwise, and shall reimburse them for any
legal or other expenses incurred by them in connection with investigating
and defending any actions, insofar as such losses, damages, liabilities,
costs or expenses shall arise out of or shall be based upon any untrue or
alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein, or any amendment
or supplement thereto, or arise out of or shall be based upon the omission
or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of
the circumstances in which they were made, not misleading; in each case to
the extent but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission resulted from a grossly
negligent or wilful act of (except to the extent there is contributory
negligence or wilful action by the Corporation), or was made in reliance
upon written information furnished specifically for use in the preparation
thereof by, such Shareholder.
5. NOTICE. Promptly after receipt by an indemnified party, pursuant to
the provisions of subsection (a) or (b) of Section 4, of notice of the
commencement of any action involving the subject matter of the
applicable foregoing indemnity provision, such indemnified party
shall, if a claim thereof is to be made against the indemnifying party
pursuant to the provisions of said subsection (a) or (b), promptly
notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve
the indemnifying party from any liability in respect to such action
which it may have to such indemnified party on account of the
indemnity agreement contained in this section unless the indemnifying
party was prejudiced by such omission, and in no event shall relieve
the indemnifying party. In case such action is brought against any
indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall have the right to
participate in, and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party.
6. PROSPECTUS QUALIFICATION RIGHTS IN CANADA. In addition to the rights
of the Shareholders to require the Corporation to register Shares
under the 1933 Act when such registration is required under the
Business Corporations Act (Ontario), pursuant to and in accordance
with Sections 1 through 5 above, the Shareholders shall have the right
to require the Corporation to file a prospectus pursuant to the
securities laws of any or all of the provinces of Canada,
contemporaneously with or independently of the exercise of such
registration rights by the Shareholders, and the provisions of
Sections 1 through 5 above shall apply, mutatis mutandis, to such
prospectus qualification rights provided that the provisions of
Section 3 shall apply only to the extent permitted under the
applicable laws of the provinces of Canada.
7. NUMBER OF REQUESTS. The aggregate number of requests that may be made
by the Investor pursuant to subsection 1(a) and Section 6 shall be
four, and each such request must pertain to a minimum of 500,000
Shares, as constituted on the Closing Date; provided that requests
made with respect to the same Shares contemporaneously under
subsection 1(a) and Section 6 shall be considered to be one request.
In the event that the offering or sale of Shares by the Investor
pursuant to a request for registration under subsection 1(a) is not
consummated for any reason, such request for registration of Shares
shall not be counted among the four requests for registration that the
Investor is entitled to exercise pursuant to this Section 7.
8. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
date hereof, the Corporation shall not enter into any agreements with
respect to its securities which is inconsistent with the rights
granted to the Shareholders hereunder, or otherwise conflicts with the
provisions hereof, in any case, without the prior written consent of
the Shareholders.
EXHIBIT 8
VOTING AGREEMENT
THIS AGREEMENT made as of the 12th day of June, 1998.
BY AND AMONG:
GARTH H. DRABINSKY,
of the City of Toronto in the
Province of Ontario
(hereinafter referred to as "Drabinsky"),
OF THE FIRST PART
- and -
MYRON I. GOTTLIEB,
of the City of Toronto in the
Province of Ontario
(hereinafter referred to as "Gottlieb"),
OF THE SECOND PART
- and -
ROY L. FURMAN,
of the City of New York in the
State of New York
(hereinafter referred to as "Furman"),
OF THE THIRD PART
- and -
DAVID R. MAISEL,
of the City of Beverly Hills in the
State of California
(hereinafter referred to as "Maisel" and together with
Drabinsky, Gottlieb and Furman, as the "Shareholders"),
OF THE FOURTH PART
- and -
LYNX VENTURES L.P.,
a limited partnership existing under the laws of
the State of Delaware
(hereinafter referred to as the "Investor"),
OF THE FIFTH PART.
WHEREAS the Shareholders have purchased, or have rights to
purchase, shares of common stock, no par value (the "Common Shares"), of
Livent Inc. (the "Corporation");
WHEREAS the Shareholders, the Investor, the Corporation and
Montreal Trust Company of Canada, as depositary (the "Depositary"), have
entered into a Voting Trust Agreement, dated as of the date hereof (the
"Voting Trust Agreement"), pursuant to which each of the Shareholders have
agreed to deposit all of the Common Shares beneficially owned by him which
are free and clear of any encumbrances with the Depositary to allow such
securities to be voted by the Investor, in its capacity as Voting Trustee
(as defined therein), pursuant to the terms thereof;
WHEREAS the Shareholders and the Investor have each agreed to
enter into a voting agreement pursuant to which the Investor shall be
authorized to vote all Common Shares or voting securities beneficially
owned by the Shareholders which are not subject to the Voting Trust
Agreement on all matters presented to shareholders of the Corporation for a
vote; and
WHEREAS the execution and delivery of this Agreement is a
condition precedent to the closing of the transactions contemplated by the
Investment Agreement, dated as of April 13, 1998 (the "Investment
Agreement"), between the Corporation and the Investor.
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of
the respective covenants and agreements of the parties contained herein and
for other good and valuable consideration (the receipt and sufficiency of
which are hereby acknowledged by each of the parties hereto), the parties,
intending to be legally bound, hereby agree as follows:
1. SUBJECT SHARES. Each of the Shareholders hereby agree that all Common
Shares and other voting securities beneficially owned by him as of the date
hereof or that become beneficially owned by him hereafter, which are not
subject to the Voting Trust Agreement (the "Subject Shares"), shall be
subject to the terms and provisions of this Agreement. Each of the
Shareholders, with respect to the Common Shares indicated opposite such
Shareholder's name in Schedule A annexed hereto, does hereby represent and
warrant that such shares represent all of the Common Shares and other
voting securities in the Corporation beneficially owned by him as of the
date hereof which are not subject to the Voting Trust Agreement. Each
Shareholder hereby agrees to provide prompt notice to the Investor in the
event of a change in the number of Subject Shares beneficially owned by
such Shareholder.
2. PROXY AUTHORITY. Each Shareholder shall take all such action as shall
be required in order to appoint the Investor as its duly authorized proxy
holder for all of the Subject Shares beneficially owned by such
Shareholder. Such appointment shall provide the Investor with full
authority to vote all of the Subject Shares beneficially owned by such
Shareholder, on all matters presented to the shareholders of the
Corporation for a vote, as the Investor, in its sole discretion shall deem
appropriate. Such appointment shall be renewed as appropriate by the
Shareholders during the term of this Agreement in order to ensure that the
Investor remains the duly authorized proxy holder of such Shareholder at
all times during the term of this Agreement. Each Shareholder hereby
represents and warrants, with respect to the Subject Shares beneficially
owned by him, that no proxies have been granted by such Shareholder with
respect to any of the Subject Shares that remain in effect as of the date
hereof and hereby covenants that, for so long as this Agreement remains in
full force and effect, no proxy shall be granted to a third party with
respect to any of the Subject Shares beneficially owned by such Shareholder
without the prior written consent of the Investor.
3. VOTE AS DIRECTED. In the event that for any reason a Shareholder is
not able to grant the Investor the requisite authority necessary for the
Investor to vote the Subject Shares beneficially owned by such Shareholder
in accordance with the provisions of Section 2 on or before the date on
which the vote of the shareholders of the Corporation must be cast, such
Shareholder shall cause all such Subject Shares beneficially owned by him
to be voted on such matter in accordance with any instructions it receives
from the Investor.
4. TEMPORARY RELEASE OF VOTING AUTHORITY. The Investor may, in its sole
discretion and upon written notice to the Shareholder, irrevocably
relinquish its right to vote the Subject Shares identified in such notice
(the "Exempt Shares") for the period of time (the "Exemption Period") set
forth therein. Upon receipt of such notice, the Shareholder shall be
entitled to revoke the proxy issued to the Investor pursuant to Section 2
with respect to the Exempt Shares and vote all such shares during the
Exemption Period in such Shareholder's sole discretion. The Shareholder,
unless otherwise directed by the Investor, shall take all such action as
shall be necessary to reestablish the Investor's right to vote the Exempt
Shares in accordance with the terms of this Agreement, upon termination of
the Exemption Period.
5. TERM AND TERMINATION OF VOTING AGREEMENT.
(a) This Agreement shall become effective as of the Closing Date (as
such term is defined under the Investment Agreement) and shall remain in
full force and effect, unless otherwise terminated in accordance with the
terms of this Agreement, from the Closing Date through to the date which is
twenty one (21) years after the death of the last living Shareholder.
(b) This Agreement shall automatically terminate if at any time
following the Closing Date the Investor and its affiliates beneficially own
less than the Share Limit (as defined below). As used herein, the term
"Share Limit" shall mean initially 500,000 Common Shares and shall be
appropriately adjusted from time to time to take into account dilutive
effects resulting from changes in the number of shares of common stock
outstanding subsequent to the Closing Date, whether by recapitalization,
declaration of a stock split, payment of a stock dividend or otherwise.
6. ALLOCATION OF VOTING RIGHTS.
(a) The Investor will in no event have the right to cast votes with
respect to Non-Investor Shares to the extent that the sum of the number of
votes the Investor has a right to vote with respect to (i) Investor Shares
and (ii) Non-Investor Shares exceeds 50% of the total number of votes which
can be cast by all Voting Securities. For purposes of this provision, this
restriction shall apply first to the Investor's right to vote Common Shares
attributable to Outstanding Options held by the Shareholders pursuant to
this Agreement and the Voting Trust Agreement on a pro rata basis and then
to any Common Shares (other than Investor Shares) held by the Shareholders
on a pro rata basis.
(b) To the extent that the Investor is precluded from exercising
voting rights with respect to Common Shares outstanding pursuant to Section
6(a), voting rights with respect to such Common Shares outstanding (the
"Additional Voting Rights") shall be allocated to Maisel provided that
Maisel shall not have a right to cast votes that would cause such
Additional Voting Rights, when aggregated with any other voting rights
owned by Maisel, to equal or exceed 10% of the total number of votes which
can be cast by all Voting Securities (assuming for such purposes that all
Outstanding Options are converted to Common Shares if Maisel would have the
right to vote such Common Shares), in which case another party designated
by the parties to this Agreement shall have the right to cast the
Additional Voting Rights.
(c) Maisel shall be entitled to exercise the Additional Voting Rights
on all matters presented to the shareholders of the Corporation for voting
in his sole discretion. Further, Maisel shall be permitted to designate a
substitute party to exercise the Additional Voting Rights, provided that
the Investor consents and such consent is consistent with the terms of the
Boston Agreement.
(d) The provisions of this Section 6 shall expire if the sum of the
Investor Shares and the Boston Shares exceeds more than 50% of all
outstanding Voting Securities or the Corporation otherwise becomes a
controlled foreign corporation ("CFC") for U.S. federal income tax
purposes.
(e) Each of the parties hereto covenants and agrees to cooperate with
each other with respect to compliance with the provisions of this Section 6
and to report to each other any information affecting such compliance.
Further, each of the parties hereto hereby covenants and agrees to
implement a strategy to prevent the voting rights of any person other than
Investor to equal or exceed 10% of the total number of votes which can be
cast by all Voting Securities (assuming for such purposes that all
Outstanding Options are converted to Common Shares if such person would
have the right to vote such Common Shares).
(f) For purposes of this Section 6 only, the term "Voting Securities"
means all Common Shares and any other voting securities of the Corporation.
(g) For purposes of this Section 6 only, the term "Outstanding
Options" means all outstanding options, warrants and convertible debentures
of the Corporation that may be converted to Common Shares.
(h) For purposes of this Section 6 only, the term "Investor Shares"
means all Voting Securities owned by the Investor directly, indirectly, or
by attribution, assuming for such purposes that all Outstanding Options are
converted to Common Shares if such Common Shares would be considered to be
Investor Shares pursuant to this provision.
(i) For purposes of this Section 6 only, the term "Non-Investor
Shares" means all Voting Securities other than Investor Shares that
Investor has a right to vote pursuant to this Agreement, the Voting Trust
Agreement, the Boston Agreement or otherwise, assuming for such purposes
that all Outstanding Options are converted to Common Shares if such Common
Shares would be considered to be Non-Investor Shares pursuant to this
provision.
(j) For purposes of this Section 6 only, the term "Boston Agreement"
means the Voting, Right of First Offer and Waiver Agreement, dated as of
June __, 1998, among the Investor, Thomas H. Lee Equity Partners, L.P.
("THL"), and THL-CCI Limited Partnership ("THL-CCI").
(k) For purposes of this Section 6 only, the term "Boston Shares"
means all Voting Securities owned by THL and THL-CCI directly, indirectly,
or by attribution, assuming for such purposes that all Outstanding Options
are converted to Common Shares if such Common Shares would be considered to
be Boston Shares pursuant to this provision.
7. CHANGE OF COMMON SHARES. The parties hereto agree that the provisions
of this Agreement relating to the Subject Shares shall apply, mutatis
mutandis, to any shares or securities into which such Subject Shares may be
converted, changed, reclassified redivided, redisignated, subdivided or
consolidated, to any shares or securities which are received by the
Shareholder as a stock dividend or distribution payable in shares or
securities of the Corporation which entitle the holder thereof to vote at
any meeting of the shareholders of the Corporation and to any shares or
securities of the Corporation or of any successor or continuing company or
corporation to the Corporation which may be received by the Shareholder on
a reorganization, amalgamation, consolidation or merger, statutory or
otherwise.
8. AMENDMENTS. This Agreement may be amended only with the written
approval of each of the parties hereto.
9. WARRANTY. Each of the parties hereto represents, warrants and agrees
that he is free to enter into this Agreement and is not subject to any
obligations or agreements which will or might prevent or interfere with the
performance of his obligations hereunder. Each of the parties hereto
further represents and warrants and acknowledges and agrees that he has had
the opportunity to seek, and was not prevented or discouraged from seeking,
independent legal advice prior to the execution and delivery of this
Agreement and that, in the event that he did not avail himself of that
opportunity prior to signing this Agreement, he did so voluntarily without
any undue duress or pressure and agrees that this failure to obtain legal
advice shall not be used by him as a defense as to the enforcement of his
obligations under this Agreement.
10. NOTICE. All notices, requests, demands and other communications shall
be in writing and shall be deemed to have been duly given if personally
delivered or sent by United States or Canadian mails or by telegram or
telex confirmed by letter, or by facsimile transmission, receipt confirmed,
to the address set forth below:
(i) in the case of Drabinsky:
Livent Inc.
165 Avenue Road, Suite 600
Toronto, Ontario
Canada M5R 2H7
Fax No.: (416) 324-5535
Attention: Garth H. Drabinsky
(ii) in the case of Gottlieb:
Livent Inc.
165 Avenue Road, Suite 600
Toronto, Ontario
Canada M5R 2H7
Fax No.: (416) 324-5535
Attention: Myron I. Gottlieb
(iii) in the case of Furman:
c/o Schulte, Roth & Zabel
900 Third Avenue
New York, NY 10022
U.S.A.
Fax No.: (212) 593-5955
Attention: Burton Lehman
(iv) in the case of Maisel:
Lynx Ventures L.P.
9465 Wilshire Boulevard
Suite 510
Beverly Hills, CA 90212
U.S.A.
Fax No.: (310) 271-8860
Attention: David R. Maisel
(v) in the case of the Investor:
Lynx Ventures L.P.
c/o Dreyer, Edmonds & Associates
355 South Grand Avenue
Suite 4150
Los Angeles, CA 90071
U.S.A.
Fax No.: (213) 617-1806
Attention: Michael Dreyer
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022-3897
U.S.A.
Fax No.: (212) 735-2000
Attention: Eric L. Cochran
with a courtesy copy to:
Munger, Tolles & Olson
355 South Grand Avenue
Los Angeles, CA 90071-1560
U.S.A.
Fax No.: (213) 687-3702
Attention: Robert L. Adler
All notices requiring timely attention shall be sent by facsimile
transmission, telex or overnight mail. Any notice shall be deemed
received, unless earlier received, (a) if sent by certified or registered
mail, return receipt requested, when actually received, (b) if sent by
overnight mail, on the next business day, (c) if sent by telegram or telex,
on the date sent, and (d) if sent by facsimile transmission or delivered by
hand, on the date of receipt. Any party may change its address for service
from time to time by notice given in accordance with the foregoing
provisions.
11. GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY
AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE DOMESTIC LAWS OF THE PROVINCE OF ONTARIO AND THE
FEDERAL LAWS OF CANADA APPLICABLE THEREIN, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE PROVINCE
OF ONTARIO OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE PROVINCE OF ONTARIO AND THE
FEDERAL LAWS OF CANADA APPLICABLE THEREIN.
12. SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the
parties shall negotiate in good faith with a view to the substitution
therefor of a suitable and equitable solution in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid
provision, provided, however, that the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
13. ASSIGNMENT. This Agreement may not be assigned by a party hereto
without the prior written consent of the other parties hereto.
14. SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors, permitted
assigns, heirs, administrators, executors and legal personal
representatives.
15. NUMBER AND GENDER. Words importing the singular number only shall
include the plural and vice versa, words importing the masculine gender
shall include the feminine and neuter genders and vice versa and words
importing persons shall include individuals, partnerships, associations,
trusts, unincorporated organizations and corporations and vice versa.
16. ENTIRE AGREEMENT. This Agreement, including Schedule A hereto,
constitutes the entire agreement between the parties with respect to the
subject matter hereof. There are no conditions, covenants, agreements,
representations, warranties or other provisions, express or implied,
collateral, statutory or otherwise, relating to the subject matter hereof,
except as provided herein. No amendment, waiver or termination of this
Agreement shall be binding on a party hereto unless consented to in writing
by such party.
17. TIME OF THE ESSENCE. Time shall be the essence of this Agreement.
18. FURTHER ASSURANCES. Each of the parties to this Agreement shall do
all such acts and things and shall execute and deliver, or cause to be
executed and delivered, all such documents, instruments and agreements as
may be necessary or desirable to give effect to the provisions of and the
intent of this Agreement.
19. NO INCONSISTENT ARRANGEMENTS. Each of the parties hereby covenants
and agrees that, except as expressly provided in this Agreement, it shall
not take any action that would in any way restrict, limit or interfere with
the performance of its obligations hereunder or the transactions
contemplated hereby.
20. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which, when executed by a party hereto, shall be deemed to be an
original and such counterparts shall together constitute one and the same
instrument.
IN WITNESS WHEREOF the parties hereto have hereunto set their
corporate seals and hands and seals.
/s/ Garth H. Drabinsky /s/ Myron I. Gottlieb
__________________________ __________________________
Garth H. Drabinsky Myron I. Gottlieb
/s/ Roy L. Furman /s/ David R. Maisel
__________________________ __________________________
Roy L. Furman David R. Maisel
LYNX VENTURES L.P.
By: Lynx Ventures L.L.C.,
its General Partner
By /s/ Michael S. Ovitz
_____________________________
Name: Michael S. Ovitz
Title: Managing Member
SCHEDULE A
Shareholder Common Shares
Garth H. Drabinsky 1,792,875
Myron I. Gottlieb 1,042,875
Roy L. Furman 0
David R. Maisel 0
EXHIBIT 9
VOTING TRUST AGREEMENT
THIS AGREEMENT made as of the 12th day of June, 1998.
