DEBENTURE PURCHASE AGREEMENT
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DEBENTURE PURCHASE AGREEMENT dated as of the 12th day of December,
2000.
B E T W E E N:
MOORE CORPORATION LIMITED,
a corporation incorporated under the
laws of the Province of Ontario,
(hereinafter referred to as the "Corporation"),
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CHANCERY LANE/GSC INVESTORS L.P.,
a limited partnership formed under the
laws of the State of Delaware,
(hereinafter referred to as the "Purchaser").
THIS AGREEMENT WITNESSETH THAT in consideration of the mutual covenants
and agreements herein contained and for other good and valuable consideration
(the receipt and sufficiency of which are hereby acknowledged by each party),
the parties agree as follows:
1. INTERPRETATION.
1.1 DEFINITIONS. Where used in this Agreement and any Schedule annexed
hereto or in any amendments hereto, the following terms shall have the following
meanings, respectively:
"AFFILIATE" means, at any time, and with respect to any Person, any other Person
that at such time directly or indirectly through one or more intermediaries
Controls, or is Controlled by, or is under common Control with, such first
Person. As used in this definition, "CONTROL" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. Unless the context otherwise clearly requires, any
reference to an "Affiliate" is a reference to an Affiliate of the Corporation;
"ANCILLARY AGREEMENTS" means the Standstill Agreement and the Registration
Rights Agreement;
"BOARD" means the Board of Directors of the Corporation;
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"BUSINESS DAY" means a day which is not a Saturday, a Sunday or a day observed
as a holiday in Toronto, Ontario or New York, New York;
"CAPITAL LEASE" means, at any time, a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP;
"CEO" has the meaning set out in section 6.1(c);
"CLAIM" has the meaning set out in section 9.2;
"CLOSING" has the meaning set out in section 3.2;
"CLOSING DATE" has the meaning set out in section 3.2;
"CODE" means the United States Internal Revenue Code of 1986, as amended;
"COMMON SHARES" means the common shares in the capital of the Corporation as
currently constituted, any shares resulting from the change of the designation
of such common shares, and any shares into which such common shares may be
changed, converted, exchanged or reclassified;
"CONFIDENTIAL INFORMATION" has the meaning set out in Section 13.2(a);
"CONVERSION SHARES" means the Common Shares issuable upon the exercise of the
rights of conversion contained in the Debentures in accordance with their terms;
"CORPORATION" means Moore Corporation Limited;
"DEBENTURE CERTIFICATE" means the certificate representing a Debenture and
containing the terms and conditions thereof, substantially in the form annexed
hereto as Exhibit 1;
"DEBENTURES" means the 8.70% Subordinated Convertible Debentures in the
principal amount of $70,500,000 to be issued by the Corporation and to be
purchased by the Purchaser pursuant to Article 3 hereof, including any such
Debentures issued in substitution therefor pursuant to this Agreement or the
Debenture Certificate;
"DEFAULT" means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default;
"ENVIRONMENTAL LAWS" means any and all applicable national, federal, state,
provincial, local and foreign statutes, laws, regulations, ordinances, binding
agreements with Governmental Authorities, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or
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governmental restrictions or Environmental Permits relating to pollution and the
protection of the environment, natural resources or human health or the release
of any materials into the environment, including but not limited to those
related to the Release of Hazardous Substances and to worker health and safety,
in effect from time to time;
"ENVIRONMENTAL PERMITS" means all licenses, permits, approvals, consents,
certificates, registrations or other similar authorizations required under
Environmental Laws;
"EVENT OF DEFAULT" has the meaning given to that term in subsection 8.1 of the
Debenture Certificate;
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended;
"EXCHANGES" means The Toronto Stock Exchange and the New York Stock Exchange;
"GAAP", in respect of any Person, means generally accepted accounting principles
as in effect from time to time in the country of organization of such Person (it
being understood that for the Corporation, GAAP means Canadian GAAP);
"GENERAL PARTNER" means CLGI, Inc., a Delaware corporation and the general
partner of the Purchaser;
"GOVERNMENTAL AUTHORITY" means any national, federal, state, provincial, county,
municipal, district or local government or government body, or any public
administrative or regulatory agency, political subdivision, commission, court,
arbitral body, board or body, or representative of any of the foregoing, foreign
or domestic, of, or established by any such government or government body which
has authority in respect of a particular matter or any quasi-governmental body
having the right to exercise any regulatory authority thereunder;
"GUARANTEE" means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person (other than
Guarantees between members of such Person's consolidated financial reporting
group) in any manner, whether directly or indirectly, including (without
limitation) obligations incurred through an agreement, contingent or otherwise,
by such Person:
(a) to purchase such Indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of
such Indebtedness or obligation, or (ii) to maintain any
working capital or other balance sheet condition
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or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase
or payment of such Indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of any other Person
to make payment of the Indebtedness or obligation; or
(d) otherwise to assure the owner of such Indebtedness or
obligation against loss in respect thereof;
"HAZARDOUS SUBSTANCES" means any pollutants, contaminants, hazardous or toxic
substances or wastes, materials containing asbestos, petroleum or any fraction
or derivative thereof, radioactive materials or any other element, compound,
mixture, solution or substances that is classified or regulated from time to
time under any Environmental Law;
"HOLDER" or "HOLDER" means the Purchaser or such other Person or Persons to whom
the Purchaser has transferred Debentures in whole or in part in accordance with
the provisions of this Agreement;
"INTEREST PAYMENT DATE" means each March 31, June 30, September 30 and December
31 in each year, commencing March 31, 2001;
"INDEBTEDNESS" means, in respect of any Person at any date, without duplication,
(a) all indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of property or services (other than
trade payables incurred in the ordinary course of such Person's business), (c)
all obligations of such Person evidenced by notes, bonds, debentures (including
the Debentures) or other similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property), (e) all Capital Leases of such
Person, (f) all obligations of such Person, contingent or otherwise, as an
account party under acceptance, letter of credit or similar facilities, (g) all
obligations of such Person, contingent or otherwise, to purchase, redeem, retire
or otherwise acquire for value any capital stock (other than common shares) of
such Person, (h) all Guarantees of such Person in respect of obligations of the
kind referred to in clauses (a) through (g) above to the extent quantified as
liabilities, contingent obligations or like term in accordance with GAAP on the
balance sheet (including notes thereto) of such Person, (i) all obligations of
the kind referred to in clauses (a) through (h) above secured by (or for which
the holder of such obligation has an existing right, contingent or otherwise, to
be secured by) any Lien on property (including, without limitation, accounts and
contract rights) owned by such Person, whether or not such Person has assumed or
become liable for the payment of such obligation, (but only to the extent of the
fair market value of such Property), (j) all Swaps of such Person and (k) the
liquidation value of any preferred capital stock of such Person or its
Subsidiaries held by any Person other than such Person and its Wholly-Owned
Subsidiaries;
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"INDEMNIFIED PARTY" has the meaning set out in section 9.2;
"INDEMNIFYING PARTY" has the meaning set out in section 9.2;
"LIEN" means, with respect to any Person, any voluntary or involuntary,
mortgage, lien, pledge, charge, security interest, right of first offer, right
of first refusal or other similar right or obligation under a shareholders or
similar agreement, or other encumbrance, or any interest or title of any vendor,
lessor, lender or other secured party to or of such Person under any conditional
sale or other title retention agreement or Capital Lease, upon or with respect
to any property or asset of such Person (including in the case of shares,
shareholder agreements, voting trust agreements and all similar arrangements);
"LOSSES", in respect of any matter, means all claims, demands, proceedings,
losses, damages (other than punitive or consequential damages and including
incidental damages), liabilities, diminution in value, deficiencies, costs and
expenses (including, without limitation, all reasonable legal and other
professional fees and disbursements and all interest, penalties and amounts paid
in settlement) arising directly or indirectly as a consequence of such matter;
"MATERIAL" means material in relation to the business, operations, results of
operations, financial or other condition, assets, properties or liabilities of
the Corporation and its Subsidiaries taken as a whole;
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the business,
operations, results of operations, financial or other condition, assets,
properties or liabilities of the Corporation and its Subsidiaries taken as a
whole, or (b) the ability of the Corporation to perform its obligations under
this Agreement, the Ancillary Agreements and the Debentures, or (c) the validity
or enforceability of this Agreement, the Ancillary Agreements or the Debentures;
"MATERIAL CONTRACT" has the meaning set out in section 4.1(r);
"ONTARIO SECURITIES ACT" means the Securities Act (Ontario), as the same may be
amended, re-enacted or replaced from time to time;
"OSC" means the Ontario Securities Commission;
"PASSIVE INVESTORS" shall mean any limited partners or other similar equity
holders in the Purchaser or any other collective investment vehicle that is an
Affiliate of the Purchaser or the General Partner;
"PERSON" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization or Governmental
Authority;
"PREFERENCE SHARES" means the preference shares in the capital of the
Corporation;
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"PROPERTY" or "PROPERTIES" means, unless otherwise specifically limited, real or
personal property of any kind, tangible or intangible, choate or inchoate;
"PUBLIC FILINGS" has the meaning set out in section 4.1(n)(i);
"PURCHASE PRICE" has the meaning set out in section 3.1;
"PURCHASER GROUP" shall mean, collectively, each member of the Restricted Group
and each Passive Investor;
"REGISTRATION RIGHTS AGREEMENT" means the registration rights agreement to be
entered into by the Corporation and the Purchaser on the Closing Date,
substantially in the form annexed hereto as Exhibit 2, as amended, supplemented,
changed or modified from time to time;
"RELEASE" means any release, spill, emission, discharge, leak, disposal,
dispersal, leaching or migration into the indoor or outdoor environment;
"RELEASE DATE" means the date which is six months after the earliest to occur of
the date on which (i) the Purchaser does not designate persons for nomination as
directors pursuant to section 6.1(b) or exercise its contractual right pursuant
to this Agreement to approve nominees pursuant to section 6.1(d)(i), having
irrevocably waived its contractual rights pursuant to this Agreement to do so
and having caused the persons designated for nomination as directors pursuant to
section 6.1(b) to resign from the Board if requested to do so by a majority of
the members of the Board other than those designated for nomination pursuant to
section 6.1(b) and 6(d)(i) (even if such persons thereafter remain on the Board
if not requested to resign by the Board), or (ii) the Purchaser no longer has
any contractual rights pursuant to this Agreement relating to Board
representation as a result of the operation of section 6.3 and has caused the
persons designated for nomination as directors pursuant to section 6.1(b) to
resign from the Board if requested to do so by a majority of the members of the
Board other than those designated for nomination pursuant to section 6.1(b) and
6(d)(i) (even if the Purchaser's designees thereafter remain on the Board if not
requested to resign by the Board);
"REPRESENTATIVES" has the meaning set out in section 13.2(b);
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any other officer
of the Corporation reasonably expected to have knowledge of the matter as to
which such officer's knowledge is required;
"RESTRICTED GROUP" shall mean:
(a) the Purchaser;
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(b) the General Partner;
(c) Chancery Lane Capital, LLC;
(d) Greenwich Street Capital Partners II, L.P.; and
(e) the respective Affiliates of the Persons named in clauses (a)
through (d);
provided, that, for the avoidance of doubt, DB Capital Partners and its
Affiliates shall not be members of the Restricted Group.
