CORUS ENTERTAINMENT INC.
- and -
SHAW COMMUNICATIONS INC.
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SHARE PURCHASE AGREEMENT |
January 13th, 2016 |
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THIS SHARE PURCHASE AGREEMENT is made January 13th, 2016
BETWEEN:
CORUS ENTERTAINMENT INC., a corporation governed by the laws of
Canada (the “Purchaser”),
- and -
SHAW COMMUNICATIONS INC., a corporation governed by the laws of the
Province of Alberta (the “Vendor”),
RECITALS:
| A. |
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The Vendor beneficially owns and controls all of the issued and outstanding shares of Shaw
Media Inc., a corporation governed by the laws of the Province of Alberta (the “Company”). |
| B. |
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The Purchaser wishes to purchase, and the Vendor wishes to sell, all of the issued and
outstanding shares in the capital of the Company and the Purchased Debt (as defined herein). |
| C. |
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The Vendor and the Purchaser are “related parties” pursuant to the requirements of MI 61-101
(as defined herein) and, as such, the purchase and sale of the Purchased Shares (as defined
herein) and the Purchased Debt constitutes a “related party transaction” (as defined in
MI 61-101) for each of the Vendor and the Purchaser. |
| D. |
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The Purchaser has obtained a formal valuation prepared by Barclays Capital Canada Inc. as
required under MI 61-101 in connection with the purchase and sale of the Purchased Shares and
the Purchased Debt and will seek Purchaser Shareholder Approval (as defined herein) in
accordance with this Agreement. |
| E. |
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The Vendor is exempt from the requirements under MI 61-101 to obtain a formal valuation or
minority shareholder approval in respect of the transactions contemplated by this Agreement. |
THEREFORE, the Parties agree as follows:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
Whenever used in this Agreement, the following words and terms have the meanings set out below:
“Accounts Receivable” means all accounts receivable, notes receivable, bills receivable,
trade accounts, book debts and insurance claims due or deemed to be due to the Company,
including any refunds and rebates receivable due or deemed to be due to the Company, and the
benefit of all security (including cash deposits), guarantees and other collateral held by
the Company, all as recorded on the Books and Records in accordance with GAAP as at the
given date;
“Affiliate” of any Person means, at the time such determination is being made, any other
Person controlling, controlled by or under common control with such first Person, in each
case, whether directly or indirectly;
“Agreement” means this Share Purchase Agreement, including all schedules, and all amendments
or restatements, as permitted, and references to “Article”, “Section”, “Schedule” or
“Exhibit” mean the specified Article or Section of, or Schedule or Exhibit to, this
Agreement;
“Alternative Transaction” has the meaning given in Section 7.4(a) hereof;
“Appurtenances” means privileges, rights, easements and appurtenances both at law and equity
belonging to or for the benefit of Real Property, including means of access between Real
Property and a public way, rights in respect of or for any other uses upon which the present
use is dependent (such as pipelines, cables, railway sidings) and rights existing in and to
any streets, alleys, passages and other rights-of-way;
“Arbitrating Accountant” has the meaning given in Section 3.3(c) hereof;
“Arm’s Length” has the meaning given in the Tax Act;
“Balance Sheet” means the audited consolidated statement of financial position of the
Company and its Subsidiaries as at August 31, 2015, forming part of the Company Financial
Statements;
“Benefit Plans” means plans, arrangements, agreements, programs, policies, practices or
undertakings, whether oral or written, formal or informal, funded or unfunded, insured or
uninsured, registered or unregistered to which the Company or any of its Subsidiaries is a
party or bound or in which the Employees participate or under which the Company or any of
its Subsidiaries has, or will have, any liability or contingent liability, or pursuant to
which payments are made, or benefits are provided to, or an entitlement to payments or
benefits may arise with respect to any of its Employees or former employees, directors or
officers, individuals working on contract with the Company or any of its Subsidiaries or
other individuals providing services to any of them of a kind normally provided by employees
(or any spouses, dependants, survivors or beneficiaries of any such Persons), excluding
Statutory Plans;
“Books and Records” means books and records of the Company and its Subsidiaries or of the
Vendor or its Affiliates principally relating to the Company or any of its Subsidiaries
including financial, corporate, operations and sales books and records, sales and purchase
records, lists of suppliers and customers, formulae, business reports, and material plans
and projections and all other material documents, surveys, plans, files, records,
assessments, correspondence, and other material data and information, financial or
otherwise, including all material data, information and databases stored on computer-related
or other electronic media;
“Business” means the business of the Company and its Subsidiaries, namely that of providing
Canadians with programming content through a portfolio of conventional television stations,
specialty television channels, and digital and mobile properties;
“Business Day” means any day, other than a Saturday or Sunday, on which Royal Bank of Canada
in Toronto, Ontario and Calgary, Alberta is open for commercial banking business during
normal banking hours;
“Canadian Securities Laws” means the securities legislation and regulations thereunder of
each province and territory of Canada and the rules, instruments, policies and orders of
each Securities Regulator made thereunder;
“Claims” includes claims, demands, complaints, grievances, actions, applications, suits,
causes of action, Orders, charges, indictments, prosecutions, assessments or reassessments,
informations or other similar processes;
“Closing” means the completion of the transactions contemplated by this Agreement;
“Closing Date” means:
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(a) |
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if the conditions set out in Article 8 and Article 9 have been satisfied or
waived (other than those Closing conditions that by their nature are only capable of
being satisfied on the Closing Date, which conditions are capable of being satisfied)
at a moment in time that is at least seven Business Days prior to the end of a calendar
month, the first Business Day of the immediately following calendar month; |
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(b) |
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if the conditions set out in Article 8 and Article 9 have been satisfied or
waived (other than those Closing conditions that by their nature are only capable of
being satisfied on the Closing Date, which conditions are capable of being satisfied)
at a moment in time that is fewer than seven Business Days prior to the end of a
calendar month, the first Business Day of the second calendar month following the month
in which the conditions set out in Article 8 and Article 9 have been satisfied or
waived (other than those Closing conditions that by their nature are only capable of
being satisfied on the Closing Date, which conditions are capable of being satisfied); |
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(c) |
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such earlier or later date as may be agreed to in writing by the Purchaser and
the Vendor, |
and provided that if the Vendor reasonably expects to receive the Tax Ruling during
the calendar month in which the Closing Date would otherwise occur pursuant to
paragraph (a) or (b) above, the Vendor may, on not less than five Business Days
written notice prior to the date on which the Closing Date would otherwise occur
pursuant to paragraph (a) or (b) above, delay the Closing Date to the first Business
Day of the calendar month immediately following the calendar month in which the
Closing Date would otherwise occur, and provided that in no event shall the Closing
Date be later than the Outside Date; and provided further that if any portion of the
Purchaser Debt Financing provided for in the Purchaser Commitment Letters would be
unavailable on the date on which the Closing Date is otherwise scheduled to occur
and the aggregate net proceeds of the Purchaser Debt Financing that would be
available together with the proceeds from one or more Purchaser Offerings completed
following the date of this Agreement would not be sufficient to pay the amount
provided for in Section 3.2(a) on the date on which the Closing Date is otherwise
scheduled to occur, the Purchaser may, from time to time, on written notice prior to
the Closing, delay the Closing Date to a date specified by the Purchaser (which must
be the first Business Day of a calendar month), provided that in no event shall the
delayed Closing Date be later than the Outside Date and the Purchaser shall not be
entitled to delay the Closing Date pursuant to this proviso if it has breached in
any material respect any of its obligations pursuant to Section 7.5.
“Closing Time” means 9:00 a.m. (Toronto time), on the Closing Date or such other time on the
Closing Date as the Parties may agree in writing as the time at which the Closing shall take
place;
“Closing Working Capital” has the meaning given in Section 3.3(a) hereof;
“Collective Agreements” means collective agreements (including expired collective agreements
which have not been renewed) and related documents including benefit agreements, letters of
understanding, letters of intent and other written communications (including arbitration
awards) by which the Company or any of its Subsidiaries is bound or which impose any
obligations upon the Company or any of its Subsidiaries or set out the understanding of the
parties or an interpretation with respect to the meaning of any provisions of such
collective agreements;
“Company” has the meaning given in the recitals to this Agreement;
“Company Disclosure” means the disclosure prepared by the Vendor regarding the Company, its
Subsidiaries, the Business and the Purchased Shares and, to the extent required, the Vendor,
required to be included under applicable Law in the Purchaser Circular or any prospectus or
other offering document prepared in connection with a Purchaser Offering, including the
Company Financial Statements and, to the extent required, the unaudited interim consolidated
financial statements of the Company and its Subsidiaries for any period subsequent to August
31, 2015;
“Company Financial Statements” means, collectively, the audited consolidated statements of
the Company of income, comprehensive income, changes in shareholders’ equity and cash flows
and all notes thereto for each of the years ended August 31, 2013, August 31, 2014 and
August 31, 2015 and the audited consolidated statements of the Company of financial position
as at August 31, 2014 and August 31, 2015, and all notes thereto, copies of which are
attached to the Vendor Disclosure Letter;
“Company Material Adverse Change” means (i) any fact or state of facts, circumstance,
change, effect, occurrence or event which either individually is or collectively in the
aggregate are, or either individually or collectively in the aggregate would reasonably be
expected to be, materially adverse to the business, operations, results of operations,
properties, assets, liabilities, obligations (whether absolute, accrued, conditional or
otherwise) or condition (financial or otherwise) of the Company and its Subsidiaries, taken
as a whole, except to the extent of any fact or state of facts, circumstance, change,
effect, occurrence or event resulting from or arising in connection with: (a) the
announcement of the execution of this Agreement or the transactions contemplated herein; or
(b) any change in GAAP or changes in applicable regulatory accounting requirements
applicable to the industries in which the Company and its Subsidiaries conduct business; or
(c) any change in global, national or regional political conditions (including the outbreak
of war or acts of terrorism) or in general economic, business, regulatory, or market
conditions, or in national or global financial or capital markets; or (d) any change
generally affecting the industries in which the Company and its Subsidiaries conduct
business; or (e) any natural disaster; or (f) any actions taken (or omitted to be taken) at
the written request of the Purchaser including, for greater certainty, any actions requested
in writing by the Purchaser that would be implemented following consummation of the
transactions contemplated by this Agreement; or (g) any action taken by the Company or any
of its Subsidiaries that is required pursuant to this Agreement (excluding any obligation to
act in the ordinary course of business); provided, however, that with respect to clauses
(b), (c), (d) and (e) above, such matter does not have a disproportionate effect on the
Company and its Subsidiaries, taken as a whole, relative to comparable entities operating in
the industries in which the Company and its Subsidiaries conduct business (in which case,
only the incremental disproportionate impact shall be taken into account in determining
whether a “Company Material Adverse Change” has occurred or would reasonably be expected to
occur), and references in certain sections of this Agreement to dollar amounts are not
intended to be, and shall not be deemed to be, illustrative or interpretative for purposes
of determining whether a “Company Material Adverse Change” has occurred or would reasonably
be expected to occur; or (ii) any fact or state of facts, circumstance, change, effect,
occurrence or event which, either individually or collectively in the aggregate is or would
reasonably be expected to be materially adverse to the ability of the Vendor and/or the
Company to complete or consummate the transactions contemplated by this Agreement;
“Company Plan” means any Benefit Plan that is sponsored or maintained by the Company or any
of its Subsidiaries;
“Consideration Shares” means the 71,364,853 Purchaser Class B Shares issuable to the Vendor
pursuant to this Agreement in partial satisfaction of the Purchase Price;
“Consolidated Plan of Compromise, Arrangement and Reorganization” means the consolidated
plan of compromise, arrangement and reorganization dated June 23, 2010 pursuant to the
Companies’ Creditors Arrangement Act (Canada) and the Canada Business Corporations Act
involving Canwest Global Communications Corp. (“Canwest”), Canwest Media Inc. (“CMI”) and
certain subsidiaries of Canwest;
“Contracts” means contracts, licences, leases, agreements, obligations, promises,
undertakings, understandings, arrangements, documents, commitments, entitlements or
engagements to which a Party or any of its Subsidiaries is a party or by which any of them
are legally bound or under which a Party or any of its Subsidiaries has, or will have, any
liability or contingent liability (in each case, whether written or oral, express or
implied), and includes any quotations, orders, proposals or tenders which remain open for
acceptance and warranties and guarantees;
“control” means, in respect of:
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(a) |
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a corporation, the ability of a Person or group of Persons acting in concert to
influence the manner in which the business of such corporation is carried on, whether
as a result of ownership of sufficient voting shares of such corporation to enable that
Person or group of Persons to elect a majority of the directors of such corporation or
by contract or otherwise; |
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(b) |
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a partnership, trust, syndicate or other entity, actual power or authority to
manage and direct the affairs of, or ownership of more than fifty percent (50%) of the
transferable beneficial interests in, such entity, |
and the term “controlled” has a corresponding meaning;
“CRTC” means the Canadian Radio-television and Telecommunications Commission or any
successor body thereto;
“CRTC Approval” means the approval by the CRTC pursuant to the administrative approach set
out in Broadcasting Information Bulletin CRTC 2008-8-2 of the transactions contemplated by
this Agreement or such other approval as may be required;
“CRTC Licence” means a licence issued by the CRTC to carry on a programming undertaking;
“Data Protection Laws” means any applicable Laws relating to (i) the privacy of users of the
products or services of the Company and its Subsidiaries and all internet websites owned,
maintained or operated by the Company or its Subsidiaries and (ii) any other applicable data
protection and privacy Laws, including those regarding the collection, storage, processing,
transfer, disclosure, use and provision of notice of breach regarding any data consisting of
personal information, in each case as such term is defined under the applicable Law, that
is, or is capable of being, associated with identifiable individuals (in each case, as may
be amended or re-enacted);
“Defined Benefit Plans” means any Benefit Plan that is a “registered pension plan” as
defined in subsection 248(1) of the Tax Act and which contains a “defined benefit provision”
as defined in subsection 147.1(1) of the Tax Act;
“Determination Date” has the meaning given in Section 3.3(c) hereof;
“Dispute”, “Dispute Notice” and “Dispute Period” have the respective meanings attributed
thereto in Section 3.3(b) hereof;
“Effective Time” means 12:01 a.m. (Toronto time) on the first day of the calendar month in
which the Closing occurs;
“Elected Amount” has the meaning given in Section 3.5(a) hereof;
“Employees” means individuals employed by the Company or any of its Subsidiaries on a
full-time, part-time or temporary basis, including those employees on disability leave,
parental leave or other absence;
“Employment Contracts” means written Contracts, other than Benefit Plans, relating to an
Employee, including any written communication or practice relating to an Employee which
imposes any obligation on the Company or any of its Subsidiaries;
“Encumbrances” means pledges, liens, charges, security interests, leases, title retention
agreements, mortgages, restrictions, developments or similar agreements, easements,
rights-of-way, title defects, options or adverse claims or encumbrances of any kind or
character whatsoever;
“Environment” means the environment and natural environment as defined in any Environmental
Laws and includes indoor air and any living things;
“Environmental Approvals” means permits, certificates, licences, authorizations, consents,
agreements, instructions, directions, notices, registrations, approvals or other rights
made, issued, granted, conferred or required by a Governmental Authority pursuant to any
Environmental Law relating to the operations, business or assets of the Company or any of
its Subsidiaries;
“Environmental Laws” means Laws relating to the Environment and public health or safety, and
includes Laws relating to any sewer system and to the storage, generation, use, handling,
manufacture, processing, labelling, advertising, sale, display, transportation, treatment,
reuse, recycling, Release and disposal of Hazardous Substances;
“Environmental Orders” means Orders issued, filed or imposed by any Governmental Authority
pursuant to any Environmental Laws and include certificates of property use and Orders
requiring investigation, assessment, monitoring, managing, controlling, treatment, removal,
excavation or remediation of any site or Hazardous Substance, or requiring that any Release
or any other activity be reduced, modified, managed, controlled, stopped or eliminated or
requiring any form of payment or co-operation be provided to any Governmental Authority;
“Equipment Contracts” means Contracts relating to Tangible Personal Property and includes
motor vehicle leases, equipment leases, leases of computer hardware and computer systems,
conditional sales contracts, title retention agreements and other similar agreements;
“GAAP” means generally accepted accounting principles from time to time approved by the
Chartered Professional Accountants Canada, or any successor institute, applicable as at the
date on which any calculation or determination is required to be made;
“Governmental Authorities” means governments, regulatory authorities, governmental
departments, agencies, commissions, bureaus, officials, ministers, courts, bodies, boards,
tribunals or dispute settlement panels, stock exchanges or other law, rule or
regulation-making organizations or entities:
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(a) |
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having jurisdiction on behalf of any nation, province, territory or state or
any other geographic or political subdivision of any of them; or |
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(b) |
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exercising, or entitled to exercise, any administrative, executive, judicial,
legislative, policy, regulatory or taxing authority or power; |
“Governance and Investor Rights Agreement” means the governance and investor rights
agreement to be entered into on the Closing Date between the Vendor and the Purchaser in the
form attached as Exhibit A hereto;
“Governmental Authorizations” means authorizations, approvals, including Environmental
Approvals, franchises, Orders, certificates, consents, directives, notices, licences,
permits, variances, agreements, instructions, registrations or other rights issued to or
required by a Party or any of its Subsidiaries, by or from any Governmental Authority;
“Hazardous Substances” means pollutants, contaminants, wastes of any nature, hazardous
substances, hazardous materials, toxic substances, prohibited substances, dangerous
substances or dangerous goods as defined, judicially interpreted or identified in any
Environmental Laws including asbestos, asbestos-containing materials, polychlorinated
biphenyls (PCBs) and mould;
“Improvements” means plants, buildings, structures, fixtures, erections and improvements
located on, over, under or upon the Real Property and mechanical, electrical, plumbing,
heating and air-conditioning systems relating to the Real Property, including any of the
foregoing under construction;
“Incurred” means, in relation to claims under the Parent Plans, the date on which the event
giving rise to such claim occurred and, in particular: (i) with respect to a death or
dismemberment claim, shall be the date of the death or dismemberment; (ii) with respect to a
short-term or long-term disability claim, shall be the date that the period of short-term or
long-term disability commenced (provided that a short-term or long-term disability claim
shall be deemed to be Incurred prior to the Closing Date where any Employee suffers a
disability after the Closing Date and such disability would be considered under the terms of
the Parent Plan, as it read as at the Closing Date, to be a recurrence of disability that
occurred prior to the Closing Date); (iii) with respect to an extended health care claim,
including dental and medical treatments, shall be the date of the treatment; and (iv) with
respect to a prescription drug or vision care claim, the date that the prescription was
filled;
“Indemnification Period” means the period commencing on the date of this Agreement and
expiring on the date that is 18 months from the Closing Date;
“Indemnified Party” has the meaning given in Section 11.3(a) hereof;
“Indemnifying Party” has the meaning given in Section 11.3(a) hereof;
“Information Technology” means physical or virtualized computer hardware, specialized
technology equipment rooms, commissioned, licensed or internally built software, databases,
data archives and websites owned or leased by the Company or any of its Subsidiaries;
“Intellectual Property” means intellectual property rights, whether registered or not,
owned, licensed, used or held by the Company or any of its Subsidiaries, including:
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(a) |
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inventions, pending patent applications (including divisionals, reissues,
renewals, re-examinations, continuations, continuations-in-part and extensions) and
issued patents, including those inventions, pending patent applications and issued
patents; |
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(b) |
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trade-marks, trade dress, trade-names, business names, corporate names, domain
names, website names and world wide web assesses, logos and other indicia of origin; |
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(c) |
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copyrights, including the copyright registrations and applications; |
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(d) |
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industrial designs and similar rights, including those registrations and
applications; and |
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(e) |
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material proprietary and non-public business information, including inventions
(whether patentable or not), invention disclosures, improvements, discoveries, trade
secrets, confidential information, know-how, methods, processes, designs, technology,
technical data, schematics, formulae and customer lists, and documentation relating to
any of the foregoing; |
“Laws” means applicable laws (including common law or civil law), statutes, by-laws, rules,
regulations, Orders, ordinances, protocols, codes, guidelines, treaties, policies, notices,
directions, decrees, judgments, awards or requirements, in each case of any Governmental
Authority;
“Leased Real Property” means lands and/or premises which are used by the Company or any of
its Subsidiaries and which are leased, subleased, licensed to or otherwise occupied by the
Company or any of its Subsidiaries pursuant to a Real Property Lease and the interests of
the Company or any of its Subsidiaries in any Improvements and Appurtenances;
“Lenders” means Royal Bank of Canada and each other Person who becomes a lender in respect
of one or more of the Purchaser Debt Financings pursuant to one or more of the Purchaser
Commitment Letters;
“Losses” means assessments or reassessments, judgments, debts, liabilities, penalties,
fines, expenses, costs, damages or losses, including fees and disbursements of legal counsel
on a full indemnity basis, and all costs incurred in investigating or pursuing any of the
foregoing or any proceeding relating to any of the foregoing;
“Material Contracts” means Contracts to which the Company or any of its Subsidiaries is a
party:
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(a) |
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involving aggregate payments to or by the Company and/or its Subsidiaries in
excess of $10,000,000 in a fiscal year or in the aggregate, including program output or
licence agreements with any production studio, producer or distributor based in Canada,
the United States or otherwise, and any other supplier or customer agreements not
otherwise disclosed in this Agreement; |
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(b) |
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entered into after September 1, 2015 for the acquisition or disposition,
directly or indirectly (by merger or otherwise), of any material assets or any capital
stock or other equity interests of any Person; |
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(c) |
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relating to the acquisition or disposition of any material assets or any
capital stock or other equity interests of any Person pursuant to which the Company or
any of its Subsidiaries has continuing indemnification, “earn-out” or other continuing
payment obligations (contingent or actual); |
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(d) |
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that constitute shareholder agreements, joint venture agreements that are
material in nature, partnership agreements, strategic alliance agreements or trust
agreements, in each case governing the Company or any of its Subsidiaries; |
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(e) |
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which restrict or purport to restrict the Company and/or its Subsidiaries from
competing with any Person in any business or in any geographic area or to engage in any
business or other activity; or |
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(f) |
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which, if terminated without the consent of the Company and/or its
Subsidiaries, would reasonably be expected to have a Company Material Adverse Change; |
and in each case, including any and all amendments and revisions thereto and restatements
thereof;
“Material Subsidiaries” means the material Subsidiaries of the Purchaser, being those
subsidiaries listed in the current annual information form of the Purchaser;
“MI 61-101” means Multilateral Instrument 61-101 – Protection of Minority Security Holders
in Special Transactions of the Canadian Securities Administrators;
“misrepresentation” has the meaning given in Canadian Securities Laws;
“Multi-Employer Plans” means Benefit Plans to which the Company is required to contribute
and which are not maintained or administered by the Company or any of its Affiliates;
“Notice” has the meaning given in Section 13.5 hereof;
“Orders” means orders, injunctions, judgments, administrative complaints, decrees, rulings,
awards, assessments, directions, instructions, penalties or sanctions issued, filed or
imposed by any Governmental Authority or arbitrator, including Environmental Orders;
“Outside Date” means May 2, 2016, or such later date as may be agreed to by the Parties in
writing, provided that:
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(a) |
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the Outside Date shall automatically be extended if CRTC Approval has not been
obtained by such date to the first Business Day of the calendar month following the
date on which CRTC Approval has been obtained; and |
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(b) |
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the Outside Date shall automatically be extended to the first Business Day of
the calendar month immediately following the calendar month in which the Outside Date
would otherwise occur in the event the Vendor reasonably expects to receive the Tax
Ruling during such following calendar month; |
provided further and notwithstanding any of the foregoing or any other provision of this
Agreement, in no event shall the Outside Date be extended or deemed to be extended beyond
October 3, 2016;
“Owned Real Property” means real property, owned or purported to be owned in fee simple, by
the Company or any of its Subsidiaries, and real property, other than Leased Real Property,
in which the Company or any of its Subsidiaries has an interest, including Improvements and
Appurtenances;
“Parent DC Pension Plan” means the Vendor DC Pension Plan having registration number 55709
under the Pension Benefits Standards Act (Canada) in which Employees participate;
“Parent Plan” means any Benefit Plan that is sponsored or maintained by the Vendor and in
which Employees participate;
“Parties” means each of the Vendor and the Purchaser collectively, and “Party” means either
of them;
“Pension Plans” means Benefit Plans providing pensions, superannuation benefits or
retirement savings, including pension plans, top up pensions or supplemental pensions,
“registered retirement savings plans” (as defined in the Tax Act), “registered pension
plans” (as defined in the Tax Act) and “retirement compensation arrangements” (as defined in
the Tax Act);
“Pension Plan Unfunded Liability” means an unfunded liability in respect of any Pension
Plan, including a going concern unfunded liability, a solvency deficiency or wind-up
deficiency, determined as at the date of the most recent actuarial valuation prepared in
respect of such plan;
“Permitted Encumbrances” means:
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(a) |
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the Encumbrances listed in Section 1.1 of the Vendor Disclosure Letter; |
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(b) |
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liens for Taxes, assessments and governmental charges that are due but are
being contested in good faith and diligently by appropriate proceedings and in respect
of which adequate provision for the related monetary obligation has been made; |
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(c) |
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in respect of real property, servitudes, easements, restrictions, rights-of-way
and other similar rights or any interest therein, provided the same are not of such
nature as to materially adversely affect the use or value of the property subject
thereto; |
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(d) |
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in respect of real property, the reservations in any original grants from the
Crown of any real property or interest therein which do not materially adversely affect
the use or value of the real property subject thereto; |
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(e) |
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assignments of insurance provided to landlords (or their mortgagees) pursuant
to the terms of any lease and liens or rights reserved in any lease for rent or for
compliance with the terms of such lease; |
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(f) |
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inchoate liens claimed or held by any Governmental Authority or a public
utility in respect of the payment of Taxes or utilities not yet due and payable; |
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(g) |
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in respect of Tangible Personal Property, liens of any kind, provided the same
are not of such nature as to materially adversely affect the use or value of the
Tangible Personal Property subject thereto; and |
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(h) |
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liens under pension standards legislation applicable to any Benefit Plan that
relate to employee contributions withheld from pay but not yet due to be remitted to
the applicable Benefit Plan; |
“Person” means any individual, sole proprietorship, partnership, firm, entity, joint
venture, unincorporated association, unincorporated syndicate, unincorporated organization,
trust, body corporate, Governmental Authority, and where the context requires, any of the
foregoing when they are acting as trustee, executor, administrator or other legal
representative;
“Personal Information” means information in the possession or under the control of the
Company about an identifiable individual;
“Pertinent Partnership” has the meaning given in the definition of Vendor Taxes;
“Plan Emergence Agreement” means the Plan Emergence Agreement entered into on June 25, 2010
by Canwest, CMI, Skipper and the Monitor (as defined therein) in connection with the
Consolidated Plan of Compromise, Arrangement and Reorganization;
“Post-Retirement Benefit Plans” means any Benefit Plans providing health, dental, life
insurance or any other welfare benefits beyond retirement or other termination of service to
any Employees or former employees, or officers or directors of the Company or any of its
Subsidiaries (or any spouse, beneficiary or dependent of any such person), whether a Company
Plan or Parent Plan;
“Pre-Closing Reorganization” has the meaning given in Section 7.3(a) hereof;
“Pre-Closing Tax Period” means any taxable period ending on or before the Effective Time and
that portion of any Straddle Period up to the Effective Time;
“Pre-Closing Time” has the meaning given in the definition of Vendor Taxes;
“Purchase Price” has the meaning given in Section 3.1 hereof;
“Purchased Debt” means the ordinary course non-interest bearing debt owing by the Company to
the Vendor, and which debt is in the aggregate principal amount of approximately $335
million as of November 30, 2015 (which principal amount, for certainty, may increase or
decrease from such date until the Closing Time), which is to be evidenced by one or more
promissory notes by the Closing Time in mutually acceptable form;
“Purchased Shares” means all of the issued and outstanding shares in the capital of the
Company, being 10,000,100 Class A common shares in the capital of the Company;
“Purchaser Acquisition Proposal” means:
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(a) |
|
any take-over bid, issuer bid, amalgamation, plan of arrangement, business
combination, merger, tender offer, exchange offer, consolidation, recapitalization,
reorganization, liquidation, dissolution, or winding-up in respect of the Purchaser
that, if consummated, would result in a Person or group of joint actors beneficially
owning 50% or more of the equity securities of the Purchaser; |
| |
(b) |
|
any direct or indirect sale of assets (or any lease, long-term supply
arrangement, licence, or other arrangement having the same economic effect as a sale)
of the Purchaser or any of its Subsidiaries representing 50% or more of the
consolidated assets, revenues, or earnings of the Purchaser; |
| |
(c) |
|
any direct or indirect sale, issuance, or acquisition of shares or other equity
interests (or securities convertible or exchangeable into or exercisable for such
shares or interests) in the Purchaser or any of its material Subsidiaries representing
50% or more of the issued and outstanding equity interests of the Purchaser or such
material Subsidiary or rights or interests therein or thereto; |
| |
(d) |
|
any similar transaction or series of transactions involving the Purchaser or
any of its Subsidiaries, directly or indirectly; or |
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(e) |
|
any inquiry, proposal, offer, or public announcement of an intention to do any
of the foregoing; |
in each case, made after the date hereof, and excluding the transactions contemplated by