BY AND AMONG:
GARTH H. DRABINSKY,
of the City of Toronto in the
Province of Ontario,
(hereinafter referred to as "Drabinsky"),
OF THE FIRST PART
- and -
MYRON I. GOTTLIEB,
of the City of Toronto in the
Province of Ontario,
(hereinafter referred to as "Gottlieb"),
OF THE SECOND PART
- and -
ROY L. FURMAN,
of the City of New York in the
State of New York,
(hereinafter referred to as "Furman"),
OF THE THIRD PART
- and -
DAVID R. MAISEL,
of the City of Beverly Hills in the
State of California,
(hereinafter referred to as "Maisel" and together with
Drabinsky, Gottlieb and Furman, as the "Shareholders"),
OF THE FOURTH PART
- and -
LYNX VENTURES L.P.,
a limited partnership existing under the laws of
the State of Delaware,
(hereinafter referred to as the "Investor" or the "Voting
Trustee"),
OF THE FIFTH PART,
- and -
MONTREAL TRUST COMPANY OF CANADA,
a trust company duly qualified to carry on business in
the Province of Ontario,
(hereinafter referred to as the "Depositary"),
OF THE SIXTH PART,
- and -
LIVENT INC.,
a corporation existing under the laws of
the Province of Ontario,
(hereinafter referred to as the "Corporation"),
OF THE SEVENTH PART.
WHEREAS the Shareholders have purchased, or have rights to
purchase, shares of common stock, no par value, of the Corporation (the
"Common Shares");
WHEREAS each Shareholder has agreed to deposit any Common Shares
beneficially owned by him which are free and clear of any encumbrances and
any other voting securities in the Corporation beneficially owned by such
Shareholder during the term of this Agreement, to the extent that such
shares are beneficially owned free and clear of all encumbrances, with the
Depositary to allow such securities to be voted by the Investor (the
"Voting Trustee") pursuant to the terms of this Agreement;
WHEREAS Drabinsky and Gottlieb have also agreed that the Investor
shall have the right to purchase some or all of the Common Shares deposited
hereunder pursuant to an Option Agreement, dated as of April 13, 1998,
among Drabinsky, Gottlieb, the Corporation and the Investor (the "Option
Agreement");
WHEREAS the Shareholders, the Corporation and the Investor have
each entered into a Shareholders Agreement, dated as of the date hereof
(the "Shareholders Agreement"), pursuant to which the shares beneficially
owned by the Shareholders may be transferred by the Shareholders subject to
the terms and conditions set forth therein;
WHEREAS the Shareholders and the Investor have each entered into
a Voting Agreement, dated as of the date hereof (the "Voting Agreement"),
pursuant to which all Common Shares or voting securities beneficially owned
by the Shareholders and not subject to this Agreement are subject to the
voting arrangement set forth therein; and
WHEREAS the execution and delivery of this Agreement is a
condition precedent to the closing of the transactions contemplated by the
Investment Agreement, dated as of April 13, 1998 (the "Investment
Agreement"), between the Corporation and the Investor.
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of
the respective covenants and agreements of the parties contained herein and
for other good and valuable consideration (the receipt and sufficiency of
which are hereby acknowledged by each of the parties hereto), the parties,
intending to be legally bound, hereby agree as follows:
1. DEPOSITED SHARES. Each of the Shareholders shall deliver forthwith to
the Depositary for deposit hereunder at its principal office in the City of
Toronto a certificate or certificates registered in his name, duly endorsed
in blank for transfer with signatures guaranteed by a Canadian chartered
bank or a broker member of a recognized exchange representing the number of
unencumbered Common Shares indicated opposite such Shareholder's name in
Schedule A annexed hereto (such shares being referred to herein as the
"Deposited Shares"). Each of the Shareholders, with respect to the
Deposited Shares beneficially owned by him, does hereby represent and
warrant that all such shares are free and clear of any encumbrances and
represent all of the unencumbered Common Shares or other voting securities
in the Corporation beneficially owned by him as of the date hereof. Each
of Drabinsky and Gottlieb further represent and warrant that the Escrow
Agreement, dated May 7, 1993, by and among Drabinsky, Gottlieb and certain
members of management of the Corporation is no longer in force and that
Common Shares beneficially owned by Drabinsky and Gottlieb are not subject
to any other escrow arrangements. Each of the Shareholders agrees and
covenants that any Common Shares or other voting securities in the
Corporation that hereafter become beneficially owned by such Shareholder
during the term of this Agreement shall be deposited with the Depositary
and shall thereafter be deemed to be Deposited Shares for all purposes.
The Shareholders and the Depositary will take any further actions or
execute and deliver any further documents or instruments necessary to
comply with the terms of this Agreement. Further, any Common Shares owned
by the Investor, now or hereafter, are not subject to the provisions of
this Voting Trust Agreement. Notwithstanding anything contained herein to
the contrary, the parties hereto agree that Deposited Shares may be
transferred to and held by the Depositary on a book basis in lieu of such
Deposited Shares being converted into certificated form.
2. ISSUE OF VOTING TRUST CERTIFICATES. The Depositary shall issue in the
name of each Shareholder and deliver forthwith to each such Shareholder a
voting trust certificate ("Voting Trust Certificate") substantially in the
form of the Voting Trust Certificate attached as Schedule B hereto
representing the Deposited Shares delivered and deposited hereunder by such
Shareholder, and the Depositary shall forthwith proceed to have such
Deposited Shares registered in its name on the registers of the
Corporation. The Depositary shall at all times ensure that the number of
Deposited Shares held by it pursuant to this Agreement is equivalent to the
aggregate number of all such shares represented by the outstanding Voting
Trust Certificates issued by it. The Depositary shall not be responsible
or liable in any manner whatsoever for the sufficiency, correctness,
genuineness or validity of any security deposited with it. Further, the
signature of the Depositary on the Voting Trust Certificates cannot be
interpreted as a representation of validity of the underlying Common Shares
or of the quality of the Common Shares.
3. EXERCISE OF VOTING RIGHTS BY VOTING TRUSTEE. Until the actual
redelivery of any Deposited Shares to the holder or holders of the Voting
Trust Certificates representing the same in accordance with the provisions
of this Agreement, the Voting Trustee shall, in respect thereof but subject
as hereinafter provided, exclusively possess and be entitled to exercise,
in person or by attorney, all the voting rights appertaining to the
Deposited Shares and all rights in connection with the initiation of,
taking part in and consenting to any action as a shareholder of the
Corporation, and the Shareholders and the Depositary shall from time to
time and at all times do whatever may be requested by direction in writing
by the Voting Trustee, including the execution and delivery of appropriate
instruments of proxy and/or powers of attorney, to enable and facilitate
the exercise of any and all such rights by or on behalf of the Voting
Trustee. The Depositary shall not be obligated to do any act or thing in
respect of the Deposited Shares absent an express written direction or
request signed by the Voting Trustee and delivered to the Depositary.
4. PAYMENT OF DIVIDENDS TO HOLDERS OF VOTING TRUST CERTIFICATES.
(a) The holder of each Voting Trust Certificate issued hereunder
shall be entitled to receive promptly from the Depositary payments by
cheque of the cash dividend or other distribution payments, if any,
received by the Depositary upon that number of Deposited Shares represented
by such Voting Trust Certificate. The payment made to the holders of
Voting Trust Certificates in respect of any such dividend shall be made to
the holders of record of such certificates, respectively, according to the
books of the Depositary as at the close of business on the record date
established by the Corporation for determining the shareholders entitled to
receive such cash dividend or distribution or, if no such record date is
established, as at the close of business on the date established by the
Corporation for payment to its shareholders of such cash dividend or
distribution. The Depositary will disburse monies according to this
Agreement only to the extent that monies have been deposited with it. In
the event that any funds are received by the Depositary in the form of an
uncertified check or checks, the Depositary shall be entitled to delay the
time for release of such part of the funds to any party until such
uncertified check or checks have cleared in the ordinary course the
financial institution upon which the same are drawn.
(b) The Depositary will not under any circumstances be obligated to
expend or risk its own funds. The forwarding of a check by the Depositary
will satisfy and discharge the Depositary's liability for any amounts due
to the extent of the sum or sums represented thereby (plus the amount of
any tax deducted or withheld as required by law) unless such check is not
honored on presentation; provided that in the event of the non-receipt of
such check by the payee, or the loss or destruction thereof, the Depositary
upon being furnished with reasonable evidence of such non-receipt, loss or
destruction and indemnity reasonably satisfactory to it, will issue to such
payee a replacement check for the amount of such check.
(c) In the event that the Depositary shall hold any amount of
interest or other distributable amount which is unclaimed or which cannot
be paid for any reason, the Depositary shall be under no obligation to
invest or reinvest the same but shall only be obligated to hold the same on
behalf of the person or persons entitled thereto in a current or other non-
interest bearing account pending payment to the person or persons entitled
thereto. The Depositary shall be entitled to retain for its own account
any benefit earned by the holding of such amount of unclaimed or unpaid
interest or such other unclaimed or unpaid distributable amount prior to
its disposition in accordance with this Section 4(c). The Depositary
shall, as and when required by law, and may at any time prior to such
required time, pay all or part of such interest or other distributable
amount so held to the Public Trustee (or other appropriate government
official or agency) whose receipt shall be a good discharge and release of
the Depositary.
5. REGISTER OF HOLDERS OF VOTING TRUST CERTIFICATES. The Depositary
shall keep a register at its principal office in the City of Toronto of the
names and addresses of the holders of all Voting Trust Certificates issued
and shall record the names and addresses of all transferees of Voting Trust
Certificates. The Depositary and the Voting Trustee shall at all times
treat and consider the registered holder of a Voting Trust Certificate on
the books of the Depositary as the holder thereof for all purposes.
6. TRANSFER OF VOTING TRUST CERTIFICATES.
(a) Except with the prior written consent of the Investor, Voting
Trust Certificates shall not be transferred, assigned, disposed of or
otherwise dealt with. Other than with the prior written consent of the
Investor, any attempt to transfer, assign, dispose of or otherwise deal the
Voting Trust Certificates shall be null and void, and the Depositary and
the Voting Trustee shall not recognize any such transfer, assignment,
disposition or dealing.
(b) Except with the prior written consent of the Investor, Voting
Trust Certificates shall not be mortgaged, pledged, charged, hypothecated
or otherwise encumbered or subject to any security interest. Other than
with the prior written consent of the Investor, any attempt to mortgage,
pledge, charge, hypothecate or otherwise encumber or subject the Voting
Trust Certificates to any security interest shall be null and void, and the
Depositary and the Voting Trustee shall not recognize any such mortgage,
pledge, charge, hypothecation, encumbrance or security interest.
(c) No transfer, assignment, disposition or other dealing with a
Voting Trust Certificate shall be valid for any purpose whatsoever unless
made on the register of the holders of Voting Trust Certificates maintained
by the Depositary by the registered holder of the Voting Trust Certificate
or his or their attorney duly appointed by an instrument in writing in form
and execution satisfactory to the Depositary, and upon compliance with such
reasonable requirements as the Depositary may prescribe, including such
reasonable evidence that the provisions of this Agreement have been duly
complied with.
7. RIGHT TO RECEIVE DEPOSITED SHARES. Upon the termination of this
Agreement or the occurrence of a Permitted Transfer (as defined below) of
Deposited Shares and, in each case, subject to the provisions of section 9
hereof, each Voting Trust Certificate shall entitle the registered holder
thereof or his or their attorney duly appointed by an instrument in writing
in form and execution satisfactory to the Depositary, to a certificate
representing the number of Deposited Shares represented thereby on
surrender of such Voting Trust Certificate, duly endorsed for transfer with
signatures guaranteed by a Canadian chartered bank, at the principal office
of the Depositary in the City of Toronto.
8. TERM AND TERMINATION OF VOTING TRUST AGREEMENT.
(a) This Agreement shall become effective as of the Closing Date (as
such term is defined under the Investment Agreement) and shall remain in
full force and effect, unless otherwise terminated in accordance with the
terms of this Agreement, from the Closing Date through to the date which is
twenty one (21) years after the death of the last living Shareholder.
(b) This Agreement may be terminated by the Voting Trustee at its
option at any time upon ten (10) days prior written notice to the
Depositary and to each of the Shareholders who hold a Voting Trust
Certificate at the time such notice is issued.
(c) This Agreement shall automatically terminate in the event that
the Corporation informs the Depositary, by providing sufficient
corroborating evidentiary information which is not disputed by the
Investor, that the Investor and its affiliates collectively beneficially
own less than the Share Limit (as defined below). As used herein, the term
"Share Limit" shall mean initially 500,000 Common Shares and shall be
appropriately adjusted from time to time to take into account dilutive
effects resulting from changes in the number of Common Shares outstanding
subsequent to the Effective Date, whether by recapitalization, declaration
of a stock split, payment of a stock dividend or otherwise.
9. RELEASE OF DEPOSITED SHARES.
(a) Upon the termination of this Agreement the Depositary shall
deliver to the registered holder or holders of the relevant Voting Trust
Certificates, certificates for the Deposited Shares represented by such
certificates registered in the names of, or to the order of, the holders of
such Voting Trust Certificates on surrender of such Voting Trust
Certificates, duly endorsed with signatures guaranteed by a Canadian
chartered bank, at the principal office of the Depositary in the City of
Toronto.
(b) In the event of the occurrence of a Permitted Transfer (as
defined below), a Shareholder desiring the release of Deposited Shares for
Transfer (as defined below) in connection with such Permitted Transfer
shall surrender the Voting Trust Certificates representing such Deposited
Shares, duly endorsed with signatures guaranteed by a Canadian chartered
bank, to the Depositary at the principal office of the Depositary in the
City of Toronto, and the Depositary shall deliver a certificate or
certificates representing such Deposited Shares registered to the order of
the Shareholder and shall also deliver a Voting Trust Certificate to the
Shareholder representing the number of Deposited Shares, if any, which
shall not be Transferred and shall remain as Deposited Shares. As to any
matters relating to the delivery of certificates representing such
Deposited Shares, the Depositary shall be entitled to rely solely upon
written instructions received from the Voting Trustee, but in the event of
a dispute among the foregoing, the opinion or advice of the Voting Trustee
shall prevail.
(c) As used herein, the term "Permitted Transfer" shall mean a
transaction pursuant to which a Shareholder sells, pledges, assigns, grants
a participation interest in, encumbers or otherwise transfers (each, a
"Transfer") the Deposited Shares to a third party and such Transfer is in
compliance with each of the following:
(i) the Transfer is in compliance with the terms and conditions
set forth in the Shareholders Agreement regarding the
Transfer of Common Shares owned by the Shareholder;
(ii) if such Transfer is in connection with the establishment of
a Permitted Encumbrance (as defined below) on Deposited
Shares, the beneficial owner of the Deposited Shares
released from this Agreement must continue to be entitled to
vote the released shares and all such released shares must
immediately become subject to the terms and conditions of
the Voting Agreement; and
(iii) with respect to any Transfer by Drabinsky and/or
Gottlieb, the terms and conditions set forth in the
Option Agreement regarding the Transfer of Optioned
Shares (as defined therein) must be complied with;
provided that following such Transfer sufficient Common
Shares remain subject to this Agreement to satisfy the
exercise by the Investor of the options granted
pursuant to the Option Agreement.
In connection with determining whether a Transfer is a Permitted Transfer
satisfying the provisions of this subsection (c), the Depositary shall be
entitled to rely on the opinion or advice of the Voting Trustee or its own
counsel, as well as the factual representations of the Shareholder seeking
the release of the Deposited Shares. As used herein, the term "Permitted
Encumbrance" means, collectively, any mortgage, pledge, charge,
hypothecation or other encumbrance granted on Deposited Shares, other than
Optioned Shares (as defined in the Option Agreement), to a bank or other
bona fide financial institution as collateral security for bone fide
indebtedness incurred by the owner of such shares.
(d) Except in connection with a Permitted Transfer, each Shareholder
hereby agrees not to Transfer the Deposited Shares without the prior
written consent of the Investor. Other than with the prior written consent
of the Investor or in connection with a Permitted Transfer, any attempt to
Transfer Deposited Shares shall be null and void, and none of the
Corporation, the Depositary or the Voting Trustee shall recognize any such
Transfer.
(e) Each Shareholder acknowledges and agrees that he shall have no
right to the delivery of and the Depositary shall have no obligation to
deliver certificates for the Deposited Shares represented by the Voting
Trust Certificates held by such Shareholder except in accordance with the
provisions of this Section 9.
10. TEMPORARY RELEASE OF DEPOSITED SHARES. The Investor may, in its sole
discretion and upon written notice to the Shareholder, irrevocably release
the Deposited Shares identified in such notice (the "Exempt Shares") for
the period of time (the "Exemption Period") set forth therein. Upon
receipt of such notice, the Shareholder shall surrender the Voting Trust
Certificates representing the Deposited Shares released by the Investor,
duly endorsed with signatures guaranteed by a Canadian chartered bank, to
the Depositary at the principal office of the Depositary in the City of
Toronto, and receive from the Depositary a certificate or certificates
representing such Deposited Shares registered to the order of the
Shareholder and a Voting Trust Certificate representing the number of
Deposited Shares, if any, which shall remain as Deposited Shares.
Deposited Shares released pursuant to this Section 10 shall not be subject
to the terms of the Voting Agreement during the Exemption Period and the
Shareholder shall be entitled to vote all such shares during the Exemption
Period in such Shareholder's sole discretion. The Shareholder, unless
otherwise directed by the Investor, shall take all such action as shall be
necessary to cause such Exempt Shares to become subject to the terms of
this Agreement by depositing all such shares with the Depositary at the end
of the Exemption Period. All Deposited Shares released hereunder shall
continue to be subject to the transfer restrictions contained herein.
11. ALLOCATION OF VOTING RIGHTS.
(a) The Investor will in no event have the right to cast votes with
respect to Non-Investor Shares to the extent that the sum of the number of
votes that the Investor has a right to vote with respect to (i) Investor
Shares and (ii) Non-Investor Shares exceeds 50% of the total number of
votes which can be cast by all Voting Securities. For purposes of this
provision, this restriction shall apply first to the Investor's right to
vote Common Shares attributable to Outstanding Options held by the
Shareholders pursuant to this Agreement and the Voting Agreement on a pro
rata basis and then to any Common Shares (other than Investor Shares) held
by the Shareholders on a pro rata basis.
(b) To the extent that the Investor is precluded from exercising
voting rights with respect to Common Shares outstanding pursuant to Section
11(a), voting rights with respect to such Common Shares outstanding (the
"Additional Voting Rights") shall be allocated to Maisel provided that
Maisel shall not have a right to cast votes that would cause such
Additional Voting Rights, when aggregated with any other voting rights
owned by Maisel, to equal or exceed 10% of the total number of votes which
can be cast by all Voting Securities (assuming for such purposes that all
Outstanding Options are converted to Common Shares if Maisel would have the
right to vote such Common Shares), in which case another party designated
by mutual agreement between the Shareholders and the Investor shall have
the right to cast the Additional Voting Rights.
(c) Maisel shall be entitled to exercise the Additional Voting Rights
on all matters presented to the shareholders of the Corporation for voting
in his sole discretion. Further, Maisel shall be permitted to designate a
substitute party to exercise the Additional Voting Rights, provided that
the Investor consents and such consent is consistent with the terms of the
Boston Agreement.
(d) The provisions of this Section 11 shall expire if the sum of the
Investor Shares and the Boston Shares exceeds more than 50% of all
outstanding Voting Securities or the Corporation otherwise becomes a
controlled foreign corporation ("CFC") for U.S. federal income tax
purposes.
(e) Each of the Shareholders and the Investor hereby covenants and
agrees to cooperate with each other with respect to compliance with the
provisions of this Section 11 and to report to each other any information
affecting such compliance. Further, each of the Shareholders and the
Investor hereby covenants and agrees to implement a strategy to prevent the
voting rights of any person other than the Investor to equal or exceed 10%
of the total number of votes which can be cast by all Voting Securities
(assuming for such purposes that all Outstanding Options are converted to
Common Shares if such person would have the right to vote such Common
Shares).