"SEC" means the Securities and Exchange Commission;
"SENIOR FINANCIAL OFFICER" means the chief financial officer, treasurer or
controller of the Corporation;
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that, as of the relevant date of
determination, had assets that had a fair market value representing 10% or more
of the total consolidated assets of the Corporation and its Subsidiaries or
revenues representing 10% or more of the total consolidated revenues of the
Corporation and its Subsidiaries;
"STANDSTILL AGREEMENT" means the standstill agreement to be entered into and
dated as of the Closing Date among the Corporation, the Purchaser and the
General Partner, substantially in the form annexed hereto as Exhibit 3, as
amended, supplemented, changed or modified from time to time;
"SUBSIDIARY" means, as to any Person, any corporation, association or other
business entity in which such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership, limited liability
company or joint venture if more than a 50% interest in the profits or capital
thereof is owned by such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries (unless such partnership, limited
liability company or joint venture can and does ordinarily take major business
actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Corporation;
"SWAPS" means, with respect to any Person, payment obligations with respect to
interest rate swaps, currency swaps and similar obligations obligating such
Person to make payments, whether periodically or upon the happening of a
contingency. For the purposes of this Agreement, the amount of the obligation
under any Swap shall be the amount determined in respect thereof as of the end
of the then most recently ended fiscal quarter of such Person, based on the
assumption that such
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Swap had terminated at the end of such fiscal quarter, and in making such
determination, if any agreement relating to such Swap provides for the netting
of amounts payable by and to such Person thereunder or if any such agreement
provides for the simultaneous payment of amounts by and to such Person, then in
each such case, the amount of such obligation shall be the net amount so
determined;
"TIME OF CLOSING" has the meaning set out in section 3.2;
"TSE NOTICE" means the notice required to be filed by the Corporation with, and
accepted by, The Toronto Stock Exchange pursuant to section 619 of the Company
Manual of The Toronto Stock Exchange;
"U.S. SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time; and
"WHOLLY-OWNED SUBSIDIARY" means, at any time, any Subsidiary one hundred percent
(100%) of all of the equity interests (except directors' qualifying shares) and
voting interests of which are owned by any one or more of the Corporation and
the Corporation's other Wholly-Owned Subsidiaries at such time.
1.2 RULES OF CONSTRUCTION. Unless the context otherwise requires, in this
Agreement:
(a) "Agreement", "this Agreement", "the Agreement", "hereto", "hereof",
"herein", "hereby", "hereunder" and similar expressions mean or refer
to this Agreement as amended from time to time, including the Schedules
and Exhibits annexed hereto or to any amendment to this Agreement, and
any agreement or instrument supplemental hereto and the expressions
"Article", "section", "Schedule" and "Exhibit" followed by a number or
letter mean and refer to the specified Article, section, Schedule or
Exhibit of this Agreement;
(b) the division of this Agreement into Articles and sections and the
insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation thereof;
(c) words importing the singular number only shall include the plural and
vice versa and words importing the use of any gender shall include all
genders;
(d) reference to any agreement, indenture or other instrument in writing
means such agreement, indenture or other instrument in writing as
amended, modified, replaced or supplemented from time to time;
(e) reference to any statute shall be deemed to be a reference to such
statute as amended, re-enacted or replaced from time to time;
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(f) if there is any conflict or inconsistency between the provisions
contained in the body of this Agreement and those of any Schedule or
Exhibit (other than the Ancillary Agreements) hereto, the provisions
contained in the body of this Agreement shall prevail;
(g) time periods within which a payment is to be made or any other action
is to be taken hereunder shall be calculated excluding the day on which
the period commences and including the day on which the period ends;
and
(h) whenever any payment to be made or action to be taken hereunder is
required to be made or taken on a day other than a Business Day, such
payment shall be made or action taken on the next following Business
Day.
1.3 SEVERABILITY. If any provision of this Agreement is determined by a
court of competent jurisdiction to be invalid, illegal or unenforceable in any
respect, such determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct. To the extent that any such
provision is found to be invalid, illegal or unenforceable, the parties hereto
shall act in good faith to substitute for such provision, to the extent
possible, a new provision with content and purpose as close as possible to the
provision so determined to be invalid, illegal or unenforceable.
1.4 GOVERNING LAW; CONSENT TO JURISDICTION. 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
State of New York. Each of the parties hereby submits to the exclusive
jurisdiction of the courts of the State of New York and all courts competent to
hear appeals therefrom, and waives any objection as to venue in the County of
New York, State of New York with respect to any suit, claim or other dispute
arising out of or related to this Agreement, the Ancillary Agreements or the
Debentures.
1.5 WAIVER OF IMMUNITY. To the extent that any of the parties hereto has or
hereafter may be entitled to claim or may acquire, for itself or any of its
assets, any immunity from suit, jurisdiction of any court or from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, or otherwise) with respect to itself or its
property, it hereby irrevocably waives such immunity in respect of its
obligations hereunder or under the Ancillary Agreements or the Debentures to
which it may be a party to the fullest extent permitted by applicable law and,
without limiting the generality of the foregoing, agrees that the waivers set
forth in this Section 1.5 shall be effective to the fullest extent now or
hereafter permitted under the Foreign Sovereign Immunities Act of 1976 of the
United States of America and are intended to be irrevocable for purposes of such
Act.
1.6 WAIVER OF JURY TRIAL. Each party hereto hereby waives, to the fullest
extent permitted by applicable laws, any right it may have to a trial by jury in
respect of any litigation
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directly or indirectly arising out of, under or in connection with this
Agreement, the Ancillary Agreements or the Debentures. Each party hereto (a)
certifies that no representative, agent or counsel of the other party has
represented expressly or otherwise that the other party would not, in the event
of litigation, seek to enforce the foregoing waiver, and (b) acknowledges that
it and the other party hereto have been induced to enter into this Agreement,
the Ancillary Agreements and the Debentures by, among other things, the mutual
waivers and certifications contained in this section 1.6.
1.7 CURRENCY. Except as otherwise provided herein, all references to
currency herein are to lawful money of the United States of America.
2. AUTHORIZATION OF DEBENTURES.
2.1 The Corporation has authorized the issuance and sale of $70,500,000
aggregate principal amount of its 8.70% subordinated convertible debentures due
2009 (the "Debentures", such term to include any such debentures issued in
substitution therefor pursuant to this Agreement or the Debenture Certificate).
The Debentures shall be substantially in the form set out in Exhibit 1, with
such changes therefrom, if any, as may be approved by the Purchaser and the
Corporation.
3. PURCHASE OF DEBENTURES.
3.1 CREATION, ISSUANCE AND SALE. Subject to the terms and conditions
hereof, the Purchaser hereby agrees to purchase from the Corporation, and the
Corporation hereby agrees to create, issue and sell to the Purchaser, free and
clear of any and all Liens, other than any Liens created by the Purchaser, this
Agreement, the Ancillary Agreements or the Debenture Certificate, an aggregate
of $70,500,000 in principal amount of Debentures at 100% of the principal amount
thereof (the "Purchase Price"). Upon the Closing, the Purchaser will be the
record and beneficial owner of all the Debentures.
3.2 CLOSING. The closing of the purchase and sale of the Debentures (the
"Closing") shall take place at 10:00 a.m. (Toronto time) (the "Time of Closing")
at the offices of Davies, Ward & Beck LLP or Sullivan & Cromwell on the first
Business Day (no earlier than December 20, 2000) after the conditions in
Sections 7.1 and 7.2 hereof have been satisfied (other than those conditions
regarding the delivery of closing documentation) or waived, or at such other
date, time and place as may be agreed upon by the parties in writing, provided
that on such date the conditions set forth in sections 7.1 and 7.2 shall have
been satisfied (other than those conditions regarding the delivery of closing
documentation) or waived (such closing day or such other time being hereinafter
referred to as the "Closing Date") or at such other place as may be agreed by
the parties. At the Closing the Corporation will deliver to the Purchaser the
Debentures in the form of a single Debenture Certificate (or such greater number
of Debenture Certificates in denominations of at least $100,000, as the
Purchaser may request) dated the Closing Date and registered in the Purchaser's
name, against delivery by the Purchaser to the Corporation or to its order of
immediately available funds in the
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amount of the Purchase Price therefor by wire transfer for the account of the
Corporation to such bank account as the Corporation shall have notified the
Purchaser in writing at least two Business Days prior to the Closing Date.
3.3 ISSUE DATE. The Debentures will be issued and be dated as of the
Closing Date and in the form of the Debenture Certificate.
3.4 DELIVERY OF CLOSING DOCUMENTS. At the Time of Closing on the Closing
Date, the Corporation shall deliver to or to the order of the Purchaser the
definitive Debentures, the documentation contemplated herein and such further
documentation as counsel for the Purchaser may reasonably require against
payment of the Purchase Price for the Debentures pursuant to section 3.2.
4. REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation
represents and warrants to the Purchaser as follows (in each case except as
disclosed in the applicable referenced paragraphs of the Disclosure Letter of
even date herewith delivered by the Corporation to the Purchaser in connection
with the transactions contemplated hereby (the "Disclosure Letter")) and
acknowledges that the Purchaser is relying upon such representations and
warranties in connection with any purchase by it of the Debentures:
(a) ORGANIZATION; POWER AND AUTHORITY. The Corporation and each of its
Significant Subsidiaries is duly incorporated or organized and is
validly subsisting under the laws of its jurisdiction of incorporation
or organization; the Corporation and each of its Significant
Subsidiaries has all necessary corporate or other legal power and
authority to own or lease its property and to carry on its business as
presently carried on by it and the Corporation has all necessary
corporate power and authority to execute and deliver this Agreement,
the Ancillary Agreements and the Debentures and to comply with its
obligations hereunder and thereunder. The Corporation and each of its
Significant Subsidiaries is duly qualified as a corporation or other
applicable legal entity to carry on 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 except where any failure to so qualify would not,
individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect.
(b) AUTHORIZED CAPITAL. The authorized capital of the Corporation consists
of an unlimited number of Preference Shares and an unlimited number of
Common Shares, of which, on December 8, 2000, no Preference Shares and
88,456,940 Common Shares are issued and outstanding and all of which
are validly issued, fully paid, non-assessable and free of pre-emptive
rights.