this Agreement or any transaction involving only the Purchaser and one or more of its
Subsidiaries;
“Purchaser Circular” means the notice of the Purchaser Meeting and accompanying management
information circular, including all schedules, appendices and exhibits thereto and
enclosures therewith, to be sent to the Purchaser Shareholders in connection with the
Purchaser Meeting, as amended, supplemented or otherwise modified from time to time;
“Purchaser Class A Shareholders” means the holders of Purchaser Class A Shares;
“Purchaser Class A Shares” means the Class A participating shares in the capital of the
Purchaser;
“Purchaser Class B Shares” means the Class B Non-Voting participating shares in the capital
of the Purchaser;
“Purchaser Commitment Letters” means, collectively, the Purchaser Senior Debt Commitment
Letter, the Purchaser Equity Commitment Letter and the Purchaser Note Commitment Letter, and
each a “Purchaser Commitment Letter”;
“Purchaser Core Representations” means the representations and warranties of the Purchaser
set forth in Sections 1 (Organization and Qualification), 2 (Residence), 3 (Due
Authorization and Enforceability of Obligations), and 7 (Capitalization) of Schedule 5.1;
“Purchaser Debt Financings” means: (a) the agreement of each of the applicable Lenders
to lend, subject to the terms and conditions of the Purchaser Senior Debt Commitment Letter,
the amounts set forth therein; and (b) the agreement of each of the applicable Lenders to
lend, subject to the terms and conditions of the Purchaser Equity Commitment Letter, the
Purchaser Note Commitment Letter or both, as applicable, the amounts set forth therein,
respectively, except to the extent that the obligations of the Lenders under the Purchaser
Equity Commitment Letter and/or Purchaser Note Commitment Letter have been reduced or
terminated in accordance with the terms thereof as a result of the completion of one or more
Purchaser Offerings, the proceeds of all of which will be used by the Purchaser for purposes
of financing the cash portion of the Purchase Price;
“Purchaser Disclosure Letter” means the disclosure letter executed by the Purchaser and
delivered to the Vendor concurrently with the execution of this Agreement;
“Purchaser Equity Commitment Letter” means the commitment letter dated the date of this
Agreement between the Purchaser and the Lenders, including the summaries of terms attached
thereto, providing for an equity bridge credit facility;
“Purchaser Financial Statements” has the meaning given in Section 10 of Schedule 5.1 hereto;
“Purchaser Indemnified Parties” has the meaning given in Section 11.1(a) hereof;
“Purchaser Material Adverse Change” means (i) any fact or state of facts, circumstance,
change, effect, occurrence or event which either individually is or collectively in the
aggregate are, or either individually or collectively in the aggregate would reasonably be
expected to be, materially adverse to the business, operations, results of operations,
properties, assets, liabilities, obligations (whether absolute, accrued, conditional or
otherwise) or condition (financial or otherwise) of the Purchaser and its Subsidiaries,
taken as a whole, except to the extent of any fact or state of facts, circumstance, change,
effect, occurrence or event resulting from or arising in connection with: (a) the
announcement of the execution of this Agreement or the transactions contemplated herein; or
(b) any change in GAAP or changes in applicable regulatory accounting requirements
applicable to the industries in which it conducts business; or (c) any change in global,
national or regional political conditions (including the outbreak of war or acts of
terrorism) or in general economic, business, regulatory, or market conditions or in national
or global financial or capital markets; or (d) any change generally affecting the industries
in which the Purchaser and its Subsidiaries conduct business; or (e) any natural disaster;
or (f) any action taken by the Purchaser or any of its Subsidiaries that is required
pursuant to this Agreement (including any item agreed to be taken pursuant to Section 7.4,
but excluding any obligation to act in the ordinary course of business); provided, however,
that with respect to clauses (b), (c), (d) and (e) above, such matter does not have a
disproportionate effect on the Purchaser and its Subsidiaries, taken as a whole, relative to
comparable entities operating in the industries in which the Purchaser and its Subsidiaries
conduct business (in which case, only the incremental disproportionate impact shall be taken
into account in determining whether a “Purchaser Material Adverse Change” has occurred or
would reasonably be expected to occur), and references in certain sections of this Agreement
to dollar amounts are not intended to be, and shall not be deemed to be, illustrative or
interpretative for purposes of determining whether a “Purchaser Material Adverse Change” has
occurred or would reasonably be expected to occur; or (ii) any fact or state of facts,
circumstance, change, effect, occurrence or event which either individually or collectively
in the aggregate is or would reasonably be expected to be materially adverse to the ability
of the Purchaser to complete or consummate the transactions contemplated by this Agreement;
“Purchaser Meeting” means the special meeting of Purchaser Shareholders, including any
adjournment or postponement thereof, to be called for the purpose of obtaining Purchaser
Shareholder Approval;
“Purchaser Note Commitment Letter” means the commitment letter dated the date of this
Agreement between the Purchaser and the Lenders, including the summaries of terms attached
thereto, providing for a high-yield note bridge credit facility;
“Purchaser Offerings” means one or more public or private offerings of equity or debt
securities of the Purchaser, including an offering of Subscription Receipts;
“Purchaser Public Documents” means all forms, reports, schedules, statements and other
documents filed by the Purchaser on SEDAR since September 1, 2014;
“Purchaser Senior Debt Commitment Letter” means the commitment letter dated the date of this
Agreement between the Purchaser and the Lenders, including the summaries of terms attached
thereto, providing for a term credit facility and a revolving credit facility;
“Purchaser Shareholder Approval” means the approval of the issuance of the Consideration
Shares and the purchase of the Purchased Shares at the Purchaser Meeting by: (a) the
Purchaser Class A Shareholders and Purchaser Class B Shareholders, each voting as a class,
by ordinary resolution, in accordance with the “minority approval” requirements of Part 8 of
MI 61-101; and (b) the Purchaser Class B Shareholders, by ordinary resolution, in accordance
with the requirements of the TSX;
“Purchaser Shareholders” means the Purchaser Class A Shareholders and the holders of
Purchaser Class B Shares;
“Purchaser Shares” means, collectively, the Purchaser Class A Shares and the Purchaser Class
B Shares;
“Real Property” means the Owned Real Property and the Leased Real Property;
“Real Property Leases” means Contracts pursuant to which the Company or any of its
Subsidiaries uses or occupies the Leased Real Property, including all rights related to
Improvements and Appurtenances;
“Release” has the meaning prescribed in any Environmental Laws and includes any release,
spill, leak, pumping, addition, pouring, emission, emptying, discharge, injection, escape,
leaching, disposal, dumping, deposit, spraying, burial, abandonment, incineration, seepage,
placement or introduction, whether accidental or intentional;
“Representative” means, in respect of a Person, its Subsidiaries and its Affiliates and its
and their directors, officers, employees, agents and representatives (including any
financial, legal or other advisors);
“Securities Regulators” means the securities commission or other securities regulatory
authority of each province and territory of Canada;
“Services” means all conventional television undertakings, all licensed and exempt specialty
television services, including any ownership interests in such undertakings, and all
associated non-linear offerings owned or controlled by the Company and its Subsidiaries;
“Shomi Partnership” means the general partnership between Shaw Cablesystems Limited and
Rogers Media Inc. established for the purpose of developing, launching and operating a
premium subscription video on demand service;
“Special Committee” means the committee of the board of directors of the Purchaser formed
for the purpose, among other things, of considering the transactions contemplated by this
Agreement;
“Straddle Period” means any taxable period which begins before the Effective Time and ends
after the Effective Time;
“Straddle Period Return” means a Tax Return for a Straddle Period;
“Statutory Plans” means statutory benefit plans which the Company or any of its Subsidiaries
are required to participate in or comply with, including the Canada and Quebec Pension Plans
and plans administered pursuant to applicable health tax, workplace safety insurance and
employment insurance legislation;
“Subscription Receipts” means subscription receipts to acquire Purchaser Class B Shares;
“Subsidiaries” with respect to a Person means, at the time such determination is being made,
any other Person controlled by such first Person, in each case, whether directly or
indirectly, but in the case of the Company, excludes the Shomi Partnership;
“Tangible Personal Property” means machinery, equipment, furniture, furnishings, office
equipment, computer hardware, supplies, materials, vehicles, material handling equipment,
implements, parts, tools and spare parts and tangible assets (other than the Real Property)
owned or used or held by the Company or any of its Subsidiaries, including: (a) any of the
foregoing which are in storage or in transit; (b) other tangible personal property of the
Company or any of its Subsidiaries whether located in or on the Real Property or elsewhere;
and (c) any of the foregoing which may be attached to Real Property but are not
Improvements;
“Target Working Capital” means $136,269,000; a calculation of Target Working Capital is set
out in Section 1.1 of the Vendor Disclosure Letter;
“Taxes” includes any taxes, duties, fees, premiums, assessments, imposts, levies and other
charges of any kind whatsoever imposed by any Governmental Authority, including all
interest, penalties, fines, additions to tax or other additional amounts imposed by any
Governmental Authority in respect thereof, and including those levied on, or measured by, or
referred to as, income, gross receipts, profits, capital, transfer, land transfer, sales,
goods and services, harmonized sales, use, value-added, excise, stamp, withholding,
business, franchising, property, development, occupancy, employer health, payroll,
employment, health, social services, education and social security taxes, all surtaxes, all
customs duties and import and export taxes, countervail and anti-dumping, all licence,
franchise and registration fees and all employment insurance, health insurance and Canada,
Québec and other government pension plan premiums or contributions;
“Tax Act” means the Income Tax Act (Canada), as amended;
“Tax Returns” includes all returns, reports, declarations, elections, notices, filings,
forms, statements and other documents (whether in tangible, electronic or other form) and
including any amendments, schedules, attachments, supplements, appendices and exhibits
thereto, made, prepared, filed or required to be made, prepared or filed by Law in respect
of Taxes;
“Tax Ruling” has the meaning given in Section 7.4(c) hereof;
“Taxing Authority” means any federal, provincial, state, local or foreign Governmental
Authority having responsibility for Taxes;
“Technical Information” means know-how and related technical knowledge owned, used or held
by the Company or any of its Subsidiaries, including:
| |
(a) |
|
trade secrets, confidential information and other proprietary know-how, other
than content licences, program format licences, and other licenced program formats; |
| |
(b) |
|
information of a scientific, technical, financial or business nature regardless
of its form; |
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(c) |
|
uniform resource locators, domain names, telephone, telecopy, internet protocol
and email addresses, and UPC consumer packaging codes; and |
| |
(d) |
|
documented research, forecasts, studies, marketing plans, budgets, market data,
developmental, demonstration or engineering work, information that can be used to
define a design or process or procure, produce, support or operate material and
equipment, methods of production and procedures, all formulas and designs and drawings,
blueprints, patterns, plans, flow charts, parts lists, manuals and records,
specifications, and test data; |
“Technology” means Intellectual Property, Technical Information and Information Technology;
“Transaction Agreements” means, collectively, this Agreement, the Governance and Investor
Rights Agreement and the Transition Services Agreement;
“Transition Services Agreement” means the transition services agreement to be entered into
on the Closing Date between the Vendor and the Purchaser substantially in the form agreed to
by the Parties on the date hereof;
“TSX” means the Toronto Stock Exchange;
“Union” means an organization of employees formed for purposes that include the regulation
of relations between employees and employers and includes a provincial, territorial,
national or international union, a certified council of unions, a designated or certified
employee bargaining agency, and any organization which has been declared a union pursuant to
applicable labour relations legislation;
“Unrelated Person” has the meaning provided in subsection 55(3.01) of the Tax Act;
“Vendor Core Representations” means the representations and warranties of the Vendor in
Sections 1 (Organization and Qualification of the Company), 2 (Status of the Vendor and
Right to Sell), 3 (Residence), 4 (Due Authorization and Enforceability of Obligations), 7
(Capitalization), 8 (Subsidiaries), 37 (Securities Law Matters), 38 (Brokers) and 39 (Assets
Located and Sales in the United States) of Schedule 4.1;
“Vendor Disclosure Letter” means the disclosure letter executed by the Vendor and delivered
to the Purchaser concurrently with the execution of this Agreement;
“Vendor Indemnified Parties” has the meaning given in Section 11.2(a) hereof;
“Vendor Public Documents” means all forms, reports, schedules, statements and other
documents filed by the Vendor on SEDAR since September 1, 2014;
“Vendor Taxes” means: (1) any and all Taxes payable or receivable of the Company or its
Subsidiaries with respect to any Pre-Closing Tax Period, and for these purposes income Taxes
in respect of a Straddle Period of a corporation shall be calculated on the basis that: (i)
such Straddle Period for the corporation and any partnership in which the corporation has a
direct or indirect interest at the Effective Time (a “Pertinent Partnership”) ended
immediately before the Effective Time (the “Pre-Closing Time”); and (ii) the income and
taxable income of the corporation and any Pertinent Partnership for such Straddle Period was
reduced by the maximum amount of deductions and credits, including any discretionary
deductions and credits, that would have been available to the corporation or Pertinent
Partnership, as the case may be, had the corporation’s or Pertinent Partnership’s taxation
year ended at the Pre-Closing Time; for which purpose any deduction or credit that is
calculated for an annual or periodic basis shall be prorated on the basis of the number of
days in the period starting on the commencement of such Straddle Period and ending at the
Pre-Closing Time as compared to 365 days; and (2) any and all Taxes of the Company or its
Subsidiaries with respect to periods between the Effective Time and up to and including the
Closing Time arising as a result of, or in connection with or relating to, any non-ordinary
course events or transactions that occur in that period;
“Working Capital” means the aggregate working capital of the Company and its Subsidiaries
calculated in accordance with, and including only the categories of items set forth in,
Section 1.1 of the Vendor Disclosure Letter;
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1.2 |
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“Working Capital Adjustment” has the meaning given in Section 3.3(a) hereof; and
“Working Capital Statement” has the meaning given in Section 3.3(a) hereof.
Certain Rules of Interpretation |
In this Agreement:
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(a) |
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Currency – Unless otherwise specified, all references to money amounts are to
the lawful currency of Canada. |
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(b) |
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Governing Law – This Agreement is a contract made under and shall be governed
by and construed in accordance with the laws of the Province of Ontario and the federal
laws of Canada applicable in the Province of Ontario. |
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(c) |
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Headings – Headings of Articles and Sections are inserted for convenience of
reference only and do not affect the construction or interpretation of this Agreement. |
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(d) |
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Including – Where the word “including” or “includes” is used in this Agreement,
it means “including (or includes) without limitation”. |
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(e) |
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No Strict Construction – The language used in this Agreement is the language
chosen by the Parties to express their mutual intent, and no rule of strict
construction shall be applied against any Party. |
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(f) |
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Number and Gender – Unless the context otherwise requires, words importing the
singular include the plural and vice versa and words importing gender include all
genders. |
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(g) |
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Severability – If, in any jurisdiction, any provision of this Agreement or its
application to any Party or circumstance is restricted, prohibited or unenforceable,
such provision shall, as to such jurisdiction, be ineffective only to the extent of
such restriction, prohibition or unenforceability without invalidating the remaining
provisions of this Agreement and without affecting the validity or enforceability of
such provision in any other jurisdiction or without affecting its application to other
parties or circumstances. |
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(h) |
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Statutory References – A reference to a statute includes all regulations and
rules made pursuant to such statute and, unless otherwise specified, the provisions of
any statute, regulation or rule which amends, supplements or supersedes any such
statute, regulation or rule. |
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(i) |
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Time – Time is of the essence in the performance of the Parties’ respective
obligations. |
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(j) |
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Time Periods – Unless otherwise specified, time periods within or following
which any payment is to be made or act is to be done shall be calculated by excluding
the day on which the period commences and including the day on which the period ends
and by extending the period to the next Business Day following if the last day of the
period is not a Business Day. |
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(k) |
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Affiliates – The Parties acknowledge that they are Affiliates by virtue of
being under common control; however, for purposes of this Agreement and the
interpretation of the provisions of this Agreement, the Parties agree that the
Purchaser and its Subsidiaries shall be deemed not to be Affiliates of the Vendor and
its Subsidiaries and that the Vendor and its Subsidiaries shall be deemed not to be
Affiliates of the Purchaser and its Subsidiaries. |
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(a) |
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Any reference to the “knowledge of the Vendor” or to the “knowledge of the
Company” means the actual knowledge, after reasonable inquiry (but excluding any
inquiries or searches of public registries or filings), of the following officers of
the Vendor and the Company: Trevor English, Senior Vice President Corporate Development
& Business Planning of the Vendor, Barbara Williams, Executive Vice President and
President of the Company, Michael French, Vice President, Finance of the Company, Ella
Stuart, Vice President, Taxation, of the Vendor, and Peter Johnson, Senior Vice
President, Corporate Secretary and General Counsel of the Vendor. |
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(b) |
|
Any reference to the “knowledge of the Purchaser” means the actual knowledge,
after reasonable inquiry (but excluding any inquiries or searches of public registries
or filings), of the following officers of the Purchaser: Doug Murphy, President and
Chief Executive Officer, Tom Peddie, Chief Financial Officer, Kathleen McNair,
Executive Vice President, Special Advisor to the CEO and Chief Integration Officer,
Gary Maavara, Executive Vice President and General Counsel, Judy Adam, Vice President,
Finance, and Jeremy Wilson, Vice President, Taxation. |
This Agreement and the agreements and other documents entered into pursuant to or in connection
with this Agreement, constitute the entire agreement between the Parties and set out all the
covenants, promises, warranties, representations, conditions and agreements between the Parties in
connection with the subject matter of this Agreement and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written, pre-contractual or
otherwise. There are no covenants, promises, warranties, representations, conditions,
understandings or other agreements, whether oral or written, pre-contractual or otherwise, express,
implied or collateral between the Parties in connection with the subject matter of this Agreement
except as specifically set forth in this Agreement and any document required to be delivered
pursuant to this Agreement.
The schedules and exhibits to this Agreement, listed below, are an integral part of this Agreement:
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| Schedule |
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Description |
Schedule 4.1
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Vendor Representations and Warranties |
Schedule 5.1
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Purchaser Representations and Warranties |
Schedule 7.4
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Alternative Transaction |
Exhibit
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Description |
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Exhibit A
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Governance and Investor Rights Agreement |
ARTICLE 2
PURCHASE AND SALE
| 2.1 |
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Action by Vendor and Purchaser |
Subject to the provisions of this Agreement, at the Closing Time:
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(a) |
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Purchase and Sale of Purchased Shares and Purchased Debt – the Vendor shall
sell and the Purchaser shall purchase the Purchased Shares and the Purchased Debt, in
each case free and clear of all Encumbrances; |
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(b) |
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Payment of Purchase Price – the Purchaser shall pay the Purchase Price to the
Vendor as provided in Sections 3.2, 3.3 and 3.6; |
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(c) |
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Transfer and Delivery of the Purchased Shares and Purchased Debt – the Vendor
shall transfer and deliver to the Purchaser (i) share certificates representing the
Purchased Shares duly endorsed in blank for transfer, or accompanied by irrevocable
security transfer powers of attorney duly executed in blank, in either case by the
holders of record, and shall take such steps as shall be necessary to cause the Company
to enter the Purchaser or its nominee(s) upon the books of the Company as the holder of
the Purchased Shares and to issue one or more share certificates to the Purchaser or
its nominee(s) representing the Purchased Shares; and (ii) any evidence of the
Purchased Debt; |
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(d) |
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Other Documents – the Vendor and Purchaser shall deliver such other documents
as may be necessary and reasonably requested to complete the transactions provided for
in this Agreement. |
Notwithstanding the Effective Time, the transfer of title to the Purchased Shares and the Purchased
Debt shall occur at the Closing Time and the Purchaser shall be entered into the books of the
Company as the holder of the Purchased Shares and the Purchased Debt at the Closing Time.
The Closing shall take place at the Closing Time at the offices of Osler, Hoskin & Harcourt LLP
located at 1 First Canadian Place, Suite 6300, 100 King Street West, Toronto, Ontario, or at such
other place as may be agreed upon by the Vendor and the Purchaser.
ARTICLE 3
PURCHASE PRICE
Subject to any adjustments pursuant to Section 3.3, the amount payable by the Purchaser for the
Purchased Shares and the Purchased Debt (the “Purchase Price”) shall be the aggregate of the
following:
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(a) |
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the sum of $1,850 million in cash; and |
| |
(b) |
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$800 million to be satisfied through the issuance of the Consideration Shares. |
| 3.2 |
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Satisfaction of Purchase Price |
The Purchaser shall satisfy the Purchase Price in accordance with this Section 3.2. At the Closing
Time, the Purchaser will:
| |
(a) |
|
pay to the Vendor by wire transfer of immediately available funds to an account
designated in writing by the Vendor to the Purchaser (such designation to be made at
least three Business Days prior to the Closing Date), an amount equal to the amount set
forth in subsection 3.1(a); and |
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(b) |
|
issue the Consideration Shares to the Vendor or as otherwise designated in
writing by the Vendor (such designation to be made at least three Business Days prior
to the Closing Date). |
| 3.3 |
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Working Capital Adjustment |
| |
(a) |
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Prior to the date which is 90 days after the Closing Date, the Purchaser shall
prepare and deliver to the Vendor a statement (the “Working Capital Statement”) setting
forth (i) a calculation of the Working Capital as of the Effective Time (the “Closing
Working Capital”); and a calculation of the adjustment, if any, to be made pursuant to
this Section 3.3 (the “Working Capital Adjustment”). Except as otherwise provided in
the definition of Working Capital, the Working Capital Statement shall be prepared by
the Purchaser in accordance with GAAP, applied consistently with the Company’s past
practices used in the preparation of the Company Financial Statements. The cost of
preparing such Working Capital Statement shall be borne by the Purchaser. The Vendor
shall, as requested by the Purchaser, cooperate fully in the post-Closing audit
contemplated by this Section 3.3 and the preparation of the Working Capital Statement. |
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(b) |
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If the Vendor disagrees with the Purchaser’s calculation of the Working Capital
Adjustment (the “Dispute”), the Vendor shall deliver written notice of the Dispute (the
“Dispute Notice”) to the Purchaser within 30 days after the Vendor’s receipt of the
Working Capital Statement (the “Dispute Period”). The Dispute Notice shall set forth in
reasonable detail the basis for the Vendor’s disagreement with the Purchaser’s
determination of the Working Capital Adjustment, the dollar amounts of the proposed
revisions thereto and the Vendor’s good faith estimate of the Working Capital
Adjustment if and to the extent determinable. The Purchaser shall permit the Vendor and
its Representatives to review all working papers and documentation used or prepared in
connection with the preparation of, or which otherwise form the basis of, the Working
Capital Statement and the Purchaser’s calculation of the Working Capital Adjustment. If
no Dispute Notice is received by the Purchaser during the Dispute Period, then the
Working Capital Statement (and the calculations reflected therein) shall be deemed to
have been accepted and agreed to by the Vendor in the form in which it was delivered to
the Vendor and shall be final and binding upon the Parties. If the Purchaser receives a
Dispute Notice from the Vendor during the Dispute Period, the Purchaser and the Vendor
shall attempt to resolve the Dispute and agree in writing upon the final Working
Capital Adjustment within 10 Business Days after the Purchaser’s receipt of the Dispute
Notice. |
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(c) |
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If the Purchaser and the Vendor are unable to resolve the Dispute within the
10- Business Day period after the Purchaser’s receipt of the Dispute Notice, the
Purchaser and the Vendor shall jointly engage a mutually agreed nationally recognized
accounting firm (the “Arbitrating Accountant”). For the purposes of this Section
3.3(c), if the Parties are unable to agree on the appointment of the Arbitrating
Accountant within five Business Days of the end of such 10-Business Day period, then
either Party may apply to a judge of the Ontario Superior Court to have a nationally
recognized firm of chartered accountants appointed as the Arbitrating Accountant for
the purposes of this Section 3.3(c). The Arbitrating Accountant will not be the
accountant or auditor for the Purchaser, the Company or the Vendor. The Arbitrating
Accountant’s function shall be to review only those items that are in Dispute with
respect to the determination of the Working Capital Adjustment and to resolve such
Dispute in accordance with the requirements of this Section 3.3. The Arbitrating
Accountant shall, as promptly as possible and in any event within 30 days after the
date of its appointment, render its decision on the Dispute in writing to the Purchaser
and the Vendor, together with a revised Working Capital Adjustment reflecting its
decision with respect to each of the items in Dispute. The date on which the Working
Capital Adjustment is finally determined in accordance with this Section is referred to
as the “Determination Date”. The Arbitrating Accountant’s decision shall be final and
binding upon the Parties, and the Working Capital Adjustment, as revised pursuant to
the Arbitrating Accountant’s decision, shall be final and binding, barring manifest
error. The Arbitrating Accountant, in its sole and absolute discretion, shall determine
the proportion of its fees and expenses to be paid by the Vendor and the Purchaser,
respectively, based primarily on the degree to which the Arbitrating Accountant has
accepted the positions of the respective Parties in relation to the Dispute. |
| |
(d) |
|
If it is determined pursuant to this Section 3.3 that: |
| |
(i) |
|
(1) the amount of the Closing Working Capital is greater than
(2) the amount of the Target Working Capital, the Purchaser shall pay to the
Vendor the amount of such difference; or |
| |
(ii) |
|
(1) the amount of the Closing Working Capital is less than (2)
the amount of the Target Working Capital, the Vendor shall pay to the Purchaser
the amount of such difference. |
| |
(e) |
|
Any amount to be released or paid to a Party under this Section 3.3 shall be
released or paid to the receiving Party within 10 days after (A) the conclusion of the
Dispute Period, if the Vendor does not deliver a Dispute Notice; or (B) the
Determination Date, if the Vendor delivers a Dispute Notice. |
Any amount to be paid to a Party as an adjustment under Section 3.3 shall be paid together with
interest thereon, calculated and compounded monthly from the Closing Date to the date of payment,
at the rate per annum equal to the rate quoted by Royal Bank of Canada on the Closing Date as the
reference rate of interest it uses for determining interest rates on Canadian dollar commercial
loans in Canada and designated as Royal Bank of Canada’s prime rate.
| |
(a) |
|
It is intended that the transfer hereunder of the Purchased Shares be on a
tax-deferred basis to the extent permissible under the relevant legislation. In order
to give effect to this intention, the Vendor and the Purchaser shall, in a timely
manner and in the prescribed form, jointly execute and file elections under section 85
of the Tax Act and under the corresponding provisions of applicable provincial income
tax statutes in respect of the transfer hereunder of the Purchased Shares. The elected
amount (the “Elected Amount”) for the Purchased Shares for purposes of each such
election shall be the amount determined by the Vendor, in its sole discretion, and
consistent with the above noted intention, provided that such amount is within the
limits prescribed by the Tax Act. |
| |
(b) |
|
If the Vendor subsequently determines, or if the Canada Revenue Agency or any
other Taxing Authority issues, or proposes to issue, assessments or reassessments of
additional liability for Taxes or in respect of any other matter by reason of asserting
the elected amount determined under the Tax Act for the Purchased Shares is more or
less than the Elected Amount then the Elected Amount shall be increased or decreased as
necessary but only to the extent that the Elected Amount so revised is acceptable to
the Vendor or to both the particular Taxing Authority and the Vendor, as the case may
be, or is established by a court of competent jurisdiction (after all appeal rights
have been exhausted or all time periods for appeal have expired without appeals having
been taken) to be the elected amount. |
| |
(c) |
|
If an Elected Amount is varied in the circumstances described in paragraph (b)
above, the Vendor and the Purchaser shall file a revised election(s) under the
provisions of subsection 85(1) of the Tax Act and the corresponding provisions of all
applicable provincial income tax statutes to give effect to the variation. |
| 3.6 |
|
Adjustment to Purchase Price |
| |
(a) |
|
Any difference to be paid to the Purchaser pursuant to Section 3.3 shall
constitute a reduction of the Purchase Price allocated to the Purchased Shares, and any
difference to be paid to the Vendor pursuant to Section 3.3 shall constitute an
increase in the Purchase Price allocated to the Purchased Shares. |
| |
(b) |
|
The Vendor and the Purchaser intend that the fair market value of the Purchased
Shares and the Purchased Debt at the Closing Time will be equal to the consideration
paid therefor by the Purchaser. The Vendor and the Purchaser agree that in the event
that the purchase price paid to the Company by Shaw Cablesystems Limited, a Subsidiary
of the Vendor, in exchange for the transfer by the Company of all of its interest in
Shomi Partnership (the “Partnership Purchase Price”) is adjusted after the Closing Time
(a “Partnership Purchase Price Adjustment”) in accordance with Section 2 of the Unit
Transfer Agreement entered into between the Company and Shaw Cablesystems Limited dated
as of December 30, 2015 (a “Partnership Purchase Price Adjustment”), there will be a
corresponding adjustment to the fair market value of the Purchased Shares and the
allocation of the Purchase Price related thereto. If, as a result of a Partnership
Purchase Price Adjustment, there is: |
| |
(i) |
|
an increase in the amount of the Partnership Purchase Price,
the Purchaser shall pay to the Vendor an amount equal to the amount of such
increase; or |
| |
(ii) |
|
a decrease in the amount of the Partnership Purchase Price, the
Vendor shall pay to the Purchaser an amount equal to the amount of such
decrease. |
Any amount to be released or paid to a Party under this Section 3.6(b) shall be
released or paid to the receiving Party within 10 days of the Partnership Purchase
Price Adjustment.
| |
(c) |
|
If at any time after the Closing Time there is a refund, rebate or return of
funds or assets from the Plan Implementation Fund (as defined in the Plan Emergence
Agreement) to the Company or its Subsidiaries, the Purchaser shall pay, or shall direct
the Company or such Subsidiary to pay, 50% of such amount to the Vendor within 10 days
of the receipt thereof. Any such payment shall adjust the fair market value of the
Purchased Shares and the allocation of the Purchase Price thereto under Section 3.7. |
| 3.7 |
|
Purchase Price Allocation |
The Purchaser and the Vendor agree (i) to allocate the cash portion of the Purchase Price among the
Purchased Shares and the Purchased Debt as follows: an amount equivalent to the full face amount of
the Purchased Debt outstanding as at the Closing Time shall be allocated to the Purchased Debt with
the remainder to be allocated to the Purchased Shares, and (ii) to report the sale and purchase of
the Purchased Shares and the Purchased Debt for all federal, provincial and local Tax purposes in a
manner consistent with such allocation.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE VENDOR
| 4.1 |
|
Vendor Representations and Warranties |
The Vendor hereby makes to the Purchaser the representations and warranties set forth in Schedule
4.1 hereto, and acknowledges that the Purchaser is relying upon such representations and warranties
in connection with the entering into of this Agreement and the carrying out of the transactions
contemplated herein.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
| 5.1 |
|
Purchaser Representations and Warranties |
The Purchaser hereby makes to the Vendor the representations and warranties set forth in Schedule
5.1 hereto, and acknowledges that the Vendor is relying upon such representations and warranties in
connection with the entering into of this Agreement and the carrying out of the transactions
contemplated herein.