(f) For purposes of this Section 11 only, the term "Voting
Securities" means all Common Shares and any other voting securities of the
Corporation.
(g) For purposes of this Section 11 only, the term "Outstanding
Options" means all outstanding options, warrants and convertible debentures
of the Corporation that may be converted to Common Shares.
(h) For purposes of this Section 11 only, the term "Investor Shares"
means all Voting Securities owned by the Investor directly, indirectly, or
by attribution, assuming for such purposes that all Outstanding Options are
converted to Common Shares if such Common Shares would be considered to be
Investor Shares pursuant to this provision.
(i) For purposes of this Section 11 only, the term "Non-Investor
Shares" means all Voting Securities other than Investor Shares that
Investor has a right to vote pursuant to this Agreement, the Voting
Agreement, the Boston Agreement or otherwise, assuming for such purposes
that all Outstanding Options are converted to Common Shares if such Common
Shares would be considered to be Non-Investor Shares pursuant to this
provision.
(j) For purposes of this Section 11 only, the term "Boston Agreement"
means the Voting, Right of First Offer and Waiver Agreement, dated as of
June __, 1998, between the Investor, Thomas H. Lee Equity Partners, L.P.
("THL"), and THL-CCI Limited Partnership ("THL-CCI").
(k) For purposes of this Section 11 only, the term "Boston Shares"
means all Voting Securities owned by THL and THL-CCI directly, indirectly,
or by attribution, assuming for such purposes that all Outstanding Options
are converted to Common Shares if such Common Shares would be considered to
be Boston Shares pursuant to this provision.
12. VOTING TRUSTEE. During the term of this Agreement, unless otherwise
agreed in writing between the parties hereto, there shall only be one
Voting Trustee hereunder and the Investor shall be the only entity
authorized to serve as Voting Trustee.
13. ISSUE OF REPLACEMENT VOTING TRUST CERTIFICATES. If any Voting Trust
Certificate issued hereunder shall become mutilated or be lost, destroyed
or stolen, the Depositary, upon receipt of written instructions from the
Voting Trustee, may issue and deliver in exchange for and upon cancellation
of such mutilated Voting Trust Certificate or in lieu of the Voting Trust
Certificate so lost, destroyed or stolen, a new Voting Trust Certificate
representing the same number of Common Shares of the Corporation upon, in
case of loss, destruction or theft, the production of such evidence thereof
and the receipt of an indemnity in the form of an open penalty bond issued
by a surety company licensed to transact business in the province of
Ontario and compliance with such reasonable regulations as the Depositary
may from time to time deem proper in the circumstances.
14. PROTECTION OF VOTING TRUSTEE. By way of supplement to the provisions
of law or of any statute for the time being in effect relating to
trustees, it is agreed that:
(i) neither the Voting Trustee nor the Investor shall incur any
liability or responsibility by reason of any error of law or
mistake or any matter or thing done or omitted to be done
under or in relation to this Agreement, except for his or
its own individual wilful and wrongful neglect or default;
and
(ii) the Voting Trustee may, in relation to this Agreement, act
on the opinion or advice of or opinion obtained from any
lawyer, broker or other expert and shall not be responsible
for any loss occasioned by so acting, and shall incur no
liability or responsibility for deciding in good faith not
to act upon any such opinion or advice.
15. PROTECTION OF DEPOSITARY.
(a) Except for its gross negligence or wilful misconduct, the
Depositary shall not be liable for any act done or step taken or omitted by
it in good faith, or for any mistake of fact or law and the Corporation
agrees to indemnify and save harmless the Depositary from and against all
claims, demands, actions, suits or other proceedings by whomsoever made,
prosecuted or brought and from all losses, costs, damages and expenses in
any manner based upon, occasioned by or attributable to any act of the
Depositary (other than acts of gross negligence or wilful misconduct on the
part of the Depositary) in the execution of its duties hereunder.
(b) The Depositary shall retain the right not to act and shall not be
held liable for refusing to act unless it has received clear documentation
which complies with the terms of this Agreement. Such documentation must
not require the exercise of any discretion or independent judgement. The
Depositary shall be protected in acting upon any written notice, request,
waiver, consent, certificate, receipt, statutory declaration or other paper
or document furnished to it, not only as to its due execution and the
validity and the effectiveness of its provisions but also as to the truth
and acceptability of any information therein contained which it in good
faith beehives to be genuine as to what it purports to be.
(c) In the event of any disagreement arising regarding the terms of
this Agreement, the Depositary shall be entitled at its option to refuse to
comply with any or all demands whatsoever until the dispute is settled
either by written agreement amongst the various parties or by a court of
competent jurisdiction.
(d) The Depositary shall have the right to consult with and obtain
advice from legal counsel appointed by it, who may but need not be legal
counsel for the other parties, in the event of any questions as to any of
the provisions hereof or its duties hereunder and it shall incur no
liability and it shall be fully protected in acting or not acting in good
faith in accordance with any opinion or instruction of such counsel. The
cost of such services shall be added to and be part of the Depositary fee
hereunder.
(e) The Depositary may employ such experts, advisers, agents or
agencies as it may reasonably require for the purpose of discharging its
duties hereunder and the reasonable costs incurred by the Depositary for
services provided by such experts, advisers, agents or agencies shall be
added to and be part of the Depositary fee hereunder.
(f) The Depositary shall not be liable for the delivery or non-
delivery of any certificate or certificates properly packaged for delivery
that has been placed in the mails or sent by courier.
(g) The Corporation will pay to the Depositary from time to time
remuneration for its services hereunder and will pay or reimburse the
Depositary, upon its request, for all reasonable expenses and disbursements
incurred or made by the Depositary in the administration of its services
and duties created hereby (including the reasonable fees and disbursements
of its counsel and all other advisers and assistants not regularly in its
employ). Any amount due under this Section and unpaid 30 days after
request for such payment, will bear interest from the expiration of such 30
days at a rate per annum equal to the then current interest rate charged by
the Depositary for overdue balances, as stated on the invoice issued by the
Depositary evidencing the amount owed, which shall be payable on demand.
The current interest rate for overdue balances charged by the Depositary is
1.20% per month. The Corporation will be advised in writing by the
Depositary at least 30 days prior to the implementation of any increase in
the invoice rate for overdue balances.
16. CHANGE OF COMMON SHARES. The parties hereto agree that the provisions
of this Agreement relating to the Deposited Shares shall apply, mutatis
mutandis, to any shares or securities into which such Deposited Shares may
be converted, changed, reclassified, redivided, redisignated, subdivided or
consolidated, to any shares or securities which are received by the
Depositary as the registered holder of the Deposited Shares as a stock
dividend or distribution payable in shares or securities of the Corporation
which entitle the holder thereof to vote at any meeting of the shareholders
of the Corporation and to any shares or securities of the Corporation or of
any successor or continuing company or corporation to the Corporation which
may be received by the Depositary as the registered holder of the Deposited
Shares on a reorganization, amalgamation, consolidation or merger,
statutory or otherwise.
17. AMENDMENTS; RELEASE OF COMMON SHARES. This Agreement may be amended
only with the written approval of the Voting Trustee, the Depositary, the
Investor and each of the Shareholders. Each Shareholder covenants and
agrees that the Deposited Shares shall not be released by the Depositary
except on termination of this Agreement or otherwise in accordance with the
terms hereof and that he will not request nor be entitled to the release of
his Deposited Shares by the Depositary except on such basis.
18. WARRANTY. Each of the parties hereto represents, warrants and agrees
that he is free to enter into this Agreement and is not subject to any
obligations or agreements which will or might prevent or interfere with the
performance of his obligations hereunder. Each of the parties hereto
further represents and warrants and acknowledges and agrees that he has had
the opportunity to seek, and was not prevented or discouraged from seeking,
independent legal advice prior to the execution and delivery of this
Agreement and that, in the event that he did not avail himself of that
opportunity prior to signing this Agreement, he did so voluntarily without
any undue duress or pressure and agrees that this failure to obtain legal
advice shall not be used by him as a defense as to the enforcement of his
obligations under this Agreement.
19. DEPOSITARY'S RESIGNATION. The Depositary shall have the right to
resign form its duties and obligations hereunder upon giving to each of the
Corporation, the Shareholders and the Investor (collectively, the
"Transaction Parties") no less than sixty (60) days prior written notice,
or such shorter notice as the Transaction Parties accept as sufficient.
The Corporation, upon receipt of prior written consent from the Voting
Trustee, shall have the power, at any time on thirty (30) days written
notice, to remove the existing Depositary and appoint a new Depositary. In
the event of the Depositary resigning or being removed as aforesaid, each
of the parties hereto shall take such action as shall be necessary to cause
the transfer of all funds, certificates, agreements and other documents
then in the possession of the retiring Depositary over to the new
Depositary, provided that the retiring Depositary shall have received
payment in full of all fees and expenses owing to it hereunder. Any new
Depositary appointed under any provision of this section shall be a
corporation authorized to carry on the business of a Depositary in the
Province of Ontario and shall be subject to removal as aforesaid. On any
such appointment, the new Depositary shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named
herein as the Depositary, without any further assurance, conveyance, act or
deed; but there shall be immediately executed, at the expense of the
Corporation, all such conveyances or other instruments as may, in the
opinion of counsel, be necessary or advisable for the purpose of assuring
the new Depositary a full estate in the premises. Should the Transaction
Parties fail to appoint a new Depositary as outlined above, then the
retiring Depositary shall cease its functions at the expiration of the
period of notice and may retain all and any property in its possession
hereunder on a merely safekeeping basis, at a fee to be determined solely
by the Depositary.
20. SHAREHOLDER CORRESPONDENCE. Each registered holder of a Voting Trust
Certificate shall be entitled to receive all notices, financial statements
(interim or otherwise), annual reports and other documents or mailings
distributed to the holders of Common Shares by the Corporation, except
proxies or any other instruments relating to the voting of Deposited
Shares, and, as soon as practicable following receipt of any such
documents, the Depositary shall deliver the same to such registered holder.
21. SUBSTITUTION OF SHARES. Upon exercise by the Investor of its right to
purchase Optioned Shares pursuant to the Option Agreement, each of Gottlieb
and Drabinsky, to the extent they own Optioned Shares subject to such
exercise, shall be entitled to substitute other Common Shares beneficially
owned by them in place of the Optioned Shares provided that such
replacement shares are delivered to the Investor within five (5) days after
receipt of notice of the Investor's intention to exercise its option with
respect to such Optioned Shares.
22. NOTICE. All notices, requests, demands and other communications shall
be in writing and shall be deemed to have been duly given if personally
delivered or sent by United States or Canadian mails or by telegram or
telex confirmed by letter, or by facsimile transmission, receipt confirmed,
to the address set forth below:
(i) in the case of Drabinsky:
Livent Inc.
165 Avenue Road, Suite 600
Toronto, Ontario
Canada M5R 2H7
Fax No.: (416) 324-5535
Attention: Garth H. Drabinsky
(ii) in the case of Gottlieb:
Livent Inc.
165 Avenue Road, Suite 600
Toronto, Ontario
Canada M5R 2H7
Fax No.: (416) 324-5535
Attention: Myron I. Gottlieb
(iii) in the case of Furman:
c/o Schulte, Roth & Zabel
900 Third Avenue
New York, NY 10022
U.S.A.
Fax No.: (212) 593-5955
Attention: Burton Lehman
(iv) in the case of Maisel:
Lynx Ventures L.P.
9465 Wilshire Boulevard
Suite 510
Beverly Hills, CA 90212
U.S.A.
Fax No.: (310) 271-8860
Attention: David R. Maisel
(v) in the case of the Investor:
Lynx Ventures L.P.
c/o Dreyer, Edmonds & Associates
355 South Grand Avenue
Suite 4150
Los Angeles, CA 90071
U.S.A.
Fax: 213-617-1806
Attention: Michael Dreyer
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022-3897
U.S.A.
Fax No.: (212) 735-2000
Attention: Eric L. Cochran
with a courtesy copy to:
Munger, Tolles & Olson
355 South Grand Avenue
Los Angeles, CA 90071-1560
U.S.A.
Fax No.: (213) 687-3702
Attention: Robert L. Adler
(vi) in the case of the Depositary:
Montreal Trust Company of Canada
151 Front Street West, Suite 605
Toronto, Ontario
Canada M5J 2N1
Fax No.: (416) 981-9777
Attention: Manager, Corporate Trust Department
(vii) in the case of the Corporation:
Livent Inc.
165 Avenue Road, Suite 600
Toronto, Ontario
Canada M5R 2H7
Fax No.: (416) 324-5535
Attention: The Secretary
All notices requiring timely attention shall be sent by facsimile
transmission, telex or overnight mail. Any notice shall be deemed
received, unless earlier received, (a) if sent by certified or registered
mail, return receipt requested, when actually received, (b) if sent by
overnight mail, on the next Business Day, (c) if sent by telegram or telex,
on the date sent, and (d) if sent by facsimile transmission or delivered by
hand, on the date of receipt. Any party may change its address for service
from time to time by notice given in accordance with the foregoing
provisions.
23. GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY
AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE DOMESTIC LAWS OF THE PROVINCE OF ONTARIO AND THE
FEDERAL LAWS OF CANADA APPLICABLE THEREIN, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE PROVINCE
OF ONTARIO OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE PROVINCE OF ONTARIO AND THE
FEDERAL LAWS OF CANADA APPLICABLE THEREIN.
24. SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the
parties shall negotiate in good faith with a view to the substitution
therefor of a suitable and equitable solution in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid
provision, provided, however, that the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
25. ASSIGNMENT. This Agreement may not be assigned by a party hereto
without the prior written consent of the other parties hereto.
26. SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors, permitted
assigns, heirs, administrators, executors and legal personal
representatives.
27. NUMBER AND GENDER. Words importing the singular number only shall
include the plural and vice versa, words importing the masculine gender
shall include the feminine and neuter genders and vice versa and words
importing persons shall include individuals, partnerships, associations,
trusts, unincorporated organizations and corporations and vice versa.
28. CANADIAN FUNDS. Except as otherwise expressly indicated herein, all
dollar amounts referred to in his agreement are in Canadian funds.
29. CHOICE OF LANGUAGE. The parties hereby acknowledge that they have
expressly required this Agreement and all notices, statements of account
and other documents required or permitted to be given or entered into
pursuant hereto to be drawn up in the English language. Les parties
reconnaissent avoir expressEment demandEes que la prEsente Convention ainsi
que tout avis, tout Etat de compte et tout autre document A tre ou pouvant
tre donnE ou conclu en vertu des dispositions des prEsentes, soient
rEdigEs en langue anglaise seulement.
30. ENTIRE AGREEMENT. This Agreement, including the Schedules hereto,
constitutes the entire agreement between the parties with respect to the
subject matter hereof. There are no conditions, covenants, agreements,
representations, warranties or other provisions, express or implied,
collateral, statutory or otherwise, relating to the subject matter hereof,
except as provided herein. No amendment, waiver or termination of this
Agreement shall be binding on a party hereto unless consented to in writing
by such party.
31. DUTIES ONLY AS SET FORTH. The duties and obligations of the
Depositary shall be determined solely by the provisions hereof and,
accordingly, the Depositary shall not be responsible except for the
performance of such duties and obligations as it has undertaken herein.
The Depositary shall not be bound by any notice of a claim or demand with
respect to, or any waiver, modification, amendment, termination or
rescission of this Agreement, unless received by it in writing, and signed
by the parties hereto and, if its duties are herein affected, unless it
shall have given its prior written consent thereto.
32. TIME OF THE ESSENCE. Time shall be the essence of this Agreement.
33. FURTHER ASSURANCES. Each of the parties to this Agreement shall do
all such acts and things and shall execute and deliver, or cause to be
executed and delivered, all such documents, instruments and agreements as
may be necessary or desirable to give effect to the provisions of and the
intent of this Agreement.
34. NO INCONSISTENT ARRANGEMENTS. Each of the parties hereby covenants
and agrees that, except as expressly provided in this Agreement, it shall
not take any action that would in any way restrict, limit or interfere with
the performance of its obligations hereunder or the transactions
contemplated hereby.
35. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which, when executed by a party hereto, shall be deemed to be an
original and such counterparts shall together constitute one and the same
instrument.
IN WITNESS WHEREOF the parties hereto have hereunto set their
corporate seals and hands and seals.
/s/ Garth H. Drabinsky /s/ Myron I. Gottlieb
---------------------------- ---------------------------
Garth H. Drabinsky Myron I. Gottlieb
/s/ Roy L. Furman /s/ David R. Maisel
---------------------------- ---------------------------
Roy L. Furman David R. Maisel
LYNX VENTURES L.P.
By: Lynx Ventures L.L.C.,
its General Partner
By /s/ Michael S. Ovitz
-------------------------
Name: Michael S. Ovitz
Title: Managing Member
LIVENT INC.
By /s/ Garth H. Drabinsky
--------------------------
Name: Garth H. Drabinsky
Title: Chairman and
Chief Executive Officer
MONTREAL TRUST COMPANY
OF CANADA
By /s/ Daniel E. Marz By /s/ Shelly Bloomberg
--------------------------- ---------------------
Name: Daniel E. Marz Name: Shelly Bloomberg
Title: Senior Corporate Trust Title: Manager
Officer
SCHEDULE A*
Shareholder Common Shares
Garth H. Drabinsky 0
Myron I. Gottlieb 1,500,000
Roy L. Furman 350,000
David R. Maisel 0
* This schedule may be updated from time to time to reflect
additional shares pursuant to the terms of the Agreement.
SCHEDULE B
NO. SHARES
VOTING TRUST CERTIFICATE
IN RESPECT OF
COMMON SHARES OF LIVENT INC.
THIS IS TO CERTIFY that, upon the termination of the Voting Trust
Agreement hereinafter mentioned or otherwise in accordance with the
provisions of such Voting Trust Agreement, and on surrender of this Voting
Trust Certificate, duly endorsed with signatures guaranteed by a Canadian
chartered bank, to the undersigned Depositary at its principal office in
the City of Toronto, _________________ will be entitled, upon and subject
to the terms and provisions of the voting trust agreement (the "Voting
Trust Agreement") made the 12th day of June, 1998 among Garth H. Drabinsky,
Myron I. Gottlieb, Roy L. Furman, David R. Maisel, Lynx Ventures L.P.,
Livent Inc., a corporation incorporated under the laws of the Province of
Ontario (the "Corporation") and the undersigned Depositary, to receive out
of the common shares in the capital of the Corporation, deposited with the
undersigned Depositary under the Voting Trust Agreement, a certificate or
certificates for _____________ common shares of the Corporation and in the
meantime to receive payments, of the amounts of the dividend or
distribution payments, if any, received in cash or by cheque by the
Depositary upon said common shares of the Corporation, subject however to
the terms and provisions of the Voting Trust Agreement applicable to the
payment of such cash dividends and distributions.
No voting right passes by or under this Voting Trust Certificate
or by or under any agreement expressed or implied and, until the actual
delivery of such share certificate(s) for common shares of the Corporation
as aforesaid to the registered holder hereof, the Voting Trustee (as
defined in the Voting Trust Agreement) shall, in respect thereof,
exclusively possess and be entitled to exercise all the rights of voting
and of taking part in the consenting to any corporate or shareholders'
action appertaining to the common shares of the Corporation deposited with
the undersigned Depositary, in accordance with the terms of the Voting
Trust Agreement.