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(c) NO OPTIONS, ETC. As of December 8, 2000, there are no outstanding
agreements, warrants, options, rights or privileges, pre-emptive or
contractual, capable of becoming an agreement, including convertible or
exchangeable securities, to subscribe for, purchase or otherwise
acquire, or otherwise obligating the Corporation or any of its
Subsidiaries to issue, any shares of the Corporation or any of its
Subsidiaries or securities convertible into or exchangeable for shares
of the Corporation or any of its Subsidiaries, other than, on December
8, 2000: (i) options to purchase an aggregate of 5,836,286 Common
Shares held by employees of the Corporation and its Subsidiaries, of
which options to purchase 2,207,059 Common Shares are vested and
exercisable as of December 8, 2000, and the remaining options to
acquire 3,629,227 Common Shares are not vested or exercisable as of
December 8, 2000, and which become vested and exercisable in accordance
with the terms of the relevant plans; (ii) rights under joint venture
and similar agreements governing Subsidiaries that are not Significant
Subsidiaries; and (iii) as contemplated by this Agreement. Section
4.1(c) of the Disclosure Letter sets forth the vesting schedules and
exercise prices of such options. Neither the Corporation nor any of its
Subsidiaries is a party to any voting or sale agreements with respect
to the Corporation's or any Subsidiary's share capital. Except as set
forth in the Public Filings, neither the Corporation nor any of its
Subsidiaries is under any obligation to redeem or purchase any of the
Corporation's or any Subsidiary's outstanding securities.
(d) AUTHORIZATION, ETC. The directors of the Corporation have taken all
necessary corporate action to authorize the execution, delivery and
performance of this Agreement, the Ancillary Agreements and the
Debentures. No action of the shareholders of the Corporation is
required to authorize the execution, delivery and performance of this
Agreement, the Ancillary Agreements or the Debentures. Each of this
Agreement and the Ancillary Agreements has been, and upon execution and
delivery thereof to the Purchaser the Debentures will be, duly executed
and delivered on behalf of the Corporation and constitute and will
constitute legal, valid and binding obligations of the Corporation
enforceable by the Purchaser in accordance with their respective 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 be
granted only in the discretion of a court of competent jurisdiction.
(e) CORPORATE ACTION. All necessary corporate action of the directors of
the Corporation has been taken to authorize the due creation, issue and
sale of the Debentures and to issue the Conversion Shares. No action of
the shareholders of the Corporation is required to authorize the due
creation, issue and sale of the Debentures or the issue of the
Conversion Shares. Upon the issuance thereof and payment therefor as
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provided herein, the Debentures and the Conversion Shares will be
validly issued, fully paid, non-assessable and free of pre-emptive
rights or any other Liens, other than any Liens created by the
Purchaser, this Agreement, the Ancillary Agreements or the Debenture
Certificate.
(f) NO CHANGE IN ARTICLES OR BY-LAWS. Except as permitted by Section 5.4
hereof on or after the date of this Agreement, change or amendment has
been made or authorized by the directors or shareholders of the
Corporation to the articles or by-laws of the Corporation, in each case
since December 31, 1998. The Corporation is not in violation of any
provision of its articles or by-laws.
(g) COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC. None of: (i) the
authorization, execution, delivery or performance by the Corporation of
this Agreement, the Ancillary Agreements or the Debentures, including,
without limitation, the allotment and issuance of the Conversion
Shares; or (ii) the issuance and sale of the Debentures as provided
herein, (A) will violate the provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Corporation
or any of its Subsidiaries or (B) will contravene, result in any breach
of or is 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 articles or by-laws of the Corporation or any of its
Subsidiaries, the resolutions of the directors or shareholders of the
Corporation or any of its Subsidiaries or any Material indenture,
instrument, agreement or undertaking to which the Corporation or any of
its Subsidiaries is a party or by which the Corporation or any of its
Subsidiaries or the properties or assets of the Corporation or any of
its Subsidiaries are or may become bound or results or would result in
the creation or imposition of any Lien upon any of the Material
Properties or assets of the Corporation or any of its Subsidiaries
pursuant to the terms of any such indenture, instrument, agreement or
undertaking or result in any acceleration or other change in rights of
others or an imposition of any penalty or other payments under any of
the foregoing.
(h) ORDERS, ETC. As of the date of this Agreement, no order suspending the
sale or ceasing the trading of the Common Shares, the sale of the
Debentures or the exercise of the conversion rights contained therein
or the Conversion 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
Responsible Officers of the Corporation, threatened.
(i) REPORTING ISSUER STATUS. The Corporation is a "reporting issuer", as
defined in the Ontario Securities Act, has been a reporting issuer in
Ontario and the other Provinces of Canada that have a "reporting
issuer" concept for at least six months prior to the
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date hereof, and is not in material default of any filings required to
be made pursuant to the Ontario Securities Act and the regulations made
thereunder or pursuant to other securities laws and regulations and
rules made thereunder or under the securities laws of the other
Provinces of Canada and applicable to the Corporation. The Corporation
is a "foreign private issuer", as defined under the Exchange Act, and
is eligible to use Form 20-F in accordance with the Exchange Act.
(j) SECURITIES LAWS. Subject to the filing by the Corporation of a Form
45-501F1 pursuant to Rule 45-501 of the OSC within 10 days following
the Closing Date, compliance with the requirements of the Exchanges and
the Purchaser meeting applicable reporting requirements and
requirements as to its status (including purchasing as principal,
investment intent and status as a sophisticated purchaser and having
not breached its representations set forth in section 4.2(e)), none of
the issuance and sale of the Debentures and the allotment or issuance
of the Conversion Shares will require registration under the U.S.
Securities Act and the registration and prospectus requirements of the
Ontario Securities Act or has resulted or will result in any
contravention of such securities laws of the United States or Canada or
the securities laws of any other applicable jurisdiction (other than
blue sky laws), and regulations and rules made thereunder and
applicable to the Corporation.
(k) SUBSIDIARIES. Except as disclosed in the Public Filings, the
Corporation owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of its Significant Subsidiaries,
and as of the date of this Agreement, there are no outstanding
agreements, warrants, options, rights or privileges, pre-emptive or
contractual, capable of becoming an agreement, including convertible or
exchangeable securities, to subscribe for, purchase or otherwise
acquire, or otherwise obligating any Significant Subsidiary to issue,
purchase or redeem any shares or securities convertible into or
exchangeable for shares of any Significant Subsidiary, except for
agreements among the Corporation and its Significant Subsidiaries.
(l) LITIGATION, ETC. As of the date of this Agreement, there is not pending
against the Corporation or any of its Subsidiaries or, to the knowledge
of the Responsible Officers of the Corporation, threatened against the
Corporation or any of its Subsidiaries, any litigation, action, suit or
other proceeding by or before any court, tribunal, Governmental
Authority, securities commission or regulatory body that, individually
or in the aggregate, would reasonably be expected to have a Material
Adverse Effect, except as disclosed in the Public Filings.
(m) TAXES. Except as disclosed in the Public Filings, the Corporation and
its Subsidiaries have filed all tax returns that are required to have
been filed in any jurisdiction, and have paid all taxes shown to be due
and payable on such returns and all other taxes and assessments payable
by them, to the extent such taxes and assessments have
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become due and payable and before they have become delinquent, except
for any taxes and assessments the amount, applicability or validity of
which is currently being contested in good faith by appropriate
proceedings and with respect to which the Corporation or a Subsidiary,
as the case may be, has established adequate reserves in accordance
with GAAP other than any failures of the foregoing to be true which
would not, individually or in the aggregate, be reasonably expected to
have a Material Adverse Effect. Except as set forth in the Public
Filings, no deficiencies exist or have been asserted with respect to
taxes of the Corporation or any of its Subsidiaries, no unresolved
controversies regarding taxes exist with respect to the Corporation or
any of its Subsidiaries and neither the Corporation nor any of its
Subsidiaries is a party to any action or proceeding for assessment or
collection of taxes, nor has any such event been asserted or, to the
knowledge of the Responsible Officers, threatened against the
Corporation or any of its Subsidiaries or any of their respective
assets, except for failures of the foregoing to be true which would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(n) FILED DOCUMENTS AND FINANCIAL STATEMENTS.
(i) Each of the documents filed by the Corporation with the SEC under
the U.S. Securities Act and the Exchange Act and the OSC under the
Ontario Securities Act and other Canadian securities regulatory
authorities under Canadian securities legislation since December
31, 1998 (the "Public Filings") complied as to form in all
material respects with all of the applicable requirements of the
Ontario Securities Act, the U.S. Securities Act, the Exchange Act
and other applicable Canadian securities legislation, as
applicable, and did not contain any untrue statement of a material
fact or omit to state any material fact required to be contained
therein or necessary in order to make the statements contained
therein, in the light of the circumstances under which they were
made, not misleading, except to the extent superseded by
subsequent filings in effect as of the date of this Agreement and
included in the Public Filings. Any financial statements contained
in such filings (including in each case the related schedules and
notes) fairly present in all material respects the consolidated
financial position of the Corporation and its Subsidiaries as of
the respective dates and the consolidated results of their
operations and cash flows for the respective periods and have been
prepared in accordance with GAAP consistently applied throughout
the periods involved except as set forth in the notes thereto
(subject, in the case of any interim financial statements, to the
absence of footnote disclosure and normal year-end adjustments
which are not expected to be material), except to the extent
superseded by subsequent filings in effect as of the date of this
Agreement and included in the Public Filings.
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(ii) The Corporation does not have any undisclosed liabilities of the
kind that are required to be disclosed in a balance sheet
(including the notes thereto) under GAAP except for liabilities
(A) set forth in its September 30, 2000 balance sheet included in
the Public Filings (including the notes thereto) or (B)
liabilities incurred in the ordinary course of business since
September 30, 2000, which would not, individually or in the
aggregate, have a Material Adverse Effect.
(iii) Since December 31, 1999, except as set forth in the Public
Filings, there has been no Material Adverse Effect (other than
any effects caused by general economic conditions or the public
announcement of the transactions contemplated by this Agreement).
Since September 30, 2000, except as disclosed in the Public
Filings, the Corporation has conducted its business in the
ordinary course, except for any conduct that (A) relates to the
negotiation and entry into the transactions contemplated hereby
and the negotiation of similar transactions or (B) individually
or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
(o) LISTING. The Common Shares are listed and posted for trading on the
Exchanges. The Corporation is in good standing with the Exchanges and
in full compliance with the rules and regulations thereof.
(p) TITLE TO PROPERTY. Except as disclosed in the Public Filings, the
Corporation and its Subsidiaries have good and valid title to their
respective Properties, free and clear of all Liens (other than purchase
money security interests and liens under capital leases), and the
Corporation and its Subsidiaries have full right to use their assets
and properties as currently used, except for failures of the foregoing
to be true that, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect.
(q) LICENSES, PERMITS, ETC. Except as disclosed in the Public Filings, the
Corporation and its Subsidiaries own or possess all licenses, permits,
franchises, authorizations, patents, copyrights, service marks,
trademarks and trade names, or rights thereto, necessary to conduct
their businesses as currently conducted, which are not, to the
knowledge of the Responsible Officers, in conflict with the rights of
others and are not in breach of any of the same, all of which are in
good standing and full force and effect, in each case except for
failures of the foregoing to be true that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect.