ARTICLE 6
NON-WAIVER; SURVIVAL
No waiver of any condition or other provisions, in whole or in part, shall constitute a waiver of
any other condition or provision (whether or not similar) nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
All representations, warranties and covenants contained in this Agreement on the part of each of
the Parties shall survive:
| |
(b) |
|
the execution and delivery under this Agreement of any share or security
transfer instruments or other documents of title to any of the Purchased Shares and
Purchased Debt; and |
| |
(c) |
|
the payment of the consideration for the Purchased Shares and the Purchased
Debt, |
in each case, for the same period of time during which an obligation to indemnify exists pursuant
to Article 11.
ARTICLE 7
COVENANTS REGARDING THE TRANSACTION
Subject to the terms of this Agreement:
| |
(a) |
|
The Purchaser agrees to convene and conduct the Purchaser Meeting in accordance
with the Purchaser’s articles, by-laws and applicable Law as soon as reasonably
practicable and in any event no later March 31, 2016. |
| |
(b) |
|
Except as required for quorum purposes or as otherwise permitted under this
Agreement, the Purchaser shall not adjourn (except as required by Law or by valid
Purchaser Shareholder action), postpone or cancel (or propose or permit the adjournment
(except as required by Law or by valid Purchaser Shareholder action), postponement or
cancellation of) the Purchaser Meeting without the Vendor’s prior written consent,
which consent will not be unreasonably withheld, delayed or conditioned. |
| |
(c) |
|
The Purchaser will advise the Vendor as the Vendor may reasonably request, and
at least on a daily basis on each of the last 10 Business Days prior to the date of the
Purchaser Meeting, as to the aggregate tally, and the tally for each of the Purchaser
Class A Shares and the Purchaser Class B Shares, of the proxies received by the
Purchaser in respect of the Purchaser Shareholder Approval resolution. |
| |
(a) |
|
As promptly as reasonably practicable following execution of this Agreement,
the Purchaser shall: (i) prepare the Purchaser Circular together with any other
documents required by applicable Laws; (ii) file the Purchaser Circular in all
jurisdictions where the same is required to be filed; and (iii) mail the Purchaser
Circular as required in accordance with all applicable Laws. On the date of mailing
thereof, the Purchaser Circular shall comply in all material respects with all
applicable Laws and shall contain sufficient detail to permit the Purchaser
Shareholders to form a reasoned judgement concerning the matters to be placed before
them at the Purchaser Meeting. |
| |
(b) |
|
The Purchaser shall ensure that the Purchaser Circular complies in all material
respects with all applicable Laws, and, without limiting the generality of the
foregoing, that the Purchaser Circular will not contain any misrepresentation (except
that the Purchaser may rely on the Vendor for any Company Disclosure). |
| |
(c) |
|
The Purchaser shall: (i) retain, at its sole cost and expense and following
consultation with the Vendor, a proxy solicitation agent to solicit proxies in favour
of the Purchaser Shareholder Approval resolution, and against any resolution submitted
by any other Person inconsistent with the approval of the transactions contemplated
hereby, and take all other actions that are reasonably necessary or desirable to seek
the Purchaser Shareholder Approval; and (ii) recommend to Purchaser Shareholders that
they vote in favour of the Purchaser Shareholder Approval resolution. |
| |
(d) |
|
The Vendor shall: (i) provide to the Purchaser the Company Disclosure and shall
use commercially reasonable efforts to obtain any necessary consents from any of the
Company’s auditors and any other advisors to the use of any financial, technical or
other expert information required to be included in the Purchaser Circular and to the
identification in the Purchaser Circular of each such advisor; and (ii) ensure that the
Company Disclosure will not contain any misrepresentation and shall comply in all
material respects with all applicable Laws. |
| |
(e) |
|
The Vendor and its legal counsel shall be given a reasonable opportunity to
review and comment on the Purchaser Circular prior to the Purchaser Circular being
printed and filed with the Governmental Authorities, and reasonable consideration shall
be given to any comments made by the Vendor and its counsel, provided that the Company
Disclosure included in the Purchaser Circular shall be in form and content satisfactory
to the Vendor, acting reasonably. The Purchaser shall provide the Vendor with final
copies of the Purchaser Circular prior to the mailing to the Purchaser Shareholders. |
| |
(f) |
|
The Vendor and the Purchaser shall each promptly notify each other if at any
time before the Closing Date either becomes aware that the Purchaser Circular contains
a misrepresentation, or that otherwise requires an amendment or supplement to the
Purchaser Circular and the Parties shall co-operate in the preparation of any amendment
or supplement to the Purchaser Circular as required or appropriate, and Purchaser shall
promptly mail or otherwise publicly disseminate any amendment or supplement to the
Purchaser Circular to Purchaser Shareholders and, if required by applicable Laws, file
the same with the Governmental Authorities and as otherwise required. |
| 7.3 |
|
Pre-Closing Reorganizations |
| |
(a) |
|
Subject to Section 7.4, the Vendor acknowledges and agrees that, in
contemplation of the purchase and sale of the Purchased Shares and Purchased Debt, it
shall, and shall cause the Company and its Subsidiaries to, cooperate with the
Purchaser in structuring, planning and implementing any reorganization of the Company’s
or its Subsidiaries’ business, operations and assets as the Purchaser may reasonably
require (each, a “Pre-Closing Reorganization”) and cooperate with the Purchaser and its
advisors to determine the nature of the Pre-Closing Reorganization that might be
undertaken and the manner in which it most effectively could be undertaken; provided
that: (i) such requested cooperation does not unreasonably interfere with the ongoing
operations of the Company and its Subsidiaries; (ii) the Purchaser shall provide the
Company with written notice of any proposed Pre-Closing Reorganization at least 20 days
prior to the Closing Date; (iii) such Pre-Closing Reorganization is not, in the opinion
of the Company or the Company’s counsel, acting reasonably, prejudicial to the Vendor,
the Company or any of its Subsidiaries; (iv) such Pre-Closing Reorganization shall not
impede, delay or prevent the receipt of any governmental and third party approvals and
consents or the satisfaction of any other conditions set forth in this Agreement;
(v) such Pre-Closing Reorganization shall not impede, delay or prevent the Closing;
(vi) the Purchaser shall pay all out-of-pocket costs and expenses incurred by the
Purchaser in connection with such cooperation and implementation, and shall indemnify
the Vendor, the Company and their Subsidiaries for all direct or indirect costs and
liabilities, fees, losses, claims, expenses, damages, penalties and Taxes that may be
suffered or incurred as a consequence of the implementation of or to unwind any such
reorganization if the Closing does not occur, including all out-of-pocket costs and
expenses for filing fees and external counsel and auditors which may be incurred;
(vii) such requested cooperation does not require the directors, officers, employees or
agents of the Company or its Subsidiaries to take any action in any capacity other than
as a director, officer or employee; and (viii) the structuring, planning for and
implementation of any Pre-Closing Reorganization shall not be considered a breach of
any covenant hereunder and shall not be considered in determining whether the
representations, warranties or covenants of the Company hereunder have been breached. |
| |
(b) |
|
The Parties shall seek to have any Pre-Closing Reorganization that is to be
effective before the Closing made effective as of a time to be mutually agreed in
writing by the Parties prior to the Closing Date (but after the Purchaser shall have
irrevocably waived or confirmed that all conditions under Article 8 have been or are
capable of being satisfied at the Closing Time); provided that no Pre-Closing
Reorganization will be made effective unless: (i) it is reasonably certain, after
consulting with the Parties and the Company, that the Closing will occur; or (ii) such
Pre-Closing Reorganization can be reversed or unwound without adversely affecting the
Vendor, the Company or any of its Subsidiaries in the event the Closing does not occur
and this Agreement is terminated; or (iii) the Company otherwise reasonably agrees. |
| |
(c) |
|
The obligation of the Purchaser to reimburse the Company for costs and expenses
and indemnify the Vendor, the Company and their Subsidiaries as set out in this Section
7.3 will survive termination of this Agreement. |
| |
(a) |
|
The Purchaser acknowledges and agrees that, at the request of the Vendor, it
shall cooperate with the Vendor in structuring, planning and, if so elected by the
Vendor, implementing an alternative structure to the purchase and sale of the Purchased
Shares provided for herein to facilitate the Vendor’s objectives (an “Alternative
Transaction”), which Alternative Transaction shall involve one of the alternative
structures set forth in Schedule 7.4; provided, however, that such Alternative
Transaction must not: (i) after giving effect to all of the steps contemplated by the
Alternative Transaction, require the Purchaser and its Subsidiaries to pay
consideration in excess of the Purchase Price, (ii) in the opinion of the Purchaser or
the Purchaser’s counsel, acting reasonably, be prejudicial to the Purchaser, the
Purchaser Shareholders, the Company or its Subsidiaries; (iii) other than as
contemplated in the definition of Closing Date, materially impede, delay or prevent the
Closing; or (iv) materially impede, delay or adversely affect the terms, conditions or
availability of the Purchaser Debt Financing contemplated by the Purchaser Commitment
Letters or the completion of any Purchaser Offering; and (v) further provided that the
structuring, planning for and implementation of an Alternative Transaction shall not be
considered a breach of any covenant hereunder and shall not be considered in
determining whether the representations, warranties or covenants of the Vendor or the
Purchaser hereunder have been breached. |
| |
(b) |
|
Without limiting the generality of Section 7.4(a), at the request of the Vendor
and provided that the Vendor has obtained exemptive relief from the applicable
Securities Regulators, satisfactory to the Purchaser, acting reasonably, the Purchaser
Offering of Subscription Receipts shall be structured such that all or a portion of the
Subscription Receipts offered by the Purchaser pursuant to the Purchaser Offering shall
be exchangeable into any Purchaser Class B Shares subscribed for by the Vendor prior to
the Closing. |
| |
(c) |
|
The Purchaser acknowledges that the Vendor has applied to the Canada Revenue
Agency for an advance income tax ruling in respect of an Alternative Transaction (the
“Tax Ruling”). The Vendor shall provide as soon as reasonably practicable a copy of the
requests for any such Tax Rulings and shall provide, promptly upon receipt thereof, any
such Tax Rulings. The Vendor shall keep the Purchaser reasonably informed as to the
status of the Vendor’s application for the Tax Ruling, including the provision of
additional material to the Canada Revenue Agency and will give reasonable consideration
to requests by the Purchaser to add ruling requests for the benefit of the Purchaser.
If an Alternative Transaction is to be implemented, the Vendor shall make its election
to implement an Alternative Transaction pursuant to Section 7.4(a) by giving written
Notice to the Purchaser as soon as reasonably practicable and in sufficient time in
advance of the Closing Date in order to permit the Purchaser to obtain the opinion
referred to in Section 7.4(a)(ii) above and to permit the Parties to implement the
Alternative Transaction. For greater certainty, the receipt of the Tax Ruling shall not
constitute a condition to the closing of the purchase and sale of the Purchased Shares
and the Purchased Debt as contemplated by this Agreement. |
| |
(d) |
|
The Vendor shall pay for (or reimburse the Purchaser for) all of the
out-of-pocket costs and expenses incurred by the Purchaser in connection with such
cooperation and implementation, and shall indemnify the Purchaser, the Company and
their Subsidiaries for all direct or indirect costs and liabilities, fees, losses,
claims, expenses, damages, penalties and Taxes that may be suffered or incurred as a
consequence of the implementation of any such Alternative Transaction including, for
certainty, (i) (A) all out-of-pocket costs and expenses, and (B) in the event the
Vendor elects to defer the Closing Date to receive the Tax Ruling as contemplated in
the proviso in the definition of Closing Date, all incremental commitment fees accrued
under the Purchaser Commitment Letters for the duration of the period from the date
upon which the Closing Date would otherwise have occurred to and including the actual
Closing Date, and (ii) any incremental out-of-pocket costs or expenses relating to the
Purchaser Offerings, or, to the extent applicable to the Purchaser or any of its
Subsidiaries, to unwind any such Alternative Transaction if the Closing does not occur,
including actual out-of-pocket costs and expenses for filing fees and external counsel
and auditors which may be incurred. |
| |
(e) |
|
The obligation of the Vendor to reimburse the Purchaser for costs and expenses
and indemnify the Purchaser, the Company and their Subsidiaries as set out in this
Section 7.4 will survive termination of this Agreement. |
| 7.5 |
|
Financing Arrangements |
| |
(a) |
|
The Purchaser shall, and shall cause its Subsidiaries to, use reasonable best
efforts to take or cause to be taken all actions and to do, or cause to be done, all
things necessary, proper or advisable to arrange and obtain the proceeds of the
Purchaser Debt Financings on the terms and conditions described in the Purchaser
Commitment Letters by no later than the Closing, and shall not permit, without the
prior written consent of the Vendor, any amendment or modification to be made to, or
any waiver or release of any provision or remedy under, the Purchaser Commitment
Letters or any definitive agreement or documentation in connection therewith if such
amendment, modification, waiver or release would reduce the aggregate amount of the
Purchaser Debt Financings or would be reasonably expected to impair, prevent or
materially delay the consummation of the Purchaser Debt Financings or the consummation
of the transactions contemplated by this Agreement or adversely impact the ability of
the Purchaser to enforce its rights against the other parties to the Purchaser
Commitment Letters or any definitive agreements or documentation with respect thereto,
except that the obligations under the Purchaser Equity Commitment Letter and Purchaser
Note Commitment Letter may be reduced or terminated as a result of, and to the extent
of, the completion of one or more Purchaser Offerings. The Purchaser may amend the
Purchaser Commitment Letters to add lenders, lead arrangers, bookrunners, syndication
agents or similar entities that have not executed one or more of the Purchaser
Commitment Letters as of the date hereof. The Purchaser shall not release or consent to
the termination of the obligations of the lenders under the Purchaser Commitment
Letters, except for (i) assignments and replacements of an individual lender under the
terms of, and only in connection with, the syndication of the Purchaser Debt Financings
pursuant to the Purchaser Commitment Letters, and (ii) in the case of the Purchaser
Equity Commitment Letter and Purchaser Note Commitment Letter, as a result of the
completion of one or more Purchaser Offerings. For purposes of this Agreement,
references to “Purchaser Debt Financings” shall include the financings contemplated by
the Purchaser Commitment Letters as permitted to be amended or modified by this Section
7.5 (including any alternative financing obtained in accordance with this Section 7.5)
and references to “Purchaser Commitment Letters” shall include such documents as
permitted to be amended or modified by this Section 7.5 (including any alternative
financing obtained in accordance with this Section 7.5). |
| |
(b) |
|
Without limiting the generality of Section 7.5(a), the Purchaser shall, and
shall cause its Subsidiaries to, use reasonable best efforts to: (i) maintain in effect
the Purchaser Commitment Letters until the transactions contemplated by this Agreement
are consummated; (ii) satisfy, on a timely basis, all conditions, covenants, terms,
representations and warranties within the control of the Purchaser and its Subsidiaries
or its and their Representatives in the Purchaser Commitment Letters (and any
definitive documentation related thereto) at or prior to the Closing and otherwise
comply with its obligations thereunder; (iii) enter into definitive agreements and
documentation with respect to the Purchaser Debt Financings as soon as reasonably
practicable but in any event prior to the Closing, on the terms and conditions
(including the flex provisions applicable to each of the Purchaser Debt Financings (the
“Lender Flex Provisions”)) contemplated by the Purchaser Commitment Letters (after
giving effect to the Lender Flex Provisions) and otherwise on terms and conditions no
less favourable to the Purchaser than those contained in the Purchaser Commitment
Letters and otherwise subject only to such other conditions precedent as are acceptable
to the Vendor in its reasonable discretion; (iv) consummate the Purchaser Debt
Financing prior to the Closing; (v) enforce its rights under the Purchaser Commitment
Letter (and any definitive documentation related thereto); and (vi) cause the lenders
to fund prior to the Closing the Purchaser Debt Financing, except that the foregoing
shall not apply with respect to the Purchaser Equity Commitment Letter and/or the
Purchaser Note Commitment Letter to the extent such commitments have been terminated as
contemplated by Section 7.5(a). The Purchaser shall deliver to the Vendor true, correct
and complete copies of any executed definitive agreements and documentation entered
into in connection with the Purchaser Debt Financing promptly when available and drafts
thereof from time to time upon the reasonable request of the Vendor, provided that the
Lenders will not be required to provide copies of any fee letter or any other agreement
setting forth the Lender Flex Provisions. |
| |
(c) |
|
The Purchaser shall keep the Vendor informed with respect to all material
activity concerning the status of the Purchaser Debt Financing and will give the Vendor
prompt notice of any material change in or with respect to the Purchaser Debt
Financing. Without limiting the generality of the foregoing, the Purchaser shall give
the Vendor prompt notice: (i) of any breach or default (or any event or circumstance
that, with or without notice, lapse of time or both, would reasonably be expected to
give rise to any breach or default) by any party to any Purchaser Commitment Letter or
definitive document related to any of the Purchaser Debt Financings of which the
Purchaser becomes aware; (ii) of the receipt of any written notice or other
communication from any Person with respect to any actual or potential breach, default,
termination or repudiation by any party to any Purchaser Commitment Letter or any
definitive document related to the Purchaser Debt Financings or a request for
amendments or waivers thereto that are or could be reasonably expected to be adverse to
the timely completion of any of the Purchaser Debt Financings; (iii) if for any reason
the Purchaser believes in good faith that it will not be able to obtain all or any
portion of the Purchaser Debt Financings on the terms, in the manner or from the
sources contemplated by the Purchaser Commitment Letters or the definitive documents
related to the Purchaser Debt Financing including if the Purchaser has any reason to
believe that it will be unable to satisfy, on a timely basis, any term or condition of
any Purchaser Commitment Letter or any definitive document related to the Purchaser
Debt Financing; and (iv) if any Purchaser Commitment Letter or the definitive documents
related to the Purchaser Debt Financing will expire or be terminated for any reason
(other than the termination of the Purchaser Equity Commitment Letter and/or the
Purchaser Note Commitment Letter as contemplated by Section 7.5(a)). Without limiting
the generality of the foregoing, as soon as reasonably practicable, but in any event
within two Business Days after the date the Vendor delivers to the Purchaser a written
request, the Purchaser shall provide any information reasonably requested by the Vendor
relating to any circumstance referred to in clause (i), (ii), (iii) or (iv) of the
immediately preceding sentence. |
| |
(d) |
|
If any portion of the Purchaser Debt Financing becomes unavailable or could
reasonably be expected to become unavailable in the manner or from the sources
contemplated in the Purchaser Commitment Letters (other than the reduction or
termination of the obligations under the Purchaser Equity Commitment Letter and/or the
Purchaser Note Commitment Letter as contemplated by Section 7.5(a), or the occurrence
of the Outside Date), the Purchaser shall, and shall cause its Subsidiaries to, use
reasonable best efforts to arrange and obtain, as promptly as practicable, alternative
financing from alternative sources in an amount sufficient to consummate the
transactions contemplated by this Agreement on a basis that is not subject to any
condition precedent materially less favourable from the perspective of the Company and
the Purchaser than the conditions precedent contained in the applicable Purchaser
Commitment Letter and otherwise on terms and conditions not materially less favourable
from the perspective of the Vendor and the Purchaser than the terms and conditions
contained in the applicable Purchaser Commitment Letter and deliver to the Vendor true,
correct and complete copies of such alternative commitments when available. For the
avoidance of doubt, the Purchaser arranging and obtaining, in replacement of any
portion of the Purchaser Debt Financing, new or replacement financing in accordance
with this Section 7.5(d) shall not modify or affect in any way the Vendor’s rights
pursuant to this Agreement or the Purchaser’s obligations pursuant to this Agreement. |
| |
(e) |
|
The Purchaser agrees that other than in connection with and as contemplated in
this Agreement, neither the Purchaser, nor any of its Subsidiaries, will, without the
prior written consent of the Vendor, take any action or enter into any transaction that
would reasonably be expected to prevent or materially impair or delay the Purchaser
obtaining any of the financings contemplated by this Section 7.5. |
| 7.6 |
|
Financing Cooperation |
The Vendor agrees to, and shall cause the Company and its Subsidiaries to and shall use its
commercially reasonable efforts to cause its and their Representatives to, in each case at the
Purchaser’s sole expense, use commercially reasonable efforts to provide customary and reasonable
cooperation with the Purchaser and its Subsidiaries with respect to the arrangement of the
Purchaser Debt Financings and the completion of one or more Purchaser Offerings (except that, for
certainty, the Vendor shall be solely responsible for all costs and expenses relating to the
preparation of the Company Disclosure and the Company Financial Statements), including, at the
reasonable request by the Purchaser:
| |
(a) |
|
assisting in the preparation for and participation in (including by senior
management) a reasonable number of lender and/or underwriter marketing meetings,
presentations, road shows and calls and a reasonable number of other due diligence and
drafting sessions with prospective lenders and/or underwriters and ratings agencies in
each case in connection with obtaining the Purchaser Debt Financings and completing one
or more Purchaser Offerings, and otherwise providing cooperation that is customary and
reasonable in connection with the marketing efforts of the Purchaser for the Purchaser
Debt Financings and one or more Purchaser Offerings; |
| |
(b) |
|
providing pertinent and customary information regarding the Company and its
Subsidiaries reasonably requested by the Purchaser, including any requested
documentation and other information regarding the Company and its Subsidiaries required
under applicable “know your customer” and anti-money laundering rules and regulations,
in each case at least five Business Days prior to the consummation of the transactions
contemplated by this Agreement, the Company Disclosure and any other information, in
all cases to the extent required in connection with the Purchaser Debt Financings
and/or one or more Purchaser Offerings and reasonably requested by the Purchaser; |
| |
(c) |
|
to the extent reasonably requested, assisting the Purchaser in the preparation
of appropriate and customary offering documents, lender, underwriter and investor
presentations, rating agency presentations, bank information memoranda, prospectuses
and similar documents for the Purchaser Debt Financing and one or more Purchaser
Offerings, that contain the Company Disclosure and any other information relating to
the Company and its Subsidiaries required to be included therein (which, in the case of
financial information relating to the Company and its Subsidiaries, if required under
applicable Canadian Securities Law or by the underwriters for any securities offering,
shall have been reviewed by the independent accountants for the Company), and all other
data (including selected financial data) relating to the Company and its Subsidiaries
that applicable Securities Regulators would require in a public offering or that would
be necessary for an investment bank to receive customary “comfort” from independent
accountants in connection with a public offering; |
| |
(d) |
|
causing the Company’s independent accountants, consistent with their customary
practice, to provide reasonable assistance and cooperation to the Purchaser, including
accounting due diligence sessions, and providing consent to the Purchaser to use its
audit reports relating to the Company and reasonable assistance in facilitating the
provision of customary “comfort” by such independent accountants, in each case on
customary terms and consistent with their customary practice in connection with
financings similar to each of the Purchaser Debt Financings and one or more Purchaser
Offerings; |
| |
(e) |
|
assisting the Purchaser to review and comment on the Purchaser Debt Financing
and/or Purchaser Offering definitive documentation as may be reasonably requested by
the Purchaser; |
| |
(f) |
|
taking all reasonable and customary corporate or other organizational action,
subject to the occurrence of the consummation of the transactions contemplated by this
Agreement, reasonably requested by the Purchaser and necessary to permit the
consummation of the Purchaser Debt Financings and/or one or more Purchaser Offerings; |
| |
(g) |
|
to the extent reasonably requested, providing to the underwriters for a
Purchaser Offering an industry standard lock-up agreement not to exceed 90 days; |
| |
(h) |
|
providing pertinent and customary information with respect to the Company’s and
its Subsidiaries’ property and assets reasonably required in connection with the
Purchaser Debt Financings and/or one or more Purchaser Offerings and facilitating the
pledge and perfection of liens and security and the providing of guarantees supporting
the Purchaser Debt Financing by the Company and its Subsidiaries effective on or after
the Closing Time; and |
| |
(i) |
|
providing all cooperation that is reasonable and customary to satisfy the
conditions precedent to each of the Purchaser Debt Financings, any Purchaser Offerings
or any financing documents relating thereto to the extent the satisfaction of such
conditions requires the reasonable and customary cooperation of, or is within the
control of, the Company and its Subsidiaries; provided, that, in each case: (i) neither
the Vendor, the Company, any of their Subsidiaries nor any of their respective
Representatives shall be required to pay (or agree to pay) any commitment or other fee
to a Purchaser financing source (other than as contemplated by Section 7.4(d)), provide
any indemnities or incur any liability (other than: (1) to the Purchaser under this
Agreement in respect of the Company Disclosure, or (2) in the case of the Purchaser
Offering of Subscription Receipts contemplated by Section 7.4(b), indemnification in
favour of the underwriters for such Purchaser Offering to the extent reasonably
required by such underwriters) or enter into any agreement in connection with any of
the Purchaser Debt Financing (other than agreements and liability entered into or
incurred by the Company and its Subsidiaries that only become effective upon the
consummation of the transactions contemplated by this Agreement); and (ii) no personal
liability shall be imposed on the Representatives of the Vendor, the Company or any of
their Subsidiaries involved. The Vendor, the Company and their Subsidiaries hereby
consent to the use of their logos and trademarks in connection with the Purchaser Debt
Financing and one or more Purchaser Offerings. |
| 7.7 |
|
Safe Income Determination Time |
The Purchaser covenants and agrees that neither it nor any of its Subsidiaries shall undertake any
of the following transactions or events, from the time of the execution of this Agreement until 10
days before the Effective Time:
| |
(a) |
|
pay any dividends outside of the normal course of business, the proceeds of
which will be used to fund the Purchase Price; |
| |
(b) |
|
pay any dividends out of the shell holding company that may be participating in
the Alternative Transaction (“Holdco”); |
| |
(c) |
|
issue treasury shares of any entity within the corporate group to an Unrelated
Person of Vendor, other than: (i) in satisfaction of stock option obligations of the
Purchaser; (ii) as required pursuant to the Purchaser’s dividend reinvestment program;
or (iii) shares to be issued by Bento Box Canada Inc.; |
| |
(d) |
|
dispose of any of the shares of Holdco to an Unrelated Person of the Vendor; or |
| |
(e) |
|
agree to sell property to a Unrelated Person of Vendor for proceeds that the
Purchaser or the Subsidiary, as applicable, knows are less than fair market value. |
ARTICLE 8
PURCHASER’S CONDITIONS PRECEDENT
The obligation of the Purchaser to complete the purchase of the Purchased Shares and Purchased Debt
under this Agreement shall be subject to the satisfaction of, or compliance with, at or before the
Closing Time, each of the following conditions precedent (each of which is acknowledged to be
inserted for the exclusive benefit of the Purchaser and may be waived by it in whole or in part).
| 8.1 |
|
Purchaser Shareholder Approval |
| |
|
|
|
|
| Purchaser Shareholder Approval shall have been obtained. |
| |
8.2 |
|
|
Truth and Accuracy of Representations of Vendor at the Closing Time |
The representations and warranties of the Vendor set forth in (i) the Vendor Core Representations
shall be true and correct in all respects as of the Closing Time as if made at and as of such time
(except that any such Vendor Core Representation that by its terms speaks specifically as of the
date of this Agreement or another date shall be true and correct as of such date, and other than de
minimis inaccuracies in Section 7 [Capitalization] and Section 8 [Subsidiaries] of Schedule 4.1 or
except as such Vendor Core Representations may be affected by transactions expressly permitted by
this Agreement); and (ii) Schedule 4.1, other than those to which clause (i) above applies, shall
be true and correct in all respects, except as would not reasonably be expected to result in a
Company Material Adverse Change (disregarding for purposes of this Section 8.2(ii) any materiality,
or Company Material Adverse Change qualification contained in any such representation or warranty)
as of the Closing Time as if made at and as of such time (except that any such representation and
warranty that by its terms speaks specifically as of the date of this Agreement or another date
shall be true and correct in all respects, except as would not reasonably be expected to result in
a Company Material Adverse Change as of such date or except as such representations and warranties
may be affected by transactions permitted by this Agreement), and the Purchaser shall have received
a certificate of the Vendor addressed to the Purchaser and dated the Closing Date, signed on behalf
of the Vendor by two senior executive officers of the Vendor (on the Vendor’s behalf and without
personal liability), confirming the same as at the Closing Time.
| 8.3 |
|
Performance of Obligations |
The Vendor shall have performed or complied with, in all material respects, all of its obligations
and covenants under this Agreement and the Purchaser shall have received a certificate of the
Vendor addressed to the Purchaser and dated the Closing Date, signed on behalf of the Vendor by two
senior executive officers of the Vendor (on the Vendor’s behalf and without personal liability),
confirming the same as at the Closing Time.