This Voting Trust Certificate is issued pursuant and subject to
the terms and conditions of the Voting Trust Agreement which, among other
things, establishes the rights of the holders of Voting Trust Certificates
issued pursuant to the Voting Trust Agreement and the rights, powers and
discretions of the Voting Trustee and of the Depositary.
The right to transfer, assign, dispose of or otherwise deal with
this Voting Trust Certificate is expressly subject to the terms, conditions
and restrictions contained in the Voting Trust Agreement ( an original
counterpart of which is on file at the principal Toronto office of the
Depositary), and no transfer, assignment, disposition or other dealing with
this Voting Trust Certificate is valid for any purpose whatsoever, unless
made in accordance with and subject to the terms, conditions and
restrictions of the Voting Trust Agreement. This Voting Trust Certificate
is transferable only, subject to compliance with such terms, conditions and
restrictions on transfer, on the books of the Depositary maintained by the
Depositary at its principal Toronto office on surrender hereof, properly
endorsed for transfer by the registered holder hereof in person or by
attorney duly authorized, and, until completion of the due transfer hereof
on the said books in accordance with and subject to the terms, conditions
and restrictions contained in the Voting Trust Agreement, the Voting
Trustee and the Depositary shall be required at all times to treat and
consider the holder of record hereof on said books as the holder hereof for
all purposes.
IN WITNESS WHEREOF, MONTREAL TRUST COMPANY OF CANADA has caused
this Certificate to be signed by its duly authorized officer and to be
issued at its principal office in the City of Toronto this ___ day of
__________.
MONTREAL TRUST COMPANY
OF CANADA
By_____________________________
Name:
Title:
FORM OF TRANSFER
(to be set out on the back of Voting Trust Certificate)
FOR VALUE RECEIVED, ___________ hereby sells, assigns and
transfers unto _____________ the within Voting Trust Certificate and all
right, title and interest in the common shares in the capital of Livent
Inc. represented thereby, and hereby irrevocably constitutes and
appoints____________ attorney to transfer the said certificate on the books
of the within named Depositary with full power of substitution in the
premises.
Dated:
In the presences of:
(signature of witness) (signature of registered holder)
EXHIBIT 10
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Assignment and
Assumption Agreement") is made and entered into as of this 12th day of
June, 1998, by and among Lynx Ventures L.P., a Delaware limited partnership
(the "Investor"), Garth H. Drabinsky ("Drabinsky") and Myron I. Gottlieb
("Gottlieb" and together with Drabinsky, the "Executives").
W I T N E S S E T H :
WHEREAS, the execution and delivery of this Assignment and
Assumption Agreement is a condition precedent to the closing of the
transactions contemplated by the Investment Agreement, dated as of April
13, 1998 (the "Investment Agreement"), by and between Livent Inc., a
corporation existing under the laws of the Province of Ontario ("Livent"),
and the Investor; and
WHEREAS, the Investor desires to assume, and the Executives
desire to assign, all of the Executives' assignable rights under the Voting
Trust Agreement, dated as of May 19, 1993 (the "Management Voting Trust
Agreement"), by and among Livent, the Executives, certain members of
Livent's management and the Depositary (as defined therein), effective as
of the Closing Date (as defined in the Investment Agreement), upon the
terms and subject to the conditions hereof.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth and other good and valuable consideration
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as follows:
1. Assignment. Each Executive hereby assigns to the Investor,
effective as of the Closing Date, all of its right, title and interest in,
to and under the Management Voting Trust Agreement, to the extent such
right, title and interest may be assigned by such Executive, to have and to
hold the same unto the Investor and its successors.
2. Assumption. The Investor hereby accepts the foregoing
assignment of all of the Executives' right, title and interest in, to and
under the Management Voting Trust Agreement and assumes all such rights,
title and interest thereunder to the extent that the same may be assigned
by the Executives.
3. Unassignable Rights. Each Executive hereby agrees that to
the extent that any of its right, title and interest in, to and under the
Management Voting Trust Agreement are determined to be unassignable (the
"Unassignable Rights"), the Executive shall, during the term of this
Assignment and Assumption Agreement, be deemed to hold all such
Unassignable Rights in trust for, and for the benefit of, the Investor and
shall, in connection with the exercise of any such Unassignable Rights,
consult with the Investor and take such action with respect to such
exercise as the Investor shall request.
4. Resignation and Appointment of Trustee. Effective as of the
Closing Date, each Executive hereby resigns from the position of Voting
Trustee (as defined in the Management Voting Trust Agreement) under the
Management Voting Trust Agreement and appoints the Investor as its
successor, in accordance with the provisions of Section 12 (b) thereunder,
to exercise all of the rights, powers and discretions of the Voting Trustee
granted thereunder. The Investor hereby accepts the foregoing appointment
as Voting Trustee under the Management Voting Trust Agreement and agrees to
be bound by the provisions of the Management Voting Trust Agreement as if
it were an original signatory thereto.
5. Further Assurances. Each of the Executives hereby agree to
do all such acts and things and execute and deliver, or cause to be
executed and delivered all such documents, notices, instruments and
agreements as may be necessary or desirable to give effect to the
provisions of and the intent of this Assignment and Assumption Agreement.
6. Warranty.
(a) Each Executive hereby represents, warrants and agrees that
pursuant to this Assignment and Assumption Agreement, the Investor has
all of the rights, powers and discretions of the Voting Trustee under
the Management Voting Trust Agreement.
(b) Each Executive hereby represents, warrants and agrees that
he is free to enter into this Agreement and is not subject to any
obligations or agreements which will or might prevent or interfere
with the performance of his obligations hereunder. Each Executive
further represents and warrants and acknowledges and agrees that he
has had the opportunity to seek, and was not prevented or discouraged
from seeking, independent legal advice prior to the execution and
delivery of this Assignment and Assumption Agreement and that, in the
event that he did not avail himself of that opportunity prior to
signing this Assignment and Assumption Agreement, he did so
voluntarily without any undue duress or pressure and agrees that this
failure to obtain legal advice shall not be used by him as a defense
as to the enforcement of his obligations under this Assignment and
Assumption Agreement.
7. Term and Termination.
(a) This Assignment and Assumption Agreement shall become
effective as of the Closing Date and shall remain in full force and
effect, unless otherwise terminated in accordance with the terms of
this Agreement, from the Closing Date through to the date which is
twenty one (21) years after the death of the last living Executive.
(b) This Assignment and Assumption Agreement shall automatically
terminate if at any time following the Closing Date the Investor and
its affiliates beneficially own less than the Share Limit (as defined
below). As used herein, the term "Share Limit" shall mean initially
500,000 shares of common stock, no par value, of Livent and shall be
appropriately adjusted from time to time to take into account dilutive
effects resulting from changes in the number of shares of common stock
outstanding subsequent to the Closing Date, whether by
recapitalization, declaration of a stock split, payment of a stock
dividend or otherwise.
(c) Upon termination of this Assignment and Assumption Agreement
(i) all right, title and interest in, to and under the Management
Voting Trust Agreement assigned by the Executives and assumed by the
Investor hereunder shall be automatically reassigned by the Investor
and assumed by the respective Executive to the extent previously
assigned by such Executive pursuant to this Assignment and Assumption
Agreement and (ii) the Investor, without any further action on its
part, shall be deemed to have resigned from its position as Voting
Trustee and reappointed each of the Executives to their previous
position as Voting Trustee.
8. Binding Effect. This Assignment and Assumption Agreement
shall be binding upon and inure solely to the benefit of the parties hereto
and may not be assigned by any party without the prior written consent of
the other parties.
9. Specific Performance. The parties hereto acknowledge and
agree that monetary damages for breaches of covenants contained herein may
not be an adequate remedy and that the covenants herein may be enforced in
equity by a decree requiring specific performance.
10. Counterparts. This Assignment and Assumption Agreement may
be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
11. Governing Law. This Assignment and Assumption Agreement
shall be governed by and interpreted in accordance with the laws of the
Province of Ontario and the federal laws of Canada applicable therein,
without regard to any applicable principles of conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Assumption Agreement to be executed as of the date first
above written.
/s/ Garth H. Drabinsky
_______________________________
Garth H. Drabinsky
/s/ Myron I. Gottlieb
_______________________________
Myron I. Gottlieb
LYNX VENTURES L.P.
By: Lynx Ventures L.L.C.,
its General Partner
By: /s/ Michael S. Ovitz
____________________________
Name: Michael S. Ovitz
Title: Managing Member
The undersigned, as Depositary under the Management Voting Trust
Agreement, hereby acknowledges the terms and provisions agreed to by the
parties to this Assignment and Assumption Agreement and consents to the
assignment and assumption of rights contemplated hereby.
MONTREAL TRUST COMPANY
OF CANADA
By: /S/ Lee Waddington
____________________________
Name: Lee Waddington
Title: Senior Account Manager
EXHIBIT 12
VOTING, RIGHT OF FIRST OFFER
AND
WAIVER AGREEMENT
THIS AGREEMENT made as of the 12th day of June, 1998.
BY AND AMONG:
LYNX VENTURES L.P.,
a limited partnership existing under the laws of
the State of Delaware
(hereinafter referred to as the "Investor"),
OF THE FIRST PART,
- and -
THOMAS H. LEE EQUITY PARTNERS, L.P.,
a limited partnership existing under the laws
of the State of Delaware,
(hereinafter referred to as "THL"),
OF THE SECOND PART,
- and -
THL-CCI LIMITED PARTNERSHIP,
a limited partnership existing under the
laws of the Commonwealth of Massachusetts,
(hereinafter referred to as "THL-CCI"),
OF THE THIRD PART.
WHEREAS, as of the date hereof, each of Investor, THL and THL-CCI
(together, the "Parties") owns (either beneficially or of record) the
number of shares of common stock, no par value (the "Common Shares") of
Livent Inc., an Ontario corporation (the "Corporation") set forth in
Schedule A annexed hereto (all such shares, including any shares or other
voting securities of the Corporation which are issued upon exercise of any
options, rights or similar arrangements held by any of the Parties and any
shares or other voting securities of the Corporation hereafter acquired
(including as dividends) by any of the Parties being hereinafter referred
to as the "Shares");
WHEREAS the execution and delivery of this Agreement is a
condition precedent to the closing of the transactions contemplated by the
Investment Agreement, dated as of April 13, 1998 (the "Investment
Agreement"), between the Corporation and the Investor; and
WHEREAS, THL and THL-CCI have agreed to grant Investor a right of
first offer over all the Shares owned beneficially or of record by them.
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of
the respective covenants and agreements of the parties contained herein and
for other good and valuable consideration (the receipt and sufficiency of
which are hereby acknowledged by each of the parties hereto), the parties,
intending to be legally bound, hereby agree as follows:
1. SHARES. Each of the Parties hereby agrees that all Shares shall be
subject to the terms and provisions of this Agreement. Each of the
Parties, with respect to the Common Shares indicated opposite such
Party's name in Schedule A annexed hereto, does hereby represent and
warrant that such shares represent all of the Common Shares and other
voting securities in the Corporation beneficially owned by it as of
the date hereof. Each of the Parties hereby agrees to provide prompt
notice to the other in the event of a change in the number of Shares
beneficially owned by such Party.
2. VOTING OF SHARES. Each of the Parties agrees to vote or cause to be
voted all Shares, and to exercise its influence in respect of the
Corporation (including with respect to its nominees who are directors
of the Corporation) in an effort to ensure that the nominees for
election as directors nominated from time to time by each of the
Parties pursuant to (i) the Shareholders Agreement dated the date
hereof between the Company, Investor, David R. Maisel, Garth H.
Drabinsky ("Drabinsky"), Myron L. Gottlieb ("Gottlieb") and Roy L.
Furman (the "1998 Shareholders Agreement") and (ii) the Shareholders
Agreement dated February 3, 1995, between Drabinsky, Gottlieb, THL and
THL-CCI (the "1995 Shareholders Agreement"), shall be elected as
directors of the Corporation; provided, however, that the number of
Common Shares which shall be subject to this Agreement shall be
reduced on a pro rata basis among the Parties, based on the number of
votes each Party has a right to cast, such that the total number of
votes cast by the Parties shall never exceed 50% of the total votes
which can be cast by all of the voting securities of the Corporation.
3. CONSENT TO ASSIGNMENT OF RIGHTS. THL and THL-CCI hereby consent to
the assignment by Gottlieb and Drabinsky to Investor of their rights
under Sections 4.5 and 4.6 of the 1995 Shareholders Agreement.
4. WAIVER OF PRE-EMPTIVE RIGHTS. Each of THL and THL-CCI hereby agrees
to waive any existing pre-emptive rights it may have in connection
with any Shares owned beneficially or of record by it pursuant to
Section 3.1(b) of the Investors Agreement dated February 3, 1995,
between the Corporation, THL and THL-CCI (the "1995 Investors
Agreement") and Section 3.1(h) of the 1995 Shareholders Agreement.
5. WAIVER OF TAG-ALONG RIGHTS. Each of THL and THL-CCI hereby agrees to
waive any existing rights it may have to sell any Shares owned
beneficially or of record by it pursuant to any Tag-Along Rights (as
defined below) with respect to any sale by Drabinsky or Gottlieb of
Common Shares owned beneficially or of record by each of them. For
purposes of this Section 5, "Tag-Along Rights" shall mean any right to
sell Common Shares owned beneficially or of record by participating in
a sale by Drabinsky or Gottlieb of the Common Shares owned by each of
them.
6. CONVERTIBLE NOTE COVENANTS. Each of THL and THL-CCI hereby agree that
in the event that the Corporation is requested by the Investor to take
an action which would otherwise require the Corporation to obtain a
waiver or consent from THL and/or THL-CCI of any of the covenants
contained in Section 3.1(j) of the 1995 Shareholders Agreement and
Section 3.1(f) of the 1995 Investors Agreement, such waiver or consent
shall be deemed granted pursuant hereto by each of THL and THL-CCI for
purposes of the Corporation taking any such action immediately upon
receipt of notice from the Corporation or the Investor of such request
and no further action shall be required to be taken by THL and THL-CCI
in connection with such waiver or consent.
7. CONTROLLED FOREIGN CORPORATION PROHIBITION.
a. Each of the Parties hereby covenants and agrees that, after the
date hereof, it shall not take any action (including the purchase
of, or acquisition of voting rights with respect to, Voting
Securities) that would cause the Corporation to be a controlled
foreign corporation ("CFC") for U.S. federal income tax purposes.
b. Section 7(a) above shall not apply with respect to a bona fide
offer by Investor to purchase all outstanding Voting Securities
provided that if the Corporation becomes a CFC as a result of
such offer, THL and THL-CCI would not collectively own, directly,
indirectly, or by attribution, 10% or more of all Voting
Securities at the end of the day on which the Corporation becomes
a CFC. For purposes of this provision, it is assumed that all
Outstanding Options held by THL and THL-CCI are converted to
Common Shares.
c. Each of the Parties hereby covenants and agrees to cooperate with
each other with respect to compliance with the provisions of this
Section 7 and to report to each other any information affecting
such compliance. Further, each of the Parties hereby covenants
and agrees to implement a strategy to prevent the voting rights
of any person other than Investor to equal or exceed 10% of the
total number of votes which can be cast by all Voting Securities
(assuming for such purposes that all Outstanding Options are
converted to Common Shares if such person would have the right to
vote such Common Shares).
d. For purposes of this Section 7 only, the term "Voting Securities"
means all Common Shares and any other voting securities of the
Corporation.
e. For purposes of this Section 7 only, the term "Outstanding
Options" means all outstanding options, warrants and convertible
debentures of the Corporation that may be converted to Common
Shares.
8. NO INCONSISTENT ARRANGEMENTS. Each of the Parties hereby covenants
and agrees that, except as expressly provided in this Agreement, it
shall not take any action that would in any way restrict, limit or
interfere with the performance of its obligations hereunder or the
transactions contemplated hereby.
9. TERM AND TERMINATION OF AGREEMENT.
a. This Agreement shall become effective as of the Closing Date (as
such term is defined under the Investment Agreement) and shall
remain in full force and effect, unless otherwise terminated in
accordance with the terms of this Agreement.
b. Any Party may terminate this Agreement in the event that (i) the
Investor and its affiliates collectively or (ii) THL and THL-CCI
collectively, beneficially own less than the Share Limit (as
defined below). As used herein, the term "Share Limit" shall
mean initially 500,000 Common Shares and shall be appropriately
adjusted from time to time to take into account dilutive effects
resulting from changes in the number of Common Shares outstanding
subsequent to the Closing Date, whether by recapitalization,
declaration of a stock split, payment of a stock dividend or
otherwise.
10. CHANGE OF COMMON SHARES. The Parties agree that the provisions of
this Agreement relating to the Shares shall apply, mutatis mutandis, to any
shares or securities into which such Shares may be converted, changed,
reclassified, redivided, redisignated, subdivided or consolidated, to any
shares or securities which are received by a Party as a stock dividend or
distribution payable in shares or securities of the Corporation which
entitle the holder thereof to vote at any meeting of the shareholders of
the Corporation and to any shares or securities of the Corporation or of
any successor or continuing company or corporation to the Corporation which
may be received by any Party on a reorganization, amalgamation,
consolidation or merger, statutory or otherwise.
11. AMENDMENTS. This Agreement may be amended only with the approval of
each of the parties hereto.
12. WARRANTY. Each of the Parties represents, warrants and agrees that it
is free to enter into this Agreement and is not subject to any obligations
or agreements which will or might prevent or interfere with the performance
of its obligations hereunder. Each of the parties hereto further
represents and warrants and acknowledges and agrees that it has had the
opportunity to seek, and was not prevented or discouraged from seeking,
independent legal advice prior to the execution and delivery of this
Agreement and that, in the event that it did not avail himself of that
opportunity prior to signing this Agreement, it did so voluntarily without
any undue duress or pressure and agrees that this failure to obtain legal
advice shall not be used by it as a defense as to the enforcement of its
obligations under this Agreement.
13. NOTICE. All notices, requests, demands and other communications shall
be in writing and shall be deemed to have been duly given if personally
delivered or sent by United States or Canadian mails or by telegram or
telex confirmed by letter, or by facsimile transmission, receipt confirmed,
to the address set forth below:
Notices to Investor shall be addressed as follows:
Lynx Ventures L.P.
c/o Dreyer, Edmonds & Associates
355 South Grand Avenue
Suite 4150
Los Angeles, CA 90071
U.S.A.
Fax No.: (213) 617-1806
Attention: Michael Dreyer
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022-3897
U.S.A.
Fax No.: (212) 735-2000
Attention: Eric L. Cochran
with a courtesy copy to:
Munger, Tolles & Olson
355 South Grand Avenue
Los Angeles, CA 90071-1560
U.S.A.
Fax No.: (213) 687-3702
Attention: Robert L. Adler
Notices to THL or THL-CCI shall be addressed as follows:
Thomas H. Lee Company
75 State Street
Boston, MA 02109
U.S.A.
Fax No.: (617) 227-3514
Attention: Scott M. Sperling
with a copy to:
Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, MA 02110
U.S.A.
Fax No.: (617) 951-1295
Attention: Charles W. Robins
All notices requiring timely attention shall be sent by facsimile
transmission, telex or overnight mail. Any notice shall be deemed
received, unless earlier received, (a) if sent by certified or registered
mail, return receipt requested, when actually received, (b) if sent by
overnight mail, on the next business day, (c) if sent by telegram or telex,
on the date sent, and (d) if sent by facsimile transmission or delivered by
hand, on the date of receipt. Any party may change its address for service
from time to time by notice given in accordance with the foregoing
provisions.
14. GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY
AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE PROVINCE OF
ONTARIO AND THE FEDERAL LAWS OF CANADA AS APPLICABLE THEREIN, WITHOUT
GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR
RULE (WHETHER OF THE PROVINCE OF ONTARIO OR ANY OTHER JURISDICTION)
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER
THAN THE PROVINCE OF ONTARIO AND THE FEDERAL LAWS OF CANADA AS
APPLICABLE THEREIN.
15. SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason,
the parties shall negotiate in good faith with a view to the
substitution therefor of a suitable and equitable solution in order to
carry out, so far as may be valid and enforceable, the intent and
purpose of such invalid provision, provided, however, that the
validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions contained herein shall
not be in any way impaired thereby, it being intended that all of the
rights and privileges of the parties hereto shall be enforceable to
the fullest extent permitted by law.
16. ASSIGNMENT. This Agreement may not be assigned by a party hereto
without the prior written consent of the other parties hereto.
17. SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors,
permitted assigns, heirs, administrators, executors and legal personal
representatives.
18. NUMBER AND GENDER. Words importing the singular number only shall
include the plural and vice versa, and words importing the masculine
gender shall include the feminine and neuter genders and vice versa
importing persons shall include individuals, partnerships,
associations, trusts, unincorporated organizations and corporations
and vice versa.
19. ENTIRE AGREEMENT. This Agreement, including Schedule A hereto,
constitutes the entire agreement between the parties with respect to
the subject matter hereof. There are no conditions, covenants,
agreements, representations, warranties or other provisions, express
or implied, collateral, statutory or otherwise, relating to the
subject matter hereof, except as provided herein. No amendment,
waiver or termination of this Agreement shall be binding on a party
hereto unless consented to in writing by such party.
20. SPECIFIC PERFORMANCE. The parties hereto agree that if any of the
provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached, irreparable damage
would occur, no adequate remedy at law would exist and damages would
be difficult to determine, and that the parties shall be entitled to
specific performance of the terms hereof, without any requirement for
securing or posting any bond, in addition to any other remedy at law
or equity.
21. TIME OF THE ESSENCE. Time shall be the essence of this Agreement.
22. FURTHER ASSURANCES. Each of the parties to this Agreement shall do
all such acts and things and shall execute and deliver, or cause to be
executed and delivered, all such documents, instruments and agreements
as may be necessary or desirable to give effect to the provisions of
and the intent of this Agreement.
23. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which, when executed by a party hereto, shall be deemed to be
an original and such counterparts shall together constitute one and
the same instrument.
IN WITNESS WHEREOF, each of the Parties have caused this
Agreement to be duly executed on the date hereof.
LYNX VENTURES L.P.
By: Lynx Ventures L.L.C.,
its General Partner
By: /s/ Michael S. Ovitz
_____________________________
Name: Michael S. Ovitz
Title: Managing Member
THOMAS H. LEE EQUITY
PARTNERS, L.P.
By: THL Equity Advisors Limited
Partnership, its General Partner
By: THL Equity Trust,
its General Partner
By: /s/ Scott M. Sperling
_____________________________
Name: Scott M. Sperling
Title: Managing Director and Trustee
THL-CCI LIMITED PARTNERSHIP
By: THL Investment Management Corp.,
its General Partner
By: /s/ Scott M. Sperling
_____________________________
Name: Scott M. Sperling
Title: Managing Director
SCHEDULE A
Shareholder Common Shares
Lynx Ventures L.P. 2,500,000 (1)
Thomas H. Lee Equity Partners, L.P. 1,261,026
THL-CCI Limited Partnership 266,246
______________________
1 Number of Common Shares acquired upon closing of the transactions
contemplated by the Investment Agree- ment.
EXHIBIT 15
LIVENT INC.
June 12, 1998
The Ovitz Family Limited Partnership
c/o Dreyer, Edmonds & Associates
355 South Grand Avenue
Suite 4150
Los Angeles, CA 90071
Dear Optionee:
RE: GRANT OF OPTION
This letter agreement sets forth the terms and conditions
pursuant to which the Corporation has granted to you (the "Optionee"),
effective as of April 9, 1998 (the "Date of Grant"), an option to purchase
common shares of Livent Inc.
1. DEFINED TERMS
Where used herein, the following terms shall have the following
meanings, respectively:
(a) "Board" shall mean the board of directors of the Corporation;
(b) "Change in Control shall mean the occurrence of any of the following
events:
(i) any "person" (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, as amended from time to time (the
"Act")) is or becomes the beneficial owner within the meaning of Rule
13d-3 under the Act (a "Beneficial Owner"), directly or indirectly, of
securities of the Corporation (not including in the securities
beneficially owned by such person any securities acquired from the
Corporation or its affiliates) representing 50% or more of the
combined voting power of the Corporation's then outstanding
securities, excluding the Investor (as defined in the Investment
Agreement) and any person who becomes such a Beneficial Owner in
connection with a transaction described in clause (A) of paragraph
(iii) below: or
(ii) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, as
of the Effective Time, constitute the Board and any new director
(other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including
but not limited to a consent solicitation, relating to the election of
directors of the Corporation) whose appointment or election by the
Board or nomination for election by the Corporation's stockholders was
approved or recommended by a vote of at least a majority of the
directors then still in office who either were directors as of the
Effective Time or whose appointment, election or nomination for
election was previously so approved or recommended; or
(iii) there is consummated a merger or consolidation of the
Corporation or any direct or indirect wholly-owned subsidiary of the
Corporation with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of the
Corporation outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving entity
or any parent thereof), in combination with the ownership of any
trustee or other fiduciary holding securities under an employee
benefit plan of the Corporation or any subsidiary of the Corporation,
more than 50% of the combined voting power of the securities of the
Corporation or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the
Corporation (or similar transaction) in which no person other than the
Investor is or becomes the Beneficial Owner, directly or indirectly,
of securities of the Corporation representing 50% or more of the
combined voting power of the Corporation's then outstanding
securities; or
(iv) the stockholders of the Corporation approve a plan of complete
liquidation or dissolution of the Corporation or there is consummated
an agreement for the sale or disposition by the Corporation of all or
substantially all of the Corporation's assets, other than a sale or
disposition by the Corporation of all or substantially all of the
Corporation's assets to an entity, more than 50% of the combined
voting power of the voting securities of which are owned by
stockholders of the Corporation in substantially the same proportions
as their ownership of the Corporation immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control" shall not be
deemed to have occurred by virtue of (i) the consummation of the
transactions contemplated by the Investment Agreement or (ii) the
consummation of any transaction or series of integrated transactions
immediately following which the record holders of the common stock of
the Corporation immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate
ownership in an entity which owns all or substantially all of the
assets of the Corporation immediately following such transaction or
series of transactions;
(c) "Common Shares" shall mean the common shares of the Corporation, or,
in the event of an adjustment contemplated by Section 8 hereof, such
other shares or securities to which the Optionee may be entitled upon
the exercise of an Option as a result of such adjustment;
(d) "Corporation" shall mean Livent Inc., and includes any successor
corporation thereto;
(e) "Effective Time" shall mean the effective time of the consummation of
the transactions contemplated by the Investment Agreement;
(f) "Expiration Time" shall mean 5:00 p.m. (Toronto time) on April 9,
2008;
(g) "Investment Agreement" shall mean the Investment Agreement entered
into between the Corporation and Lynx Ventures L.P., dated as of April
13, 1998;
(h) "Option" shall mean the option to purchase Common Shares granted
hereunder;
(i) "Option Price" shall mean the price per share specified in Section 3
below at which Common Shares may be purchased under the Option, as the
same may be adjusted from time to time in accordance with Section 8
hereof;
(j) "Subsidiary" shall have the meaning ascribed to such term in the
Business Corporation Act (Ontario); and
(k) "Take-Over Bid" shall mean a bona fide offer to acquire Common Shares
that is a "take-over bid" as such term is defined in the Securities
Act (Ontario), as such statute is amended, varied or re-enacted from
time to time, provided that (i) such offer is made to all or
substantially all of the holders of Common Shares, (ii) such offer is
made to acquire all or substantially all of the Common Shares
outstanding on the date of such offer and (iii) the Board issues a
recommendation that holders of Common Shares accept such offer.
2. GRANT OF OPTION
The Corporation hereby grants to the Optionee, on the terms and
subject to the conditions set forth in this agreement, an irrevocable
option (the "Option") to purchase 990,000 Common Shares (the "Optioned
Shares"), subject to any adjustment of such shares or of the number of such
shares in accordance with Section 8 below. The Options will be granted in
four equal series, designated "Series A," "Series B," "Series C" and
"Series D," each of which will entitle the Optionee to purchase 247,500
Optioned Shares.
3. OPTION PRICE
Subject to any adjustments in accordance with Section 8 hereof,
the Option Price at which each Optioned Share may be purchased upon
exercise of the Option at any time and from time to time shall be
U.S.$8.00.
4. VESTING PERIODS
(a) Subject to the terms and conditions set forth herein, the
Optionee shall have a vested and nonforfeitable right in the Option during
the periods and in the amounts specified below:
(i) as to all of the Series A Optioned Shares and Series B
Optioned Shares, on or after the first anniversary of the
Effective Time until the Expiration Time; and
(ii) as to all of the Series C Optioned Shares and Series D
Optioned Shares, on or after the second anniversary of the
Effective Time until the Expiration Time.
(b) Subject to the terms and conditions set forth herein, the
Optionee shall have the right to take up and purchase the Optioned Shares,
at any time and from time to time, during the periods and in the amounts
specified below:
(i) as to the Series A Optioned Shares, after they have become
vested pursuant to Section 4(a) above;
(ii) as to the Series B Optioned Shares, after the later of (A)
the time that they have become vested pursuant to Section
4(a) above and (B) the first date after the Date of Grant
on which the twenty trading day trailing average closing
price on NASDAQ exceeds U.S. $8.80;
(iii) as to the Series C Optioned Shares, after the later of
(A) the time that they have become vested pursuant to
Section 4(a) above and (B) the first date after the
Date of Grant on which the twenty trading day trailing
average closing price on NASDAQ exceeds U.S. $10.40;
and
(iv) as to the Series D Optioned Shares, after the later of (A)
the time that they have become vested pursuant to Section
4(a) above and (B) the first date after the Date of Grant
on which the twenty trading day trailing average closing
price on NASDAQ exceeds U.S. $12.00.
5. TERMINATION
The Option shall expire and terminate and be of no further force
or effect whatsoever as to the Optioned Shares in respect of which the
Option has not been exercised as of the earlier to occur of (a) the
Expiration Time or (b) termination of the Investment Agreement prior to
consummation of the transactions contemplated thereby.
6. CHANGE IN CONTROL
In the event of a Take-Over Bid or a Change in Control, the
Optionee, at any time while the Take-Over Bid is open for acceptance, and
at any time following a Change in Control, and notwithstanding any
conditions to the contrary regarding exercise otherwise attaching to such
Option (whether pursuant to Section 4 above or otherwise), may take up and
purchase any or all of the Optioned Shares covered by such Option.
7. EXERCISE OF OPTIONS
(a) An Option may be exercised from time to time by delivery to the
Corporation at its registered office of a written notice of exercise
addressed to the Secretary of the Corporation specifying the number of
Common Shares with respect to which the Option is being exercised and
accompanied by payment in full of the Option Price of the Common Shares to
be purchased. Certificates for such Common Shares shall be issued and
delivered to the Optionee as soon as practicable following the receipt of
such notice and payment. Payment of the Option Price may be made (i) in
cash, (ii) by cheque or money order, or (iii) by a combination of the
foregoing methods.
(b) Notwithstanding any other provision hereof, the Corporation's
obligation to issue Common Shares to an Optionee pursuant to the exercise
of an Option shall be subject to:
(i) completion of such registration or other qualification of such
Common Shares or obtaining approval of such governmental
authority as the Corporation shall determine to be necessary or
advisable in connection with the authorization, issuance or
sale thereof;
(ii) the admission of such Common Shares to listing on any stock
exchange on which the Common Shares are then listed; and
(iii) the receipt from the Optionee of such representations,
agreements and undertakings, including as to future dealings
in such Common Shares, as the Corporation or its counsel
determines to be necessary or advisable in order to
safeguard against the violation of the securities laws of
any jurisdiction.
In this connection the Corporation shall, to the extent necessary, take all
reasonable steps to obtain such approvals, registrations and qualifications
as may be necessary for the issuance of such Common Shares in compliance
with applicable laws and for the listing of such Common Shares on any stock
exchange on which the Common Shares are then listed.
8. CERTAIN ADJUSTMENTS
Appropriate adjustments in the number and kind of Common Shares
or other property issuable upon exercise of the Option and in the Option
Price shall be made by the Board to give effect to changes in the Common
Shares of the Corporation resulting from subdivisions, consolidations or
reclassification of the Common Shares of the Corporation, the payment of
dividends or other distributions by the Corporation (other than dividends
or other distributions determined by the Board to be in the ordinary
course), mergers, consolidations, combinations or similar transactions or
other relevant changes in the capital of the Corporation.
9. REGISTRATION AND POSSESSION OF OPTION SHARES
Upon each exercise of the Option in accordance with Section 7
hereof, the Corporation shall cause the transfer agent of the Common Shares
forthwith to register in the name of the Optionee, or in such other name as
the Optionee may direct, the Optioned Shares paid for by the Optionee in
connection with that exercise of the Option (the "Purchased Shares") and to
prepare and deliver to the Optionee a definitive certificate in the name of
the Optionee, or in such other name as the Optionee may direct,
representing such Purchased Shares.
10. TERMINATION OF OPTION BY OPTIONEE
The Optionee may at any time terminate the Option by written
notice given to the Corporation at its registered address, and, forthwith
upon the receipt by the Corporation of any such notice in writing, the
Option shall expire and terminate as to the Optioned Shares in respect of
which the Option has not been exercised.
11. OPTIONEE NOT REQUIRED TO EXERCISE OPTION
The Optionee shall have no obligation to purchase and/or pay for,
and the Corporation shall have no obligation to issue, any Optioned Shares
except those Optioned Shares in respect of which the Optionee shall have
exercised the Option in accordance with the terms and conditions of this
agreement.
12. REPRESENTATION AND WARRANTY BY OPTIONEE
The Optionee represents and warrants to the Corporation, as a
continuing representation and warranty which shall be true and correct on
the date of this agreement and on each date that the Optionee exercises the
Option as if made and given on and as of each such date, that the Optionee
is acquiring the Option and will acquire the Purchased Shares as principal
and not as agent, nominee or trustee on behalf of any other party.
13. GENERAL
(a) Time shall be of the essence of this agreement.
(b) All dollar amounts referred to in this agreement are in U.S.
funds.
(c) The division of this agreement into articles, sections,
paragraphs, subparagraphs and other subdivisions and the
insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of this
agreement.
(d) In the event that any day on or before which any action is to be
taken under this agreement is not a business day in the place
where the action is to be taken, then such action shall be
required to be taken on or before the requisite time on the next
succeeding day that is a business day in such place.
(e) This agreement shall be construed, interpreted and enforced in
accordance with, and the respective rights and obligations of the
parties shall be governed by, the laws of the Province of Ontario
and the federal laws of Canada applicable therein, and each party
hereby irrevocably and unconditionally agrees to the non-
exclusive jurisdiction of the courts of such Province.
(f) This agreement shall enure to the benefit of and be binding upon
the parties to this agreement and the successors and assigns of
the Corporation and legal personal representatives of the
Optionee.
(g) This agreement and the Option granted to the Optionee is non-
assignable and non-transferable otherwise than, to the extent
permitted by applicable law, by will or pursuant to the laws of
succession or descent and distribution and, during the lifetime
of the Optionee, the Option shall be exercisable only by the
Optionee, provided however that the Company shall not be required
to file a prospectus or otherwise be required to take any action
or incur any expense in connection with any proposed transfer by
will or pursuant to the laws of succession or descent and
distribution. Subject to applicable law, but notwithstanding
anything in this letter agreement to the contrary, the Optionee
may, at any time in its sole and absolute discretion, assign any
or all of its rights and obligations under this letter agreement
and the Option to Michael S. Ovitz (the "Executive") or to any
corporation, partnership or other entity controlled directly or
indirectly by the Executive. The Optionee shall notify the
Company in writing of any such assignment and such assignment
shall be effective at any time specified by the Optionee in such
notice. Any person or entity to whom the rights and obligations
under this letter agreement have been assigned in accordance with
this Section 13(g) may further assign such rights and
obligations, provided that such further assignment also satisfies
the requirements of this Section 13(g). This Agreement shall
inure to the benefit of and be enforceable by the Optionee's
legal representatives and successors and any person or entity to
whom this letter agreement and the Option are assigned pursuant
to this Section 13(g).
(h) This agreement may be executed by the parties in counterparts
and, when so executed, such counterparts shall constitute a
single agreement.
(i) The provisions of this agreement may not be modified, waived or
discharged without obtaining the consent of applicable securities
regulatory authorities and unless such waiver, modification or
discharge is agreed to in writing by the parties hereto.
(j) No portion of the Option may be exercised unless and until the
granting of the Option hereunder is approved by the shareholders
of the Corporation to be given by a resolution passed at a
meeting of the shareholders of the Corporation and accepted by
The Toronto Stock Exchange.
(k) The Optionee shall not have any rights as a shareholder of the
Corporation with respect to any of the Common Shares covered by
the Option until the Optionee shall have exercised the Option in
accordance with the terms hereof (including tendering payment in
full of the Option Price of the Common Shares in respect of which
the Option is being exercised) and the Corporation shall have
issued such Common Shares to the Optionee in accordance with the
terms hereof.
If the terms and conditions of this agreement are acceptable to
you, please indicate your acceptance by signing this letter and printing
your name and address where indicated below.
Yours truly,
LIVENT INC.
By: /s/ Garth H. Drabinsky
___________________________
Name: Garth H. Drabinsky
Title: Chairman and
Chief Executive Officer
The undersigned Optionee has reviewed, and hereby accepts and
agrees to, the provisions of this letter agreement.
THE OVITZ FAMILY
LIMITED PARTNERSHIP
By: The Michael and Judy
Ovitz Revocable Trust,
its General Partner
By: /s/ Michael S. Ovitz
_________________________
Name: Michael S. Ovitz
Title: Trustee
Address:
c/o Dreyer, Edmonds &
Associates
355 South Grand Avenue
Suite 4150
Los Angeles, CA 90071-3103
SCHEDULE A
NOTICE OF EXERCISE OF OPTION
TO: LIVENT INC.
165 Avenue Road
Suite 600
Toronto, Ontario
M5R 3S4
Attention: Secretary
Name of Optionee: _____________________
Address of Optionee: _____________________
_____________________
Date of Option Agreement _____________________
Number of Optioned Shares
in respect of which Option
is being exercised: _____________________
Aggregate Option Price: $ _____________________
The undersigned hereby notifies Livent Inc. (the "Corporation")
of the undersigned's exercise, as detailed above, of the option granted by
the Corporation pursuant to the above-referenced Option Agreement.
THE OVITZ FAMILY
LIMITED PARTNERSHIP
By: The Michael and Judy
Ovitz Revocable Trust,
its General Partner
By:________________________
Name: Michael S. Ovitz
Title: Trustee
EXHIBIT 16
LIVENT INC.
June 12, 1998
Mr. Roy L. Furman
c/o Schulte, Roth & Zabel
900 Third Avenue
New York, NY 10022
Dear Mr. Furman:
RE: GRANT OF OPTION
This letter agreement sets forth the terms and conditions
pursuant to which the Corporation has granted to you (the "Optionee"),
effective as of April 9, 1998 (the "Date of Grant"), an option to purchase
common shares of Livent Inc.