(r) CONTRACTUAL OBLIGATIONS. Except as disclosed in the Public Filings, the
Corporation and its Subsidiaries are in compliance with all of the
Corporation's material contracts
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(including any contract evidencing Indebtedness) which a corporation
registered under Section 12 of the Exchange Act would be required to
file in response to Item 10 of Rule 601 of Regulation S-K promulgated
under the U.S. Securities Act (together, the "Material Contracts") and
neither the Corporation nor its Subsidiaries is, or has received any
written notice or otherwise has (through its Responsible Officers) any
knowledge that any other party is, in default under any such Material
Contract, in each case other than failures of the foregoing to be true
which would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect; except as set forth in
the Public Filings, to the knowledge of the Responsible Officers no
event or condition exists with respect to any such Material Contract
that would permit (or that with notice or the lapse of time, or both,
would permit) one or more Persons to cause such Material Contract to be
in default, in all cases except for those defaults that would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; except as set forth in the Public Filings,
since December 31, 1999, the Corporation and its Subsidiaries have not
waived or relinquished any right under any contract, other than waivers
or relinquishments which would not, individually or in aggregate,
reasonably be expected to have a Material Adverse Effect.
(s) STATUS UNDER CERTAIN STATUTES. Neither the Corporation nor any
Subsidiary is subject to regulation under the Investment Company Act of
1940, as amended, the Public Utility Holding Company Act of 1935, as
amended, the Interstate Commerce Act, as amended, or the Federal Power
Act, as amended.
(t) FOREIGN CORRUPT PRACTICES ACT. The Corporation and its Subsidiaries and
each of their respective officers, directors and employees are not in
violation of section 30A of the Exchange Act or any similar non-U.S.
statute or law.
(u) NO BROKERS OR FINDERS. No agent, broker, finder, or investment or
commercial banker (other than RBC Dominion Securities Inc. and Morgan
Stanley Dean Witter, as to whose fees and expenses the Corporation
shall have full responsibility and the Purchaser shall have no
responsibility) or other Person or firm engaged by or acting on behalf
of the Corporation or any Subsidiary in connection with the
negotiation, execution or performance of this Agreement or the
transactions contemplated by this Agreement, is or will be entitled to
any brokerage or finder's or similar fee or other commission as a
result of this Agreement or such transactions.
(v) COMPLIANCE WITH LAWS. Since December 31, 1998, the Corporation and its
Subsidiaries have complied with and are not in violation in any
material respect of any applicable laws including, without limitation,
Environmental Laws, orders, judgments and decrees, in all cases except
for any violations that would not reasonably be expected to have a
Material Adverse Effect.
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(w) STATE TAKEOVER STATUS. No takeover statute or regulation having
consequences similar to Section 203 of the Delaware General Corporation
Law applies to this Agreement, the Ancillary Agreements or the
Debentures or any of the transactions contemplated hereby or thereby.
Neither the Corporation nor any of its Subsidiaries has any rights
plan, preference shares or similar arrangement which have any of the
aforementioned consequences in respect of the transactions contemplated
hereby.
(x) RELATED PARTY TRANSACTIONS. Except as disclosed in the Public Filings
and except for Indebtedness or contractual amounts aggregating not more
than $3,000,000, no director, officer, partner, "affiliate" or
"associate" (as such terms are defined in Rule 12b-2 under the Exchange
Act) of the Corporation or any of its Subsidiaries, to the knowledge of
the Corporation:
(i) has outstanding indebtedness or other similar obligations to the
Corporation or any of its Subsidiaries in excess of $60,000; and
(ii) is otherwise a party to any contract, arrangement or understanding
with the Corporation or any of its Subsidiaries except for any
such contract, arrangement or understanding providing for (A) such
Person's employment by the Corporation or one of its Subsidiaries
and arrangements relating thereto, or (B) employee or other fringe
benefits, or (C) options or other rights, granted pursuant to
stock option plans of the Corporation.
4.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to the Corporation as follows and acknowledges that the
Corporation is relying upon such representations and warranties in connection
with the sale of the Debentures:
(a) ORGANIZATION; POWER AND AUTHORITY. The Purchaser is a limited
partnership duly organized and is validly existing under the laws of
Delaware; the General Partner is the sole general partner of the
Purchaser; the General Partner has all necessary corporate power to
execute and deliver this Agreement and each of the Ancillary Agreements
on behalf of the Purchaser and the Purchaser has all necessary
partnership power to enter into this Agreement and each of the
Ancillary Agreements and to comply with its obligations hereunder and
thereunder. All of the capital stock of the General Partner is owned by
an Affiliate of Chancery Lane Capital, LLC. Greenwich Street Capital
Partners II, L.P. is a limited partner of the Purchaser. DB Capital
Partners is a limited partner of the Purchaser and holds no other
interest in the Purchaser or the General Partner.
(b) AUTHORIZATION, ETC. The General Partner has taken all necessary
corporate action to authorize the execution, delivery and performance
of this Agreement and the Ancillary Agreements; this Agreement and the
Ancillary Agreements have been duly
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executed and delivered by the General Partner on behalf of the
Purchaser and constitute the legal, valid and binding obligations of
the Purchaser enforceable by the Corporation in accordance with their
respective terms, except as 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
be granted only in the discretion of a court of competent jurisdiction.
(c) COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC. Neither: (i) the
authorization, execution, delivery or performance by the Purchaser of
this Agreement and the Ancillary Agreements; or (ii) the purchase of
the Debentures as provided herein, is in conflict with and does not and
will not result in any 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 limited
partnership agreement of the Purchaser, the resolutions of the board of
directors of the General Partner or any Material indenture, instrument,
agreement or undertaking to which the Purchaser is a party or by which
the Purchaser or the properties or assets of the Purchaser are or may
become bound, or results or would result in the creation or imposition
of any security interest, mortgage, Lien, charge or encumbrance of any
nature whatsoever upon any of the Material properties or assets of the
Purchaser pursuant to the terms of any such indenture, instrument,
agreement or undertaking.
(d) NO ORDERS. To the knowledge of the Purchaser, after reasonable inquiry,
no order suspending the purchase of the Debentures by the Purchaser 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 threatened.
(e) PURCHASE FOR INVESTMENT. The purchase of the Debentures is being made
by the Purchaser as principal, for investment purposes only, and not
with a view to, or for, resale, distribution or any present intention
of distributing or selling the Debentures, the Conversion Shares or any
part thereof. Each of the Purchaser's limited partners has acquired its
interest in the Purchaser for its own account as principal, for
investment purposes only, and not with a view to, or for, resale,
distribution or granting a participation therein, in whole or in part,
in violation of applicable securities laws and no other person has a
direct or indirect beneficial interest in the interest of such limited
partner. The Purchaser and each of its limited partners acknowledges
that it has been given access to all information regarding the
Corporation, the future business, condition and operations of the
Corporation that the Purchaser and its limited partners have requested
in order to evaluate its investment in the Debentures. The Purchaser
understands that the Debentures are being offered and sold in reliance
on specific exemptions from applicable securities laws and that the
Corporation is relying upon the truth and accuracy of the
representations,
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warranties, acknowledgements and understanding set forth herein in
order to determine the applicability of such exemptions and the
suitability of the Purchaser and each of its limited partners to
acquire the Debentures. Nothing in this section 4.2(e) or any
investigation or right of investigation of the Purchaser shall be
deemed or construed to limit the Purchaser's right to rely fully on the
representations and warranties of the Corporation to the Purchaser
contained in this Agreement, the Ancillary Agreements and the
Debenture. The Purchaser is purchasing as principal for its own account
and the Purchaser and each limited partner of the Purchaser is an
"accredited investor" as the term is defined in Regulation D under the
U.S. Securities Act and a Person who has contributed at least
Cdn.$150,000 for the purchase of the Debentures.
(f) ACKNOWLEDGEMENT RE: SECURITIES LAWS. The Purchaser understands,
recognizes and acknowledges that neither the Debentures nor the
Conversion Shares have been qualified for distribution or registered
under any applicable securities legislation, including the Ontario
Securities Act, the U.S. Securities Act or any other applicable
federal, provincial or state securities laws by reason of exemptions
from such requirements being available, and that neither the Debentures
nor the Conversion Shares may be sold, pledged, assigned or otherwise
disposed of in the absence of compliance with such law or unless an
exemption from the application of such law is applicable.
(g) NO PRIOR ACTIVITIES. The Purchaser was formed for the purpose of
entering into this Agreement and the Ancillary Agreements and
purchasing the Debentures and has not engaged in any other activities
other than related thereto. The Restricted Group does not have
Beneficial Ownership of Voting Securities (as such terms are defined in
the Standstill Agreement) that, when aggregated with the Debentures to
be purchased hereunder, would cause the Restricted Group to breach
Section 1 of the Standstill Agreement.
4.3 SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES. All covenants,
representations and warranties of each party made herein and in the Debenture
Certificate, in any certificate or other document delivered by it or on its
behalf pursuant to the provisions hereof or otherwise with respect to this
Agreement and the transactions contemplated hereby, shall survive the closing of
the purchase and sale of the Debentures and, notwithstanding such closing, nor
any investigation made by or on behalf of such party, shall continue in full
force and effect, subject as hereinafter provided, for a period of eighteen
months from the Closing Date for the benefit of the party to whom the covenants,
representations and warranties are made; provided, however, that notwithstanding
anything herein contained, the representations and warranties contained in
sections 4.1(b), (c), (d) and (e) and the representations, warranties and
covenants in Section 3 of the Debenture Certificate shall survive the closing of
the purchase and sale of the Debentures and shall continue in full force and
effect for the benefit of the Purchaser without any limitation period and
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the representation and warranty contained in Section 4.1(m) hereof shall survive
the closing of the purchase and sale of the Debentures and shall continue in
full force and effect for the benefit of the Purchaser until the 60th day after
the expiration of the relevant statute of limitations period.
5. COVENANTS OF THE CORPORATION.
5.1 AFFIRMATIVE COVENANTS OF THE CORPORATION. Until the Maturity Date, the
Corporation covenants and agrees with the Purchaser that it will do or cause to
be done, and, as applicable, will cause its Subsidiaries to do or cause to be
done, the following:
(a) use its reasonable best efforts to comply with, satisfy and fulfill
promptly all prerequisites, conditions and requirements imposed by or
arising out of legal, regulatory and administrative requirements
applicable to the Corporation with respect to the consummation of the
transactions contemplated hereby, including, without limiting the
generality of the foregoing, filing or causing to be filed all
documents, certificates, opinions, forms or undertakings required to be
filed by the Corporation in connection with the purchase and sale of
the Debentures, the issue of the Conversion Shares and the listing and
posting for trading of the Conversion Shares on the Exchanges;
(b) maintain its status as a "reporting issuer" in good standing under the
Ontario Securities Act and other applicable Canadian securities
legislation and as a "registrant" in good standing under the Exchange
Act;
(c) maintain the listing or posting for trading of the Common Shares
(including the Conversion Shares) on the Exchanges; and
(d) will pay all stamp or duty taxes, if any, associated with the issuance
of the Debentures and, on conversion thereof, the issuance of the
Conversion Shares.