The Vendor shall have executed and delivered each of the Governance and Investor Rights Agreement
and the Transition Services Agreement, or counterparts thereof.
| 8.5 |
|
Receipt of Closing Documentation |
All documentation relating to the due authorization and completion of the sale and purchase of the
Purchased Shares and Purchased Debt under this Agreement shall be satisfactory to the Purchaser,
acting reasonably, and the Purchaser shall have received copies of all such documentation as it may
reasonably request.
| |
|
|
|
|
| The CRTC Approval shall have been obtained. |
| |
8.7 |
|
|
No Proceedings |
No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law
which is then in effect and has the effect of making the transactions contemplated by this
Agreement illegal or otherwise preventing or prohibiting Closing.
| 8.8 |
|
Listing of Consideration Shares |
The TSX shall have approved the listing and posting for trading on the TSX of the Consideration
Shares, subject only to the satisfaction of the customary listing conditions of the TSX.
The Purchaser shall have received evidence satisfactory to it that all Encumbrances resulting from
or relating to outstanding indebtedness (other than capital leases and purchase money security
interests for assets within the Company and its Subsidiaries incurred in the ordinary course of
business) have been discharged.
| 8.10 |
|
No Company Material Adverse Change |
There shall have been no Company Material Adverse Change since the date of this Agreement.
| 8.11 |
|
Directors and Officers of the Company and Subsidiaries, Releases |
The Board of Directors of the Company and each of its Subsidiaries at the Closing Time shall
consist of individuals nominated by the Purchaser and there shall have been delivered to the
Purchaser on or before the Closing Time the resignations of all individuals who are immediately
before the Closing Time directors or officers of the Company or any of its Subsidiaries (except to
the extent that the Vendor shall have been notified to the contrary by the Purchaser) and duly
executed comprehensive mutual releases from each such individual and from the Vendor of all their
claims respectively, against the Company and its Subsidiaries except for any claims for current
unpaid remuneration and other customary exceptions.
| 8.12 |
|
Intercompany Relationships |
Except as set out in Section 8.12 of the Vendor Disclosure Letter, as of the Closing Time,
| |
(a) |
|
except for the Contracts listed on Schedule 8.12, there shall be no Contracts
solely between the Company and its Subsidiaries or any operating unit thereof, on the
one hand, and the Vendor and its Affiliates (other than the Company and its
Subsidiaries) or any operating unit thereof, on the other hand; |
| |
(b) |
|
other than the Purchased Debt and intercompany indebtedness included in the
Working Capital, there shall be no intercompany indebtedness (which shall include
payables and receivables) between the Company and its Subsidiaries or any operating
unit thereof, on the one hand, and the Vendor and its Affiliates (other than the
Company and its Subsidiaries) or any operating unit thereof, on the other hand; and |
| |
(c) |
|
there shall be no debt or operating facilities shared among the Company and its
Subsidiaries or any operating unit thereof, on the one hand, and the Vendor and its
Affiliates (other than the Company and its Subsidiaries) or any operating unit thereof,
on the other hand, |
and the Purchaser shall have received a certificate of the Vendor addressed to the Purchaser
and dated the Closing Date, signed on behalf of the Vendor by two senior executive officers
of the Vendor (on the Vendor’s behalf and without personal liability), confirming the same
as at the Closing Time.
The conditions in this Article 8 are for the exclusive benefit of the Purchaser and may be asserted
by the Purchaser regardless of the circumstances or may be waived in writing by the Purchaser in
its sole discretion, in whole or in part, at any time and from time to time without prejudice to
any other rights which the Purchaser may have.
ARTICLE 9
VENDOR’S CONDITIONS PRECEDENT
The obligations of the Vendor to complete the sale of the Purchased Shares and Purchased Debt under
this Agreement shall be subject to the satisfaction of or compliance with, at or before the Closing
Time, each of the following conditions precedent (each of which is acknowledged to be inserted for
the exclusive benefit of the Vendor and may be waived by it in whole or in part).
| 9.1 |
|
Purchaser Shareholder Approval |
| |
|
|
|
|
| Purchaser Shareholder Approval shall have been obtained. |
| |
9.2 |
|
|
Truth and Accuracy of Representations of the Purchaser at Closing Time |
The representations and warranties of the Purchaser set forth in (i) the Purchaser Core
Representations shall be true and correct in all respects as of the Closing Time as if made at and
as of such time (except that any such Purchaser Core Representation that by its terms speaks
specifically as of the date of this Agreement or another date shall be true and correct as of such
date, and other than de minimis inaccuracies in Section 7 [Capitalization] of Schedule 5.1 or
except as such Purchaser Core Representations may be affected by transactions expressly permitted
by this Agreement); and (ii) Section 5.1, other than those to which clause (i) above applies, shall
be true and correct in all respects, except as would not reasonably be expected to result in a
Purchaser Material Adverse Change (disregarding for purposes of this Section 9.2(ii) any
materiality, or Purchaser Material Adverse Change qualification contained in any such
representation or warranty) as of the Closing Time as if made at and as of such time (except that
any such representation and warranty that by its terms speaks specifically as of the date of this
Agreement or another date shall be true and correct in all respects, except as would not reasonably
be expected to result in a Purchaser Material Adverse Change as of such date or except as such
representations and warranties may be affected by transactions permitted by this Agreement), and
the Vendor shall have received a certificate of the Purchaser addressed to the Vendor and dated the
Closing Date, signed on behalf of the Purchaser by two senior executive officers of the Purchaser
(on the Purchaser’s behalf and without personal liability), confirming the same as at the Closing
Time.
| 9.3 |
|
Performance of Obligations |
The Purchaser shall have performed or complied with, in all material respects, all of its
obligations and covenants under this Agreement and the Vendor shall have received a certificate of
the Purchaser addressed to the Vendor and dated the Closing Date, signed on behalf of the Purchaser
by two senior executive officers of the Purchaser (on the Purchaser’s behalf and without personal
liability), confirming the same as at the Closing Time.
The Purchaser shall have executed and delivered the Governance and Investor Rights Agreement, or
counterparts thereof, and Company shall have executed and delivered the Transition Services
Agreement, or counterparts thereof.
| 9.5 |
|
Receipt of Closing Documentation |
All documentation relating to the due authorization and completion of the sale and purchase of the
Purchased Shares and Purchased Debt under this Agreement shall be satisfactory to the Vendor,
acting reasonably, and the Vendor shall have received copies of all such documentation as it may
reasonably request.
| |
|
|
|
|
| The CRTC Approval shall have been obtained. |
| |
9.7 |
|
|
No Proceedings |
No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law
which is then in effect and has the effect of making the transactions contemplated by this
Agreement illegal or otherwise preventing or prohibiting Closing.
| 9.8 |
|
Listing of Consideration Shares |
The Purchaser shall have delivered evidence satisfactory to the Vendor, acting reasonably, of the
approval of the listing and posting for trading on the TSX of the Consideration Shares, subject
only to the satisfaction of the customary listing conditions of the TSX.
The distribution of the Consideration Shares shall be exempt from the prospectus requirements of
Canadian Securities Laws and there shall be no resale restrictions on the Consideration Shares
under Canadian Securities Laws, except in respect of those holders who are subject to restrictions
on resale as a result of being a “control person” under Canadian Securities Laws.
| 9.10 |
|
No Purchaser Material Adverse Change |
There shall have been no Purchaser Material Adverse Change since the date of this Agreement.
The conditions in this Article 9 are for the exclusive benefit of the Vendor and may be asserted by
the Vendor regardless of the circumstances or may be waived in writing by the Vendor in its sole
discretion, in whole or in part, at any time and from time to time without prejudice to any other
rights which the Vendor may have.
ARTICLE 10
OTHER COVENANTS OF THE PARTIES
| 10.1 |
|
Vendor Conduct of Business Prior to Closing |
During the period from the date of this Agreement to the Closing Time, the Vendor shall cause the
Company and each of its Subsidiaries to do the following, unless Purchaser shall otherwise agree in
writing or as described in the Vendor Disclosure Letter or as otherwise expressly contemplated or
permitted by this Agreement:
| |
(a) |
|
the Vendor shall cause the Company and each of its Subsidiaries to, conduct
their respective businesses only in, not take any action except in, and maintain their
respective facilities in, the ordinary course of business consistent with past practice
and to use commercially reasonable efforts to preserve intact its and their present
business organization and goodwill, to preserve intact the Company and the Business and
to maintain satisfactory relationships consistent with past practice with suppliers,
distributors, Employees, Governmental Authorities and others having business
relationships with them; |
| |
(b) |
|
without limiting the generality of the foregoing, the Vendor shall cause the
Company and each of its Subsidiaries not to: |
| |
(i) |
|
issue, sell, grant, award, pledge, dispose of, encumber or
agree to issue, sell, grant, award, pledge, dispose of or encumber any
securities of the Company or any of its Subsidiaries; |
| |
(ii) |
|
except in the ordinary course of business, sell, pledge, lease,
dispose of, mortgage, licence, encumber or agree to sell, pledge, dispose of,
mortgage, licence, encumber or otherwise transfer any assets of the Company or
any of its Subsidiaries or any interest in any assets of the Company and its
Subsidiaries having a value greater than $10,000,000 in the aggregate; |
| |
(iii) |
|
amend or propose to amend the articles, by-laws or other
constating documents or the terms of any securities of the Company or any of
its Subsidiaries; |
| |
(iv) |
|
split, combine or reclassify any outstanding securities of the
Company or any of its Subsidiaries; |
| |
(v) |
|
except as set forth in Section 10.10, declare, set aside or pay
any dividend or other distribution (whether in cash, securities or property or
any combination thereof) in respect of any securities of the Company; |
| |
(vi) |
|
reorganize, amalgamate or merge the Company or any of its
Subsidiaries with any other Person; |
| |
(vii) |
|
except as set forth in Section 10.10, reduce the stated
capital of the shares of the Company or any of its Subsidiaries; |
| |
(viii) |
|
except as provided for in the Company’s existing budget and other than cash
management investments made in accordance with the Company’s existing cash
management policies and practices, acquire or agree to acquire (by merger,
amalgamation, acquisition of shares or assets or otherwise) any Person, or make
any investment either by purchase of shares or securities, contributions of
capital (other than to wholly-owned Subsidiaries), property transfer or
purchase of any property or assets of any other Person that has a value greater
than $10,000,000 in the aggregate; |
| |
(ix) |
|
except in the ordinary course of business consistent with past
practice, incur, create, assume or otherwise become liable for any indebtedness
for borrowed money or any other material liability or obligation or issue any
debt securities, except for the borrowing of working capital in the ordinary
course of business and consistent with past practice, or guarantee, endorse or
otherwise as an accommodation become responsible for, the obligations of any
other Person or make any loans or advances; |
| |
(x) |
|
adopt a plan of liquidation or resolutions providing for the
liquidation or dissolution of the Company or any of its Subsidiaries; |
| |
(xi) |
|
pay, discharge, settle, satisfy, compromise, waive, assign or
release any claims, liabilities or obligations other than the payment,
discharge or satisfaction, in the ordinary course of business consistent with
past practice, of liabilities reflected or reserved against in the Company
Financial Statements or incurred in the ordinary course of business consistent
with past practice; |
| |
(xii) |
|
authorize, recommend or propose any release or relinquishment
of any contractual right, except in the ordinary course of business consistent
with past practice; |
| |
(xiii) |
|
waive, release, grant, transfer, exercise, modify, amend or seek the
amendment of, in any material respect, other than in the ordinary course of the
business consistent with past practice, any Governmental Authorization,
including any CRTC Licence; |
| |
(xiv) |
|
waive, release, grant or transfer any rights of value or
modify or change in any material respect any existing material licence, lease,
Contract or other document, other than in the ordinary course of business
consistent with past practice; |
| |
(xv) |
|
take any action or fail to take any action which action or
failure to act would result in the material loss, expiration or surrender of,
or the loss of any material benefit under, or reasonably be expected to cause
any Governmental Authorities to institute proceedings for the suspension,
revocation or limitation of rights under, any Governmental Authorizations
necessary to conduct its businesses as now conducted; or fail to prosecute with
commercially reasonable due diligence any pending applications to any
Governmental Authorities; |
| |
(xvi) |
|
incur business expenses other than in the ordinary course of
business consistent with past practice; |
| |
(xvii) |
|
take any action or fail to take any action that is intended to, or would
reasonably be expected to, individually or in the aggregate, prevent,
materially delay or materially impede the ability of the Vendor to consummate
the transactions contemplated by this Agreement; |
| |
(xviii) |
|
except in the ordinary course of business consistent with past practice,
increase the benefits payable or to become payable to the directors or officers
of the Company or any of its Subsidiaries, enter into or modify any employment,
severance, or similar agreements or arrangements with, or grant any bonuses,
salary increases, severance or termination pay to, any directors or officers of
the Company or any of its Subsidiaries other than pursuant to agreements
already entered into and listed on Section 26 of the Vendor Disclosure Letter;
or |
| |
(xix) |
|
in the case of Employees who are not directors or officers of
the Company or any of its Subsidiaries, take any action other than in the
ordinary course of business consistent with past practice with respect to the
grant of any bonuses, salary increases, severance or termination pay or with
respect to any increase of benefits payable in effect on the date hereof; |
| |
(c) |
|
the Vendor shall cause the Company and its Subsidiaries to not establish,
adopt, enter into, amend or waive any performance or vesting criteria or accelerate
vesting, exercisability or funding under any bonus, profit sharing, thrift, incentive,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, savings, welfare, employment, termination, severance or other employee
benefit plan, agreement, trust, fund, policy or arrangement for the benefit or welfare
of any directors, officers, current or former employees of the Company or its
Subsidiaries; provided that the Vendor shall do all things necessary to cause the
entitlements of any Employees or former employees of the Company or its Subsidiaries
(or any spouse, beneficiary or dependant of any such person) accrued up to the date of
Closing under the Vendor Executive Retirement Plan to be paid out in full or otherwise
be irrevocably secured and provided for (at the Vendor’s cost); and do all things
necessary to cause all options held by Employees that are outstanding under the Vendor
Stock Option Plan to fully vest in advance of the Closing Date (at the Vendor’s cost); |
| |
(i) |
|
not take any action, or permit any of its Subsidiaries to take
any action, which would render, or which reasonably may be expected to render,
any representation or warranty made by it in this Agreement untrue in any
material respect; |
| |
(ii) |
|
provide Purchaser with prompt written notice of: (A) any change
(or any condition, event, circumstance or development involving a prospective
change) in the business, assets, operations, capitalization, condition
(financial or otherwise), share or debt ownership, results of operations, cash
flows, properties, articles, by-laws, licenses, permits, rights, or privileges,
whether contractual or otherwise, or liabilities (including any contingent
liabilities that may arise through outstanding, pending or threatened
litigation or otherwise), of the Company or any of its Subsidiaries which, when
considered either individually or in the aggregate, has resulted in or would
reasonably be expected to result in a Company Material Adverse Change; (B) the
occurrence, or failure to occur, of any event or state of facts which
occurrence or failure would or would reasonably be expected to (x) cause any of
the representations of the Vendor contained herein to be untrue or inaccurate
(without giving effect to, applying or taking into consideration any
materiality or Company Material Adverse Change qualification already contained
within such representation or warranty) in any material respect; or (y) result
in the failure in any material respect of the Vendor to comply with or satisfy
any covenant, condition or agreement (without giving effect to, applying or
taking into consideration any qualification already contained in such covenant,
condition or agreement) to be complied with or satisfied prior to the Closing
Time; |
| |
(iii) |
|
not enter into or renew any agreement, Contract, lease,
licence or other binding obligation of the Company or its Subsidiaries:
(A) containing (1) any limitation or restriction on the ability of the Company
or its Subsidiaries or, following completion of the transactions contemplated
hereby, the ability of Purchaser or its Subsidiaries, to engage in any type of
activity or business; (2) any limitation or restriction on the manner in which,
or the localities in which, all or any portion of the business of the Company
or its Subsidiaries or, following consummation of the transactions contemplated
hereby, all or any portion of the business of Purchaser or its Subsidiaries, is
or would be conducted; (3) any limit or restriction on the ability of the
Company or its Subsidiaries or, following completion of the transactions
contemplated hereby, the ability of Purchaser or its Subsidiaries, to solicit
customers or employees; or (4) any limitation or restriction on the ability of
the Company or any of its Subsidiaries to grant the Encumbrances required to be
granted by them in connection with the Purchaser Debt Financing; or (B) that
would reasonably be expected to materially delay or prevent the consummation of
the transactions contemplated by this Agreement; |
| |
(iv) |
|
not enter into, authorize, agree or otherwise become committed
to enter into any new Collective Agreements or authorize, agree or otherwise
become committed to any variation or change to the terms of any Collective
Agreement without having first: (A) notified the Purchaser; (B) consulted with
the Purchaser; and (C) adopted any reasonable request of the Purchaser in
respect of the same; and |
| |
(v) |
|
not enter into or renew any agreement, contract, lease, licence
or other binding obligation of the Company or its Subsidiaries that is not
terminable within 30 days of the Closing Date without payment by the Purchaser
or its Subsidiaries that involves or would reasonably be expected to involve
payments in excess of $10,000,000 in the aggregate over the term of the
Contract; |
| |
(e) |
|
the Vendor shall consult with the Purchaser with respect to any audits under
any carriage or other agreement with any broadcasting distribution undertaking
involving the Company and/or any of its Subsidiaries, including with respect to the
initiation of any audits; and |
| |
(f) |
|
the Vendor shall cause the Company and each of its Subsidiaries to not
authorize or propose, or enter into or modify any contract, agreement, commitment or
arrangement, to do any of the matters prohibited by the other subsections of this
Section 10.1. |
| 10.2 |
|
Covenants of the Vendor Relating to the Transactions Contemplated by this Agreement |
The Vendor shall, and shall cause the Company and its Subsidiaries to, perform all obligations
required under this Agreement, co-operate with Purchaser in connection therewith, and use
commercially reasonable efforts to do all such other acts and things as may be necessary in order
to consummate and make effective the transactions contemplated in this Agreement and, without
limiting the generality of the foregoing, the Vendor shall, and shall cause the Company and its
Subsidiaries to:
| |
(a) |
|
use commercially reasonable efforts to obtain as soon as practicable following
execution of this Agreement all third party consents, approvals and notices required
under any of the Material Contracts or any other required consents, approvals and
notices from any Governmental Authority; |
| |
(b) |
|
use commercially reasonable efforts to defend all lawsuits or other legal,
regulatory or other proceedings against the Vendor, the Company or any of their
Subsidiaries challenging or affecting this Agreement or the consummation of the
transactions contemplated hereby; |
| |
(c) |
|
subject to applicable Law, use commercially reasonable efforts to make
available and cause to be made available to the Purchaser, and the agents and advisors
thereto, information reasonably requested by the Purchaser for the purposes of
preparing, considering and implementing integration and strategic plans for the
combined businesses of the Purchaser and the Company following the Closing and
confirming the representations and warranties of the Vendor set out in Schedule 5.1; |
| |
(d) |
|
use commercially reasonable efforts to discharge those Permitted Encumbrances
listed in Section 1.1 of the Vendor Disclosure Letter as to be discharged prior to the
Closing Date; and |
| |
(e) |
|
concurrently with the Closing, release any Employees from any confidentiality
or non-competition agreements or non-solicitation covenants with the Vendor and its
Affiliates. |
| 10.3 |
|
Purchaser Conduct of Business Prior to Closing |
During the period from the date of this Agreement to the Closing Time, the Purchaser shall:
| |
(a) |
|
except as otherwise contemplated or permitted by this Agreement, conduct its
business in the ordinary course, consistent with past practice and regular customer
service and business policies and not, without the prior written consent of the Vendor,
enter into any transaction which, if effected before the date of this Agreement, would
constitute a breach of the representations, warranties or agreements of the Vendor
contained in this Agreement; |
| |
(b) |
|
not, without the prior written consent of the Vendor, take any actions that
would reasonably be likely to result in a Purchaser Material Adverse Change; |
| |
(c) |
|
cooperate with the Vendor and the Company and use all commercially reasonable
efforts to obtain and diligently assist the Vendor and the Company in obtaining all
necessary consents, approvals and authorizations under any applicable Law; and |
| |
(d) |
|
promptly advise the Vendor orally and, if then requested, in writing (i) of any
fact or any change in the business, operations, affairs, assets, liabilities,
capitalization or financial condition of the Purchaser or any of its Subsidiaries that
could be a Purchaser Material Adverse Change; (ii) of any material breach by the
Purchaser of any covenant or agreement contained in this Agreement; and (iii) of any
death, permanent disability, resignation, termination of employment or other departure
of any senior officer of the Purchaser or any of its Subsidiaries. |
| 10.4 |
|
Regulatory Approvals |
| |
(a) |
|
The Purchaser shall use its reasonable best efforts to obtain as soon as
practicable following execution of this Agreement the CRTC Approval, including
providing or submitting on a timely basis all filings, written submissions,
documentation and information that is required, or in the reasonable opinion of either
Party, advisable, in connection with obtaining the CRTC Approval, provided that
competitively sensitive information may be provided only to the external counsel of the
other Party. The Vendor and the Purchaser shall cooperate with one another in
connection with obtaining the CRTC Approval and shall not take any actions or steps
that would be reasonably likely to materially adversely impact the likelihood of
receiving CRTC Approval. |
| |
(b) |
|
Each of the Vendor and the Purchaser shall use its reasonable best efforts to
avoid, resolve, or rescind any application, injunction, action, order or proceeding or
threatened application, injunction, action, order, or proceeding made or brought by any
Governmental Authority (other than the CRTC) in respect of the transactions
contemplated by this Agreement. In connection with, but without limiting the generality
of, the foregoing, each of the Vendor and the Purchaser shall (i) promptly respond to
any questions or requests for information from any Governmental Authority (other than
the CRTC) relating to the transactions contemplated by this Agreement, including
providing or submitting on a timely basis all filings, written submissions,
documentation, and information that is required or, in the reasonable opinion of either
Party, advisable to fully respond to such questions or requests for information, and
(ii) provide or submit to such Governmental Authority all other filings, submissions,
documentation, and information that is, in the reasonable opinion of the Parties,
advisable. |
| |
(c) |
|
The obligation of the Purchaser to use its reasonable best efforts pursuant to
Section 10.4(a) shall include proposing, negotiating, accepting, agreeing to,
committing to and effecting any actions or remedies necessary to obtain CRTC Approval;
provided that any such actions or remedies are conditioned on the Closing and would
not, individually or in the aggregate, have a material and detrimental impact on the
Purchaser, the Company and their Subsidiaries, taken as a whole (assuming the
completion of the transactions provided for herein). |
| |
(d) |
|
The Vendor and the Purchaser shall also request that the CRTC process the
application for CRTC Approval in the most expedited manner available. If the CRTC
rejects the transactions contemplated in this Agreement, upon the agreement of each of
the Parties, the Vendor and the Purchaser shall, if available, appeal the decision or
reapply to CRTC within 30 days of the CRTC decision with an application that addresses
the matters raised by the CRTC and the provisions of this Section 10.4 shall apply to
such new application, mutatis mutandis. |
| |
(e) |
|
With respect to the CRTC Approval, the Vendor and the Purchaser shall, as
promptly as practicable, prepare a draft of all required documents, registrations,
statements, petitions, filings and applications for the CRTC Approval in respect of the
transactions contemplated by this Agreement. Each Party shall be entitled to comment
upon such application for the CRTC Approval, it being understood that the draft
application shall be amended to reflect such comments inasmuch as the other Party
considers such comments to be appropriate, in its reasonable discretion. The Vendor and
the Purchaser agree to request the CRTC to preserve the confidentiality of such
competitively or commercially sensitive information as the Parties may agree upon in
writing, each acting reasonably, and to take all such reasonable steps, at its cost, as
may be required to preserve the confidentiality of such information. |
| |
(f) |
|
Subject to applicable Laws, the Vendor and the Purchaser shall keep each other
fully informed as to the status of and the processes and proceedings relating to
obtaining the CRTC Approval and any review, investigation or inquiry by another
Governmental Authority relating to the transactions contemplated by this Agreement, and
shall promptly notify each other of any material notice or other material communication
(including providing copies of any correspondence, deficiency responses, and responses
to information requests) from the CRTC in connection with obtaining the CRTC Approval
or from any other Governmental Authority, or any other review, investigation or inquiry
relating to the transactions contemplated by this Agreement. No Party shall make any
written submissions or filings or respond to any information requests, or participate
in any meetings or any material conversations with the CRTC or any other Governmental
Authority in connection with the obtaining of the CRTC Approval or any other review,
investigation or inquiry relating to the transactions contemplated by this Agreement
unless it consults with the other Party and obtains the other Party’s approval (acting
reasonably) in advance and gives the other Party a reasonable opportunity to review and
approve drafts of any such written submissions or to attend and participate in any
meetings or material communication (except (i) where the timing of the response
requested by the CRTC or other Governmental Authority does not reasonably permit such
review, (ii) the CRTC or other Governmental Authority expressly requests that the other
should not be present at the meeting or discussion or part or parts of the meeting or
discussion, or (iii) where competitively or commercially sensitive information may be
discussed); provided that a portion of any such substantive meeting or discussion shall
be reserved for a private discussion between the Party and the CRTC or such other
Governmental Authority. |
| |
(g) |
|
Despite the foregoing, submissions, filings, documentation or other written
communications with the CRTC or any other Governmental Authority may be redacted as
reasonably necessary before sharing with the other Party to address reasonable
attorney-client or other privilege or confidentiality concerns, provided that a Party
shall provide external legal counsel to the other Party non-redacted versions of drafts
or final submissions, filings or other written communications with the CRTC or such
other Governmental Authority on the basis that the redacted information will not be
shared with its clients. |
| |
(h) |
|
For greater certainty, any changes or amendments proposed to be made by a Party
to the application for the CRTC Approval as filed, or any response to be filed in
respect of a deficiency question, or any filings, submissions or responses to
information requests made in connection with the CRTC Approval shall be submitted to
the other Party for comments, prior to being filed, it being understood that the
drafting Party shall amend the relevant materials to reflect such comments inasmuch as
the drafting Party considers such comments to be appropriate, in the drafting Party’s
reasonable discretion. |
| |
(i) |
|
All costs and expenses incurred in connection with obtaining the CRTC Approval
(including all filing fees, the costs and expenses of any financial contributions or
other regulatory levies, charges or payments) shall be borne by the Purchaser, other
than costs and expenses of any advisors retained by, or for the benefit of, the Vendor,
including legal counsel, which costs and expenses shall be for the account of the
Vendor. |
| 10.5 |
|
Access for Investigation |
The Vendor shall permit the Purchaser and its Representatives, between the date of this Agreement
and the Closing Time, to have reasonable access during normal business hours to: (i) the Real
Property; (ii) all other locations where Books and Records or other material relevant to the
business of the Company or any of its Subsidiaries are stored; (iii) all the Books and Records; and
(iv) the properties and assets used by the Company or any of its Subsidiaries. The Vendor shall
furnish to the Purchaser copies of Books and Records as the Purchaser shall from time to time
reasonably request for transition planning purposes. The Vendor shall cooperate and assist, to the
extent reasonably requested by the Purchaser, with the Purchaser’s investigation of the property,
assets, undertaking and financial condition of the Company and its Subsidiaries. The Purchaser’s
rights of access shall be exercised in a manner that does not unreasonably interfere with the
operations of the Company and its Subsidiaries.