1. DEFINED TERMS
Where used herein, the following terms shall have the following
meanings, respectively:
(a) "Board" shall mean the board of directors of the Corporation;
(b) "Cause" shall have the meaning ascribed to such term in the Employment
Agreement;
(c) "Change in Control" shall have the meaning ascribed to such term in
the Employment Agreement;
(d) "Common Shares" shall mean the common shares of the Corporation, or,
in the event of an adjustment contemplated by Section 8 hereof, such
other shares or securities to which the Optionee may be entitled upon
the exercise of an Option as a result of such adjustment;
(e) "Corporation" shall mean Livent Inc., and includes any successor
corporation thereto;
(f) "Disability" shall have the meaning ascribed to such term in the
Employment Agreement;
(g) "Effective Time" shall mean the effective time of the consummation of
the transactions contemplated by the Investment Agreement;
(h) "Employment Agreement" shall mean the employment agreement entered
into between the Corporation and the Optionee, dated as of June 12,
1998;
(i) "Expiration Time" shall mean 5:00 p.m. (Toronto time) on April 9,
2003;
(j) "Good Reason" shall have the meaning ascribed to such term in the
Employment Agreement;
(k) "Investment Agreement" shall mean the Investment Agreement entered
into between the Corporation and Lynx Ventures L.P., dated as of April
13, 1998;
(l) "Option" shall mean the option to purchase Common Shares granted
hereunder;
(m) "Option Price" shall mean the price per share specified in Section 3
below at which Common Shares may be purchased under the Option, as the
same may be adjusted from time to time in accordance with Section 8
hereof;
(n) "Subsidiary" shall have the meaning ascribed to such term in the
Business Corporation Act (Ontario); and
(o) "Take-Over Bid" shall mean a bona fide offer to acquire Common Shares
that is a "take-over bid" as such term is defined in the Securities
Act (Ontario), as such statute is amended, varied or re-enacted from
time to time, provided that (i) such offer is made to all or
substantially all of the holders of Common Shares, (ii) such offer is
made to acquire all or substantially all of the Common Shares
outstanding on the date of such offer and (iii) the Board issues a
recommendation that holders of Common Shares accept such offer.
2. GRANT OF OPTION
The Corporation hereby grants to the Optionee, on the terms and
subject to the conditions set forth in this agreement, an irrevocable
option (the "Option") to purchase 1,025,000 Common Shares (the "Optioned
Shares"), subject to any adjustment of such shares or of the number of such
shares in accordance with Section 8 below. The Options will be granted in
four equal series, designated "Series A," "Series B," "Series C" and
"Series D," each of which will entitle the Optionee to purchase 256,250
Optioned Shares.
3. OPTION PRICE
Subject to any adjustments in accordance with Section 8 hereof,
the Option Price at which each Optioned Share may be purchased upon
exercise of the Option at any time and from time to time shall be
U.S.$8.00.
4. VESTING PERIODS
(a) Subject to the terms and conditions set forth herein, the
Optionee shall have a vested and nonforfeitable right in the Option during
the periods and in the amounts specified below:
(i) as to all of the Series A Optioned Shares and 85,417 of
the Series B Optioned Shares, on or after the first
anniversary of the Effective Time until the Expiration
Time;
(ii) as to 170,833 of the Series B Optioned Shares and 170,834
of the Series C Optioned Shares, on or after the second
anniversary of the Effective Time until the Expiration
Time; and
(iii) as to 85,416 of the Series C Optioned Shares and all of
the Series D Optioned Shares, on or after the third
anniversary of the Effective Time until the Expiration
Time.
(b) Subject to the terms and conditions set forth herein, the
Optionee shall have the right to take up and purchase the Optioned Shares,
at any time and from time to time, during the periods and in the amounts
specified below:
(i) as to the Series A Optioned Shares, after they have become
vested pursuant to Section 4(a) above;
(ii) as to the Series B Optioned Shares, after the later of (A)
the time that they have become vested pursuant to Section
4(a) above and (B) the first date after the Date of Grant
on which the twenty trading day trailing average closing
price on NASDAQ exceeds U.S. $8.80;
(iii) as to the Series C Optioned Shares, after the later of
(A) the time that they have become vested pursuant to
Section 4(a) above and (B) the first date after the
Date of Grant on which the twenty trading day trailing
average closing price on NASDAQ exceeds U.S. $10.40;
and
(iv) as to the Series D Optioned Shares, after the later of (A)
the time that they have become vested pursuant to Section
4(a) above and (B) the first date after the Date of Grant
on which the twenty trading day trailing average closing
price on NASDAQ exceeds U.S. $12.00.
5. TERMINATION
The Option shall expire and terminate and be of no further force
or effect whatsoever as to the Optioned Shares in respect of which the
Option has not been exercised as of the earlier to occur of (a) the
Expiration Time or (b) termination of the Investment Agreement prior to
consummation of the transactions contemplated thereby.
6. CHANGE IN CONTROL, TERMINATION OF EMPLOYMENT
(a) Subject to Section 6(b) below, in the event of a Take-Over Bid or
a Change in Control, the Optionee, at any time while the Take-Over Bid is
open for acceptance, and at any time following a Change in Control, and
notwithstanding any conditions to the contrary regarding exercise otherwise
attaching to such Option (whether pursuant to Section 4 above or
otherwise), may take up and purchase any or all of the Optioned Shares
covered by such Option.
(b) Upon the termination of the Optionee's employment due to (i)
death, (ii) Disability, (iii) termination by the Corporation without Cause
or (iv) termination by the Optionee for Good Reason, and notwithstanding
any conditions to the contrary regarding exercise otherwise attaching to
such Option (whether pursuant to Section 4 above or otherwise), the
Optionee (or the Optionee's legal representative, as the case may be) may
take up and purchase any or all of the Optioned Shares covered by such
Option for a period of one year following such termination of employment,
at the end of which period the Option shall expire. Upon the termination of
the Optionee's employment for any other reason, the Optionee may, for a
period of ninety days following such termination, take up and purchase
those Optioned Shares which, immediately prior to such termination, the
Optionee could have taken up pursuant to Section 4(b) above, at the end of
which period the Option shall expire, provided however, that the Option
shall terminate immediately upon the Optionee's termination of employment
by the Company for Cause.
(c) Options shall not be affected by any change of employment of the
Optionee or by the Optionee ceasing to be a director where the Optionee
continues to be employed by, or continues to be a director of, the
Corporation or any Subsidiary of the Corporation.
7. EXERCISE OF OPTIONS
(a) An Option may be exercised from time to time by delivery to the
Corporation at its registered office of a written notice of exercise
addressed to the Secretary of the Corporation specifying the number of
Common Shares with respect to which the Option is being exercised and
accompanied by payment in full of the Option Price of the Common Shares to
be purchased. Certificates for such Common Shares shall be issued and
delivered to the Optionee as soon as practicable following the receipt of
such notice and payment. Payment of the Option Price may be made (i) in
cash, (ii) by cheque or money order, or (iii) by a combination of the
foregoing methods.
(b) Notwithstanding any other provision hereof, the Corporation's
obligation to issue Common Shares to an Optionee pursuant to the exercise
of an Option shall be subject to:
(i) completion of such registration or other qualification of such
Common Shares or obtaining approval of such governmental
authority as the Corporation shall determine to be necessary or
advisable in connection with the authorization, issuance or
sale thereof;
(ii) the admission of such Common Shares to listing on any stock
exchange on which the Common Shares are then listed; and
(iii) the receipt from the Optionee of such representations,
agreements and undertakings, including as to future dealings
in such Common Shares, as the Corporation or its counsel
determines to be necessary or advisable in order to
safeguard against the violation of the securities laws of
any jurisdiction.
In this connection the Corporation shall, to the extent necessary, take all
reasonable steps to obtain such approvals, registrations and qualifications
as may be necessary for the issuance of such Common Shares in compliance
with applicable laws and for the listing of such Common Shares on any stock
exchange on which the Common Shares are then listed.
8. CERTAIN ADJUSTMENTS
Appropriate adjustments in the number and kind of Common Shares
or other property issuable upon exercise of the Option and in the Option
Price shall be made by the Board to give effect to changes in the Common
Shares of the Corporation resulting from subdivisions, consolidations or
reclassification of the Common Shares of the Corporation, the payment of
dividends or other distributions by the Corporation (other than dividends
or other distributions determined by the Board to be in the ordinary
course), mergers, consolidations, combinations or similar transactions or
other relevant changes in the capital of the Corporation.
9. REGISTRATION AND POSSESSION OF OPTION SHARES
Upon each exercise of the Option in accordance with Section 7
hereof, the Corporation shall cause the transfer agent of the Common Shares
forthwith to register in the name of the Optionee, or in such other name as
the Optionee may direct, the Optioned Shares paid for by the Optionee in
connection with that exercise of the Option (the "Purchased Shares") and to
prepare and deliver to the Optionee a definitive certificate in the name of
the Optionee, or in such other name as the Optionee may direct,
representing such Purchased Shares.
10. TERMINATION OF OPTION BY OPTIONEE
The Optionee may at any time terminate the Option by written
notice given to the Corporation at its registered address, and, forthwith
upon the receipt by the Corporation of any such notice in writing, the
Option shall expire and terminate as to the Optioned Shares in respect of
which the Option has not been exercised.
11. OPTIONEE NOT REQUIRED TO EXERCISE OPTION
The Optionee shall have no obligation to purchase and/or pay for,
and the Corporation shall have no obligation to issue, any Optioned Shares
except those Optioned Shares in respect of which the Optionee shall have
exercised the Option in accordance with the terms and conditions of this
agreement.
12. REPRESENTATION AND WARRANTY BY OPTIONEE
The Optionee represents and warrants to the Corporation, as a
continuing representation and warranty which shall be true and correct on
the date of this agreement and on each date that the Optionee exercises the
Option as if made and given on and as of each such date, that the Optionee
is acquiring the Option and will acquire the Purchased Shares as principal
and not as agent, nominee or trustee on behalf of any other party.
13. GENERAL
(a) Time shall be of the essence of this agreement.
(b) All dollar amounts referred to in this agreement are in U.S.
funds.
(c) The division of this agreement into articles, sections,
paragraphs, subparagraphs and other subdivisions and the
insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of this
agreement.
(d) In the event that any day on or before which any action is to be
taken under this agreement is not a business day in the place
where the action is to be taken, then such action shall be
required to be taken on or before the requisite time on the next
succeeding day that is a business day in such place.
(e) This agreement shall be construed, interpreted and enforced in
accordance with, and the respective rights and obligations of the
parties shall be governed by, the laws of the Province of Ontario
and the federal laws of Canada applicable therein, and each party
hereby irrevocably and unconditionally agrees to the non-
exclusive jurisdiction of the courts of such Province.
(f) This agreement shall enure to the benefit of and be binding upon
the parties to this agreement and the successors and assigns of
the Corporation and legal personal representatives of the
Optionee.
(g) This agreement and the Option granted to the Optionee is non-
assignable and non-transferable otherwise than, to the extent
permitted by applicable law, by will or pursuant to the laws of
succession or descent and distribution and, during the lifetime
of the Optionee, the Option shall be exercisable only by the
Optionee, provided however that the Company shall not be required
to file a prospectus or otherwise be required to take any action
or incur any expense in connection with any proposed transfer by
will or pursuant to the laws of succession or descent and
distribution.
(h) This agreement may be executed by the parties in counterparts
and, when so executed, such counterparts shall constitute a
single agreement.
(i) The provisions of this agreement may not be modified, waived or
discharged without obtaining the consent of applicable securities
regulatory authorities and unless such waiver, modification or
discharge is agreed to in writing by the parties hereto.
(j) No portion of the Option may be exercised unless and until the
granting of the Option hereunder is approved by the shareholders
of the Corporation to be given by a resolution passed at a
meeting of the shareholders of the Corporation and accepted by
The Toronto Stock Exchange.
(k) The Optionee shall not have any rights as a shareholder of the
Corporation with respect to any of the Common Shares covered by
the Option until the Optionee shall have exercised the Option in
accordance with the terms hereof (including tendering payment in
full of the Option Price of the Common Shares in respect of which
the Option is being exercised) and the Corporation shall have
issued such Common Shares to the Optionee in accordance with the
terms hereof.
(l) Nothing herein shall confer upon the Optionee any right to
continue in the employ of the Corporation or any Subsidiary of
the Corporation or affect in any way the right of the Corporation
or any such Subsidiary to terminate the Optionee's employment at
any time; nor shall the Option be deemed or construed to
constitute an agreement, or an expression of intent, on the part
of the Corporation or any such Subsidiary to extend the
employment of the Optionee beyond the time at which the Optionee
would normally be retired pursuant to the provision of any
present or future retirement plan of the Corporation or any
Subsidiary of the Corporation or any present or future retirement
policy of the Corporation or any Subsidiary of the Corporation,
or beyond the time at which the Optionee would otherwise be
retired pursuant to the provisions of any contract of employment
with the Corporation or any Subsidiary of the Corporation.
If the terms and conditions of this agreement are acceptable to
you, please indicate your acceptance by signing this letter and printing
your name and address where indicated below.
Yours truly,
LIVENT INC.
By: /s/ Garth H. Drabinsky
-----------------------------
Name: Garth H. Drabinsky
Title: Chairman and
Chief Executive Officer
The undersigned Optionee has reviewed, and hereby accepts and
agrees to, the provisions of this letter agreement.
/s/ Roy L. Furman
-----------------------------------
Signature of Optionee
Roy L. Furman
-----------------------------------
Name of Optionee
(please print)
Address:
c/o Schulte, Roth & Zabel
900 Third Avenue
New York, NY 10022
Attention: Burton Lehman
SCHEDULE A
NOTICE OF EXERCISE OF OPTION
TO: LIVENT INC.
165 Avenue Road
Suite 600
Toronto, Ontario
M5R 3S4
Attention: Secretary
Name of Optionee: ______________________
Address of Optionee: ______________________
______________________
Date of Option Agreement ______________________
Number of Optioned Shares
in respect of which Option
is being exercised: ______________________
Aggregate Option Price: $______________________
The undersigned hereby notifies Livent Inc. (the "Corporation")
of the undersigned's exercise, as detailed above, of the option granted by
the Corporation pursuant to the above-referenced Option Agreement.
___________________________________
Signature of Optionee or of Legal
Personal Representative of Optionee
EXHBIT 17
LIVENT INC.
June 12, 1998
Mr. David R. Maisel
Lynx Ventures L.P.
9465 Wilshire Boulevard
Suite 510
Beverly Hills, CA 90212
Dear Mr. Maisel:
RE: GRANT OF OPTION
This letter agreement sets forth the terms and conditions
pursuant to which the Corporation has granted to you (the "Optionee"),
effective as of April 9, 1998 (the "Date of Grant"), an option to purchase
common shares of Livent Inc.
1. DEFINED TERMS
Where used herein, the following terms shall have the following
meanings, respectively:
(a) "Board" shall mean the board of directors of the Corporation;
(b) "Cause" shall have the meaning ascribed to such term in the Employment
Agreement;
(c) "Change in Control" shall have the meaning ascribed to such term in
the Employment Agreement;
(d) "Common Shares" shall mean the common shares of the Corporation, or,
in the event of an adjustment contemplated by Section 8 hereof, such
other shares or securities to which the Optionee may be entitled upon
the exercise of an Option as a result of such adjustment;
(e) "Corporation" shall mean Livent Inc., and includes any successor
corporation thereto;
(f) "Disability" shall have the meaning ascribed to such term in the
Employment Agreement;
(g) "Effective Time" shall mean the effective time of the consummation of
the transactions contemplated by the Investment Agreement;
(h) "Employment Agreement" shall mean the employment agreement entered
into between the Corporation and the Optionee, dated as of June 12,
1998;
(i) "Expiration Time" shall mean 5:00 p.m. (Toronto time) on April 9,
2003;
(j) "Good Reason" shall have the meaning ascribed to such term in the
Employment Agreement;
(k) "Investment Agreement" shall mean the Investment Agreement entered
into between the Corporation and Lynx Ventures L.P., dated as of April
13, 1998;
(l) "Option" shall mean the option to purchase Common Shares granted
hereunder;
(m) "Option Price" shall mean the price per share specified in Section 3
below at which Common Shares may be purchased under the Option, as the
same may be adjusted from time to time in accordance with Section 8
hereof;
(n) "Subsidiary" shall have the meaning ascribed to such term in the
Business Corporation Act (Ontario); and
(o) "Take-Over Bid" shall mean a bona fide offer to acquire Common Shares
that is a "take-over bid" as such term is defined in the Securities
Act (Ontario), as such statute is amended, varied or re-enacted from
time to time, provided that (i) such offer is made to all or
substantially all of the holders of Common Shares, (ii) such offer is
made to acquire all or substantially all of the Common Shares
outstanding on the date of such offer and (iii) the Board issues a
recommendation that holders of Common Shares accept such offer.
2. GRANT OF OPTION
The Corporation hereby grants to the Optionee, on the terms and
subject to the conditions set forth in this agreement, an irrevocable
option (the "Option") to purchase 400,000 Common Shares (the "Optioned
Shares"), subject to any adjustment of such shares or of the number of such
shares in accordance with Section 8 below.
3. OPTION PRICE
Subject to any adjustments in accordance with Section 8 hereof,
the Option Price at which each Optioned Share may be purchased upon
exercise of the Option at any time and from time to time shall be
U.S.$8.00.
4. VESTING PERIODS
Subject to the terms and conditions set forth herein, the Optionee
shall have a vested and nonforfeitable right in the Option, and shall have
the right to take up and purchase the Optioned Shares, at any time and from
time to time, during the periods and in the amounts specified below:
(a) as to 133,334 of the Optioned Shares, on or after the first
anniversary of the Effective Time until the Expiration Time;
(b) as to 133,333 of the Optioned Shares, on or after the second
anniversary of the Effective Time until the Expiration Time;
and
(c) as to the balance of the Optioned Shares, on or after the
third anniversary of the Effective Time until the Expiration
Time.
5. TERMINATION
The Option shall expire and terminate and be of no further force
or effect whatsoever as to the Optioned Shares in respect of which the
Option has not been exercised as of the earlier to occur of (a) the
Expiration Time or (b) termination of the Investment Agreement prior to
consummation of the transactions contemplated thereby.
6. CHANGE IN CONTROL, TERMINATION OF EMPLOYMENT
(a) Subject to Section 6(b) below, in the event of a Take-Over Bid or
a Change in Control, the Optionee, at any time while the Take-Over Bid is
open for acceptance, and at any time following a Change in Control, and
notwithstanding any conditions to the contrary regarding exercise otherwise
attaching to such Option (whether pursuant to Section 4 above or
otherwise), may take up and purchase any or all of the Optioned Shares
covered by such Option.
(b) Upon the termination of the Optionee's employment due to (i)
death, (ii) Disability, (iii) termination by the Corporation without Cause
or (iv) termination by the Optionee for Good Reason, and notwithstanding
any conditions to the contrary regarding exercise otherwise attaching to
such Option (whether pursuant to Section 4 above or otherwise), the
Optionee (or the Optionee's legal representative, as the case may be) may
take up and purchase any or all of the Optioned Shares covered by such
Option for a period of one year following such termination of employment,
at the end of which period the Option shall expire. Upon the termination of
the Optionee's employment for any other reason, the Optionee may, for a
period of ninety days following such termination, take up and purchase
those Optioned Shares which, immediately prior to such termination, the
Optionee could have taken up pursuant to Section 4(b) above, at the end of
which period the Option shall expire, provided however, that the Option
shall terminate immediately upon the Optionee's termination of employment
by the Company for Cause.