5.2 AFFIRMATIVE COVENANTS OF THE PURCHASER. The Purchaser covenants and
agrees with the Corporation that it will use its reasonable best efforts to
comply with, satisfy and fulfill promptly all prerequisites, conditions and
requirements imposed by or arising out of legal, regulatory and administrative
requirements applicable to the Purchaser with respect to the consummation of the
transactions contemplated hereby, including, without limiting the generality of
the foregoing, filing or causing to be filed all documents, certificates,
opinions, forms or undertakings required to be filed by the Purchaser in
connection with the purchase and sale of the Debentures and the issuance of the
Conversion Shares.
5.3 USE OF PROCEEDS. The Corporation will use the proceeds of the sale of
the Debentures for general corporate purposes only. No part of the proceeds from
the sale of the Debentures hereunder will be used, directly or indirectly, for
the purpose of buying or carrying any margin stock
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within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System (12 CFR 207), or for the purpose of buying or carrying or trading
in any securities under such circumstances as to involve the Corporation in a
violation of Regulation X of said Board (12 CFR 224) or to involve any broker or
dealer in a violation of Regulation T of said Board (12 CFR 220).
5.4 NEGATIVE COVENANTS PRIOR TO CLOSING. The Corporation covenants and
agrees with the Purchaser that, until the Closing Date, the Corporation shall
not, nor shall it permit any Significant Subsidiary to, without the prior
written consent of the Purchaser (which consent shall not be unreasonably
withheld or delayed), except as set forth in Section 5.4 of the Disclosure
Letter:
(a) propose, authorize or effect any change or amendment to the articles or
by-laws of the Corporation;
(b) distribute to the holders of Common Shares, declare, pay or issue (as
applicable):
(i) shares of the Corporation of any class, including Common Shares
or other securities of the Corporation or any Subsidiary of the
Corporation;
(ii) securities convertible into or exchangeable for shares of the
Corporation;
(iii) rights, options or warrants, including rights, options or
warrants to subscribe for or purchase shares of the Corporation
or securities convertible into or exchangeable for shares of the
Corporation;
(iv) evidences of Indebtedness; or
(v) any other property or assets;
in each case, other than (A) cash dividends in the ordinary course and
(B) shares issued on the exercise of currently issued and outstanding
rights (including rights of conversion) or options;
(c) amend, in any material respect, or terminate any Material Contract;
(d) consolidate, merge or amalgamate with or into another body corporate;
(e) transfer, lease or exchange all or substantially all the assets of the
Corporation to another body corporate;
(f) change the compensation of employees, other than (1) in connection with
the employees hired with the knowledge of the Purchaser on the date
hereof and (2) other than payments aggregating $500,000 or less for
normal year end bonus compensation
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in accordance with existing bonus plans and raises in the ordinary
course of business; or
(g) agree or commit to do any of the foregoing.
5.5 VCOC. The rights granted to Purchaser under Section 6.1 and Section
10.1 are intended to satisfy the requirement of management rights for purposes
of qualifying the indirect investment by Greenwich Street Capital Partners II,
L.P. in the ownership of the Debentures as a venture capital investment for
purposes of the Department of Labor "plan asset" regulations, 9 C.F.R. Section
2510.3-101, and in the event such rights are not satisfactory for such purpose,
the Corporation and the Purchaser shall reasonably cooperate in good faith to
agree upon mutually satisfactory access rights which satisfy such regulations.
6. BOARD REPRESENTATION
6.1 GOVERNANCE. Subject to section 6.3, the Purchaser and the Corporation
covenant and agree that, effective upon Closing and unless the Purchaser
otherwise consents in writing:
(a) the Board shall have not more than 13 directors (unless the
shareholders of the Corporation otherwise resolve against the
recommendation of the Board);
(b) Ted Ammon and Fred Eckert (or two other persons specified by the
Purchaser as to which a majority of the Board does not have a bona fide
objection; it being understood that Mark Angelson and Matthew Kaufman
shall not be objectionable to the Board) shall be appointed by the
current members of the Board as members of the Board at Closing and the
Purchaser shall have the right to designate such Persons for nomination
as directors of the Board at each meeting of shareholders of the
Corporation beginning with the Corporation's 2001 annual meeting of
shareholders;
(c) the Chief Executive Officer of the Corporation (the "CEO"), who shall
initially be Robert Burton, shall be appointed by the current members
of the Board as a member of the Board at Closing and shall be nominated
by the Board as a director at each meeting of shareholders of the
Corporation beginning with the Corporation's 2001 annual meeting of
shareholders;
(d) the remaining 10 directors of the Board to be nominated as directors by
the Board shall include:
(i) Newton Minow and John Stevens (or if Mr. Minow or Mr. Stevens is
or are unwilling or unable to serve as directors, another Person
or Persons nominated by the Board and acceptable to the Purchaser,
acting reasonably, at least one of whom shall be a resident
Canadian); and
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(ii) eight other Persons nominated by the Board, at least six of whom
shall be resident Canadians;
(e) Purchaser shall notify the Corporation in writing of the identity of
the Purchaser's nominees pursuant to Section 6.1(b) by no later than
the same time shareholder proposals are due as set forth in the
Corporation's annual proxy statement filed the year preceding the year
of the election, which notice shall be conclusive evidence of the
consent of the Purchaser nominees to serve as a director of the
Corporation. The notice shall include all information with respect to
the Purchaser's nominees as is required to be included in a proxy
statement soliciting proxies for the election of directors pursuant to
Regulation 14A under the Exchange Act or under applicable Canadian
securities law.
6.2 RESIGNATION OF DIRECTORS AT CLOSING. The Corporation may accept the
resignation of one or more current members of the Board (effective as of the
Time of Closing) in order to give effect to the provisions of section 6.1.
6.3 LOSS OF BOARD REPRESENTATION. If, at any time, the Restricted Group
collectively owns Conversion Shares and Debentures that on an as-converted basis
would in the aggregate equal less than 50% of the initial number of Conversion
Shares to which the Restricted Group is entitled assuming full conversion of the
Debentures to be purchased by the Purchaser hereunder (as adjusted following the
Closing pursuant to the provisions of the Debenture Certificate), the Purchaser
thereafter shall lose its contractual right under this Agreement to designate
one of the two persons for nomination pursuant to section 6.1(b) and its
contractual right under this Agreement to approve one of the two persons
nominated pursuant to section 6.1(d)(i) and shall, if requested by a majority of
the members of the Board other than those designated for nomination pursuant to
section 6.1(b) and 6.1(d)(i), cause one of the directors it designated for
nomination pursuant to section 6.1(b) to resign from the Board. In addition, if,
at any time, the Restricted Group owns Conversion Shares or Debentures that on
an as-converted basis would in the aggregate equal less than 33% of the initial
number of Conversion Shares to which the Restricted Group is entitled assuming
full conversion of the Debentures to be purchased by the Purchaser hereunder (as
adjusted following the Closing pursuant to the provisions of the Debenture
Certificate), the Purchaser thereafter shall have no further rights under
section 6.1, and shall, if requested by a majority of the members of the Board
other than those designated for nomination pursuant to sections 6.1(b) and
6.1(d)(i), cause the directors it designated for nomination pursuant to section
6.1(b) to resign from the Board.
6.4 SUBSTITUTION OF DISQUALIFIED NOMINEES. If any person identified by name
or otherwise designated by the Purchaser pursuant to section 6.1(b) is not
qualified to act as a director under the Business Corporations Act (Ontario),
the Purchaser shall be entitled to specify another person for nomination in
accordance with section 6.1(b). If any person nominated pursuant to section
6.1(d)(i) is not qualified to act as a director under the Business Corporations
Act (Ontario), the Board shall nominate another person pursuant to section
6.1(d)(i).
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7. CONDITIONS OF CLOSING.
7.1 CONDITIONS OF CLOSING IN FAVOUR OF THE PURCHASER. The obligation of the
Purchaser to purchase and pay for the Debentures to be sold to the Purchaser at
the Closing is subject to the following conditions precedent for the exclusive
benefit of the Purchaser to be fulfilled and/or performed prior to the Time of
Closing:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Corporation contained in this Agreement or in any certificate or
other document delivered pursuant hereto shall be true and correct (or
true and correct in all material respects, in the case of any
representation or warranty not qualified by its terms as to
"Materiality", "material" or "Material Adverse Effect") as of the date
of this Agreement or the date of any such certificate or document, as
the case may be, and shall also be true and correct (or true and
correct in all material respects, in the case of any representation or
warranty not qualified by its terms as to "Materiality", "material" or
"Material Adverse Effect") on and as of the Closing Date with the same
force and effect as though such representations and warranties had been
made on and as of such date, except where such representations and
warranties expressly relate to an earlier date, in which case they
shall be true and correct (or true and correct in all material
respects, in the case of any representation or warranty not qualified
by its terms as to "Materiality", "material" or "Material Adverse
Effect") as of such earlier date;
(b) PERFORMANCE; NO DEFAULT. The Corporation shall have performed or
complied in all material respects with all covenants and agreements
agreed to be performed or caused to be performed by the Corporation in
this Agreement at or prior to the Time of Closing, and after giving
effect to the issue and sale of the Debentures (and the application of
the proceeds thereof as contemplated by section 5.2) no Event of
Default shall have occurred and be continuing;
(c) COMPLIANCE CERTIFICATE. The Purchaser shall have received a certificate
dated the Closing Date, in form satisfactory to the Purchaser, acting
reasonably, signed under seal by the Chief Financial Officer on behalf
of the Corporation, to the effect that the conditions precedent
specified in sections 7.1(a), (b) and (g) have been complied with;
(d) CORPORATE ACTION. All necessary corporate action shall have been taken
by the Corporation to authorize the issue, execution and delivery of
the Debentures and the execution and delivery of this Agreement, the
Ancillary Agreements and the Debentures by the Corporation and the
consummation of the transactions contemplated hereby and thereby;
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(e) PURCHASE PERMITTED BY APPLICABLE LAW, ETC. On the Closing Date the
Purchaser's purchase of the Debentures shall (i) not violate any
applicable material law or regulation and (ii) not subject the
Corporation to any material tax, penalty or liability under or pursuant
to any applicable law or regulation;
(f) APPROVALS, CONSENTS, ETC. All legal, regulatory, administrative,
corporate and shareholder approvals, consents, authorizations, rulings,
orders and permits, including, without limitation, the TSE Notice,
which are necessary for completion of all of the transactions
contemplated hereby, including the issuance of Conversion Shares and
any required approvals, shall have been obtained and shall be in full
force and effect;
(g) STOCK EXCHANGE APPROVALS. To the extent advisable under the rules
thereof, the Exchanges shall have approved the issuance to the
Purchaser of the Debentures in accordance with the terms of this
Agreement pursuant to all applicable by-laws, rules, policies and
regulations of the Exchanges, and each of the Exchanges shall have
accepted as at such time the listing or posting for trading of that
number of Conversion Shares which may be issued upon the exercise of
the rights of conversion contained in the Debentures, subject to the
filing of required documents and payment of the necessary listing fees
by the Corporation;
(h) ANCILLARY AGREEMENTS. The Corporation shall have executed and delivered
the Ancillary Agreements and the Debentures. Each of the Ancillary
Agreements and the Debentures shall be in full force and effect.