After the Closing, other than Personal Information, which shall be kept confidential at all times,
the Vendor shall keep confidential for a period of 24 months from the Closing Date all information
it disclosed to the Purchaser relating to the Company or any of its Subsidiaries, except
information which:
| |
(a) |
|
is part of the public domain; |
| |
(b) |
|
becomes part of the public domain other than as a result of a breach of these
provisions by the Vendor; |
| |
(c) |
|
the Vendor is required to disclose pursuant to applicable Laws or stock
exchange rules or by a Governmental Authority; |
| |
(d) |
|
was received in good faith after Closing from an independent Person who was
lawfully in possession of such information free of any obligation of confidence; or |
| |
(e) |
|
is released from the provisions of this Agreement by the written authorization
of Purchaser. |
| 10.7 |
|
Actions to Satisfy Closing Conditions |
Each of the Parties shall take all such actions as are within its power to control, and use
reasonable commercial efforts to cause other actions to be taken which are not within its power to
control, so as to ensure compliance with each of the conditions and covenants set forth in Article
8 and Article 9 which are for the benefit of the other Party.
| 10.8 |
|
Preservation of Records |
The Purchaser shall take all reasonable steps to preserve and keep the records of the Company and
each of its Subsidiaries delivered to it in connection with the completion of the transactions
contemplated by this Agreement for a period of six years from the Closing Date, or for any longer
period as may be required by any Laws or Governmental Authority, and shall make such records
available to the Vendor as may be reasonably required by it in connection with a Claim by the
Purchaser against the Vendor under this Agreement or relating to any inquiries or requirements of
any Governmental Authority with jurisdiction over the Vendor, including any Taxing Authority.
The Vendor shall cause each of the Company and its Subsidiaries to duly and timely make or prepare
all Tax Returns required by Law for any taxable period which ends on or before the Closing Time and
for which Tax Returns have not been filed as of such date in a manner consistent with past
practice, unless otherwise required by Law, and, prior to filing such returns with the relevant
Taxing Authority, shall provide a copy to the Purchaser for review and comment at least 15 Business
Days prior to the date on which such returns are to be timely filed; provided that, in the case of
Tax Returns that are required to be filed within one calendar month of the Closing Time, the Vendor
shall use its commercially reasonable efforts to afford the Purchaser a reasonable opportunity to
review and comment on such return prior to filing such return. The Purchaser shall prepare or cause
to be prepared all Straddle Period Returns for each Straddle Period of the Company and its
Subsidiaries, in each case, in a manner consistent with past practice, unless otherwise required by
Law. In the case of a Straddle Period Return that is required to be filed within 30 days of the
Closing Time, the Purchaser shall, at least seven days prior to the date such Straddle Period
Return is required to be filed provide a substantially final draft of such Straddle Period Return
to the Vendor for review and comment, provided that, in the case of a Straddle Period Return that
is required to be filed within 15 days of the Closing Time, the Purchaser shall use its
commercially reasonable efforts to afford the Vendor a reasonable opportunity to review and comment
on such Straddle Period Return prior to filing such Straddle Period Return. In any other case, the
Purchaser shall provide a substantially final draft of the Straddle Period Return to the Vendor for
review and comment at least 15 Business Days prior to the date on which the Straddle Period Return
is required to be filed. The Vendor and the Purchaser shall cooperate fully with each other and
make available to each other in a timely fashion such data and other information as may reasonably
be required for the preparation of any Straddle Period Return of the Company or any of its
Subsidiaries and shall preserve such data and other information until the expiration of any
applicable limitation period under any applicable Law with respect to Taxes.
The Parties agree that the Vendor may: (a) cause the Company or any of its Subsidiaries to declare
and pay dividends or otherwise make payments or distributions of cash in respect of its shares or
in repayment of intercompany debt in accordance with past practice; (b) notwithstanding the
foregoing, cause the Company or any of its Subsidiaries to (i) declare and pay a dividend or
otherwise make a payment or distribution of cash in respect of its shares or in repayment of
intercompany debt immediately prior to the Effective Time, and for the avoidance of doubt,
immediately prior to any calculation of Closing Working Capital, in an amount equal to
substantially all of the cash on hand at the time of such dividend, payment, distribution or
repayment, or (ii) increase the stated capital in respect of its shares or declare and pay stock
dividends, in each case subject to applicable corporate Law.
All Books and Records of the Company and its Subsidiaries in the possession or control of the
Vendor shall be delivered to the Purchaser as soon as possible following the Closing Date and in
any event within 30 days following the Closing Date. Any Books and Records in the possession or
control of the Vendor not delivered to the Purchaser prior to the Closing Date shall be deemed to
have been delivered to the Purchaser immediately after Closing if they are maintained or held on
any Real Property or embodied or recorded electronically in any Information Technology of the
Company and its Subsidiaries.
| 10.12 |
|
Transitional Trademark Licence Agreement |
The Parties shall negotiate in good faith the provisions of a transitional trademark licence
agreement between the Vendor and the Company and/or one or more of its Subsidiaries to be entered
into on the Closing Date.
| 10.13 |
|
Submission to Jurisdiction |
Each Party submits to the exclusive jurisdiction of any Ontario courts sitting in Toronto in any
action, application, reference or other proceeding arising out of or relating to this Agreement and
consents to all claims in respect of any such action, application, reference or other proceeding
being heard and determined in such Ontario courts. Each of the Parties irrevocably waives, to the
fullest extent it may effectively do so, the defence of an inconvenient forum to the maintenance of
such action, application or proceeding. Each Party consents to any action, application, reference
or other proceeding arising out of or relating to this Agreement being tried in Toronto and, in
particular, being placed on the Commercial List of the Ontario Superior Court of Justice.
| 10.14 |
|
Notice of Untrue Representation or Warranty |
The Vendor shall notify the Purchaser, and the Purchaser shall notify the Vendor, promptly upon any
representation or warranty made by it contained in this Agreement becoming incorrect prior to
Closing, and, for the purposes of this Section 10.14, unless otherwise specified, each
representation and warranty shall be deemed to be given at and as of all times from the date of
this Agreement to the Closing Date. Any such notice shall set out particulars of the untrue or
incorrect representation or warranty and details of any actions being taken by the Vendor or the
Purchaser, as the case may be, to rectify the incorrectness. No such notice will relieve either
Party of any right or remedy provided for in this Agreement.
| |
(a) |
|
Effective as of the Closing Date, each Employee shall cease to participate in
and accrue benefits under each Parent Plan that provides non-pension benefits. The
Vendor shall be responsible, in accordance with the terms of the applicable Parent
Plan, for any and all liabilities under the Parent Plan, including any claims Incurred
by the Employees (and their eligible spouses, beneficiaries and dependants) prior to
the Closing Date. |
| |
(b) |
|
Notwithstanding any other provisions in this Agreement, the Vendor shall, if
requested by the Purchaser, permit the Employees (and their eligible spouses,
beneficiaries and dependants) to continue to participate in and receive benefits under
any Parent Plans that provide non-pension benefits for a transitional period following
the Closing Date and subject to the conditions to be agreed upon by the Vendor and
Purchaser. |
| |
(a) |
|
Effective as of the Closing Date, each Employee shall cease to participate in
and accrue benefits under the Parent DC Pension Plan. Subject to the completion of a
transfer of defined contribution assets to the applicable pension plan established or
designated by Purchaser, the Vendor shall be responsible, in accordance with the terms
of the Parent DC Pension Plan, for any and all liabilities arising under the Parent DC
Pension Plan prior to the effective date of transfer of defined contribution assets to
the pension plan designated by the Purchaser. |
| |
(b) |
|
The Vendor and the Purchaser shall use commercially reasonable efforts,
including to obtain any required approvals from any applicable Governmental Authority,
to cause the defined contribution account balances held by each Employee in the Parent
DC Pension Plan to be transferred from the Parent DC Pension Plan to the applicable
plan established or designated by Purchaser. |
ARTICLE 11
INDEMNIFICATION
| 11.1 |
|
Indemnification by the Vendor |
| |
(a) |
|
The Vendor shall indemnify and save harmless the Purchaser, its directors,
officers, agents, employees and shareholders (collectively referred to as the
“Purchaser Indemnified Parties”), from and against all Losses, whether or not arising
due to third party Claims, which may be made or brought against the Purchaser
Indemnified Parties, or which they may suffer or incur, directly or indirectly, as a
result of or in connection with or relating to: |
| |
(i) |
|
any non-fulfilment or breach of any covenant or agreement on
the part of the Vendor contained in this Agreement or in any certificate
furnished by or on behalf of the Vendor pursuant to this Agreement; |
| |
(ii) |
|
any misrepresentation or any incorrectness in or breach of any
representation or warranty of the Vendor contained in this Agreement or in any
certificate furnished by or on behalf of the Vendor pursuant to this Agreement
(including, for certainty, the Company Disclosure); |
| |
(iii) |
|
any liability for Vendor Taxes which has not been provided for
in the Closing Working Capital; and |
| |
(iv) |
|
the matters disclosed in Section 11.1(a)(iv) of the Vendor
Disclosure Letter. |
| |
(b) |
|
The obligations of the Vendor under Section 11.1(a) shall be subject to the
following limitations: |
| |
(i) |
|
subject to Sections 11.1(b)(ii) and 11.1(b)(iii), the
obligations of the Vendor under Section 11.1(a)(ii) shall terminate on the
expiry of the Indemnification Period, except with respect to bona fide Claims
by Purchaser Indemnified Parties set forth in written notices given by a
Purchaser Indemnified Party to the Vendor prior to such date; |
| |
(ii) |
|
except with respect to bona fide Claims by Purchaser
Indemnified Parties set forth in written notices given by a Purchaser
Indemnified Party to the Vendor prior to the date described below, the
obligations of the Vendor under Section 11.1(a)(ii) in respect of any Losses
relating to or impacted by Tax matters, including any Losses arising out of
Section 25 of Schedule 4.1, or under Section 11.1(a)(iii), shall terminate 90
days after the relevant Governmental Authorities shall no longer be entitled to
assess or reassess liability for Taxes against the Company or any of its
Subsidiaries in respect of such Tax matters; |
| |
(iii) |
|
the obligations of the Vendor under Section 11.1(a) with
respect to: |
| |
(A) |
|
any Losses based on Section 11.1(a)(i); |
| |
(B) |
|
any Losses based on any incorrectness in or
breach of the representations and warranties set out in the Vendor Core
Representations; and |
| |
(C) |
|
any Losses based on intentional
misrepresentation or fraud by a Vendor, |
shall terminate on the date which is the last day of the ultimate limitation
period (in accordance with the Limitations Act (Ontario));
| |
(iv) |
|
for Losses based on Section 11.1(a)(ii) (other than any Losses
relating to or impacted by Tax matters), |
| |
(A) |
|
the Vendor shall not be required to pay any
amount until the aggregate of all Losses exceeds $25 million (the
“Tipping Basket”) (disregarding Section 11.1(b)(iv)(B)) and upon the
aggregate of all Losses exceeding $25 million, the Vendor shall be
required to pay the amount owing in respect of all such Losses
including the $25 million, except that the foregoing limitation shall
not apply to wilful breaches of this Agreement or fraud or breaches of
the Vendor Core Representations; |
| |
(B) |
|
after the threshold referred to in Section
11.1(b)(iv)(A) has been reached, the minimum threshold in respect of
any individual Claim shall be $250,000, and no Claim may be brought if
such Claim is for an amount less than such minimum threshold, unless
the aggregate of all such Claims exceeds $2,000,000; and |
| |
(C) |
|
other than in respect of wilful breaches of
this Agreement or fraud or breaches of the Vendor Core Representations,
the aggregate liability of the Vendor shall not exceed $500 million. |
| |
(v) |
|
for Losses based on Section 11.1(a)(ii) relating to or impacted
by Tax matters, including any Losses arising out of Section 25 of Schedule 4.1,
or under Section 11.1(a)(iii), |
| |
(A) |
|
the minimum threshold in respect of any
individual Claim shall be $250,000, and no Claim may be brought if such
Claim is for an amount less than such minimum threshold; and |
| |
(B) |
|
other than in respect of wilful breaches of
this Agreement or fraud, the aggregate liability of the Vendor shall
not exceed $1,850,000,000; and |
| |
(vi) |
|
in no event shall the aggregate liability of the Vendor on the
indemnity contained in this Section 11.1 exceed the Purchase Price. |
| 11.2 |
|
Indemnification by the Purchaser |
| |
(a) |
|
The Purchaser shall indemnify and save harmless the Vendor, its directors,
officers, employees, agents and shareholders (collectively referred to as the “Vendor
Indemnified Parties”), from and against all Losses, whether or not arising due to third
party Claims, which may be made or brought against the Vendor Indemnified Parties, or
which they may suffer or incur, directly or indirectly as a result of or in connection
with or relating to: |
| |
(i) |
|
any non-fulfilment or breach of any covenant or agreement on
the part of the Purchaser contained in this Agreement or in any certificate
furnished by or on behalf of the Purchaser pursuant to this Agreement; |
| |
(ii) |
|
any misrepresentation or any incorrectness in or breach of any
representation or warranty of the Purchaser contained in this Agreement or in
any certificate furnished by or on behalf of the Purchaser pursuant to this
Agreement (including, for certainty, the Purchaser Circular, but excluding the
Company Disclosure). |
| |
(b) |
|
The Purchaser’s obligations under Section 11.2(a) shall be subject to the
following limitations: |
| |
(i) |
|
subject to Section 11.2(b)(iii), the obligations of the
Purchaser under Section 11.2(a)(ii) shall terminate on the expiry of the
Indemnification Period except with respect to bona fide Claims by Vendor
Indemnified Parties set forth in written notices given by a Vendor Indemnified
Party to the Purchaser prior to such date; |
| |
(ii) |
|
except with respect to bona fide Claims by Vendor Indemnified
Parties set forth in written notices given by a Vendor Indemnified Party to the
Purchaser prior to the date described below, the obligations of the Purchaser
under Section 11.1(b)(i) in respect of any Losses relating to or impacted by
Tax matters, including any Losses arising out of Section 24 of Schedule 5.1,
shall terminate 90 days after the relevant Governmental Authorities shall no
longer be entitled to assess or reassess liability for Taxes against the
Purchaser or any of its Subsidiaries in respect of such Tax matters; |
| |
(iii) |
|
the obligations of the Purchaser under Section 11.2(a) with
respect to: |
| |
(A) |
|
any Losses based on Section 11.2(a)(i); |
| |
(B) |
|
any Losses based on any incorrectness in or
breach of the representations and warranties set out in the Purchaser
Core Representations; and |
| |
(C) |
|
any Losses based on intentional
misrepresentation or fraud by the Purchaser, |
shall terminate on the date which is the last day of the ultimate limitation
period (in accordance with the Limitations Act (Ontario)).
| |
(iv) |
|
for Losses based on Section 11.2(a)(ii) (other than any Losses
relating to or impacted by Tax matters), |
| |
(A) |
|
the Purchaser shall not be required to pay any
amount until the aggregate of all Losses (disregarding 11.2(b)(iv)(B))
exceeds the Tipping Basket, and upon the aggregate of all Losses
exceeding the Tipping Basket, the Purchaser shall be required to pay
the amount owing in respect of all such Losses including the $25
million, except that the foregoing limitation shall not apply to wilful
breaches of this Agreement or fraud or breaches of the Purchaser Core
Representations; |
| |
(B) |
|
after the threshold referred to in Section
11.2(b)(iv)(A) has been reached, the minimum threshold in respect of
any individual Claim shall be $250,000, and no Claim may be brought if
such Claim is for an amount less than such minimum threshold unless the
aggregate of all such Claims exceeds $2,000,000; and |
| |
(C) |
|
other than in respect of wilful breaches of
this Agreement or fraud or breaches of the Purchaser Core
Representations, the aggregate liability of the Purchaser shall not
exceed $500 million; |
| |
(v) |
|
for Losses based on Section 11.2(a)(ii) relating to or impacted
by Tax matters, including any Losses arising out of Section 24 of Schedule 5.1: |
| |
(A) |
|
the minimum threshold in respect of any
individual Claim shall be $250,000, and no Claim may be brought if such
Claim is for an amount less than such minimum threshold; and |
| |
(B) |
|
other than in respect of wilful breaches of
this Agreement or fraud, the aggregate liability of the Purchaser shall
not exceed $1,850,000,000; and |
| |
(vi) |
|
in no event shall the aggregate liability of the Purchaser on
the indemnity contained in this Section 11.2 exceed the Purchase Price. |
| 11.3 |
|
Indemnification Procedures for Third Party Claims |
| |
(a) |
|
In the case of Losses arising from Claims made by a third party with respect to
which indemnification is sought, the Vendor Indemnified Party or Purchaser Indemnified
Party, as the case may be, seeking indemnification (the “Indemnified Party”) shall give
prompt notice, and in any event within 20 days, to the other Party (the “Indemnifying
Party”) of any such Claims made upon it. If the Indemnified Party fails to give such
notice, such failure shall not preclude the Indemnified Party from obtaining such
indemnification but its right to indemnification may be reduced to the extent that such
delay prejudiced the defence of the Claim or increased the amount of liability or cost
of defense. |
| |
(b) |
|
The Indemnifying Party shall have the right, by notice to the Indemnified Party
given not later than 30 days after receipt of the notice described in Section 11.3(a),
to assume the control of the defence, compromise or settlement of the Claim, provided
that such assumption shall, by its terms, be without cost to the Indemnified Party and
provided the Indemnifying Party acknowledges in writing its obligation to indemnify the
Indemnified Party in accordance with the terms contained in this Section in respect of
that Claim. |
| |
(c) |
|
Upon the assumption of control of any Claim by the Indemnifying Party as set
out in Section 11.3(b), the Indemnifying Party shall diligently proceed with the
defence, compromise or settlement of the Claim at its sole expense, including if
necessary, employment of counsel and experts reasonably satisfactory to the Indemnified
Party and, in connection therewith, the Indemnified Party shall cooperate fully, but at
the expense of the Indemnifying Party with respect to any out-of-pocket expenses
incurred, to make available to the Indemnifying Party all pertinent information and
witnesses under the Indemnified Party’s control, make such assignments and take such
other steps as in the opinion of the Indemnifying Party or counsel for the Indemnifying
Party are reasonably necessary to enable the Indemnifying Party to conduct such
defence. The Indemnified Party shall also have the right to participate in the
negotiation, settlement or defence of any Claim at its own expense. The Indemnifying
Party shall not settle any Claim without the prior written consent of the Indemnified
Party, such consent not to be unreasonably withheld. |
| |
(d) |
|
The final determination of any Claim pursuant to this Section, including all
related costs and expenses, shall be binding and conclusive upon the Parties as to the
validity or invalidity, as the case may be, of such Claim against the Indemnifying
Party. |
| |
(e) |
|
If the Indemnifying Party does not assume control of a Claim as permitted in
Section 11.3(b), the Indemnified Party shall be entitled to make such settlement of the
Claim as in its sole discretion may appear advisable, and such settlement or any other
final determination of the Claim shall be binding upon the Indemnifying Party. |
| |
(f) |
|
If any Claim is of a nature such that the Indemnified Party is required by Law
to post security or make a payment to any person with respect to such Claim before the
completion of any negotiation, settlement or compromise of such Claim or the rendering
of any court or administrative decision relating to such Claim including any amount
payable on account of Taxes to the extent described in subsection 225.1(7) of the Tax
Act or any substantially similar provision of any applicable provincial taxing statute,
the Indemnifying Party shall post such security or make such payment as and when
required by such Law. If the Indemnifying Party fails to post such security or make
such payment and the Indemnified Party, at its option, does so instead, the
Indemnifying Party shall forthwith after demand by the Indemnified Party reimburse the
Indemnified Party for any Losses it has suffered as a result of posting such security
or making such payment. If the amount of any Claim in respect of which a payment or
reimbursement has been made by the Indemnifying Party, as finally determined, is less
than the amount which was paid or reimbursed by the Indemnifying Party, the Indemnified
Party shall, forthwith after receipt of the difference from the person asserting such
Claim or any other person, pay such difference to the Indemnifying Party. |
| |
(g) |
|
Notwithstanding Sections 11.3(a) through 11.3(e), in the event that the Vendor
would be liable for the payment of any Taxes under this Article 11 if assessed or
imposed, the Vendor, in the Vendor’s sole and absolute discretion, will have the right
to control any audit involving any such Taxes and/or to contest any assertion that any
such Taxes are payable in any proceedings available to the Company, the Company’s
Subsidiaries or the Purchaser; provided, however, that the Purchaser will assist with
audits and provide all relevant information, and that the Vendor shall keep the
Purchaser reasonably informed of the progress of any such audit and/or contest, shall
consult with the Purchaser in connection with any significant actions in respect of any
such audit and/or contest in a timely fashion to allow the Purchaser a reasonable
opportunity for review and input in respect of such actions and shall not enter into
any settlement with respect to such audit and/or contest without receiving the prior
written consent of the Purchaser (such consent not to be unreasonably withheld). The
Purchaser, on the one hand, and the Vendor, on the other hand, shall fully cooperate in
good faith in connection with any such audit or other proceeding. |
| 11.4 |
|
Tax Status of Indemnification Payments |
Any payment made by the Vendor pursuant to this Article 11 shall constitute a reduction of the
Purchase Price allocated first up to the value of any shares purchased by Purchaser from Vendor
(including the Purchased Shares) and the remainder to the Purchased Debt and any payment made by
the Purchaser pursuant to this Article 11 shall constitute an increase in the Purchase Price
allocated to the value of any shares purchased by Purchaser from Vendor (including the Purchased
Shares). In either case, each of the Vendor and the Purchaser shall, within a reasonable time of
payment and receipt of such payment, as applicable, and in any event within two months of such
payment, request all amendments to its current or past Tax Returns as may be necessary to reflect
the foregoing. The Parties agree that the amount of any indemnity payment made pursuant to this
Article 11 shall take into account the Tax treatment of such indemnity payment to the Party
receiving such indemnity payment (excluding, for certainty, any reduction in the adjusted cost base
of shares except to the extent that such reduction results in a gain under subsection 40(3) of the
Tax Act) and the Tax treatment of the Losses giving rise to such indemnity payment. For greater
certainty, the Parties agree that in calculating the amount of any Loss for purposes of this
Article 11 there shall be deducted an amount equal to the present value of any Tax benefit as a
result of such Loss and available to the Party that incurred such Loss. The Parties further agree
that the present value of any Tax benefit will take into account the expected timing of any Tax
deduction or Tax credit.
| 11.5 |
|
Insurance and Other Recoveries |
Notwithstanding anything contained in this Agreement to the contrary, Losses of an Indemnified
Party shall be net of any insurance or other prior or subsequent recoveries by such Indemnified
Party in connection with the facts giving rise to the right of indemnification (including under or
pursuant to any insurance policy, indemnity, reimbursement agreement or contract pursuant to which
or under which such Indemnified Party is a party or has rights). The applicable Indemnified Party
shall use commercially reasonable efforts to recover from insurance policies or other applicable
sources of recovery the maximum portion of any Losses of such Indemnified Party. If the applicable
Indemnified Party has used commercially reasonable efforts to recover any amounts recoverable under
insurance policies or other applicable sources of recovery and has not recovered the applicable
Losses, the applicable Indemnifying Party shall be liable for the amount by which such Losses
exceeds the amounts actually recovered subject to the limitations on indemnification set out in
this Article 11. If the applicable Indemnified Party fails to use commercially reasonable efforts
to recover any amounts recoverable under insurance policies or other applicable sources of
recovery, the applicable Indemnifying Party shall not be required to indemnify the applicable
Indemnified Party for that portion of any Losses that could reasonably be expected to have been
recovered had the applicable Indemnified Party used such commercially reasonable efforts.
An Indemnified Party shall use its reasonable efforts to mitigate any Losses or liability that any
such Indemnified Party asserts or is reasonably likely to assert under this Article 11. In the
event that any Indemnified Party fails to make such reasonable efforts to mitigate any such claim
or liability, then notwithstanding anything contained in this Agreement to the contrary, the
Indemnifying Party shall not be required to indemnify the Indemnified Party for that portion of any
Losses that could reasonably be expected to have been avoided if the Indemnified Party had made
such efforts.
| 11.7 |
|
Calculation of Losses |
Notwithstanding anything to the contrary in this Article 11, no Indemnified Party shall be entitled
to indemnification under this Article 11 or to make a claim for any amounts under this Article 11
in respect of (i) special, exemplary or punitive damages, except to the extent payable by an
Indemnified Party to a third Person, or (ii) consequential, indirect or speculative damages, or any
Losses calculated based on any multiple of lost earnings or other similar methodology, unless (A)
such damages or Losses were reasonably foreseeable, (B) with respect to Losses based on a
diminution in value of the Company or its Subsidiaries, such calculation is the most appropriate
method to fairly compensate the Indemnified Party, and/or (C) the basis for such Loss is of a
recurring nature or represents a reduction in the historical cash flow or earnings of the Company
and its Subsidiaries (taken as a whole), which reduction would reasonably be expected to result in
an impairment of the Company’s and its Subsidiaries’ (taken as a whole) future cash flows or
earnings.
No Indemnified Party shall be entitled to recover from any Indemnifying Party under this Article 11
more than once in respect of the same Losses (notwithstanding that such Loss may result from
breaches of multiple provisions of this Agreement).
Except as set out in Section 12.3 and Section 13.1, the rights of indemnity set forth in this
Article 11 are the sole and exclusive remedy of each Party in respect of any misrepresentation,
incorrectness in or breach of any representation or warranty, or breach of covenant, by the other
Party under this Agreement or in the certificates contemplated by Section 8.2, 8.3, 9.2 or 9.3.
Accordingly, the Parties waive, from and after the Closing, any and all rights, remedies and Claims
that one Party may have against the other, whether at law, under any statute or in equity
(including but not limited to claims for contribution or other rights of recovery arising under any
Environmental Laws, claims for breach of contract, breach of representation and warranty, negligent
misrepresentation and all claims for breach of duty), or otherwise, directly or indirectly,
relating to the provisions of this Agreement or the transactions contemplated by this Agreement
other than as expressly provided for in this Article 11, other than those arising with respect to
any fraud or wilful misconduct and other than those provided for in other documents or instruments
delivered pursuant to this Agreement. The Parties agree that if a Claim for indemnification is made
by a Party in accordance with this Article 11 and there has been a refusal by the other Party to
make payment or otherwise provide satisfaction in respect of such Claim, then a legal proceeding is
the appropriate means to seek a remedy for such refusal. This Article 11 shall remain in full force
and effect in all circumstances and shall not be terminated by any breach (fundamental, negligent
or otherwise) by any Party of its representations, warranties or covenants under this Agreement or
under any Closing document or by any termination or rescission of this Agreement by any Party.
The Purchaser, on the one hand, and the Vendor, on the other hand, acknowledge that the other Party
is acting as trustee and agent for the Purchaser Indemnified Parties and the Vendor Indemnified
Parties, respectively, on whose behalf and for whose benefit the indemnities in Article 11 are
provided and that such remaining Indemnified Parties shall have the full right and entitlement to
take the benefit of and enforce such indemnity notwithstanding that they may not individually be
parties to this Agreement. The Parties agree that the other Party may enforce the indemnity for and
on behalf of such Indemnified Parties and, in such event, the Party from whom indemnification is
sought will not in any proceeding to enforce the indemnity by or on behalf of such Indemnified
Parties assert any defence thereto based on the absence of authority or consideration or privity of
contract and irrevocably waives the benefit of any such defence.