(c) Options shall not be affected by any change of employment of the
Optionee or by the Optionee ceasing to be a director where the Optionee
continues to be employed by, or continues to be a director of, the
Corporation or any Subsidiary of the Corporation.
7. EXERCISE OF OPTIONS
(a) An Option may be exercised from time to time by delivery to the
Corporation at its registered office of a written notice of exercise
addressed to the Secretary of the Corporation specifying the number of
Common Shares with respect to which the Option is being exercised and
accompanied by payment in full of the Option Price of the Common Shares to
be purchased. Certificates for such Common Shares shall be issued and
delivered to the Optionee as soon as practicable following the receipt of
such notice and payment. Payment of the Option Price may be made (i) in
cash, (ii) by cheque or money order, or (iii) by a combination of the
foregoing methods.
(b) Notwithstanding any other provision hereof, the Corporation's
obligation to issue Common Shares to an Optionee pursuant to the exercise
of an Option shall be subject to:
(i) completion of such registration or other qualification of such
Common Shares or obtaining approval of such governmental
authority as the Corporation shall determine to be necessary or
advisable in connection with the authorization, issuance or
sale thereof;
(ii) the admission of such Common Shares to listing on any stock
exchange on which the Common Shares are then listed; and
(iii) the receipt from the Optionee of such representations,
agreements and undertakings, including as to future dealings
in such Common Shares, as the Corporation or its counsel
determines to be necessary or advisable in order to
safeguard against the violation of the securities laws of
any jurisdiction.
In this connection the Corporation shall, to the extent necessary, take all
reasonable steps to obtain such approvals, registrations and qualifications
as may be necessary for the issuance of such Common Shares in compliance
with applicable laws and for the listing of such Common Shares on any stock
exchange on which the Common Shares are then listed.
8. CERTAIN ADJUSTMENTS
Appropriate adjustments in the number and kind of Common Shares
or other property issuable upon exercise of the Option and in the Option
Price shall be made by the Board to give effect to changes in the Common
Shares of the Corporation resulting from subdivisions, consolidations or
reclassification of the Common Shares of the Corporation, the payment of
dividends or other distributions by the Corporation (other than dividends
or other distributions determined by the Board to be in the ordinary
course), mergers, consolidations, combinations or similar transactions or
other relevant changes in the capital of the Corporation.
9. REGISTRATION AND POSSESSION OF OPTION SHARES
Upon each exercise of the Option in accordance with Section 7
hereof, the Corporation shall cause the transfer agent of the Common Shares
forthwith to register in the name of the Optionee, or in such other name as
the Optionee may direct, the Optioned Shares paid for by the Optionee in
connection with that exercise of the Option (the "Purchased Shares") and to
prepare and deliver to the Optionee a definitive certificate in the name of
the Optionee, or in such other name as the Optionee may direct,
representing such Purchased Shares.
10. TERMINATION OF OPTION BY OPTIONEE
The Optionee may at any time terminate the Option by written
notice given to the Corporation at its registered address, and, forthwith
upon the receipt by the Corporation of any such notice in writing, the
Option shall expire and terminate as to the Optioned Shares in respect of
which the Option has not been exercised.
11. OPTIONEE NOT REQUIRED TO EXERCISE OPTION
The Optionee shall have no obligation to purchase and/or pay for,
and the Corporation shall have no obligation to issue, any Optioned Shares
except those Optioned Shares in respect of which the Optionee shall have
exercised the Option in accordance with the terms and conditions of this
agreement.
12. REPRESENTATION AND WARRANTY BY OPTIONEE
The Optionee represents and warrants to the Corporation, as a
continuing representation and warranty which shall be true and correct on
the date of this agreement and on each date that the Optionee exercises the
Option as if made and given on and as of each such date, that the Optionee
is acquiring the Option and will acquire the Purchased Shares as principal
and not as agent, nominee or trustee on behalf of any other party.
13. GENERAL
(a) Time shall be of the essence of this agreement.
(b) All dollar amounts referred to in this agreement are in U.S.
funds.
(c) The division of this agreement into articles, sections,
paragraphs, subparagraphs and other subdivisions and the
insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of this
agreement.
(d) In the event that any day on or before which any action is to be
taken under this agreement is not a business day in the place
where the action is to be taken, then such action shall be
required to be taken on or before the requisite time on the next
succeeding day that is a business day in such place.
(e) This agreement shall be construed, interpreted and enforced in
accordance with, and the respective rights and obligations of the
parties shall be governed by, the laws of the Province of Ontario
and the federal laws of Canada applicable therein, and each party
hereby irrevocably and unconditionally agrees to the non-
exclusive jurisdiction of the courts of such Province.
(f) This agreement shall enure to the benefit of and be binding upon
the parties to this agreement and the successors and assigns of
the Corporation and legal personal representatives of the
Optionee.
(g) This agreement and the Option granted to the Optionee is non-
assignable and non-transferable otherwise than, to the extent
permitted by applicable law, by will or pursuant to the laws of
succession or descent and distribution and, during the lifetime
of the Optionee, the Option shall be exercisable only by the
Optionee, provided however that the Company shall not be required
to file a prospectus or otherwise be required to take any action
or incur any expense in connection with any proposed transfer by
will or pursuant to the laws of succession or descent and
distribution.
(h) This agreement may be executed by the parties in counterparts
and, when so executed, such counterparts shall constitute a
single agreement.
(i) The provisions of this agreement may not be modified, waived or
discharged without obtaining the consent of applicable securities
regulatory authorities and unless such waiver, modification or
discharge is agreed to in writing by the parties hereto.
(j) No portion of the Option may be exercised unless and until the
granting of the Option hereunder is approved by the shareholders
of the Corporation to be given by a resolution passed at a
meeting of the shareholders of the Corporation and accepted by
The Toronto Stock Exchange.
(k) The Optionee shall not have any rights as a shareholder of the
Corporation with respect to any of the Common Shares covered by
the Option until the Optionee shall have exercised the Option in
accordance with the terms hereof (including tendering payment in
full of the Option Price of the Common Shares in respect of which
the Option is being exercised) and the Corporation shall have
issued such Common Shares to the Optionee in accordance with the
terms hereof.
(l) Nothing herein shall confer upon the Optionee any right to
continue in the employ of the Corporation or any Subsidiary of
the Corporation or affect in any way the right of the Corporation
or any such Subsidiary to terminate the Optionee's employment at
any time; nor shall the Option be deemed or construed to
constitute an agreement, or an expression of intent, on the part
of the Corporation or any such Subsidiary to extend the
employment of the Optionee beyond the time at which the Optionee
would normally be retired pursuant to the provision of any
present or future retirement plan of the Corporation or any
Subsidiary of the Corporation or any present or future retirement
policy of the Corporation or any Subsidiary of the Corporation,
or beyond the time at which the Optionee would otherwise be
retired pursuant to the provisions of any contract of employment
with the Corporation or any Subsidiary of the Corporation.
If the terms and conditions of this agreement are acceptable to
you, please indicate your acceptance by signing this letter and printing
your name and address where indicated below.
Yours truly,
LIVENT INC.
By: /s/ Garth H. Drabinsky
___________________________
Name: Garth H. Drabinsky
Title: Chairman and
Chief Executive Officer
The undersigned Optionee has reviewed, and hereby accepts and
agrees to, the provisions of this letter agreement.
/s/ David R. Maisel
________________________________
Signature of Optionee
David R. Maisel
________________________________
Name of Optionee
(please print)
c/o Lynx Ventures L.P.
________________________________
Address of Optionee
9465 Wilshire Boulevard, Suite 510
________________________________
Beverly Hills, CA 90212
________________________________
SCHEDULE A
NOTICE OF EXERCISE OF OPTION
TO: LIVENT INC.
165 Avenue Road
Suite 600
Toronto, Ontario
M5R 3S4
Attention: Secretary
Name of Optionee: ____________________
Address of Optionee: ____________________
____________________
Date of Option Agreement ____________________
Number of Optioned Shares
in respect of which Option
is being exercised: ____________________
Aggregate Option Price: $____________________
The undersigned hereby notifies Livent Inc. (the "Corporation")
of the undersigned's exercise, as detailed above, of the option granted by
the Corporation pursuant to the above-referenced Option Agreement.
___________________________________
Signature of Optionee or of Legal
Personal Representative of Optionee
EXHIBIT 18
*** Pursuant to 17 CFR 240.24b-2, confidential information has been omitted
and has been filed separately with the Securities and Exchange Commission
pursuant to a Confidential Treatment Application filed with the Commission.
==============================================================================
*** INDIVIDUAL LOAN AGREEMENT
------------------------------------------------------------------------------
This Agreement dated as of February 3, 1997, is between *** (the "Bank")
and *** (the "Borrower").
1. LINE OF CREDIT AMOUNT AND TERMS
1.1 Line of Credit Amount.
(a) During the availability period described below, the Bank will provide
a line of credit to the Borrower. The amount of the line of credit
(the "Commitment") is ***.
(b) This is a revolving line of credit. During the availability period,
the Borrower may repay principal amounts and reborrow them.
(c) The Borrower agrees not to permit the outstanding principal balance of
the line of credit to exceed the Commitment.
1.2 Availability Period. The line of credit is available between the date
of this Agreement and March 1, 1998 (the "Expiration Date") unless the
Borrower is in default.
1.3 Interest Rate.
***
1.4 Repayment Terms.
(a) The Borrower will pay interest on March 1, 1997 and then monthly
thereafter until payment in full of any principal outstanding under
this line of credit.
(b) The Borrower will repay in full all principal and any unpaid interest
or other charges outstanding under this line of credit no later than
the Expiration Date.
(c) ***
1.5 ***
1.6 ***
1.7 ***
2. DISBURSEMENTS, PAYMENTS AND COSTS
2.1 Requests for Credit. Each request for an extension of credit will be
made in writing in a manner acceptable to the Bank, or by another means
acceptable to the Bank.
2.2 Disbursements and Payments. Each disbursement by the Bank and each
payment by the Borrower will be:
0.
(a) made at the Bank's branch (or other location) selected by the Bank
from time to time;
(b) made for the account of the Bank's branch selected by the Bank from
time to time;
(c) made in immediately available funds, or such other type of funds
selected by the Bank;
(d) evidenced by records kept by the Bank. In addition, the Bank may, at
its discretion, require the Borrower to sign one or more promissory
notes.
2.3 Telephone Authorization.
(a) The Bank may honor telephone instructions for advances or repayments
or for the designation of optional interest rates given by any one of
the individual signer(s) of this Agreement or a person or persons
authorized in writing by any one of the signer(s) of this Agreement.
(b) Advances will be deposited in and repayments will be withdrawn from
the Borrower's account number ___________________________,or such
other of the Borrower's accounts with the Bank as designated in
writing by the Borrower.
(c) The Borrower indemnifies and excuses the Bank (including the officers,
employees, and agents) from all liability, loss, and costs in
connection with any act resulting from telephone instructions it
reasonably believes are made by any individual authorized by the
Borrower to give such instructions. This indemnity and excuse will
survive this Agreement's termination.
2.4 Direct Debit (Pre-Billing).
(a) The Borrower agrees that the Bank will debit the Borrower's deposit
account number ___________________________, or such other of the
Borrower's accounts with the Bank as designated in writing by the
Borrower (the "Designated Account") on the date each payment of
principal and interest and any fees from the Borrower becomes due (the
"Due Date"). If the Due Date is not a banking day, the Designated
Account will be debited on the next banking day.
(b) Approximately 10 days prior to each Due Date, the Bank will mail to
the Borrower a statement of the amounts that will be due on that Due
Date (the "Billed Amount"). The calculation will be made on the
assumption that no new extensions of credit or payments will be made
between the date of the billing statement and the Due Date, and that
there will be no changes in the applicable interest rate.
(c) The Bank will debit the Designated Account for the Billed Amount,
regardless of the actual amount due on that date (the "Accrued
Amount"). If the Billed Amount debited to the Designated Account
differs from the Accrued Amount, the discrepancy will be treated as
follows:
(i) If the Billed Amount is less than the Accrued Amount, the Billed
Amount for the following Due Date will be increased by the amount
of the discrepancy. The Borrower will not be in default by
reason of any such discrepancy.
(ii) If the Billed Amount is more than the Accrued Amount, the Billed
Amount for the following Due Date will be decreased by the amount
of the discrepancy.
Regardless of any such discrepancy, interest will continue to accrue
based on the actual amount of principal outstanding without
compounding. The Bank will not pay the Borrower interest on any
overpayment.
(d) The Borrower will maintain sufficient funds in the Designated Account
to cover each debit. If there are insufficient funds in the
Designated Account on the date the Bank enters any debt authorized by
this Agreement, the debit will be reversed.
(e) The Borrower may terminate this direct debit arrangement at any time
by sending written notice to the Bank at the address specified at the
end of this Agreement. If the Borrower terminates this arrangement,
then the principal amount outstanding under this Agreement will at the
option of the Bank bear interest at a rate per annum which is 0.50
percentage point higher than the rate of interest otherwise provided
under this Agreement.
2.5 Banking Days. Unless otherwise provided in this Agreement, a banking
day is a day other than a Saturday or a Sunday on which the Bank is open
for business in ***. For amounts bearing interest at an offshore
rate (if any), a banking day is a day other than a Saturday or a Sunday on
which the Bank is open for business in *** and dealing in offshore
dollars. All payments and disbursements which would be due on a day which
is not a banking day will be due on the next banking day. All payments
received on a day which is not a banking day will be applied to the credit
on the next banking day.
2.6 Taxes. The Borrower will not debut any taxes from any payments it
makes to the Bank. If any government authority imposes any taxes on any
payments made by the Borrower, the Borrower will pay the taxes and will
also pay to the Bank, at the time interest is paid, any additional amount
which the Bank specifies as necessary to preserve the after-tax yield the
Bank would have received if such taxes had not been imposed. Upon request
by the Bank, the Borrower will confirm that it has paid the taxes by giving
the Bank official tax receipts (or notarized copies) within 30 days after
the due date. However, the Borrower will not pay the Bank's net income
taxes.
2.7 Interest Calculation. Except as otherwise stated in this Agreement,
all interest and fees, if any, will be computed on the basis of a 360-day
year and the actual number of days elapsed. This results in more interest
or a higher fee than if a 365-day year is used.
2.8 Interest on Late Payments. At the Bank's sole option in each
instance, any amount not paid when due under this Agreement (including
interest) shall bear interest from the due date at ***.
2.9 Default Rate. Upon the occurrence and during the continuation of any
default under this Agreement, advances under this Agreement will at the
option of the Bank bear interest at a rate per annum which is ***. This
will not constitute a waiver of any event of default.
3. CONDITIONS
The Bank must receive the following items, in form and content acceptable
to the Bank, before it is required to extend any credit to the Borrower
under this Agreement:
3.1 ***
3.2 Authorizations. Evidence that the execution, delivery and performance
by the Borrower *** and of any instrument or agreement required under this
Agreement have been duly authorized.
3.3 Conditions to Each Advance. Before each extension of credit,
including the first:
(a) A statement by the Borrower describing the purpose of the extension of
credit, the projected source of repayment, and any other relevant
information or projection the Bank may request.
3.4 Other Items. Any other items that the Bank reasonably requires.
4. REPRESENTATIONS AND WARRANTIES
When the Borrower signs this Agreement, and until the Bank is repaid in
full, the Borrower makes the following representations and warranties.
Each request for an extension of credit constitutes a renewed
representation.
4.1 ***.
4.2 ***.
4.3 Enforceable Agreement. This Agreement is a legal, valid and binding
agreement of the Borrower, enforceable against the Borrower in accordance
with its terms, and any instrument or agreement required hereunder, when
executed and delivered, will be similarly legal, valid, binding and
enforceable.
4.4 No Conflicts. This Agreement does not conflict with any law,
agreement, or obligation by which the Borrower is bound.
4.5 Financial Information. All financial and other information that has
been or will be supplied to the Bank, including the Borrower's financial
statement dated as of October 31, 1996, is:
(a) sufficiently complete to give the Bank accurate knowledge of the
Borrower's *** financial condition.
(b) in form and content required by the Bank.
(c) in compliance with all government regulations that apply.
Since the date of the financial statement specified above, there has been
no material adverse change in the assets or the financial condition of the
Borrower ***.
4.6 Lawsuits. There is no lawsuit, tax claim or other dispute pending or
threatened against the Borrower, its property or any of its business,
which, if lost, would impair the Borrower's financial condition or that of
the Borrower's business or would impair the Borrower's ability to repay the
loan, except as have been disclosed in writing to the Bank.
4.7 Other Obligations. The Borrower is not in default on any obligation
for borrowed money, any purchase money obligation or any other material
lease, commitment, contract, instrument or obligation.
4.8 Income Tax Returns. The Borrower has no knowledge of any pending
assessments or adjustments of its income tax for any year.
4.9 No Event of Default. There is no event which is, or with notice or
lapse of time or both would be, a default under this Agreement.
5. COVENANTS
The Borrower agrees, so long as credit is available under this Agreement
and until the Bank is repaid in full:
5.1 Use of Proceeds - Ineligible Securities. Not to use, directly or
indirectly, any portion of the proceeds of the credit (including any
letters of credit) for any of the following purposes:
(a) knowingly to purchase Ineligible Securities from *** (the "Arranger")
during any period in which the Arranger makes a market in such
Ineligible Securities; or
(b) knowingly to purchase during the underwriting or placement period
Ineligible Securities being underwritten or privately placed by the
Arranger.
"Ineligible Securities" means securities which may be underwritten or dealt
in by member banks of the Federal Reserve System under Section 16 of the
Banking Act of 1933 (12 U.S.C. section 24, Seventh), as amended. The
Arranger is ***, and is a registered broker-dealer which is permitted to
underwrite and deal in certain Ineligible Securities.
5.2 Financial Information. To provide the following financial information
and statements and such additional information as requested by the Bank
from time to time:
(a) Within 90 days of each calendar year end, the Borrower's annual
financial statements ***.
(b) Copies of the Borrower's federal income tax return ***, within 15 days
of filing, together with a statement of any contributions made by the
Borrower to any subchapter S corporation or trust, and, if requested
by the Bank, copies of any extensions of the filing date.
(c) ***.
5.3 Net Worth. To maintain net worth equal to at least ***.
"Net worth" means the gross fair market value of the Borrower's assets
(excluding all intangibles, goodwill, patents, trademarks, copyrights,
trade names, start-up costs, non-compete covenants, and other like
intangibles) less total liabilities, excluding estimated taxes on asset
appreciation and any reserves or offsets against assets.
5.4 Liquidity. With respect to the Borrower *** on an aggregate basis, to
maintain unencumbered liquid assets equal to at least ***.
"Liquid assets" means the following assets of the Borrower ***:
(a) cash and certificates of deposit;
(b) U.S. treasury bills and other obligations of the federal government;
(c) readily marketable securities (including commercial paper, but
excluding restricted stock and stock subject to the provisions of Rule
144 of the Securities and Exchange Commission);
(d) bankers' acceptances issued by financial institutions;
(e) repurchase agreements covering U.S. government securities.
Within 30 days of each calendar quarter end, the Borrower *** shall
provide to the Bank copies of statements from depository institutions or
brokerage firms, or other evidence acceptable to the Bank of the
Borrower's *** liquid assets.