(i) LEGAL MATTERS.
(i) The Purchaser shall have received favourable written opinions from
nationally-recognized counsel (in the appropriate jurisdiction)
(reasonably satisfactory to the Purchaser) to the Corporation (who
may rely on certificates from the Corporation with respect to
factual matters), dated the Closing Date and satisfactory in scope
and substance to the Purchaser and its counsel, acting reasonably,
with respect to the following substantive matters:
(A) the Corporation is a corporation incorporated under the laws
of the Province of Ontario and has all necessary corporate
power and authority to own its property and to execute and
deliver this Agreement, the Ancillary Agreements and the
Debentures and to perform all its respective obligations
hereunder and thereunder;
(B) all necessary corporate action has been taken by the
Corporation to authorize the issuance and sale of the
Debentures and the execution
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and delivery of this Agreement, the Ancillary Agreements and
the Debentures and, upon issuance and payment therefor as
provided herein, the Debentures will have been validly
issued, as fully paid and non-assessable Debentures;
(C) no action of the shareholders of the Corporation is required
to authorize the issuance and sale of the Debentures and the
execution and delivery of this Agreement, the Ancillary
Agreements and the Debentures;
(D) each of this Agreement, the Ancillary Agreements and the
Debentures has been duly executed and delivered by the
Corporation;
(E) all necessary corporate action has been taken by the
Corporation to authorize the issuance of the Conversion
Shares, upon the exercise of the conversion rights of the
Debentures and the Conversion Shares issuable upon the valid
exercise thereof will be validly issued and outstanding as
fully paid and non-assessable shares;
(F) the authorization, execution, delivery and performance by the
Corporation of this Agreement, the Ancillary Agreements and
the Debentures and the issuance of Conversion Shares do not
conflict with, and do not result in a breach of, the articles
or by-laws of the Corporation or violate any law;
(G) the issuance and sale of the Debentures to the Purchaser
pursuant to this Agreement and the issuance of Conversion
Shares are exempt from the registration and prospectus
requirements of the Ontario Securities Act;
(H) the issuance and sale of the Debentures to the Purchaser
pursuant to this Agreement are not in violation of United
States federal securities laws; and
(I) there is no Canadian non-resident withholding tax applicable
in respect of the Debentures and the issuance of the
Conversion Shares; and
(ii) The Purchaser shall have received a favorable written opinion from
in-house counsel or any reputable outside counsel to the
Corporation (at the Corporation's election), dated the Closing
Date and satisfactory in scope and
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substance to the Purchaser and its counsel, acting reasonably,
with respect to the following substantive matters:
(A) the Corporation is duly qualified to carry on business in all
jurisdictions in which it currently carries on business, and
has all necessary corporate power and authority to carry on
its business as aforesaid; and
(B) none of: (i) the authorization, execution, delivery or
performance by the Corporation of this Agreement, the
Ancillary Agreements or the Debentures, including, without
limitation, the allotment and issuance of the Conversion
Shares; or (ii) the issuance and sale of the Debentures as
provided herein, (A) will violate the provision of any
statute or other rule or regulation of any Governmental
Authority applicable to the Corporation or any of its
Significant Subsidiaries or (B) will contravene, result in
any breach of or is 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 articles or by-laws of the Corporation, the resolutions
of the directors or shareholders of the Corporation or any
Material Contract to which the Corporation is a party or by
which the Corporation or the properties or assets of the
Corporation are bound or results in the creation or
imposition of any Lien upon any of the Material properties or
assets of the Corporation pursuant to the terms of any
Material Contract.
(j) NO ACTION. No action or proceeding in Canada or in the United States in
front of any Governmental Authority shall be (i) pending or threatened
by any Governmental Authority to cease trade, enjoin or prohibit or
(ii) pending or threatened in writing by any other Person where such
action or proceeding would be reasonably likely to cease trade, enjoin
or prohibit, in either such case:
(a) the purchase and sale of the Debentures contemplated hereby or the
right of the Purchaser to own the Debentures; or
(b) the right of the Purchaser to exercise the rights of conversion
contained in the Debentures or the right of the Purchaser to own
the Conversion Shares;
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7.2 CONDITIONS OF CLOSING IN FAVOUR OF THE CORPORATION. The obligation of
the Corporation to issue the Debentures to be sold to the Purchaser at the
Closing is subject to the following terms and conditions for the exclusive
benefit of the Corporation to be fulfilled and/or performed prior to the Time of
Closing:
(a) APPROVALS, CONSENTS, ETC. All legal, regulatory, administrative,
corporate and shareholder approvals, consents, authorizations, rulings,
orders and permits, including, without limitation, the TSE Notice,
which are necessary for completion of all of the transactions
contemplated hereby, including the issuance of Conversion Shares and
any required approvals, shall have been obtained and be in full force
and effect;
(b) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Purchaser contained in this Agreement or in any certificate or
other document delivered pursuant hereto shall be true and correct (or
true and correct in all material respects, in the case of any
representation or warranty not qualified by its terms as to
"Materiality", "material" or "Material Adverse Effect") as of the date
of this Agreement or the date of any such certificate or document, as
the case may be, and shall also be true and correct (or true and
correct in all material respects, in the case of any representation or
warranty not qualified by its terms as to "Materiality", "material" or
"Material Adverse Effect") on and as of the Closing Date with the same
force and effect as if such representations and warranties had been
made on and as of such date, except where such representations and
warranties relate to an earlier date, in which case they shall be true
and correct (or true and correct in all material respects, in the case
of any representation or warranty not qualified by its terms as to
"Materiality", "material" or "Material Adverse Effect") as of such
earlier date;
(c) PERFORMANCE; NO DEFAULT. The Purchaser shall have performed or complied
in all material respects with all covenants and agreements agreed to be
performed or caused to be performed by the Purchaser in this Agreement
at or prior to the Time of Closing;
(d) COMPLIANCE CERTIFICATE. The Corporation shall have received a
certificate dated the Closing Date, in form satisfactory to the
Corporation, acting reasonably, signed by an officer of the General
Partner on behalf of the Purchaser, to the effect that the conditions
precedent specified in sections 7.2(a), (b) and (c) have been complied
with;
(e) PURCHASE PERMITTED BY APPLICABLE LAW, ETC. On the Closing Date, the
Purchaser's purchase of the Debentures shall (i) not violate any
applicable material law or regulation and (ii) not subject the
Corporation to any material tax, penalty or liability under or pursuant
to any applicable law or regulation;
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(f) STOCK EXCHANGE APPROVALS. To the extent advisable under the rules
thereof, the Exchanges shall have approved the issuance to the
Purchaser of the Debentures in accordance with the terms of this
Agreement pursuant to all applicable by-laws, rules, policies and
regulations of the Exchanges, and each of the Exchanges shall have
accepted as at such time the listing or posting for trading of that
number of Conversion Shares which may be issued upon the exercise of
the rights of conversion contained in the Debentures, subject to the
filing of required documents and payment of the necessary listing fees
by the Corporation;
(g) ANCILLARY AGREEMENTS. The General Partner, on behalf of the Purchaser,
and the General Partner each shall have executed and delivered the
Ancillary Agreements to the extent a party thereto. Each of the
Ancillary Agreements shall be in full force and effect;
(h) LEGAL MATTERS. The Corporation shall have received a favourable written
opinion of the Purchaser's and the General Partner's counsel, dated the
Closing Date, satisfactory in scope and substance to the Corporation
and its counsel, acting reasonably, with respect to the following
substantive matters;
(i) the Purchaser has been duly organized and is validly existing as
a limited partnership in good standing under the laws of the
State of Delaware, and the General Partner has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the State of Delaware;
(ii) the Company has duly authorized, executed and delivered this
Agreement and each of the Ancillary Agreements to which it is a
party; and
(iii) performance by the Purchaser and the General Partner of its
obligations under this Agreement and each of the Ancillary
Agreements to which it is a party will not violate the limited
partnership of the Purchaser or the certificate of incorporation
or by-laws of the General Partner.
(i) NO ACTION. No action or proceeding in Canada or the United States in
front of any Governmental Authority shall be (i) pending or threatened
by any Governmental Authority to cease trade, enjoin or prohibit, or
(ii) pending or threatened in writing by any other Person where such
action or proceeding would be reasonably likely to result in a
cessation of trade, injunction or prohibition, in either such case of:
(a) the sale of the Debentures to the Purchaser as contemplated
hereby; or
(b) the right of the Corporation to issue Conversion Shares.
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7.3 TERMINATION.
(a) Prior to Closing, this Agreement may be terminated and the transactions
contemplated hereby may be abandoned:
(i) at any time, by the mutual written consent of the Corporation and
the Purchaser;
(ii) by the Purchaser, if any of the conditions in favour of the
Purchaser set forth in section 7.1 shall have become demonstrably
incapable of being satisfied by the date set forth in clause (iv)
below (other than due to the failure of the party seeking to
terminate to perform or observe in all material respects the
covenants and agreements hereunder to be performed or observed by
such party);
(iii) by the Corporation, if any of the conditions in favour of the
Corporation set forth in section 7.2 shall have become
demonstrably incapable of being satisfied by the date set forth
in clause (iv) below (other than due to the failure of the party
seeking to terminate to perform or observe in all material
respects the covenants and agreements hereunder to be performed
or observed by such party);
(iv) by either the Purchaser or the Corporation upon written notice to
the other if the transactions contemplated by this Agreement
shall not have been consummated by January 31, 2001, unless such
failure of consummation shall be due to the failure of the party
seeking to terminate to perform or observe in all material
respects the covenants and agreements hereunder to be performed
or observed by such party; or
(v) upon the issuance of a permanent injunction by any court of
competent jurisdiction enjoining the consummation of the
transactions contemplated herein (provided that the imposition or
failure to have such injunction removed shall not have resulted
from any action or inaction of the party seeking to terminate).
(b) If this Agreement is terminated without the Closing having occurred,
neither party hereto shall have any liability to the other party hereto
arising out of or resulting from such party's breach of any
representation, warranty, covenant or agreement contained herein, other
than such party's willful and material breach of the representations
and warranties made by it, or willful and material failure in
performance of any of its covenants or agreements arising, hereunder.