ARTICLE 12
TERM, TERMINATION, AMENDMENT AND WAIVER
This Agreement may be terminated at any time prior to the Closing Date:
| |
(a) |
|
by mutual written consent of the Purchaser and the Vendor; or |
| |
(b) |
|
by either the Purchaser or the Vendor if the Purchaser Shareholder Approval is
not obtained at the Purchaser Meeting (including any adjournment or postponement
thereof); or |
| |
(c) |
|
by either the Purchaser or the Vendor if the Closing Time shall not have
occurred on or prior to the Outside Date, except that the right to terminate this
Agreement under this Section 12.1(c) shall not be available to any Party whose failure
to fulfill any of its obligations or breach of any of its representations, warranties
or covenants under this Agreement has been the cause of, or resulted in, the failure of
the Closing Time to occur by the Outside Date (it being agreed that for purposes of
this Section 12.1(c), a failure to pay the Purchase Price on the Outside Date shall not
be a failure of the Purchaser to fulfill its obligations or a breach of covenant under
this Agreement in circumstances where the Purchaser has not received funds in the
amount contemplated by the Purchaser Commitment Letters and shall therefore not prevent
termination of this Agreement by the Purchaser pursuant to this Section 12.1(c),
subject to payment of the termination payment pursuant to Section 12.3(a)); or |
| |
(d) |
|
by the Purchaser if a breach of any representation or warranty or failure to
perform any covenant or agreement on the part of the Vendor set forth in this Agreement
shall have occurred that would cause the conditions set forth in Section 8.2 or 8.3 not
to be satisfied, and such conditions are incapable of being satisfied by the Outside
Date as reasonably determined by the Purchaser and provided that the Purchaser is not
then in breach of this Agreement so as to cause any condition in Section 9.2 or 9.3 not
to be satisfied; |
| |
(e) |
|
by the Vendor if a breach of any representation or warranty or failure to
perform any covenant or agreement on the part of the Purchaser set forth in this
Agreement shall have occurred that would cause the conditions set forth in Section 9.2
or 9.3 not to be satisfied, and such conditions are incapable of being satisfied by the
Outside Date as reasonably determined by the Vendor and provided that the Vendor is not
then in breach of this Agreement so as to cause any condition in Section 8.2 or 8.3 not
to be satisfied; or |
| |
(f) |
|
by either the Purchaser or the Vendor if the CRTC rejects the transactions
contemplated in this Agreement (if applicable, after the appeal or reapplication to
CRTC contemplated by Section 10.4(d)). |
| 12.2 |
|
Effect of Termination |
In the event of the termination of this Agreement in the circumstances set out in Section 12.1,
this Agreement shall forthwith become void and neither Party shall have any liability or further
obligation to the other Party hereunder, except with respect to the obligations set forth in
Section 7.3(c), Section 7.4(d), Article 11, this Section 12.2, Section 12.3 and Article 13 (other
than Section 13.1) where applicable. Nothing contained in this Section shall relieve any Party from
liability for any willful and intentional breach of any provision of this Agreement. No termination
of this Agreement shall affect the obligations of the Parties pursuant to the confidentiality
agreement dated August 7, 2015 between the Vendor and the Purchaser, except to the extent specified
therein.
| 12.3 |
|
Termination Payments and Expense Reimbursements |
| |
(a) |
|
If this Agreement is terminated pursuant to Section 12.1(c) [Outside Date] in
circumstances where all of the conditions set forth in Article 8 have been satisfied or
waived by the Purchaser other than those conditions that by their terms are to be
satisfied at the Effective Time (but which conditions are capable of being satisfied),
the Purchaser shall pay to the Vendor, or as the Vendor may direct, the amount of $55
million in the aggregate as liquidated damages in immediately available funds to an
account designated by the Vendor, within two Business Days following such termination. |
| |
(b) |
|
If this Agreement is terminated pursuant to Section 12.1(b) [No Purchaser
Shareholder Approval], and |
| |
(i) |
|
following the date hereof and prior to such termination, a
Purchaser Acquisition Proposal is made to the Purchaser or publicly announced
by any Person; |
| |
(ii) |
|
such Purchaser Acquisition Proposal has not expired or been
withdrawn at least five Business Days prior to the Purchaser Meeting; and |
| |
(iii) |
|
within 365 days following the date of such termination such
Purchaser Acquisition Proposal or another Purchaser Acquisition Proposal made
or publicly announced during the pendency of such Purchaser Acquisition
Proposal is consummated or the Purchaser enters into an agreement providing for
the Purchaser Acquisition Proposal referred to in clause (b)(i) above or
another Purchaser Acquisition Proposal made or publicly announced during the
pendency of such Purchaser Acquisition Proposal, and the applicable Purchaser
Acquisition Proposal is consummated by the Purchaser within such 365-day period
or thereafter, |
the Purchaser shall pay to the Vendor, or as the Vendor may direct, the amount of
$55 million in the aggregate as liquidated damages in immediately available funds to
an account designated by the Vendor, within two Business Days following completion
of the acquisition contemplated by the applicable Purchaser Acquisition Proposal.
| |
(c) |
|
If this Agreement is terminated pursuant to (i) Section 12.1(c) [Outside Date]
in circumstances where all of the conditions set forth in Article 8 have been satisfied
or waived by the Purchaser other than (A) those conditions that by their terms are to
be satisfied at the Effective Time (but which conditions are capable of being
satisfied), and (B) the receipt of CRTC Approval, or (ii) Section 12.1(f) [CRTC
Approval], the Purchaser shall pay to the Vendor or as the Vendor may direct an amount
equal to the reasonable out-of-pocket expenses incurred by the Vendor and its
Subsidiaries in connection with the transactions contemplated by this Agreement, with
such amount not to exceed $7,500,000, as liquidated damages in immediately available
funds to an account designated by the Vendor, within two Business Days following such
termination. |
| |
(d) |
|
Each of the Parties acknowledges that the agreements contained in this Section
12.3 are an integral part of the transactions contemplated by this Agreement and that,
without those agreements, the Parties would not enter into this Agreement. Each Party
acknowledges that all of the payment amounts set out in this Section 12.3 are payments
of liquidated damages which are a genuine pre-estimate of the damages, which the Party
entitled to such damages will suffer or incur as a result of the event giving rise to
such payment and the resultant termination of this Agreement and are not penalties.
Each Party irrevocably waives any right it may have to raise as a defence that any such
liquidated damages are excessive or punitive. For greater certainty, the Parties agree
that on the termination of this Agreement pursuant to Section 12.1(b) or 12.1(c), the
payment in full of any amount owing pursuant to Section 12.3(a), 12.3(b) or 12.3(c), as
applicable, is the sole monetary remedy of the Vendor or the Purchaser, as applicable,
and the Vendor or the Purchaser, as applicable, shall be precluded from any other
remedy against the other Party at Law or in equity or otherwise (including an order for
specific performance), and shall not seek to obtain any recovery, judgment or damages
of any kind, whether consequential, indirect or punitive, against the Vendor or the
Purchaser, as applicable, or any of its Subsidiaries or Representatives in respect of
this Agreement or the transactions contemplated by this Agreement. |
ARTICLE 13
GENERAL
| 13.1 |
|
Specific Performance |
| |
(a) |
|
Subject to Section 12.3(d), the Parties agree that irreparable harm would occur
for which money damages would not be an adequate remedy at law in the event that any of
the provisions of this Agreement were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that the Parties shall be
entitled to injunctive and other equitable relief to prevent breaches or threatened
breaches of this Agreement, and to enforce compliance with the terms of this Agreement,
without any requirement for the securing or posting of any bond in connection with the
obtaining of any such injunctive or other equitable relief, this being in addition to
any other remedy to which the Parties may be entitled at law or in equity. Subject to
Section 12.3(d), such remedies will not be the exclusive remedies for any breach of
this Agreement but will be in addition to all other remedies available at Law or equity
to each of the Parties. Notwithstanding the foregoing or any other provision of this
Agreement, the Parties acknowledge and agree that the Vendor shall not be entitled to
enforce specifically the obligations of the Purchaser to consummate the transactions
contemplated by this Agreement unless (i) all of the conditions set forth in Article 8
have been satisfied or waived by the Purchaser (other than those conditions that by
their terms are to be satisfied at the Effective Time); (ii) the Purchaser Debt
Financing (or any alternative financing thereto contemplated by Section 7.5) has been
funded or is required to be funded, and (iii) the Vendor has irrevocably confirmed that
if specific performance is granted and the Purchaser Debt Financing (or any alternative
financings thereto contemplated by Section 7.5) are funded, it is ready, willing and
able to consummate the sale of the Purchased Shares and Purchased Debt. |
| |
(b) |
|
Each Party hereby agrees not to raise any objections to the availability of the
equitable remedies provided for herein and the Parties further agree that (i) by
seeking the remedies provided for in this Section 13.1, a Party shall not in any
respect waive its right to seek any other form of relief that may be available to a
Party under this Agreement (including monetary damages), and (ii) nothing set forth in
this Section 13.1 shall require any Party hereto to institute any proceeding for (or
limit any Party’s right to institute any proceeding for) specific performance under
this Section 13.1 prior or as a condition to exercising any termination right under
this Agreement (and/or receipt of any amounts due in connection with such termination),
nor shall the commencement of any legal action or legal proceeding pursuant to this
Section 13.1 or anything set forth in this Section 13.1 restrict or limit any Party’s
right to terminate this Agreement in accordance with the terms hereof, or pursue any
other remedies under this Agreement that may be available then or thereafter. |
The Parties shall jointly plan and co-ordinate any public notices, press releases, and any other
publicity concerning the transactions contemplated by this Agreement and no Party shall act in this
regard without the prior approval of the other, such approval not to be unreasonably withheld.
| 13.3 |
|
Announcement and Shareholder Communications |
The Purchaser and the Vendor shall each publicly announce the transactions contemplated hereby
promptly following the execution of this Agreement by the Purchaser and the Vendor, the text and
timing of each Party’s announcement to be approved by the other Party in advance, acting
reasonably. The Purchaser and the Vendor agree to co-operate in the preparation of presentations,
if any, to the Vendor’s shareholders or the Purchaser Shareholders regarding the transactions
contemplated by this Agreement, and no Party shall: (a) issue any press release or otherwise make
public announcements with respect to this Agreement without the consent of the other Party (which
consent shall not be unreasonably withheld or delayed); or (b) make any filing with any
Governmental Authority with respect thereto without prior consultation with the other Party;
provided, however, that the foregoing shall be subject to each Party’s overriding obligation to
make any disclosure or filing required under applicable Laws or stock exchange rules, and the Party
making such disclosure shall use all commercially reasonable efforts to give prior oral or written
notice to the other Party and reasonable opportunity to review or comment on the disclosure or
filing, and if such prior notice is not possible, to give such notice immediately following the
making of such disclosure or filing.
Except as otherwise provided in this Agreement each Party shall pay all costs and expenses
(including the fees and disbursements of legal counsel and other advisers) it incurs in connection
with the negotiation, preparation and execution of this Agreement and the transactions contemplated
by this Agreement. In particular, the Vendor shall be responsible for any fees payable in
connection with any regulatory filings to be made pursuant to this Agreement or in connection with
the sale of the Purchased Shares and Purchased Debt, any fees and expenses of any broker or
investment advisor retained by the Vendor, the Company or any of their respective Subsidiaries in
connection with the sale of the Purchased Shares and such fees and expenses shall not constitute an
obligation of the Purchaser, the Company or any of its Subsidiaries.
Any notice, consent or approval required or permitted to be given in connection with this Agreement
(in this Section referred to as a “Notice”) shall be in writing and shall be sufficiently given if
delivered (whether in Person, by courier service or other personal method of delivery), or if
transmitted by facsimile or e-mail:
| |
(a) |
|
in the case of a Notice to the Vendor at: |
| |
|
|
Shaw Communications Inc.
|
Suite 900, 630 – 3rd Avenue S.W.
|
Calgary, AB T2P 4L4
|
Attention:
Fax:
E-mail:
|
|
Senior Vice President and General Counsel
[Fax number redacted.]
[E-mail address redacted.] |
and to:
Attention: Senior Vice President, Corporate Development & Capital Markets
| |
|
|
Fax:
E-mail:
|
|
[Fax number redacted.]
[E-mail address redacted.] |
| |
|
|
|
|
With a copy, in the case of notice to the Vendor to:
|
Davies Ward Phillips & Vineberg LLP
|
155 Wellington Street West
Toronto, ON M5V 3J7
Attention: |
|
Vincent Mercier and Peter Hong |
Fax: |
|
|
416.863.0871 |
|
E-mail: |
|
vmercier@dwpv.com and phong@dwpv.com |
and to: |
|
|
|
|
Goodmans LLP
3400-333 Bay Street
Toronto, Ontario, Canada
M5H 2S7
Attention: |
|
Stephen H. Halperin and Robert Vaux |
Fax: |
|
|
416.979.1234 |
|
E-mail: |
|
shalperin@goodmans.com and rvaux@goodmans.com |
| |
(b) |
|
in the case of a Notice to the Purchaser at: |
| |
|
|
Corus Entertainment Inc.
|
Corus Quay
|
|
|
25 Dockside Drive
|
Toronto, ON M5A 0B5
|
Attention:
Fax:
E-mail:
and to:
|
|
President and Chief Executive Officer
[Fax number redacted.]
[E-mail address redacted.]
|
Attention:
Fax:
E-mail:
|
|
General Counsel
[Fax number redacted.]
[E-mail address redacted.] |
| |
|
|
|
|
With a copy to, in the case of notice to the Purchaser to:
|
Osler, Hoskin & Harcourt LLP
1 First Canadian Place
PO Box 50, Suite 6300
100 King Street West
Toronto, ON M5X 1B8
Attention: |
|
Douglas Bryce |
Fax: |
|
|
416.862.6666 |
|
E-mail: |
|
dbryce@osler.com |
| |
|
|
|
|
and to: |
|
|
|
|
Borden Ladner Gervais LLP
|
Scotia Plaza |
|
|
|
|
40 King Street West, 44th Floor
|
Toronto, Ontario, Canada
|
M5H 3Y4
Attention: |
|
Frank Callaghan |
Fax: |
|
|
416.361.2784 |
|
E-mail: |
|
fcallaghan@blg.com |
Any Notice delivered or transmitted to a Party as provided above shall be deemed to have been given
and received on the day it is delivered or transmitted, provided that it is delivered or
transmitted on a Business Day prior to 5:00 p.m. local time in the place of delivery or receipt.
However, if the Notice is delivered or transmitted after 5:00 p.m. local time or if such day is not
a Business Day then the Notice shall be deemed to have been given and received on the next Business
Day.
Any Party may, from time to time, change its address by giving Notice to the other Parties in
accordance with the provisions of this Section.
No Party may assign this Agreement or any rights or obligations under this Agreement without the
prior written consent of each of the other Parties.
This Agreement enures to the benefit of and is binding upon the Parties and, as applicable, their
respective successors (including any successor by reason of amalgamation of any Party) and
permitted assigns.
No amendment, supplement, modification or waiver or termination of this Agreement and, unless
otherwise specified, no consent or approval by any Party, is binding unless executed in writing by
the Party to be bound thereby.
The Parties shall, with reasonable diligence, do all such things and provide all such reasonable
assurances as may be required to consummate the transactions contemplated by this Agreement, and
each Party shall provide such further documents or instruments required by any other Party as may
be reasonably necessary to effect the purpose of this Agreement and carry out its provisions,
whether before or after the Closing.
| 13.10 |
|
Execution and Delivery |
This Agreement may be executed by the Parties in counterparts and may be executed and delivered by
electronic means and all such counterparts and electronic deliveries together constitute one and
the same agreement.
[Signature page follows]
IN WITNESS OF WHICH the Parties have executed this Agreement.
| |
|
|
| CORUS ENTERTAINMENT INC. |
| By:
|
|
“Doug Murphy” |
| |
|
|
| |
|
Name: Doug Murphy |
| |
|
Title: President and Chief Executive Officer |
| By:
|
|
“Tom Peddie” |
| |
|
|
| |
|
Name: Tom Peddie |
| |
|
Title: Chief Financial Officer |
| |
|
|
| SHAW COMMUNICATIONS INC. |
| By:
|
|
“Jay Mehr” |
| |
|
|
| |
|
Name: Jay Mehr |
| |
|
Title: Executive Vice President & Chief Operating Officer |
| By:
|
|
“Vito Culmone” |
| |
|
|
| |
|
Name: Vito Culmone |
| |
|
Title: Executive Vice President & Chief Financial Officer |
SCHEDULE 4.1
REPRESENTATIONS AND WARRANTIES OF THE VENDOR
| 1. |
|
Organization and Qualification of the Company |
The Company is a corporation duly incorporated and validly existing under the laws of the Province
of Alberta and has all necessary corporate power, authority and capacity to own its assets and to
carry on its business as presently conducted. The Company is duly qualified, licensed or registered
to conduct business and is in good standing in each jurisdiction in which its assets are located or
it conducts business.
| 2. |
|
Status of the Vendor and Right to Sell |
The Vendor is a corporation existing under the laws of the Province of Alberta. The Vendor is the
sole registered and beneficial owner of the Purchased Shares and Purchased Debt free and clear of
all Encumbrances. The Vendor has the exclusive right to dispose of the Purchased Shares and
Purchased Debt as provided in the Agreement and, subject to the receipt of CRTC Approval, such
disposition will not violate, contravene, breach or offend against or result in any default under
any Material Contract, charter or by-law provision, Order, judgment, decree, licence, permit or
Laws, to which the Vendor is a party or subject or by which the Vendor is bound or affected. The
Purchased Shares are not subject to the terms of any shareholders agreement.
The Vendor is not a non-resident of Canada within the meaning of the Tax Act.
| 4. |
|
Due Authorization and Enforceability of Obligations |
The Vendor has all necessary corporate power, authority and capacity to enter into the Transaction
Agreements and to carry out its obligations under the Transaction Agreements. The execution and
delivery of the Transaction Agreements and the consummation of the transactions contemplated by the
Transaction Agreements have been duly authorized by all necessary corporate action on the part of
the Vendor. This Agreement constitutes, and each other Transaction Agreement and other agreement to
be executed by the Vendor in connection with the Closing will constitute, a valid and binding
obligation of the Vendor enforceable against it in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization or other
Laws of general application relating to or affecting the enforcement of creditors’ rights
generally, and (ii) general principles of equity.
Subject to the receipt of CRTC Approval and except as disclosed on Section 5 of the Vendor
Disclosure Letter, and except for the Material Contracts listed on Section 5 of the Vendor
Disclosure Letter or as would not reasonably be expected to result in a Company Material Adverse
Change, none of the Company or any of its Subsidiaries is a party to, bound or affected by or
subject to any:
| |
(b) |
|
charter or by-law; or |
| |
(c) |
|
Laws or Governmental Authorizations, including any CRTC Licences; |
that would be violated in any material respect, breached in any material respect by, or under which
default would occur or an Encumbrance would, or with notice or the passage of time would, be
created, or in respect of which the obligations of the Company or any of its Subsidiaries will
materially increase or the rights or entitlements of the Company or any of its Subsidiaries will
materially decrease or any obligation on the part of the Company or any of its Subsidiaries to give
notice to any Governmental Authority will arise, as a result of the execution and delivery of, or
the performance of obligations under, this Agreement or any other agreement to be entered into
under the terms of this Agreement. There has been no sale, assignment, subletting, licensing or
granting of any rights in or other disposition of or in respect of any of the Company’s or any of
its Subsidiaries’ assets or any granting of any Contract or right capable of becoming an agreement
or option for the purchase, assignment, subletting, licensing or granting of any rights in or other
disposition of any of such assets other than pursuant to the provisions of, or as disclosed in,
this Agreement or pursuant to purchase orders accepted by the Company or any of its Subsidiaries in
the ordinary course of business.
Other than CRTC Approval, no approval, Order, consent of or filing with any Governmental Authority
is required on the part of the Vendor, the Company or any of its Subsidiaries, in connection with
the execution, delivery and performance of this Agreement or any other documents and agreements to
be delivered under this Agreement or the performance of the Vendor’s obligations under this
Agreement or any other documents and agreements to be delivered under this Agreement.
Section 7 of the Vendor Disclosure Letter sets forth the authorized and issued capital of the
Company. At the Closing Time, the Purchased Shares will constitute all of the securities in the
capital of the Company. All of the Purchased Shares have been duly and validly issued and are
outstanding as fully paid and non-assessable shares. No options, warrants or other rights to
purchase the Purchased Shares and no securities or obligations convertible into or exchangeable for
the Purchased Shares have been authorized or agreed to be issued or are outstanding.
| |
(a) |
|
Section 8 of the Vendor Disclosure Letter sets forth a complete list of the
Company’s Subsidiaries, including name and jurisdiction of formation and the authorized
and issued capital for such Subsidiaries, including the registered holder of any such
issued securities. Except for the Subsidiaries set forth in Section 8 of the Vendor
Disclosure Letter, the Company does not own or have beneficial interest in, directly or
indirectly, any capital stock or other equity securities of any other Person. |
| |
(b) |
|
Each Subsidiary of the Company is a corporation or partnership, duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or formation and has all requisite corporate or partnership power and
authority and all governmental licenses, authorizations, permits, consents and
approvals required to own, lease and operate its properties and assets and to carry on
its business as now being conducted, except where the failure to be so organized,
validly existing, qualified or in good standing, or to have such power or authority,
would not be, individually or in the aggregate, a Company Material Adverse Change. |
| |
(c) |
|
The Company or a Subsidiary of the Company is the registered and beneficial
owner of all of the outstanding shares of capital stock or other equity interests of
each of its Subsidiaries, free and clear of any Encumbrances. All of the shares in each
of its Subsidiaries have been duly and validly issued and are outstanding as fully paid
and non-assessable shares. No options, warrants or other rights to purchase shares or
other securities of the Company or of any of its Subsidiaries and no securities or
obligations convertible into or exchangeable for shares or other securities of the
Company or any of its Subsidiaries have been authorized or agreed to be issued or are
outstanding. |
| |
(a) |
|
The Books and Records fairly and correctly set out and disclose in all material
respects the financial position of the Company and its Subsidiaries and all material
financial transactions relating to each of their businesses has been accurately
recorded in such Books and Records. The Books and Records stored on computer-related or
other electronic media are appropriately organized and indexed and no data conversions,
translations or technology upgrades are required before such data can be accessed,
read, searched and used by the Company’s and its Subsidiaries’ current Information
Technology. |
| |
(b) |
|
The articles and by-laws for the Company and each of its Subsidiaries,
including any and all amendments, have been delivered or made available to the
Purchaser and such Articles and by-laws as so amended are in full force and effect and
no amendments are being made to them. |
| |
(c) |
|
The corporate records and minute books for the Company and each of its
Subsidiaries have been made available to the Purchaser. The minute books include
complete and accurate minutes of all meetings of the directors or shareholders for the
Company and each of its material Subsidiaries, as applicable, held to date or
resolutions passed by the directors or shareholders on consent, since October 27, 2010.
The share certificate book, register of shareholders, register of transfers and
register of directors for the Company and each of its Subsidiaries, are complete and
accurate. |
| 10. |
|
Company Financial Statements |
The Company Financial Statements (and, when available, the unaudited interim consolidated financial
statements of the Company and its Subsidiaries for the period ended November 30, 2015) have been
prepared in accordance with GAAP (subject to year-end adjustments, where applicable) applied on a
basis consistent with prior periods and present fairly, in all material respects, the consolidated
financial position, results of operations and changes in financial positions of the Company as of
the respective dates thereof and for the respective periods covered thereby (except as may be
otherwise indicated in the Company Financial Statements and the notes thereto or the related report
of the Company’s auditors).
| 11. |
|
Absence of Certain Changes or Events |
Since August 31, 2015, other than the transactions contemplated in the Agreement and as disclosed
in the Vendor Public Documents, (i) the business of the Company and its Subsidiaries has been
conducted in the ordinary course consistent with past practices, and (ii) there has not been any
event, occurrence, development or state of circumstances or facts that was or would be reasonably
expected to be, individually or in the aggregate, a Company Material Adverse Change.
| 12. |
|
Absence of Undisclosed Liabilities |
| |
(a) |
|
None of the Company or any of its Subsidiaries has incurred any liabilities or
obligations (whether accrued, absolute, contingent or otherwise), which continue to be
outstanding, except: (i) as disclosed in the Company Financial Statements, (ii) as
disclosed on Section 12 of the Vendor Disclosure Letter, (iii) as incurred in the
ordinary course of business and which are not a Company Material Adverse Change, or
(iv) in respect of any registered pension plan, the obligation to make special payments
to liquidate any solvency deficiency or any unfunded liability in accordance with
actuarial reports disclosed to the Purchaser under Section 28. |
| |
(b) |
|
None of the Company or any of its Subsidiaries has incurred, is liable for or
otherwise guaranteed any long term debt (as defined in accordance with GAAP). |
| 13. |
|
Absence of Changes and Unusual Transactions |
Except as disclosed in Section 13 of the Vendor Disclosure Letter, since the date of the Balance
Sheet:
| |
(a) |
|
none of the Company or any of its Subsidiaries has transferred, assigned, sold
or otherwise disposed of any of the assets shown or reflected in the Balance Sheet or
cancelled any debts or entitlements except, in each case, in the ordinary course of
business; |
| |
(b) |
|
none of the Company or any of its Subsidiaries has discharged or satisfied any
Encumbrance, or paid any obligation or liability (fixed or contingent) other than
liabilities included in the Balance Sheet and liabilities incurred since the date of
the Balance Sheet in the ordinary course of business; |
| |
(c) |
|
none of the Company or any of its Subsidiaries has granted any bonuses, whether
monetary or otherwise, or made any general wage or salary increases in respect of its
Employees, other than as provided for in the Collective Agreements, or changed the
terms of employment for any Employee or entered into a written contract with any
Employee except in the ordinary course of business and consistent with past practice; |
| |
(d) |
|
none of the Company or any of its Subsidiaries has, directly or indirectly, (i)
engaged in any transaction or entered into any arrangement with any officer, director,
shareholder, Employee (whether current or former or retired), consultant, independent
contractor or agent of the Company or any of its Subsidiaries, with a value in excess
of $1 million, or (ii) made any loan to any officer, director, shareholder, Employee
(whether current or former or retired), consultant, independent contractor or agent of
the Company or any of its Subsidiaries in excess of the lesser of $500,000 and such
individual’s annual compensation (if applicable); |
| |
(e) |
|
none of the Company or any of its Subsidiaries, directly or indirectly, has
declared or paid any dividends or declared or made any other payments or distributions
on or in respect of any of its shares and has not, directly or indirectly, purchased or
otherwise acquired any of its shares; and |
| |
(f) |
|
none of the Company or any of its Subsidiaries has authorized, agreed or
otherwise become committed to do any of the foregoing. |
| 14. |
|
Non-Arm’s Length Transactions |
| |
(a) |
|
Other than as disclosed in Section 14 of the Vendor Disclosure Letter and
except for employment arrangements with Employees, the terms of which are disclosed in
Section 26 of the Vendor Disclosure Letter, neither the Vendor, nor any director or
officer, former director or officer, shareholder or Employee of, or any other Person
not dealing at arm’s length with the Company or any Subsidiary is engaged in any
transaction or arrangement with or is a party to a Contract with, or has any
indebtedness, liability or obligation to, the Company or any of its Subsidiaries in
excess of $1 million (or, in the case of any loan to any director or officer, former
director or officer, shareholder or Employee of, or any other Person not dealing at
arm’s length with the Company or any Subsidiary, in excess of the lesser of $500,000
and such individual’s annual compensation (if applicable)); |
| |
(b) |
|
There are no third party debt or operating facilities shared among the Company
and its Subsidiaries or any operating unit thereof, on the one hand, and the Vendor and
its Affiliates (other than the Company and its Subsidiaries) or any operating unit
thereof, on the other hand. |
| 15. |
|
No Joint Venture Interests or Strategic Alliances |
Other than as disclosed in Section 15 of the Vendor Disclosure Letter, none of the Company or any
of its Subsidiaries is a party to any material strategic alliance or co-operative agreement or is a
partner, beneficiary, trustee, co-tenant, joint-venturer or otherwise a participant in any material
partnership, trust, joint venture, co-tenancy or similar jointly owned business undertaking and
none of the Company or any of its Subsidiaries has significant investment interests in any business
owned or controlled by any third party.
| 16. |
|
Major Suppliers and Customers |
Section 16 of the Vendor Disclosure Letter sets forth a comprehensive listing of each supplier of
goods and services to, and each customer of, the Company and its Subsidiaries to whom the Company
and its Subsidiaries paid or billed in excess of $10,000,000 in the aggregate during the 12 month
period ended August 31, 2015, together with, in each case, the amount so billed or paid. Other than
as disclosed in Section 16 of the Vendor Disclosure Letter, since August 31, 2015, there has been
no termination or modification or change in the business relationship with any such supplier or
customer. To the knowledge of the Vendor, other than as disclosed in Section 16 of the Vendor
Disclosure Letter, no such supplier or customer has any intention to change its relationship or the
terms upon which it conducts business with the Company or any of its Subsidiaries.
| 17. |
|
Sufficiency of Assets |
The Real Property, Real Property Leases, Tangible Personal Property, Equipment Contracts,
Appurtenances, Accounts Receivable, Technology, Environmental Approvals, Governmental
Authorizations and Improvements of the Company and its Subsidiaries are sufficient for the
continued conduct of the Company’s and its Subsidiaries’ businesses after the Closing in
substantially the same manner as conducted prior to the Closing. Substantially all of the Tangible
Personal Property is in good condition, repair and (where applicable) proper working order, subject
to normal course wear and tear and having regard to its expected useful life and such assets have
been properly and regularly maintained.
| 18. |
|
Title to Certain Assets |
| |
(a) |
|
Except with respect to Technology and Real Property, each of the Company and
its Subsidiaries: (i) is the sole legal and beneficial and (where its interests are
registrable) the sole registered owner of; or (ii) is the holder of a valid and
subsisting lease, licence or other legal right to, all of its assets and interests in
its assets, with good and valid title, free and clear of all Encumbrances other than
Permitted Encumbrances. |
| |
(b) |
|
Schedule 18 sets forth a true and correct list of all vehicles owned or leased
by the Company or any of its Subsidiaries, including a description of the vehicle, the
vehicle identification number, whether the vehicle is owned or leased, the registered
owner of the vehicle (in the case of owned vehicles) or the lessee (in the case of
leased vehicles) and the lessor (in the case of leased vehicles). |
| |
(c) |
|
Schedule 18 sets forth a true and correct list of all bank accounts registered
in the name of the Company or any of its Subsidiaries, or which are used by the Company
or any of its Subsidiaries in the course of the Business. |
| |
(a) |
|
Schedule 19 of the Vendor Disclosure Letter sets forth a true and correct list
of: |
| |
(i) |
|
all Services owned or controlled by the Company or any of its
Subsidiaries; |
| |
(ii) |
|
all Canadian programming expenditures incurred for the return
year ended August 31, 2015 and the amounts paid in respect thereof, and
projected obligations for Canadian programming expenditures for the return year
ending August 31, 2016; and |
| |
(iii) |
|
all CRTC tangible benefits payments made for the return year
ended August 31, 2015 and projected obligations for the return year ending
August 31, 2016. |
| |
(b) |
|
Other than as disclosed in Schedule 19 of the Vendor Disclosure Letter, there
are no outstanding, ongoing or unresolved audits under any carriage or other agreement
with any broadcasting distribution undertaking. |
| 20. |
|
Collectability of Accounts Receivable |
The Accounts Receivable are good and collectible at the aggregate recorded amounts, except to the
extent of any reserves and allowances for doubtful accounts provided for such Accounts Receivable
in the Books and Records and to be provided for in the Working Capital Statement, and, to the
knowledge of the Company, are not subject to any defence, counterclaim or set off.