If more than ***% of the value of the Borrower's liquid assets is
represented by margin stock, the Borrower will provide the Bank a Form U-1
Purpose Statement, and the Bank and the Borrower will comply with the
restrictions imposed by Regulation U of the Federal Reserve, which may
require a reduction in the amount of credit provided to the Borrower.
5.5 Trusts. Not to transfer any of the Borrower's assets to a trust
unless the trust is acceptable to the Bank in form and content, and the
trustee guaranties payment of the Borrower's obligations under this
Agreement prior to any such transfer.
5.6 Other Debts. Not to have outstanding or incur any direct or
contingent debts (other than those to the Bank), or become liable for the
debts of others, without the Bank's written consent. This does not
prohibit:
(a) Endorsing negotiable instruments received in the usual course of
business.
5.7 Other Liens. Not to create, assume, or allow any security interest or
lien (including judicial liens) on property the Borrower now or later owns,
except:
(a) Deeds of trust and security agreements in favor of the Bank.
(b) Liens for taxes not yet due.
5.8 Notices to Bank. To promptly notify the Bank in writing of:
(a) any lawsuit over *** against the Borrower *** or any of the Borrower's
property or business.
(b) any substantial dispute between the Borrower *** and any government
authority, or which may affect the Borrower's property or business.
(c) any failure to comply with this Agreement.
(d) any material adverse change in the Borrower's *** financial condition
or operations.
(e) any change in the Borrower's name or address.
5.9 Compliance with Laws. To comply with the laws, regulations, and
orders of any government body with authority over the Borrower's business.
5.10 Cooperation. To take any action requested by the Bank to carry out
the intent of this Agreement.
5.11 Additional Negative Covenants. Not to, without the Bank's written
consent:
(a) sell or otherwise dispose of any assets for less than fair market
value or enter into any sale and leaseback agreement covering any of
the fixed or capital assets.
6. DEFAULT
If any of the following events occur, the Bank may do one or more of the
following: declare the Borrower in default, stop making any additional
credit available to the Borrower, and require the Borrower to repay its
entire debt immediately and without prior notice. If an event of default
occurs under the paragraph entitled "Bankruptcy," below, with respect to
the Borrower, then the entire debt outstanding under this Agreement will
automatically become due immediately.
6.1 Failure to Pay. The Borrower falls to make a payment under this
Agreement when due.
6.2 False Information. The Borrower has given the Bank false or
misleading information or representations.
6.3 ***
6.4 Bankruptcy. The Borrower *** files a bankruptcy petition, a bankruptcy
petition is filed against the Borrower ***, or the Borrower *** makes a
general assignment for the benefit of creditors.
6.5 Receivers; Termination. A receiver or similar official is appointed or
the Borrower's *** business, or the business is terminated ***.
6.6 Judgments. Any judgments or arbitration awards are entered against the
Borrower ***; or the Borrower *** enters into any settlement agreements
with respect to any litigation or arbitration, in an aggregate amount of
*** or more in excess of any insurance coverage.
6.7 Government Action. Any government authority takes action that the Bank
believes materially adversely affects the Borrower's *** financial
condition or ability to repay.
6.8 Material Adverse Change. A material adverse change occurs in the
Borrower's *** financial condition, properties or prospects, or ability to
repay the loan.
6.9 Cross-default. Any default occurs under any agreement in connection
with any credit the Borrower *** has obtained from anyone else or which
the Borrower *** has guaranteed.
6.10 Default under Related Documents. Any *** document required by this
Agreement is violated or no longer in effect.
6.11 Other Bank Agreements. The Borrower *** fails to meet the conditions
of, or fails to perform any obligation under any other agreement the
Borrower *** has with the Bank or any affiliate of the Bank.
6.12 Use of Proceeds. The Borrower does not utilize or invest the proceeds
of any extension of credit made under this Agreement for the purposes
described by the Borrower to the Bank.
6.13 Other Breach under Agreement. The Borrower fails to meet the
conditions of, or fails to perform any obligation under, any term of this
Agreement not specifically referred to in this Article.
6.14 Revocation or Termination. The Borrower is revoked or otherwise
terminated or all or a substantial part of the Borrower's assets are
distributed or otherwise disposed of.
7. ENFORCING THIS AGREEMENT; MISCELLANEOUS
7.1 Financial Computations. Except as otherwise stated in this Agreement,
all financial information provided to the Bank and all financial covenants
will be made in accordance with accounting principles applied consistently
with those applied in the preparation of the Borrower's financial
statements dated October 31, 1996, and shall specifically exclude any
upward revaluation of assets (other than marketable securities) after that
date, provided, however, that assets may be listed at market value on the
condition that deferred income taxes on any unrealized gain are shown as a
liability. The calculation of the Borrower's assets shall exclude goodwill
and other intangibles.
7.2 California Law. This Agreement is governed by California law.
7.3 Successors and Assigns. This Agreement is binding on the Borrower's
and the Bank's successors and assignees. The Borrower agrees that it may
not assign this Agreement without the Bank's prior consent. The Bank may
sell participations in or assign this loan, and may exchange financial
information about the Borrower with actual or potential participants or
assignees; provided that such actual or potential participants or assignees
shall agree to treat all financial information exchanged as confidential.
If a participation is sold or the loan is assigned, the purchaser will have
the right of set-off against the Borrower.
7.4 Arbitration.
(a) This paragraph concerns the resolution of any controversies or claims
between the Borrower and the Bank, including but not limited to those
that arise from:
(i) This Agreement (including any renewals, extensions or
modifications of this Agreement);
(ii) Any document, Agreement or procedure related to or delivered in
connection with this Agreement;
(iii) Any violation of this Agreement; or
(iv) Any claims for damages resulting from any business conducted
between the Borrower and the Bank, including claims for injury to
persons, property or business interests (torts).
(b) At the request of the Borrower or the Bank, any such controversies or
claims will be settled by arbitration in accordance with the United
States Arbitration Act. The United States Arbitration Act will apply
even though this Agreement provides that it is governed by California
law.
(c) Arbitration proceedings will be administered by the American
Arbitration Association and will be subject to its commercial rules of
arbitration.
(d) For purposes of the application of the statute of limitations, the
filing of an arbitration pursuant to this paragraph is the equivalent
of the filing of a lawsuit, and any claim or controversy which may be
arbitrated under this paragraph is subject to any applicable statute
of limitations. The arbitrators will have the authority to decide
whether any such claim or controversy is barred by the statute of
limitations and, if so, to dismiss the arbitration on that basis.
(e) If there is a dispute as to whether an issue is arbitrable, the
arbitrators will have the authority to resolve any such dispute.
(f) The decision that results from an arbitration proceeding may be
submitted to any authorized court of law to be confirmed and enforced.
(g) The procedure described above will not apply if the controversy or
claim, at the time of the proposed submission to arbitration, arises
from or relates to an obligation to the Bank secured by real property
located in California. In this case, both the Borrower and the Bank
must consent to submission of the claim or controversy to arbitration.
If both parties do not consent to arbitration, the controversy or
claim will be settled as follows:
(i) The Borrower and the Bank will designate a referee (or a panel of
referees) selected under the auspices of the American Arbitration
Association in the same manner as arbitrators are selected in
Association-sponsored proceedings;
(ii) The designated referee (or the panel of referees) will be
appointed by a court as provided in California Code of Civil
Procedure Section 638 and the following related sections;
(iii) The referee (or the presiding referee of the panel) will be
an active attorney or a retired judge; and
(iv) The award that results from the decision of the referee (or the
panel) will be entered as a judgment in the court that appointed
the referee, in accordance with the provisions of California Code
of Civil Procedure Sections 644 and 645.
(h) This provision does not limit the right of the Borrower or the Bank
to:
(i) exercise self-help remedies such as setoff;
(ii) foreclose against or sell any real or personal property
collateral; or
(iii) act in a court of law, before, during or after the
arbitration proceeding to obtain;
(A) an interim remedy; and/or
(B) additional or supplementary remedies.
(i) the pursuit of or a successful action for interim, additional or
supplementary remedies, or the filing of a court action, does not
constitute a waiver of the right of the Borrower or the Bank,
including the suing party, to submit the controversy or claim to
arbitration if the other party contests the lawsuit. However, if the
controversy or claim arises from or relates to an obligation to the
Bank which is secured by real property located in California at the
time of the proposed submission to arbitration, this right is limited
according to the provision above requiring the consent of both the
Borrower and the Bank to seek resolution through arbitration.
(j) If the Bank forecloses against any real property securing this
Agreement, the Bank has the option to exercise the power of sale under
the deed of trust or mortgage, or to proceed by judicial foreclosure.
7.5 Severability; Waivers. If any part of this Agreement is not
enforceable, the rest of the Agreement may be enforced. The Bank retains
all rights, even if it makes a loan after default. If the Bank waives a
default, it may enforce a later default. Any consent or waiver under this
Agreement must be in writing.
7.6 Attorneys' Fees. The Borrower shall reimburse the Bank for any
reasonable costs and attorneys' fees incurred by the Bank in connection
with the enforcement or preservation of any rights or remedies under this
Agreement and any other documents executed in connection with this
Agreement, and including any amendment, waiver, "workout" or restructuring
under this Agreement. In the event of a lawsuit or arbitration proceeding,
the prevailing party is entitled to recover costs and reasonable attorneys'
fees incurred in connection with the lawsuit or arbitration proceeding, as
determined by the court or arbitrator. As used in this paragraph,
"attorneys' fees" includes the allocated costs of the Bank's in-house
counsel.
7.7 One Agreement. This Agreement and any related security or other
agreements required by this Agreement, collectively:
(a) represent the sum of the understandings and agreements between the
Bank and the Borrower concerning this credit;
(b) replace any prior oral or written agreements between the Bank and the
Borrower concerning this credit; and
(c) are intended by the Bank and the Borrower as the final, complete and
exclusive statement of the terms agreed to by them.
In the event of any conflict between this Agreement and any other
agreements required by this Agreement, this Agreement will prevail.
7.8 Notices. All notices required under this Agreement shall be
personally delivered or sent by first class mail, postage prepaid, to the
addresses on the signature page of this Agreement, or to such other
addresses as the Bank and the Borrower may specify from time to time in
writing.
7.9 Headings. Article and paragraph headings are for reference only and
shall not affect the interpretation or meaning of any provisions of this
Agreement.
7.10 Counterparts. This Agreement may be executed in as many counterparts
as necessary or convenient, and by the different parties on separate
counterparts each of which, when so executed, shall be deemed an original
but all such counterparts shall constitute but one and the same Agreement.
This Agreement is executed as of the date stated at the top of the first
page.
[logo]
***
X *** X /s/ Michael Steven Ovitz
__________________________ _________________________________
By: *** By: Michael Steven Ovitz ***
Title: Vice President
***
Address where notices to the Bank Address where notices to the Borrower
are to be sent: are to be sent:
*** ***
===============================================================================
*** AMENDMENT TO DOCUMENTS
AMENDMENT NO. 1 TO INDIVIDUAL LOAN AGREEMENT
This Amendment No. 1 (the "Amendment") dated as of May 30, 1997, is
between *** (the "Bank") and Michael Steven Ovitz *** (the "Borrower").
RECITALS
A. The Bank and the Borrower entered into a certain Individual Loan
Agreement dated as of February 3, 1997 (the "Agreement").
B. The Bank and the Borrower desire to amend the Agreement.
AGREEMENT
1. Amendments. Capitalized terms used but not defined in this
Amendment shall have the meaning given to them in the Agreement.
2. Amendments. The Agreement is hereby amended as follows:
2.1 In Paragraph 1.1(a) of the Agreement, the amount "***"
is substituted for the amount "***."
2.2 Paragraph 5.4 of the Agreement is amended to read in its
entirety as follows:
"5.4 Liquidity. With respect to the Borrower ***
on an aggregate basis, to maintain unencumbered liquid
assets *** equal to at least *** or *** % of the principal
amount outstanding under this Agreement, whichever is
greater; ***.
"Liquid assets" means the following assets:
(a) cash and certificates of deposit;
(b) U.S. treasury bills and other obligations of the
federal government;
(c) readily marketable securities (including commercial
paper, but excluding restricted stock and stock subject
to the provisions of Rule 144 of the Securities and
Exchange Commission);
(d) bankers' acceptance issued by financial institutions;
(e) repurchase agreements covering U.S. government
securities.
Within 30 days of each quarter end, the Borrower shall
provide to the Bank copies of statements from the depository
institutions or brokerage firms, or other evidence
acceptable to the Bank of the liquid assets required by this
paragraph.
If more than ***% of the value of the liquid assets covered
by this paragraph are represented by margin stock, the
Borrower will provide the Bank a Form U-1 Purpose Statement,
and the Bank and the Borrower will comply with the
restrictions imposed by Regulation U of the Federal Reserve,
which may require a reduction in the amount of credit
provided to the Borrower."
3. Conditions. This Amendment will be effective when the Bank
receives the following items, in form and content acceptable to the Bank:
3.1 Regulation U Statement of purpose, executed by the Borrower
and the Bank.
3.2 Trust Authority Letter, executed by the Borrower.
3.3 ***.
3.4 ***.
4. Effect of Amendment. Except as provided in this Amendment, all
of the terms and conditions of the Agreement shall remain in full force and
effect.
This Amendment is executed as of the date stated at the beginning
of this Amendment.
***
X *** /s/ Michael Steven Ovitz
_______________________________ X___________________________________
By:*** By:Michael Steven Ovitz, ***
***
===============================================================================
*** AMENDMENT TO DOCUMENTS
- -------------------------------------------------------------------------------
AMENDMENT NO. 2 TO INDIVIDUAL LOAN AGREEMENT
This Amendment No. 2 (the "Amendment") dated as of March 24, 1998, is
between *** (the "Bank") and Michael Steven Ovitz ***.
RECITALS
A. The Bank and the Borrower entered into a certain Individual Loan
Agreement dated as of February 3, 1997, as previously amended (the
"Agreement").
B. The Bank and the Borrower desire to further amend the Agreement.
AGREEMENT
1. Definitions. Capitalized terms used but not defined in this
Amendment shall have the meaning given to them in the Agreement.
2. Amendments. The Agreement is hereby amended as follows:
2.1 In Paragraph 1.2 of the Agreement, the date "May 1, 2000" is
substituted for the date "March 1, 1995."
2.2 Subparagraph 2.3(b) of the Agreement is amended to read in
its entirety as follows:
(b) Advances will be deposited in and repayments will be
withdrawn from *** account number ***, or such other
of the Borrower's accounts with the Bank as designated
in writing by the Borrower.
2.3 Subparagraph 2.4(a) of the Agreement is amended to read in
its entirety as follows:
(a) The Borrower agrees that the Bank will debit ***, or such
other of the Borrower's accounts with the Bank as
designated in writing by the Borrower (the "Designated
Account") on the date each payment of principal and
interest and any fees from the Borrower becomes due
(the "Due Date"). If the Due Date is not a banking
day, the Designated Account will be debited on the next
banking day."
2.4 Paragraph 7.5 of the Agreement is amended to read in its
entirety as follows:
"7.6 Attorneys' Fees. The Borrower shall reimburse the
Bank for any reasonable costs and attorneys' fees incurred
by the Bank in connection with the enforcement or
preservation of any rights or remedies under this Agreement
and any other documents executed in connection with this
Agreement, and in connection with any amendment, waiver,
"workout" or restructuring under this Agreement. In the
event of a lawsuit or arbitration proceeding, the prevailing
party is entitled to recover costs and reasonable attorneys'
fees incurred in connection with the lawsuit or arbitration
proceeding, as determined by the court or arbitrator. In
the event that any case is commenced by or against the
Borrower under the Bankruptcy Code (Title 11, United States
Code) or any similar or successor statute, the Bank is
entitled to recover costs and reasonable attorneys' fees
incurred by the Bank related to the preservation,
protection, or enforcement of any rights of the Bank in such
a case. As used in this paragraph, "attorneys' fees"
includes the allocated costs of the Bank's in-house
counsel."
3. Conditions. This Amendment will be effective when the Bank
receives the following items, in form and content acceptable to
the Bank:
3.1 Authorizations. Evidence that the execution, delivery and
performance by the Borrower *** and any instrument or
agreement required under the Agreement have been duly
authorized.
4. Effect of Amendment. Except as provided in this Amendment, all
of the terms and conditions of the Agreement shall remain in full force and
effect.
This Amendment is executed as of the date stated at the beginning
of this Amendment.
***
*** /s/ Michael Steven Ovitz
X________________________________ X_________________________________
By: *** By:Michael Steven Ovitz,
***
***
=============================================================================
*** AMENDMENT TO DOCUMENTS
-----------------------------------------------------------------------------
AMENDMENT NO. 3 TO INDIVIDUAL LOAN AGREEMENT
This Amendment No. 3 (the "Amendment") dated as of April 27, 1998, is
between *** (the "Bank") and Michael Steven Ovitz *** (the "Borrower").
RECITALS
A. The Bank and the Borrower entered into a certain Individual Loan
Agreement dated as of February 3, 1997, as previously amended (the
"Agreement").
B. The Bank and the Borrower desire to further amend the Agreement.
AGREEMENT
1. Definitions. Capitalized terms used but not defined in this
Amendment shall have the meaning given to them in the Agreement.
2. Amendments. The Agreement is hereby amended as follows:
2.1 In Paragraph 1.1(a) of the Agreement, the amount "***"
is substituted for the amount "***."
3. Conditions. This Amendment will be effective when the Bank
receives the following items, in form and content acceptable to the Bank:
3.1 This Amendment, duly executed by the Borrower and the Bank.
3.2 ***
3.3 A Form U-1 Purpose Statement executed by the Borrower and
the Bank.
3.4 ***
3.5 ***
4. Effect of Amendment. Except as provided in this Amendment, all
of the terms and conditions of the Agreement shall remain in full force and
effect.
This Amendment is executed as of the date stated at the beginning
of this Amendment.
***
*** /s/ Michael Steven Ovitz
X___________________________________ X____________________________________
By: *** By:Michael Steven Ovitz,
***
***
EXHIBIT 19
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below hereby makes, constitutes and appoints David R.
Maisel, acting individually, as such person's true and lawful attorney-in-
fact and agent with full power of substitution and revocation for such
person and in such person's name, place and stead, in any and all
capacities, to execute, acknowledge, deliver and file any and all filings
required by the Securities Exchange Act of 1934, as amended, including
Section 13 of such Act, and the rules and regulations thereunder, and
requisite documents in connection with such filings, including joint filing
agreements, respecting securities of Livent Inc., an Ontario corporation,
that the undersigned beneficially owns, including but not limited to
Schedule 13D and any amendments thereto.
This power of attorney shall be valid with respect to any of the
undersigned from the date hereof until revoked by such person.
IN WITNESS WHEREOF, each of the undersigned has executed this
instrument as of the 30th day of June, 1998.
LYNX VENTURES L.P.
By: Lynx Ventures L.L.C.,
its General Partner
By: /s/ David R. Maisel
Name: David R. Maisel
Title: Manager
LYNX VENTURES L.L.C.
By: /s/ David R. Maisel
Name: David R. Maisel
Title: Manager
THE OVITZ FAMILY LIMITED PARTNERSHIP
By: The Michael and Judy Ovitz Revocable
Trust
By: /s/ Michael S. Ovitz
Name: Michael S. Ovitz
Title: Trustee
THE MICHAEL AND JUDY OVITZ REVOCABLE TRUST
By: /s/ Michael S. Ovitz
Name: Michael S. Ovitz
Title: Trustee
/s/ Michael S. Ovitz
Michael S. Ovitz
/s/ Roy L. Furman
Roy L. Furman