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(c) From and after the Closing, any breaches of any representations,
warranties, covenants or agreements existing before the Closing that
could have been asserted as causing any of the closing conditions in
Sections 7.1 and 7.2 from having been satisfied shall be waived.
8. RESTRICTIONS ON TRANSFER OF DEBENTURES AND CONVERSION SHARES
8.1 TRANSFERS OF DEBENTURES. The Debentures may not be assigned,
transferred or sold, directly or indirectly, other than by a member of the
Restricted Group to (i) another member of the Restricted Group, (ii) any Passive
Investor that is a limited partner of the Purchaser as of the date of this
Agreement and has been identified to the Corporation on or prior to the date
hereof or (iii) any Passive Investor that becomes a limited partner of the
Purchaser following the date of this Agreement and has been consented to in
writing by the Corporation (such consent not to be unreasonably withheld), in
any such case provided that such transferee agrees in a written instrument
delivered to the Corporation (and reasonably satisfactory in form and substance
to the Corporation) to be bound by all of the restrictions applicable to the
Purchaser hereunder, under the Ancillary Agreements and under the Debenture.
8.2 TRANSFERS OF CONVERSION SHARES BY THE RESTRICTED GROUP. Prior to the
Release Date, the Conversion Shares may only be assigned, transferred or sold,
directly or indirectly, by a member of the Restricted Group in the following
circumstances:
(a) to another member of the Restricted Group that agrees in writing to the
Corporation to be bound by all the restrictions of this section 8.2
applicable to the Purchaser hereunder and under the Standstill
Agreement;
(b) to the limited partners of the Purchaser pursuant to an in-kind
distribution made ratably in accordance with the Purchaser's limited
partnership agreement, or to the equity holders of any other Restricted
Group member that is a collective investment vehicle pursuant to an
in-kind distribution made in accordance with the constituent documents
of such collective investment vehicle governing such distributions,
provided that such in-kind distribution is not designed to violate or
circumvent any other provisions of this section 8.2;
(c) in a widely distributed underwritten public offering; provided that the
assignment, transfer or sale, to the knowledge of the transferor after
due inquiry, will not result in any Person (other than the underwriters
of such offering) acquiring (together with any "group" of which it has
reported being a member) more than 10% of the outstanding Common Shares
in such offering if no "piggy-back" registration rights by third
parties, including the Corporation, are used to participate in such
offering;
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(d) in private or open market sales which, to the knowledge of the
transferor after due inquiry, do not result in a Person (together with
any "group" of which it has reported being a member) owning more than
10% of the Common Shares outstanding at such time; or
(e) pursuant to a tender offer or takeover bid or other form of transaction
not made or induced by any member of the Purchaser Group that is
available to all holders of Common Shares and (i) either recommended to
the shareholders by the Board or (ii) reasonably likely to have all of
its conditions to consummation satisfied or waived (including a minimum
tender condition) at the scheduled expiration date even if the
Conversion Shares are not tendered.
After the Release Date, no provision of this Agreement shall restrict
the assignment, transfer or sale of the Conversion Shares by any Person.
8.3 TRANSFERS OF CONVERSION SHARES BY MEMBERS OF THE PURCHASER GROUP. The
Conversion Shares may be assigned, transferred or sold, directly or indirectly,
by Passive Investors who are not also members of the Restricted Group and who
obtain such shares in accordance with Section 8.2(b), provided that, prior to
the Release Date, no such Passive Investors shall be permitted to transfer
shares in a private sale to a shareholder that reports ownership of the
Corporation's securities on Form 13D of the Exchange Act or (to the knowledge of
the relevant member of the Purchaser Group after due inquiry) is eligible to
report ownership of the Corporation's securities pursuant to Part 4 of National
Instrument 62-103 of the Canadian securities regulatory authorities indicating
that:
(a) such Person (together with any "group" of which it has reported being a
member), to the knowledge of the transferor after due inquiry, owns in
excess of 10% of the outstanding Common Shares or would own in excess
of 10% of the outstanding Common Shares as a result of such transfer;
and
(b) such Person has acquired Common Shares for purposes other than
investment.
8.4 LEGENDS. The Debenture Certificate sets forth the legends that shall be
borne by the Debenture Certificates and the certificates representing Conversion
Shares. For so long as the Conversion Shares bear a transfer restriction legend
in accordance with the requirements of the Debenture Certificates, any member of
the Purchaser Group shall comply with reasonable requests of the Corporation's
transfer agent in connection with the transfer of such Conversion Shares
(including, without limitation, with respect to delivery of legal opinions).
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9. INDEMNIFICATION.
9.1 INDEMNIFICATION BY THE CORPORATION. From and after the Closing, the
Corporation agrees to indemnify and save harmless the Purchaser from all Losses
suffered or incurred by the Purchaser as a result of or arising directly or
indirectly out of or in connection with: (a) any breach by the Corporation of or
any inaccuracy of any representation or warranty of the Corporation contained in
this Agreement, the Ancillary Agreements, the Debenture Certificate or in any
agreement, certificate or other document delivered pursuant hereto, or (b) any
breach or non-performance by the Corporation of any covenant to be performed by
it which is contained in this Agreement, the Ancillary Agreements, the Debenture
Certificate or in any agreement, certificate or other document delivered
pursuant hereto. Notwithstanding anything contained herein to the contrary, the
indemnification provided above shall only apply to the extent that, and not
until, the aggregate of all amounts subject to indemnification under this
section 9.1 exceeds $1,000,000 (in which event, the Purchaser shall be entitled
to indemnification as provided herein for all such Losses and not just the
excess over $1,000,000). In any event, the maximum aggregate amount that the
Corporation will be required to pay under this section 9.1 in respect of Claims
by the Purchaser is $70,500,000.
9.2 NOTICE OF CLAIM; INVESTIGATIONS; DETERMINATION. Subject to Section 9.3,
in the event that a party (the "Indemnified Party") shall become aware of any
claim, proceeding or other matter (a "Claim") in respect of which another party
(the "Indemnifying Party") agreed to indemnify the Indemnified Party pursuant to
this Agreement and, if a claim for breach of representation and warranty of the
Indemnifying Party, in respect of which the applicable survival period shall not
have lapsed, the Indemnified Party shall promptly give written notice thereof to
the Indemnifying Party. Such notice shall specify the factual basis for the
Claim and the amount of the Claim, if known. Following receipt of notice from
the Indemnified Party of the Claim, the Indemnifying Party shall have 60 days to
make such investigation of the Claim as is considered necessary or desirable.
For the purpose of such investigation, the Indemnified Party shall make
available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the Claim, together with all such other
information as the Indemnifying Party may reasonably request. If both parties
agree at or prior to the expiration of such 60-day period (or any mutually
agreed upon extension thereof) to the validity and amount of such Claim, the
Indemnifying Party shall immediately pay to the Indemnified Party the full
agreed upon amount of the Claim.
9.3 CERTAIN CLAIMS. If any Claim arises directly or indirectly out of or in
connection with the Corporation's execution, delivery and performance of this
Agreement, the Ancillary Agreements or the Debentures and is asserted against
the Purchaser or any member of the Purchaser Group, the Purchaser shall promptly
give the Corporation notice thereof in accordance with section 9.2. The
Corporation shall have the right to control negotiations toward resolution of
such Claim without the necessity of litigation, and, if litigation ensues, to
defend the same with counsel chosen by the Corporation and reasonably acceptable
to the Purchaser, at the Corporation's expense with respect to the conduct of
such defense, and the Purchaser shall in such case extend reasonable
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cooperation in connection with such negotiation and defense and the Corporation
shall keep the Purchaser reasonably informed as to such case. If the Corporation
fails to assume control of the negotiations prior to litigation or to defend
such action within a reasonable time, the Purchaser shall be entitled, but not
obligated, to assume control of such negotiations or defense of such action, and
the Corporation shall be liable to the Purchaser for its expenses reasonably
incurred in connection therewith which the Corporation shall promptly pay.
Neither party shall settle, compromise, or make any other disposition of any
Claims, which would or might result in any liability to the Purchaser or the
Corporation, respectively, under this section 9 without the written consent of
the Purchaser or the Corporation, respectively, which consent shall not be
unreasonably withheld.
9.4 THIRD PARTY CLAIMS. If any Claim covered by the foregoing indemnities
is asserted against any Indemnified Party, it shall be a condition to the
obligations under this section 9 that the Indemnified Party shall promptly give
the Indemnifying Party notice thereof in accordance with section 9.2. The
Indemnifying Party shall be entitled to control negotiations toward resolution
of such claim without the necessity of litigation, and, if litigation ensues, to
defend the same with counsel reasonably acceptable to the Indemnified Party, at
the Indemnifying Party's expense, and the Indemnified Party shall in such case
extend reasonable cooperation in connection with such negotiation and defense.
If the Indemnifying Party fails to assume control of the negotiations prior to
litigation or to defend such action within a reasonable time, the Indemnified
Party shall be entitled, but not obligated, to assume control of such
negotiations or defense of such action, and the Indemnifying Party shall be
liable to the Indemnified Party for its expenses reasonably incurred in
connection therewith which the Indemnifying Party shall promptly pay. Neither
the Indemnifying Party nor the Indemnified Party shall settle, compromise, or
make any other disposition of any Claims, which would or might result in any
liability to the Indemnified Party or the Indemnifying Party, respectively,
under this section 9 without the written consent of the Indemnified Party or the
Indemnifying Party, respectively, which consent shall not be unreasonably
withheld.
9.5 EXCLUSIVITY. The provisions of this section 9 shall be the exclusive
remedy with respect to any Claim for breach by the Corporation of any of its
covenants, representations, warranties or agreements under this Agreement, the
Ancillary Agreements or the Debentures, or any agreement, certificate or other
document delivered pursuant thereto (other than a Claim for specific performance
or injunctive relief) and all such Claims against the Corporation shall be
subject to the limitations and other provisions contained in this section 9,
other than claims against the Corporation for fraud or fraudulent
misrepresentation.