The operations of the Company and its Subsidiaries have been and are now conducted in compliance in
all material respects with all Laws of each jurisdiction the Laws of which have been and are now
applicable to the business or products of the Company or of any Subsidiary (including, for
certainty, all requirements of the CRTC) and none of the Company or any of its Subsidiaries has
received any notice of any alleged material violation of any such Laws that remains unresolved or
outstanding. The Company and each Subsidiary has developed and implemented corporate policies and
procedures designed to provide for compliance in all material respects with applicable Laws and has
complied with such policies and procedures in all material respects.
| 22. |
|
Governmental Authorizations |
Section 22 of the Vendor Disclosure Letter sets forth a complete list of all material Governmental
Authorizations, including all CRTC Licences, but excluding the Environmental Approvals which are
listed in Section 36 of the Vendor Disclosure Letter, and true and complete copies of such
authorizations have been delivered or made available to the Purchaser. The Governmental
Authorizations listed in Schedules 22 and 36 are all the authorizations required by the Company or
any of its Subsidiaries to enable each of them to carry on its business in material compliance with
all Laws. Such Governmental Authorizations are in full force and effect in accordance with their
terms, and no event has occurred or circumstance exists that (with or without notice or lapse of
time) may constitute or result in a material violation of any such Governmental Authorization or
give rise to a material obligation on the part of the Company or any of its Subsidiaries to
undertake or bear any material cost. No proceedings are pending or, to the knowledge of the Vendor,
threatened, which could result in their revocation or limitation and all steps have been taken and
filings made on a timely basis with respect to each Governmental Authorization and its renewal.
Section 23 of the Vendor Disclosure Letter includes a complete and accurate list of all Contracts
relating to grants or other forms of financial assistance, including loans with interest at below
market rates, received by the Company or any of its Subsidiaries from any Governmental Authority.
Except as disclosed in Section 24 of the Vendor Disclosure Letter, there are no Claims,
investigations or other proceedings, including appeals and applications for review, in progress,
or, to the knowledge of the Vendor, pending or threatened against or relating to the Company or any
of its Subsidiaries before any Governmental Authority, which, if determined adversely to the
Company or any of its Subsidiaries, would,
| |
(a) |
|
be material to the Company and its Subsidiaries, |
| |
(b) |
|
enjoin, restrict or prohibit the transfer of all or any part of the Purchased
Shares and Purchased Debt as contemplated by this Agreement, or |
| |
(c) |
|
delay, restrict or prevent the Vendor or the Company or any of its Subsidiaries
from fulfilling any of its obligations set out in this Agreement or arising from this
Agreement, |
and the Vendor has no knowledge of any existing ground on which any such action, suit, litigation
or proceeding might be commenced with any reasonable likelihood of success. Except as disclosed in
Section 24 of the Vendor Disclosure Letter, there is no judgment, decree, injunction, rule or Order
of any Governmental Authority or arbitrator outstanding against the Company or any of its
Subsidiaries. The Purchaser has been provided with copies of all of the audit response letters from
all counsel to the Company and each of its Subsidiaries for the last three years.
Except as disclosed in Section 25 of the Vendor Disclosure Letter:
| |
(a) |
|
Each of the Company and its Subsidiaries has duly and timely made or prepared
all Tax Returns required to be made or prepared by it and has duly and timely filed all
Tax Returns required to be filed by it with the appropriate Governmental Authority. All
such Tax Returns filed were correct and complete in all material respects; |
| |
(b) |
|
Each of the Company and its Subsidiaries has duly and timely paid all Taxes,
including all instalments on account of Taxes for the current year, that are due and
payable by it whether or not assessed by the appropriate Governmental Authority. |
| |
(c) |
|
For taxable periods ending on or after October 27, 2010, none of the Company or
any of its Subsidiaries has entered into any agreement or other arrangement, or
executed any waiver, providing for any extension of time within which (i) to file any
Tax Return covering any Taxes for which the Company or any of its Subsidiaries is or
may be liable; (ii) to file any elections, designations or similar filings relating to
Taxes for which the Company or any of its Subsidiaries is or may be liable; (iii) the
Company or any of its Subsidiaries is required to pay or remit any Taxes or amounts on
account of Taxes; or (iv) any Governmental Authority may assess or collect Taxes for
which the Company or any of its Subsidiaries is or may be liable; |
| |
(d) |
|
For taxable periods ending on or after October 27, 2010, all income and capital
tax liabilities of each of the Company and its Subsidiaries have been assessed by the
relevant Governmental Authorities and notices of assessment have been issued to each
such entity by the relevant Governmental Authorities for all taxation years or periods
ending prior to and including the taxation year or period ended August 31, 2014; |
| |
(e) |
|
To the knowledge of the Vendor, there are no proceedings, investigations,
audits or Claims now pending or threatened against the Company or any of its
Subsidiaries in respect of any Taxes and there are no matters under discussion, audit
or appeal with any Governmental Authority relating to Taxes; |
| |
(f) |
|
Each of the Company and its Subsidiaries has duly and timely withheld all Taxes
and other amounts required by Law to be withheld by it (including Taxes and other
amounts required to be withheld by it in respect of any amount paid or credited or
deemed to be paid or credited by it to or for the account or benefit of any Person,
including any Employee, officer or director and any non-resident Person), and has duly
and timely remitted to the appropriate Governmental Authority such Taxes and other
amounts required by Law to be remitted by it; |
| |
(g) |
|
Each of the Company and its Subsidiaries has duly and timely collected and paid
all amounts on account of any sales or transfer taxes, including goods and services,
harmonized sales and provincial or territorial sales taxes, required by Law to be
collected and paid by it and has duly and timely remitted to the appropriate
Governmental Authority any such amounts required by Law to be remitted by it; |
| |
(h) |
|
For taxable periods ending on or after October 27, 2010, none of sections 78,
80, 80.01, 80.02, 80.03 or 80.04 of the Tax Act, or any equivalent provision of the Tax
legislation of any province or any other jurisdiction, have applied or will apply to
the Company or any of its Subsidiaries at any time up to and including the Closing
Date; |
| |
(i) |
|
For taxable periods ending on or after October 27, 2010, none of the Company or
any of its Subsidiaries has acquired property from a non-arm’s length Person, within
the meaning of the Tax Act, for consideration, the value of which is less than the fair
market value of the property acquired in circumstances which could subject it to a
liability under section 160 of the Tax Act; |
| |
(j) |
|
For taxable periods ending on or after October 27, 2010, for all transactions
between the Company or any of its Subsidiaries and any non-resident Person with whom
the Company or any of its Subsidiaries was not dealing at arm’s length, each of the
Company and its Subsidiaries has made or obtained records or documents that meet the
requirements of paragraphs 247(4)(a) to (c) of the Tax Act; |
| |
(k) |
|
Each of the Company and its Subsidiaries is duly registered under subdivision
(d) of Division V of Part IX of the Excise Tax Act (Canada) with respect to the goods
and services tax and harmonized sales tax and under Division I of Chapter VIII of Title
I of the Quebec Sales Tax Act with respect to the Quebec sales tax, as required; and |
| |
(l) |
|
Notwithstanding the representations and warranties in this Section 25, the
Vendor is providing no representation or warranty in respect of the adjusted cost base
of the Vendor, the Company or its Subsidiaries in any debt, shares or partnership
interests. |
| |
(a) |
|
The Vendor has provided to the Purchaser a complete and accurate list of the
Employees, together with their titles, service dates, current wages, salaries or hourly
rate of pay, benefits, vacation entitlement, commissions and bonus (whether monetary or
otherwise) or other compensation paid since the beginning of the most recently
completed fiscal year (including the date of payment if paid since August 31, 2015) or
payable to each such Employee and the date upon which each such term of employment
became effective if it became effective in the 12-month period prior to the date of the
Agreement. The Vendor has provided to the Purchaser a list of Employees on inactive
status, including lay-off, short-term disability leave, long-term disability leave,
pregnancy and parental leave or other extended absences, or receiving benefits pursuant
to workers’ compensation legislation, and specifies the last date of active employment,
the reason for the absence and the expected date of return of each such Employee (if
known). |
| |
(b) |
|
Current and complete copies of all Employment Contracts have been delivered or
made available to the Purchaser. Except for those Employment Contracts listed in
Section 26 of the Vendor Disclosure Letter, there are no Employment Contracts which are
not terminable on the giving of reasonable notice in accordance with applicable Laws,
nor are there any Employment Contracts providing for cash, other compensation, benefits
or contingent rights on Closing. To the knowledge of the Vendor, no executive employed
by the Company or any of its Subsidiaries has any plans to terminate his or her
employment. |
| |
(c) |
|
Except as set forth in Section 26 of the Vendor Disclosure Letter, there are no
Claims nor, to the knowledge of the Vendor, pending or threatened Claims pursuant to
any Laws relating to the Employees or former employees, including employment standards,
human rights, labour relations, occupational health and safety, workers’ compensation,
pay equity or employment equity. To the knowledge of the Vendor, nothing has occurred
which might lead to a Claim under any such Laws. There are no outstanding decisions,
Orders or settlements or pending settlements which place any obligation upon the
Company or any of its Subsidiaries to do or refrain from doing any act. |
| |
(d) |
|
All current assessments under workers’ compensation legislation in relation to
the Company and its Subsidiaries and all of their respective contractors have been paid
or accrued. None of the Company nor any of its Subsidiaries has been or is subject to
any additional or penalty assessment under such legislation which has not been paid or
has been given notice of any audit. |
| |
(e) |
|
The Vendor has made available to the Purchaser for review all inspection
reports, workplace audits or written equivalent, made under any occupational health and
safety legislation which relate to the Company or any of its Subsidiaries. There are no
outstanding inspection Orders or written equivalent made under any occupational health
and safety legislation which relate to the Company or any of its Subsidiaries. |
| 27. |
|
Collective Agreements |
| |
(a) |
|
Section 27 of the Vendor Disclosure Letter sets forth a complete list of the
Collective Agreements and their expiry dates. Current and complete copies of all
Collective Agreements have been provided to the Purchaser. |
| |
(b) |
|
Except as disclosed in Section 27 of the Vendor Disclosure Letter, no Union has
bargaining rights in respect of the Company or its Subsidiaries, any Employees or any
Persons providing on site services in respect of the Company or its Subsidiaries. |
| |
(c) |
|
There are no outstanding or, to the knowledge of the Vendor, threatened unfair
labour practices or complaints or applications relating to any Union, including any
proceedings which could result in certification of a Union as bargaining agent for any
Employees providing on site services in respect of the Company or its Subsidiaries and
there have not been any such proceedings within the last three years. |
| |
(d) |
|
There are no threatened or apparent Union organizing activities involving the
Company or its Subsidiaries, any Employees providing on site services in respect of the
Company or its Subsidiaries that are not already covered by the Collective Agreements. |
| |
(e) |
|
None of the Company or its Subsidiaries is in violation in any material respect
of any provision under any Collective Agreement. |
| |
(f) |
|
Except as disclosed in Section 27 of the Vendor Disclosure Letter, none of the
Company or its Subsidiaries has any material grievances or pending arbitration cases
outstanding nor, to the knowledge of the Vendor, are there any threatened material
grievances or arbitration cases relating to the Company or its Subsidiaries. |
| |
(g) |
|
None of the Company or its Subsidiaries has engaged in any unfair labour
practices and, during the past three years, there has not been any strike, lock-out,
work stoppage, or other material labour dispute involving the Company or its
Subsidiaries. None of the Company or its Subsidiaries has engaged in any plant closing
or employee lay-off activities within the past three years that would violate the group
termination or lay-off requirements of any applicable employment standards legislation.
There is no strike, work stoppage, slow-down, lock out or other labour dispute
occurring or, to the knowledge of the Vendor, threatened or affecting the Company or
its Subsidiaries. |
| 28. |
|
Pension and Other Benefit Plans |
| |
(a) |
|
Section 28 of the Vendor Disclosure Letter sets forth a complete list of the
Benefit Plans and identifies whether each Benefit Plan is a Parent Plan or a Company
Plan. Current and complete copies of all written Benefit Plans as amended to date or,
where oral, written summaries of the terms thereof, have been made available to the
Purchaser together with copies of all material documents relating to the Company Plans,
including (i) any funding agreements (including trust agreements, insurance contracts
and policies and benefit administration contracts); (ii) the most recent actuarial
valuation prepared in respect of each Company Plan (if any), (iii) member booklets, and
(iv) material correspondence with a Governmental Authority within the last 3 years. |
| |
(b) |
|
Section 28 of the Vendor Disclosure Letter: (i) sets forth a complete list of
each Pension Plan along with its registration number(s) and jurisdiction of
registration, (ii) identifies each Pension Plan that is a Defined Benefit Plan, and
(iii) where applicable, discloses the Pension Plan Unfunded Liability in respect of
each Company Plan that is a Defined Benefit Plan. |
| |
(c) |
|
None of the Benefit Plans applicable to the Employees is a Multi-Employer Plan. |
| |
(d) |
|
Each Company Plan is, and has been, established, registered, amended, funded,
administered and invested in compliance in all material respects with the terms of such
Company Plan (including the terms of any documents in respect of such Company Plan),
the Collective Agreements, and all applicable Laws. Neither the Company nor any its
Subsidiaries has received, in the last three years, any notice from any Person
questioning or challenging such compliance, and the Vendor has no knowledge of any such
notice beyond the last three years. |
| |
(e) |
|
There is no investigation by a Governmental Authority or Claim (other than
routine claims for payment of benefits) pending or, to the knowledge of the Vendor,
threatened, involving any Benefit Plan or their assets, and no facts exist which could
reasonably be expected to give rise to any such investigation or Claim (other than
routine claims for payment of benefits). |
| |
(f) |
|
The Company and its Subsidiaries have no formal plan and have made no promise
or commitment to create any additional benefit plans which would be considered to be a
Benefit Plan once created or to improve or change the benefits provided under any
Benefit Plan applicable to the Employees. |
| |
(g) |
|
None of the Benefit Plans provide for benefit increases, payments or the
acceleration of, or an increase in, securing or funding obligations that are contingent
upon or will be triggered by the entering into of the Agreement or the completion of
the transactions contemplated by the Agreement. |
| |
(h) |
|
All employer and employee payments, contributions and premiums required to be
remitted, paid to or in respect of each Benefit Plan and each Statutory Plan have been
paid or remitted in a timely fashion in accordance with its terms and all Laws. |
| |
(i) |
|
No individuals are participating in (or are eligible to participate in) any of
the Company Plans other than Employees or former employees of the Company or any of its
Subsidiaries, or officers or directors of the Company or any of its Subsidiaries (and
any spouses, dependants, survivors or beneficiaries of such persons). |
| |
(j) |
|
All data necessary to administer each Benefit Plan is in the possession of the
Company or its Subsidiaries or their agents and is in a form which is sufficient for
the proper administration of the Benefit Plan in accordance with its terms and all Laws
and such data is complete and correct in all material respects. |
| |
(k) |
|
Section 28 of the Vendor Disclosure Letter, sets forth a complete list of the
Post-Retirement Benefit Plans and identifies whether each such plan is a Parent Plan or
a Company Plan. |
| |
(l) |
|
None of the Benefit Plans, or any insurance contract relating thereto, require
or permit a retroactive increase in premiums or payments, or require additional
premiums or payments on termination of the Benefit Plan or any insurance contact
relating thereto. |
| |
(m) |
|
No event has occurred respecting any Defined Benefit Plan which would entitle
any Person (without the consent of the Company or any of its Subsidiaries) to wind-up
or terminate any Defined Benefit Plan, in whole or in part. Where any Defined Benefit
Plan has been partially or fully wound-up or terminated, all assets, including any
surplus, attributable to such partial or full wind-up or termination have been fully
distributed in accordance with all Laws or where such distribution of assets is
pending, the amount of the surplus attributable to such partial or full wind-up or
termination together with the date as of which such amount is determined is disclosed
Section 28 of the Vendor Disclosure Letter. |
Except as disclosed in Section 29 of the Vendor Disclosure Letter:
| |
(a) |
|
the Company and its Subsidiaries are in material compliance with all Data
Protection Laws, including, where necessary, filing notifications on any register of
data controllers. As of the date of this Agreement, no claims are pending, or, to the
knowledge of the Company, are threatened in writing against the Company or any of its
Subsidiaries by any Person alleging a violation of such Data Protection Laws or by any
Person alleging a violation of such Person’s privacy or confidentiality rights or
rights relating to Personal Information; |
| |
(b) |
|
the Company and each of its Subsidiaries, to the extent required by Law, have a
written privacy policy which governs their collection, use and disclosure of Personal
Information and the Company and each of its Subsidiaries are in compliance in all
material respects with their respective privacy policies; |
| |
(c) |
|
all required consents to the collection, use or disclosure of Personal
Information in connection with the conduct of the Company’s and its Subsidiaries’
businesses (including disclosure to Affiliates of the Company or any of its
Subsidiaries) have been obtained; |
| |
(d) |
|
to the knowledge of the Company, there has been no: (A) unauthorised disclosure
of any material third party proprietary or confidential information in the possession,
custody or control of the Company and its Subsidiaries; or (B) material breach of any
security procedures of the Company or its Subsidiaries wherein confidential information
has been disclosed to a third party; and |
| |
(e) |
|
the Company and its Subsidiaries have implemented procedures in accordance with
industry practice to ensure internal and external security of the confidentiality and
integrity of all data stored in or processed in connection therewith including
procedures for taking and storing, on-site and off-site, back-up copies of programs and
data. |
| |
(a) |
|
Section 30 of the Vendor Disclosure Letter sets forth a complete list of the
Owned Real Property in each case by reference to the owner, municipal address and legal
description. |
| |
(b) |
|
Except as disclosed in Section 30 of the Vendor Disclosure Letter, the Company
or the named Subsidiary, as the case may be, is the legal and beneficial owner of the
Owned Real Property in fee simple, with good and marketable title thereto, free and
clear of all Encumbrances other than Permitted Encumbrances. |
| |
(c) |
|
Except as disclosed in Section 30 of the Vendor Disclosure Letter, there are no
Contracts which affect or relate to the title to, or ownership, operation (other than
operational contracts entered into in the normal course of business) or management of,
the Owned Real Property. |
| |
(a) |
|
Section 31 of the Vendor Disclosure Letter sets forth a complete list of the
Leased Real Property and details for each Leased Real Property including: (i) municipal
address, (ii) legal description, (iii) area of premise (if applicable), and (iv)
details of annual rent payable, current terms, renewal rights and security deposits or
prepaid rent. |
| |
(b) |
|
Except as disclosed in Section 31 of the Vendor Disclosure Letter, the Real
Property Leases have not been altered or amended except in the normal course of
business and are in full force and effect. There are no Contracts between the landlord
and tenant, or sublandlord and subtenant, or other relevant parties relating to the use
and occupation of the Leased Real Property, other than as contained in the Real
Property Leases. |
| |
(c) |
|
There are no outstanding material defaults (or events which would constitute a
material default with the passage of time or giving of notice or both) under the Real
Property Leases on the part of the Company or any of its Subsidiaries or, to the
knowledge of the Vendor, on the part of any other party to such Real Property Leases. |
| |
(d) |
|
None of the Company or any of its Subsidiaries has an option, right of first
refusal or other right relating to the Leased Real Property, other than as set out in
the Real Property Leases. |
| |
(e) |
|
To the knowledge of the Vendor, none of the Company or any of its Subsidiaries
has waived, or omitted to take any action in respect of any material rights under any
of the Real Property Leases. |
| 32. |
|
Real Property Generally |
| |
(a) |
|
True and complete copies of certificates of title relating to the Owned Real
Property within the possession or control of the Vendor or the Company and/or its
Subsidiaries, have been delivered to the Purchaser. |
| |
(b) |
|
Except as disclosed on Section 32 of the Vendor Disclosure Letter, no Person
has any right to purchase, option to purchase, right of first refusal or other rights
with respect to any of the Real Property other than the Purchaser pursuant to this
Agreement. |
| |
(c) |
|
Section 32 of the Vendor Disclosure Letter sets forth a list of known third
parties entitled to use or have possession or occupancy of any of the Real Property,
including the key commercial terms of such use, possession or occupancy, and, except as
disclosed on Section 32 of the Vendor Disclosure Letter, no Person other than the
Company or a Subsidiary is using or has any right to use, or is in possession or
occupancy of, any part of such Real Property. |
| |
(d) |
|
None of the Company or any of its Subsidiaries has entered into any agreement
to sell, transfer, encumber, or otherwise dispose of or impair the right, title and
interest of the Company or any of its Subsidiaries in and to the Owned Real Property or
the air, density and easement rights relating to the Owned Real Property. |
| |
(e) |
|
To the knowledge of the Vendor, the current uses of the Real Property are
permitted under current zoning and land use regulations and Laws. None of the Company
or any of its Subsidiaries has made application for any minor variance or amendments to
zoning by-laws or official plans in respect of the Real Property and the Vendor has no
knowledge of any proposed or pending changes to any zoning regulation or official plan
affecting the Real Property, except in the ordinary course of business. |
| |
(f) |
|
Except for Permitted Encumbrances, to the knowledge of the Vendor, no
Improvements encroach on real property not forming part of the Owned Real Property and
no buildings, structures or other improvements on adjoining lands encroach upon the
Owned Real Property. |
| |
(g) |
|
The Vendor has no knowledge of any expropriation or condemnation or similar
proceeding pending or threatened against the Owned Real Property or any part of the
Owned Real Property. |
| |
(h) |
|
All accounts for work and services performed or materials placed or furnished
upon or in respect of the construction and completion of any Improvements have been
fully paid and no one is entitled to claim a lien under the Construction Lien Act
(Ontario) or other similar legislation for such work performed by or on behalf of the
Company or any of its Subsidiaries. |
| |
(i) |
|
The Owned Real Property is fully serviced (including water, storm and sanitary
sewer and electrical service) to a level sufficient to permit the operation of the
business of the Company and its Subsidiaries to be carried on after Closing as it has
been carried on in the ordinary course by the Company and its Subsidiaries. All
municipal levies, local improvements, imposts and permit fees due and payable prior to
the Closing Date have been or shall be paid by the Company and its Subsidiaries as at
the Closing Date. |
| |
(j) |
|
There are no outstanding material defaults (or events which would constitute a
material default with the passage of time or giving of notice or both) under the
Permitted Encumbrances on the part of the Company or any of its Subsidiaries or, to the
knowledge of the Vendor, on the part of any other party to such Permitted Encumbrances. |
| |
(k) |
|
There are no matters affecting the right, title and interest of the Company or
any of its Subsidiaries in and to the Owned Real Property which, in the aggregate,
would materially and adversely affect the ability of the Company or any of its
Subsidiaries after the Closing Date to carry on the business upon the Owned Real
Property as it has been carried on in the ordinary course by the Company and its
Subsidiaries. |
| 33. |
|
Intellectual Property |
| |
(a) |
|
Section 33 of the Vendor Disclosure Letter sets forth: |
| |
(i) |
|
a complete list of all Intellectual Property which has been
registered, or for which applications for registration have been filed, by or
on behalf of the Company or any of its Subsidiaries in any jurisdiction; |
| |
(ii) |
|
a complete list of all Material Contracts and Encumbrances
relating to any of the Information Technology, and such Material Contracts are
in full force and effect and no material default exists on the part of the
Company or any of its Subsidiaries or, to the knowledge of the Vendor, on the
part of the other parties thereto; |
| |
(iii) |
|
a complete list of the material Information Technology of
which the Company or any of its Subsidiaries is not the sole beneficial and
registered owner. |
| |
(b) |
|
Each of the Company and its Subsidiaries is using or holding the Technology of
which it is not the sole beneficial and registered owner with the consent of or a
licence from the owner of such Technology, all of which such consents or licences are
in full force and effect and no material default exists on the part of the Company or
any of its Subsidiaries or, to the knowledge of the Company, except as disclosed in
Section 33 of the Vendor Disclosure Letter, on the part of any of the other parties
thereto. |
| |
(c) |
|
Except as disclosed in Section 33 of the Vendor Disclosure Letter: |
| |
(i) |
|
all of the Intellectual Property is in full force and effect
and has not been used or enforced or failed to be used or enforced in a manner
that would result in its abandonment, cancellation or unenforceability; |
| |
(ii) |
|
there are no Claims by the Company or any of its Subsidiaries
relating to breaches, violations, infringements or interferences with any of
the Technology by any other Person and none of the Company or any of its
Subsidiaries has any knowledge of any facts upon which such a Claim could be
based; |
| |
(iii) |
|
to the knowledge of the Company, no other Person is using any
of the Technology so as to breach, violate, infringe or interfere with the
rights of the Company or any of its Subsidiaries; |
| |
(iv) |
|
there are no Claims in progress or pending or, to the knowledge
of the Company, threatened against the Company or any of its Subsidiaries
relating to the Technology and there is no valid basis for any such Claim; and |
| |
(v) |
|
to the knowledge of the Company, the carrying on of the
Company’s business and the carrying on of each Subsidiary’s business and the
use, possession, reproduction, distribution, sale, licensing, sublicensing or
other dealings involving any of the Technology does not breach, violate,
infringe or interfere with any rights of any other Person. |
| |
(d) |
|
The Information Technology: |
| |
(i) |
|
is suitable for the purposes for which it is being used and is
proposed to be used based on the plans and forecasts of the Company and its
Subsidiaries including their forecasted growth is not expected to require a
material upgrade or replacement within the 12 month period after the Closing
Date and none are planned, other than non-material upgrades or replacements in
the ordinary course of business; |
| |
(ii) |
|
is complete and no other computer hardware, software, system or
other information technology is needed in order to carry on the Company’s
business and the business of each Subsidiary as conducted on the Closing Date; |
| |
(iii) |
|
to the knowledge of the Company, is free from known defects or
deficiencies that cannot be remedied, , including any undisclosed program
routine, device or other feature, including viruses, worms, bugs, malware, time
locks, software bombs, Trojan horses, “back doors” or “trap doors”, in each
case that is designed to delete, disable, deactivate, interfere with or
otherwise harm any Information Technology, and any virus or other intentionally
created, undocumented contaminant that may, or may be used to, access, modify,
delete, damage or disable any hardware, system or data; and |
| |
(iv) |
|
to the knowledge of the Company, does not contain any disabling
mechanisms or protection features which are designed to disrupt or prevent the
use of the Information Technology, including computer viruses, time locks or
any code, instruction or device that may be used without authority to access,
modify, delete or damage any of the Information Technology. |
Section 34 of the Vendor Disclosure Letter sets forth a complete list of the Material Contracts.
True and complete copies of all Material Contracts (including all material amendments thereto) have
been made available to the Purchaser and, other than as set forth in Section 34 of the Vendor
Disclosure Letter, no Material Contract has been modified, rescinded or terminated since the date
such Material Contract was first made available to the Purchaser. Other than as set forth in
Section 34 of the Vendor Disclosure Letter, all Material Contracts are all in full force and effect
unamended and there are no outstanding material defaults (or events which would constitute a
material default with the passage of time or giving of notice or both) under any such Material
Contract on the part of the Company or any of its Subsidiaries or, to the knowledge of the Vendor,
on the part of any other party to such Material Contracts. The Company and each of its Subsidiaries
has the capacity, including the necessary personnel, equipment and supplies, to perform all its
obligations under the Material Contracts.