10. INFORMATION AS TO THE CORPORATION
10.1 FINANCIAL AND BUSINESS INFORMATION. The Corporation shall deliver to
each holder of Debentures, if any:
(a) MONTHLY STATEMENTS - within 20 Business Days after the end of each
month, duplicate copies of financial reports prepared monthly in the
normal course of
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business for the Corporation's management and/or the Board with respect
to the Corporation's operations by region and business segment,
including an income statement, balance sheet and statement of cash
flows;
(b) QUARTERLY STATEMENTS
(i) within 45 days after the end of each quarterly fiscal period in
each fiscal year of the Corporation (other than the last quarterly
fiscal period of each such fiscal year), duplicate copies of:
(A) a consolidated balance sheet of the Corporation and its
Subsidiaries as at the end of such quarter; and
(B) consolidated statements of income, changes in shareholders'
equity and cash flows of the Corporation and its
Subsidiaries, for such quarter and (in the case of the second
and third quarters) for the portion of the fiscal year ending
with such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in
reasonable detail, prepared in accordance with GAAP applicable to
quarterly financial statements generally, and certified by a
Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported
on and their results of operations and cash flows, subject to
changes resulting from year-end adjustments, provided that
delivery within the time period specified above of copies of the
Corporation's Quarterly Report on Form 10-Q prepared in compliance
with the requirements therefor applicable to the Corporation (or
such other quarterly report as is applicable to the Corporation)
and filed with the SEC shall be deemed to satisfy the requirements
of this section 10.1(b);
(c) ANNUAL STATEMENTS
(i) within 90 days after the end of each fiscal year of the
Corporation, duplicate copies of:
(A) a consolidated balance sheet of the Corporation and its
Subsidiaries, as at the end of such year; and
(B) consolidated statements of income, changes in shareholders'
equity and cash flows of the Corporation and its
Subsidiaries, for such year,
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setting forth in each case in comparative form the figures
for the previous fiscal year, all in reasonable detail,
prepared in accordance with GAAP, and accompanied by an
opinion thereon of independent certified public accountants
of recognized national standing in the Corporation's
jurisdiction, which opinion shall state that such financial
statements present fairly, in all material respects, the
financial position of the companies being reported upon and
their results of operations and cash flows and have been
prepared in conformity with GAAP, and that the examination of
such accountants in connection with such financial statements
has been made in accordance with generally accepted auditing
standards, and that such audit provides a reasonable basis
for such opinion in the circumstances, provided that the
Corporation's Annual Report on Form 10-K for such fiscal year
(together with the Corporation's annual report to
shareholders, if any, prepared pursuant to Rule 14a-3 under
the Exchange Act) prepared in accordance with the
requirements therefor applicable to the Corporation (or such
other annual report as is applicable to the Corporation) and
sent to shareholders with the annual proxy statement and
filed with the SEC shall be deemed to satisfy the
requirements of this section 10.1(c);
(d) SEC, OSC AND OTHER REPORTS
(i) promptly upon their becoming publicly available, one copy of (i)
each financial statement, report, notice or proxy statement sent
by the Corporation or any Subsidiary to public securities holders
generally, and (ii) each regular or periodic report, each
registration statement that shall have become effective (without
exhibits except as expressly requested by such holder), and each
final prospectus and all amendments thereto filed by the
Corporation or any Subsidiary with the SEC, the OSC or any other
Canadian securities regulatory authorities;
(e) REQUESTED INFORMATION
(i) with reasonable promptness, such other data and information
relating to the business, operations, affairs, financial or other
condition, prospects, assets or properties of the Corporation or
any of its Subsidiaries or relating to the ability of the
Corporation to perform its obligations under this Agreement, the
Ancillary Agreements and the Debentures prepared by the
Corporation in the normal course of business for the Corporation's
management prior to such request as from time to time may be
reasonably requested by any such holder of Debentures.
10.2 INSPECTION. The Corporation shall permit the Purchaser:
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(A) No Default -- if no Default or Event of Default then exists, at the
expense of the Purchaser and upon reasonable prior notice to the
Corporation, to visit the principal executive office of the
Corporation, to discuss the affairs, finances and accounts of the
Corporation and its Subsidiaries with the Corporation's officers, and,
with the consent of the Corporation (which consent will not be
unreasonably withheld) to visit the other offices and properties of the
Corporation and each Significant Subsidiary, all at such reasonable
times during normal business hours and as often as may be reasonably
requested in writing; and
(B) Default -- if a Default or Event of Default then exists, at the expense
of the Corporation to visit and inspect any of the offices or
properties of the Corporation or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent
public accountants (and by this provision the Corporation authorizes
said accountants to discuss the affairs, finances and accounts of the
Corporation and its Subsidiaries), all at such times during normal
business hours and as often as may be requested.
11. MUTUAL COVENANT AND IMPLEMENTATION.
11.1 Each of the Corporation and the Purchaser agrees to use its reasonable
best efforts to obtain all necessary legal, regulatory and administrative
approvals, consents, authorizations, rulings, orders and permits and to satisfy
all conditions in order to complete the transactions contemplated by this
Agreement.
12. EXPENSES, ETC.
12.1 The Purchaser shall receive from the Corporation (upon termination of
this Agreement) a payment in respect of expenses of up to $2 million if the
Closing does not occur for any reason so long as the Purchaser is not in
material breach of its representations, warranties, covenants or agreements
under this Agreement. Such reimbursement shall be made upon notice by the
Purchaser with appropriate supporting documentation and shall be payable by way
of wire transfer of immediately available funds to or to the order of the
Purchaser. If the Closing occurs, the Corporation shall pay the Purchaser's
expenses, advisory and financing fees in the amount of $7.5 million in cash at
Closing, payable by way of wire transfer of immediately available funds to or to
the order of the Purchaser, $1.5 million of which shall be wired directly to the
account of GSCP (NJ), L.P.
13. CONFIDENTIALITY.
13.1 Neither the Purchaser nor the Corporation shall make any public
disclosure, except to the extent required by law, of the terms of this Agreement
or regarding the transaction
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contemplated hereby without the prior consent of the other, such consent not to
be unreasonably withheld. The wording of any public disclosure to be made in
respect of the transactions contemplated by this Agreement must be approved by
each of the Corporation and the Purchaser. This section 13.1 shall survive any
termination of this Agreement.
13.2 CONFIDENTIAL INFORMATION.
(A) Any information furnished to the Purchaser (or any member of the
Restricted Group) concerning the Corporation (including through their
director nominees) shall be deemed to be "Confidential Information."
Notwithstanding the generality of the foregoing, information that is
publicly available or becomes publicly available other than through
disclosure by the Purchaser (or a member of the Restricted Group) or
its Representatives (as defined below) or otherwise was known to the
Purchaser (or a member of the Restricted Group) or its Representatives
prior to disclosure to any of them by the Corporation or its
Representatives other than as a result of disclosure by a Person under
an obligation of confidentiality to the Corporation known to the
Purchaser (or a member of the Restricted Group) or its Representatives
shall not be deemed to be Confidential Information.
(B) Except as may be otherwise required by law, legal process or the rules
of any securities regulatory organization (in which event the Purchaser
shall provide advance notice to the Corporation, to the extent
practicable), the Purchaser shall (and shall cause all of the members
of the Restricted Group to) keep all Confidential Information
confidential, and shall not disclose it to anyone except to other
members of the Restricted Group and to its and their own employees,
directors, attorneys, accountants, financial advisers and other
consultants and agents with a need to know (collectively,
"Representatives") (and the Purchaser shall be responsible for any
violation of the terms hereof by its Representatives) or to such
Persons as required by law. Each Person to whom such Confidential
Information is disclosed must be advised of its confidential nature and
of the terms of this section 13.2. The Purchaser acknowledges that
Confidential Information may include material, non-public information
and that the United States and Canadian federal, state and provincial
securities laws restrict the ability of any Person in possession of
such information to acquire or dispose of affected securities, and that
such laws impose liability on such Person for doing so.
(C) This Section 13.2 shall survive any termination of this Agreement.
14. GENERAL PROVISIONS.
14.1 NOTICES. Any notice, direction or other instrument required or
permitted to be given or made hereunder shall be in writing and shall be
sufficiently given or made if delivered in person
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to the address set forth below or if telecopied or sent by other means of
recorded electronic communication and confirmed by delivery as soon as
practicable thereafter.
Notices to the Corporation shall be addressed as follows:
Moore Corporation Limited
c/o Moore Executive Office
1200 Lakeside Drive
Bannockburn, IL 60015-1243
Attention: Chief Financial Officer
Telecopier No.: 847-607-7113
with copies to:
Moore Corporation Limited
c/o Moore Executive Office
1200 Lakeside Drive
Bannockburn, IL 60015-1243
Attention: Office of General Counsel
Telecopier No.: 847-607-7113
and to:
Moore Corporation Limited
Scotia Plaza
40 King St., West
Suite 3501
P.O. Box 205
Toronto, ON M5H 3Y2
Attention: Vice President and Secretary
Telecopier No.: (416) 364-1667
Notices to the Purchaser shall be addressed as follows:
Chancery Lane/GSC Investors, L.P.
c/o CLGI, Inc.
3 E. 54th Street - Suite 1700
New York, New York, 10022
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Attention: Michael Kraus
Telecopier No.: 212-223-4074
with copies to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Joseph B. Frumkin
Telecopier No.: 212- 558-3588
and to:
Davies, Ward & Beck LLP
44th Floor
1 First Canadian Place
Toronto, ON M5X 1B1
Attention: J-P. Bisnaire
Telecopier No.: (416) 863-0871
and to:
Squadron, Ellenoff, Plesent & Sheinfeld, LLP
551 Fifth Avenue
New York, NY 10176
Attention: Mitchell S. Ames
Telecopier No.: (212) 697-6686
Any notice, direction or other communication so given or made shall be deemed to
have been given or made and to have been received on the day of delivery, if
delivered, or on the day of sending if sent by telecopier or other means of
recorded electronic communication (provided such day of delivery or sending is a
Business Day and, if not, then on the first Business Day thereafter). Either
party hereto may change its address for notice to the other party by notice
given in the manner aforesaid.
14.2 ENUREMENT. This Agreement shall enure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns.
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14.3 FURTHER ASSURANCES. Each of the parties agrees to take all such
reasonable actions as may be requested by the other party hereto to implement
and give full effect to the provisions of this Agreement.
14.4 TIME OF THE ESSENCE. Time shall be of the essence of this Agreement.
14.5 ENTIRE AGREEMENT. This Agreement, the Ancillary Agreements and the
Debentures constitute the entire agreement between the parties hereto pertaining
to the subject matter hereof and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties and there
are no other agreements between the parties in connection with the subject
matter hereof, other than the confidentiality agreement between an Affiliate of
the Purchaser and the Corporation, dated as of January 13, 2000, entered into in
connection with the transactions contemplated hereby, which shall survive until
the Closing. No supplement, modification or termination of this Agreement, the
Ancillary Agreements and the Debentures shall be binding unless executed in
writing by both of the parties hereto.
14.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which when taken together shall constitute this Agreement.
IN WITNESS WHEREOF the parties have executed this Agreement.
MOORE CORPORATION LIMITED
by /s/ Brian M. Levitt C.S.
----------------------
CHANCERY LANE/GSC INVESTORS L.P.,
BY ITS GENERAL PARTNER, CLGI, INC.
by /s/ Mark Angelson C.S.
----------------------
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SCHEDULES
---------
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EXHIBIT 1
---------
FORM OF DEBENTURE CERTIFICATE
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EXHIBIT 2
---------
FORM OF REGISTRATION RIGHTS AGREEMENT
-------------------------------------
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EXHIBIT 3
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FORM OF STANDSTILL AGREEMENT
----------------------------