Each of the Company and its Subsidiaries maintains such policies of insurance, issued by
responsible insurers, as are appropriate to its operations, property and assets, in such amounts
and against such risks as are customarily carried and insured against by owners of comparable
businesses, properties and assets. All such policies of insurance are in full force and effect and
none of the Company or any of its Subsidiaries is in default, as to the payment of premiums or
otherwise, under the terms of any such policy. Section 35 of the Vendor Disclosure Letter sets
forth (i) a complete list of all policies of insurance which the Company or any of its Subsidiaries
maintain and the particulars of such policies, including the name of the insurer, the risk insured
against, indication whether the policy is claims made or occurrence based, the amount of coverage
and the amount of any deductible and a summary of all claims under each such policy for the past
five years; (ii) details of any self-insurance arrangements by or affecting the Company and its
Subsidiaries, including any reserves established thereunder; and (iii) details of any insurance
coverage provided to third parties and details of the policies under which such coverage is
provided.
| 36. |
|
Environmental Matters |
Except as disclosed in Section 36 of the Vendor Disclosure Letter:
| |
(a) |
|
To the knowledge of the Vendor, all Environmental Approvals have been obtained,
are valid and in full force and effect, have been and are being complied with, and
there have been and are no applications made or proceedings commenced or threatened to
revoke, suspend, amend or alter any Environmental Approval. None of the Company or any
of its Subsidiaries has received any notice of any intention to revoke, suspend, amend
or alter any Environmental Approval and there are no circumstances which exist which
could result in the revocation, suspension, amendment or alteration of any
Environmental Approval. |
| |
(b) |
|
To the knowledge of the Vendor, all operations of the Company and its
Subsidiaries have been and are now, in compliance in all material respects with all
Environmental Laws. None of the Company or any of its Subsidiaries has received any
notice of any alleged violation of such Laws. Any Release by the Company or any of its
Subsidiaries and to the knowledge of the Vendor, by the Company’s or any of its
Subsidiaries’ predecessors in title of any Hazardous Substance into the Environment
complied and complies in all material respects with all Environmental Laws. |
| |
(c) |
|
To the knowledge of the Vendor, none of the Company, its Subsidiaries or any of
their respective operations or any Owned Real Property has been or is now the subject
of any Environmental Order, nor does the Vendor have any knowledge of any investigation
or evaluation commenced or threatened as to whether any such Environmental Order is
necessary nor has any threat of any such Environmental Order been made. None of the
Company or any of its Subsidiaries has received any notice of any Environmental Order
or any notice of intention to issue an Environmental Order nor are there any
circumstances which could reasonably be expected to result in the issuance of any such
Environmental Order. |
| |
(d) |
|
None of the Company or any of its Subsidiaries is currently being prosecuted
for or, to the knowledge of the Vendor, has been prosecuted for or convicted of, any
offence under any Environmental Law, nor has the Company or any of its Subsidiaries
been found liable in any proceeding or been required by any Environmental Order to pay
any fine, penalty, damages, costs, expenses, amount or judgment to any Person as a
result of any Release or threatened Release or as a result of the breach or
contravention of any Environmental Law, and to the knowledge of the Vendor there is no
basis for any such proceeding or action. None of the Company or any of its Subsidiaries
has received any Claim, summons or charge or any notice of any violation or Claim under
or alleging any contravention of any Environmental Law or any notice of any intention
to issue any Claim, summons, charge or notice of violation or contravention of any
Environmental Law. |
| |
(e) |
|
True and complete copies of all material environmental data and studies
(including the results of any environmental audit assessment or environmental
management system) relating to the Company and its Subsidiaries in the possession or
control of the Vendor, the Company or any of its Subsidiaries have been delivered or
made available to the Purchaser. |
| |
(f) |
|
To the knowledge of the Vendor, there are no Hazardous Substances present in,
on, at or under any of the Owned Real Property or any other assets of the Company or
any of its Subsidiaries or any property currently or previously used or occupied by or
under the charge, management or control of the Company or any of its Subsidiaries
(including underlying soils and substrata, vegetation, surface water and groundwater)
at concentrations or in amounts which could reasonably be expected to result in or form
the basis for the issuance of an Environmental Order or which exceed decommissioning or
remediation standards under any applicable Environmental Laws or standards published or
administered by the Governmental Authority responsible for establishing or applying
such standards. |
| |
(g) |
|
The Vendor has no knowledge of any Hazardous Substance originating from any
neighbouring or adjoining properties which has migrated onto, into or under or is
migrating towards any of the Owned Real Property or any other assets of the Company or
any of its Subsidiaries. |
| |
(h) |
|
The Vendor has no knowledge of any Hazardous Substance originating from any of
the Owned Real Property or any other assets of the Company or any of its Subsidiaries
which has migrated onto, or is migrating towards any other property. |
| |
(i) |
|
To the knowledge of the Vendor, none of the Company or any of its Subsidiaries
has given or agreed to give, or is a party to or bound by, any financial assurance,
guarantee, surety or indemnity in respect of Environmental Approvals, Environmental
Orders or any other matter relating to the Environment. |
| 37. |
|
Securities Law Matters |
The transactions contemplated by this Agreement are exempt from the requirements of MI 61-101 to
obtain a formal valuation and to obtain minority securityholder approval on the basis of sections
5.5(a) and 5.7(a) thereof.
Except as set forth in Section 38 of the Vendor Disclosure Letter, there is no investment banker,
broker, finder or other intermediary that has been retained by or is authorized to act on behalf of
the Vendor, the Company or any of its Subsidiaries who might be entitled to any fee or commission
from the Company or any of its Subsidiaries in connection with the transactions contemplated by the
Agreement.
| 39. |
|
Assets Located and Sales in the United States |
The Company, including all entities it now controls, directly or indirectly, as defined under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”), 15 U.S.C. §18a (§7 A of the
Clayton Act), and the rules promulgated by the Federal Trade Commission to implement the HSR Act
(16 C.F.R. Parts 801, 802 and 803) does not hold assets located in the United States with a fair
market value of US$76.3 million or more and did not make sales in or into the United States of
US$76.3 million or more in its most recently competed fiscal year.
The interest of the Company in the Shomi Partnership has been divested of in the manner specified
in Section 40 of the Vendor Disclosure Letter.
SCHEDULE 5.1
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Vendor the matters set out below.
| 1. |
|
Organization and Qualification |
The Purchaser is a corporation duly incorporated and validly existing under the laws of Canada and
has all necessary corporate power, authority and capacity to own its assets and to carry on its
business as presently conducted. The Purchaser is duly qualified, licensed or registered to conduct
business and is in good standing in each jurisdiction in which its assets are located or it
conducts business.
The Purchaser is not a non-resident of Canada within the meaning of the Tax Act.
| 3. |
|
Due Authorization and Enforceability of Obligations |
The Purchaser has all necessary corporate power, authority and capacity to enter into the
Transaction Agreements to which it is a party and to carry out its obligations under the
Transaction Agreements to which it is a party. The execution and delivery of the Transaction
Agreements and the consummation of the transactions contemplated by the Transaction Agreements have
been duly authorized by all necessary corporate action on the part of the Purchaser. This Agreement
constitutes, and each Transaction Agreement and each other agreement to be executed by the Vendor
in connection with the Closing will constitute, a valid and binding obligation of the Vendor
enforceable against it in accordance with its terms, except as such enforceability may be limited
by (i) applicable bankruptcy, insolvency, reorganization or other Laws of general application
relating to or affecting the enforcement of creditors’ rights generally, and (ii) general
principles of equity. The Consideration Shares have been duly authorized for issuance and sale by
the Purchaser pursuant to this Agreement.
| 4. |
|
Support of the Transaction |
The board of directors of the Purchaser, upon receiving the recommendation of the Special Committee
and after consultation with its financial and outside legal advisors, has unanimously determined
(with certain interested directors having disclosed an interest in the transaction and having
recused themselves from voting) that the transactions contemplated by this Agreement are in the
best interests of the Purchaser and the Purchaser Shareholders, has unanimously approved (with
certain interested directors having disclosed an interest in the transaction and having recused
themselves from voting) this Agreement, and has resolved to recommend that the Purchaser
Shareholders vote in favour of the issuance of the Consideration Shares at the Purchaser Meeting.
Subject to the receipt of CRTC Approval and Purchaser Shareholder Approval and to compliance with
applicable securities Laws and the rules of the TSX, except as would not reasonably be expected to
result in a Purchaser Material Adverse Change or except as disclosed in Section 5 of the Purchaser
Disclosure Letter, none of the Purchaser or any of its Subsidiaries is a party to, bound or
affected by or subject to any:
| |
(b) |
|
charter or by-law; or |
| |
(c) |
|
Laws or Governmental Authorizations, including any CRTC Licence; |
that would be violated in any material respect, breached in any material respect by, or under which
default would occur or an Encumbrance would, or with notice or the passage of time would, be
created, or in respect of which the obligations of the Purchaser will materially increase or the
rights or entitlements of the Purchaser will materially decrease or any obligation on the part of
the Company or any of its Subsidiaries to give notice to any Governmental Authority will arise, as
a result of the execution and delivery of, or the performance of obligations under, this Agreement
or any other agreement to be entered into under the terms of this Agreement (including the Investor
Rights Agreement).
Other than the CRTC Approval, and for compliance with applicable securities Laws and the rules of
the TSX, no approval, Order, consent of or filing with any Governmental Authority is required on
the part of the Purchaser in connection with the execution, delivery and performance of this
Agreement or any other documents and agreements to be delivered under this Agreement or the
performance of the Purchaser’s obligations under this Agreement or any other documents and
agreements to be delivered under this Agreement.
The authorized share capital of the Purchaser consists of an unlimited number of Purchaser Class A
Shares; an unlimited number of Purchaser Class B Shares; an unlimited number of Class 1 preferred
shares, issuable in series; an unlimited number of Class 2 preferred shares, issuable in series;
and an unlimited number of Class A preferred shares. As of December 31, 2015, 3,425,792 Purchaser
Class A Shares and 84,237,997 Purchaser Class B Shares were issued and outstanding. All outstanding
Purchaser Class A Shares and Purchaser Class B Shares have been duly authorized and validly issued,
are fully paid and non-assessable and are not subject to, nor were they issued in violation of, any
pre-emptive rights, and all Purchaser Class A Shares or Purchaser Class B Shares issuable upon
exercise of outstanding stock options in accordance with their respective terms will be duly
authorized and validly issued as fully paid and non-assessable and will not be subject to any
pre-emptive rights. All Purchaser Class B Shares issued in accordance with the terms of the
Agreement will be duly authorized and validly issued as fully paid and non-assessable and will not
be subject to any pre-emptive rights. Except as disclosed in the Purchaser Public Documents, there
are no options, warrants or other rights, shareholder rights plans, agreements or commitments of
any character whatsoever requiring the issuance, sale or transfer by the Purchaser of any shares of
the Purchaser or any securities convertible into, or exchangeable or exercisable for, or otherwise
evidencing a right to acquire, any shares of the Purchaser.
All of the Purchaser’s Material Subsidiaries are disclosed in the Purchaser Public Documents, and
the Purchaser owns, directly or indirectly, all of the issued and outstanding shares or other
ownership interests of its Material Subsidiaries. Except as disclosed in the Purchaser Public
Documents, the Purchaser does not have a material interest in any capital stock or other equity
securities of any other Person. Each material Subsidiary of the Purchaser is a Person duly
organized, validly existing and in good standing under the laws of the jurisdiction of its
formation and has all requisite power and authority and all governmental licenses, authorizations,
permits, consents and approvals required to own, lease and operate its properties and assets and to
carry on its business as now being conducted, except where the failure to be so organized, validly
existing, qualified or in good standing, or to have such power or authority, would not be,
individually or in the aggregate, a Purchaser Material Adverse Change.
| 9. |
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Securities Law Matters |
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(a) |
|
The Purchaser is a reporting issuer (where such concept exists) in all
provinces of Canada, is in material compliance with all applicable Canadian Securities
Laws therein and is not on the list of reporting issuers in default under the Canadian
Securities Laws of such provinces, as applicable. |
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(b) |
|
The Purchaser Class B Shares are listed and posted for trading on the TSX and
the Purchaser is in material compliance with the rules of the TSX. |
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(c) |
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The Purchaser is not subject to any delisting, suspension of trading in or
cease trading or other order that may operate to prevent or restrict trading in the
Purchaser Class A Shares or the Purchaser Class B Shares, and no proceedings have been
initiated or, to the knowledge of the Purchaser, are pending or threatened by any
Governmental Authority in relation thereto. |
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(d) |
|
The Purchaser has filed in a timely manner all documents and information
required to be filed by it under applicable Canadian Securities Laws with all
applicable Governmental Authorities and the TSX and all such documents and information
were, as of their respective dates of such filings, in compliance in all material
respects with all applicable Canadian Securities Laws and at the time filed did not
contain any misrepresentations. The Purchaser has not filed any confidential material
change report with any Governmental Authority or the TSX which remains confidential as
of the date of this Agreement. |
| 10. |
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Purchaser Financial Statements |
The Purchaser’s audited consolidated financial statements as at and for the fiscal years ended
August 31, 2015 (the “Purchaser Financial Statements”) have been prepared in accordance with GAAP
(subject to year-end adjustments, where applicable) applied on a basis consistent with prior
periods and present fairly, in all material respects, the consolidated financial position, results
of operations and changes in financial position of the Purchaser as of the date thereof and for the
period covered thereby (except as may be otherwise indicated in such Purchaser Financial Statements
and the notes thereto or the related report of Purchaser’s auditors).
| 11. |
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Disclosure and Internal Controls |
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(a) |
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The Purchaser has established and maintains a system of disclosure controls and
procedures that are designed to provide reasonable assurance that information required
to be disclosed by the Purchaser in the Purchaser Public Documents filed or submitted
by it under applicable Canadian Securities Laws are recorded, processed, summarized and
reported within the time periods specified in applicable Canadian Securities Laws. Such
disclosure controls and procedures include controls and procedures designed to ensure
that information required to be disclosed by the Purchaser in the Purchaser Public
Documents filed or submitted under applicable Canadian Securities Laws are accumulated
and communicated to the Purchaser’s management, including its chief executive officer
and chief financial officer, as appropriate, to allow timely decisions regarding
required disclosure. |
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(b) |
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The Purchaser has established and maintains a system of internal control over
financial reporting that is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with GAAP, and includes policies and procedures that:
(i) pertain to the maintenance of records that accurately and fairly reflect the
material transactions, acquisitions and dispositions of the property and assets of the
Purchaser and each of its Subsidiaries; (ii) are designed to provide reasonable
assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with GAAP, and that material receipts and
expenditures of the Purchaser and its Subsidiaries are made only in accordance with
authorizations of management and directors of the Purchaser and its Subsidiaries; and
(iii) are designed to provide reasonable assurance regarding prevention or timely
detection of any unauthorized acquisition, use or disposition of the property or assets
of the Purchaser or any of its Subsidiaries that could be a Purchaser Material Adverse
Change. |
| 12. |
|
Absence of Certain Changes or Events |
Since August 31, 2015, other than the transactions contemplated in the Agreement and as disclosed
in the Purchaser Public Documents, (i) the business of the Purchaser and its Subsidiaries has been
conducted in the ordinary course consistent with past practices, and (ii) there has not been any
event, occurrence, development or state of circumstances or facts that has had or would be
reasonably expected to be, individually or in the aggregate, a Purchaser Material Adverse Change.
| 13. |
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Absence of Undisclosed Liabilities |
None of the Purchaser or any of its Subsidiaries has incurred any liabilities or obligations
(whether accrued, absolute, contingent or otherwise), which continue to be outstanding, except (a)
as disclosed in the Purchaser Financial Statements, or (b) as incurred in the ordinary course of
business and which are not a Purchaser Material Adverse Change.
| 14. |
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Absence of Changes and Unusual Transactions |
Except as disclosed in the Purchaser Public Documents, since August 31, 2015, none of the Purchaser
or any of its Subsidiaries has transferred, assigned, sold or otherwise disposed of any of the
assets shown or reflected in the Company Financial Statements or cancelled any debts or
entitlements except, in each case, in the ordinary course of business.
| 15. |
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No Joint Venture Interests or Strategic Alliances |
Other than as disclosed in the Purchaser Public Documents, none of the Purchaser or any of its
Subsidiaries is a party to any material strategic alliance or co-operative agreement or is a
partner, beneficiary, trustee, co-tenant, joint-venturer or otherwise a participant in any material
partnership, trust, joint venture, co-tenancy, or similar jointly owned business undertaking and
none of the Purchaser or any of its Subsidiaries has significant investment interests in any
business owned or controlled by any third party.
The operations of the Purchaser and its Subsidiaries have been and are now conducted in compliance
in all material respects with all Laws of each jurisdiction the Laws of which have been and are now
applicable to the business or products of the Purchaser or of any Subsidiary and none of the
Purchaser or any of its Subsidiaries has received any notice of any alleged violation of any such
Laws. The Purchaser and each Subsidiary has developed and implemented corporate policies and
procedures designed to provide for compliance in all material respects with applicable Laws and has
complied with such policies and procedures in all material respects.
| 17. |
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Governmental Authorizations |
The Governmental Authorizations held by the Purchaser and its Subsidiaries are all of the
authorizations required by the Purchaser or any of its Subsidiaries to enable each of them to carry
on its business in compliance with all Laws. Such Governmental Authorizations are in full force and
effect in accordance with their terms, and no event has occurred or circumstance exists that (with
or without notice or lapse of time) may constitute or result in a violation of any such
Governmental Authorization or give rise to an obligation on the part of the Purchaser or any of its
Subsidiaries to undertake or bear any cost, which violation, obligation or cost would be a
Purchaser Material Adverse Change. No proceedings are pending or, to the knowledge of the
Purchaser, threatened, which could result in their revocation or limitation and all steps have been
taken and filings made on a timely basis with respect to each Governmental Authorization and its
renewal.
There are no Claims, investigations or other proceedings, including appeals and applications for
review, in progress, or, to the knowledge of the Purchaser, pending or threatened against or
relating to the Purchaser or any of its Subsidiaries before any Governmental Authority, which, if
determined adversely to the Purchaser or any of its Subsidiaries, would,
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(a) |
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be a Purchaser Material Adverse Change, |
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(b) |
|
enjoin, restrict or prohibit the issuance of all or any part of the
Consideration Shares as contemplated by this Agreement, or |
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(c) |
|
delay, restrict or prevent the Purchaser or any of its Subsidiaries from
fulfilling any of its obligations set out in this Agreement or arising from this
Agreement, |
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(d) |
|
and the Purchaser has no knowledge of any existing ground on which any such
action, suit, litigation or proceeding might be commenced with any reasonable
likelihood of success, |
There is no judgment, decree, injunction, rule or Order of any Governmental Authority or
arbitrator outstanding against the Purchaser or any of its Subsidiaries.
| 19. |
|
Financing Arrangements |
True, correct and complete copies of the Purchaser Commitment Letters have been provided to the
Vendor. Each Purchaser Commitment Letter is valid and in full force and effect. The obligations of
the Lenders to fund the commitments under the Purchaser Commitment Letters are not subject to any
conditions precedent or other contingencies related to the funding of the full amount of the
Purchaser Debt Financing, other than as expressly set forth in the Purchaser Commitment Letters.
Excerpts of those portions, if any, of each executed fee letter associated with the Purchaser Debt
Financing that contain any conditions to the funding of the Purchaser Debt Financing, have been
provided to the Vendor. The Purchaser represents and warrants that (other than the excerpted
portion of the fee letters referred to in the immediately preceding sentence) there are no side
letters or agreements to which Purchaser is a party related to the funding or investing, as
applicable, of the Purchaser Debt Financing that could reasonably be expected to adversely affect
the availability of the Purchaser Debt Financing other than as expressly set forth in the Purchaser
Commitment Letters delivered to the Vendor on or prior to the date of the Agreement. The Purchaser
has fully paid or caused to be paid any and all commitment fees or other fees required by the
Purchaser Commitment Letters to be paid as of the date of the Agreement. The aggregate proceeds
contemplated by the Purchaser Commitment Letters will be sufficient: (i) to pay the aggregate
Purchase Price for all of the Purchased Shares and the amounts required to be paid under Article 3
of the Agreement; and (ii) to fund all other amounts payable by the Purchaser pursuant to the
Agreement and all other fees and expenses incurred by the Purchaser in connection with the
negotiation, execution and delivery of the Agreement and the consummation of the transactions
contemplated by the Agreement. The Purchaser, after due inquiry, does not have any reason to
believe: (i) that any of the conditions to the Purchaser Debt Financing will not be satisfied or
that the Purchaser Debt Financing will not be available on the Closing Time; or (ii) that the
Purchaser will not have funds otherwise available prior to the Closing Time sufficient to satisfy
the Purchaser’s obligations under the Agreement.
All of the Purchaser’s material Contracts are all in full force and effect unamended and there are
no outstanding material defaults (or events which would constitute a material default with the
passage of time or giving of notice or both) under any such material Contract on the part of the
Purchaser or any of its Subsidiaries or, to the knowledge of the Purchaser, on the part of any
other party to such material Contracts. The Purchaser and each of its Subsidiaries has the
capacity, including the necessary personnel, equipment and supplies, to perform all its obligations
under the material Contracts.
Each of the Purchaser and its Subsidiaries maintains such policies of insurance, issued by
responsible insurers, as are appropriate to its operations, property and assets, in such amounts
and against such risks as are customarily carried and insured against by owners of comparable
businesses, properties and assets. All such policies of insurance are in full force and effect and
none of the Purchaser or any of its Subsidiaries is in default, as to the payment of premiums or
otherwise, under the terms of any such policy.
| 22. |
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Written Opinion of Financial Advisor |
The Purchaser has received a fairness opinion provided by, and the formal valuation of, Barclays
Capital Canada Inc. (true and complete copies of which have been delivered to the Vendor by the
Purchaser), in connection with the purchase and sale of the Purchased Shares and Purchased Debt,
and such fairness opinion and valuation have been neither withdrawn nor modified.
| 23. |
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Non-Arm’s Length Transactions |
Other than as disclosed in the Purchaser Public Documents, neither the Purchaser, nor any director
or officer, former director or officer, shareholder or employee of, or any other Person not dealing
at arm’s length with the Purchaser or any of its Subsidiaries is engaged in any transaction or
arrangement with or is a party to a Contract with, or has any indebtedness, liability or obligation
to, the Purchaser or any of its Subsidiaries, except for employment arrangements entered into in
the ordinary course of business.
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(a) |
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Each of the Purchaser and its material Subsidiaries has duly and timely made or
prepared all Tax Returns required to be made or prepared by it, has duly and timely
filed all Tax Returns required to be filed by it with the appropriate Governmental
Authority and has duly, completely and correctly reported all income and all other
amounts and information required to be reported thereon. |
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(b) |
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Each of the Purchaser and its material Subsidiaries has duly and timely paid
all Taxes, including all instalments on account of Taxes for the current year, that are
due and payable by it whether or not assessed by the appropriate Governmental
Authority. |
SCHEDULE 7.4
ALTERNATIVE TRANSACTIONS
Alternative A — Closing Steps
The Purchaser will directly acquire from the Vendor a non-interest bearing demand note owing
by the Company in consideration for cash and Purchaser Class B Shares. The principal amount
of the note will need to be determined.
A wholly-owned subsidiary of the Purchaser (“Holdco”) will acquire the Purchased Shares from
the Vendor in consideration for preferred shares of Holdco.
The preferred shares of Holdco will be redeemed for a non-interest bearing note of Holdco
(the “Redemption Note”). The Redemption Note will be repaid by Holdco immediately thereafter
with cash.
The Purchaser will indirectly fund the repayment of the Redemption Note by lending the
required cash to the Company in consideration for a non-interest bearing demand note secured
against the operating assets of the Company. The Company will on-lend the funds to Holdco
which will use the funds to repay the Redemption Note.
Alternative B — Closing Steps
The Purchaser will directly acquire from the Vendor all of the issued and outstanding shares
of 1507441 Alberta Ltd. and a non-interest bearing demand promissory note owing by 1507441
Alberta Ltd. in consideration for cash and Purchaser Class B Shares.
The principal amount of the note will be approximately equal to the purchase price for the
Company.
1507441 Alberta Ltd. is a holding company that will own the shares of the Company and any
debt of the Company owing to the Vendor.
For greater certainty, there will be various pre-closing reorganization steps prior to, and various
post-closing reorganization steps following, the steps for Alternative A or Alternative B set forth
above (which remain subject to Section 7.4).
1
EXHIBIT A
GOVERNANCE AND INVESTOR RIGHTS AGREEMENT
(See attached)CORUS ENTERTAINMENT INC.
- and -
SHAW COMMUNICATIONS INC.
GOVERNANCE AND INVESTOR RIGHTS AGREEMENT
TABLE OF CONTENTS
Schedule A — Registration Rights Procedures
GOVERNANCE AND INVESTOR RIGHTS AGREEMENT
THIS AGREEMENT made the day of , 20,
BETWEEN:
CORUS ENTERTAINMENT INC.,
(hereinafter referred to as “Corus”),
- and -
SHAW COMMUNICATIONS INC.,
(hereinafter referred to as “Shaw”).
WHEREAS Corus and Shaw have entered into a share purchase agreement dated January 13, 2016
(the “Purchase Agreement”) providing for the sale by Shaw to Corus of the Purchased Shares (as
defined in the Purchase Agreement);
AND WHEREAS the Purchase Agreement provides that as part of the consideration payable for the
Purchased Shares, Corus will issue 71,364,853 Class B Shares (as defined herein) to Shaw (the
“Consideration Shares”);
AND WHEREAS as a condition to the completion of the transactions contemplated pursuant to the
Purchase Agreement, Corus has agreed to grant certain rights set out herein to Shaw on the terms
and subject to the conditions set out herein;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the respective covenants and
agreements of the parties herein contained and for other good and valuable consideration (the
receipt and sufficiency of which are acknowledged by each party), the parties agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
In this Agreement, capitalized terms used but not defined herein shall have the meanings
ascribed thereto in the Purchase Agreement, otherwise, the following terms have the following
meanings:
“Affiliate” of any Person means, at the time such determination is being made, any other
Person controlling, controlled by or under common control with such first Person, in each
case, whether directly or indirectly;
“Applicable Securities Laws” means the securities legislation in each province and territory
of Canada, including all rules, regulations, published policy statements and blanket orders
thereunder or issued by one or more of the Canadian Securities Regulatory Authorities;
“Board of Directors” means the board of directors of Corus;
“Bought Deal” means a fully underwritten offering on a bought deal basis pursuant to which
an underwriter has committed to purchase securities of Corus pursuant to a “bought deal”
letter prior to the filing of a prospectus or prospectus supplement or a Distribution
pursuant to an overnight marketed offering;
“Business Day” means any day, other than a Saturday or Sunday, on which Royal Bank of Canada
in Toronto, Ontario and Calgary, Alberta is open for commercial banking business during
normal banking hours;
“Canadian Securities Regulatory Authorities” means, collectively, the securities regulatory
authority in each of the provinces and territories of Canada;
“Class A Shares” means the Class A participating shares in the capital of Corus;
“Class B Shares” means the Class B non-voting participating shares in the capital of Corus;
“Closing Date” has the meaning set out in the Purchase Agreement;
“Consideration Shares” has the meaning set out in the recitals;
“control” means, in respect of:
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(a) |
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a corporation, the ability of a Person or group of Persons acting in concert to
influence the manner in which the business of such corporation is carried on, whether
as a result of ownership of sufficient voting shares of such corporation to enable that
Person or group of Persons to elect a majority of the directors of such corporation or
by contract or otherwise; |
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(b) |
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a partnership, trust, syndicate or other entity, actual power or authority to
manage and direct the affairs of, or ownership of more than fifty percent (50%) of the
transferable beneficial interests in, such entity, |
and the term “controlled” has a corresponding meaning;
“Corus” has the meaning set out in the recitals;
“Corus Directors” means the duly appointed or elected directors of Corus from time to time;
“Corus Shares” means, collectively, the Class A Shares and the Class B Shares;
“Corus Successor” has the meaning set out in Section 6.1;
“Demand Notice” has the meaning set out in Section 4.1(a);
“Demand Registration” has the meaning set out in Section 4.1(a);
“Director Eligibility Criteria” has the meaning set out in Section 2.1(e);
“Distribution” means a distribution or sale of Corus Shares to the public for cash by means
of a prospectus under Applicable Securities Laws, and the terms “Distribute” and
“Distributed” shall have corresponding meanings;
“DRIP” means the dividend reinvestment plan of Corus;
“Executive Committee” has the meaning set out in Section 2.3;
“Hold Restrictions” has the meaning set out in Section 3.2;
“Hold Shares” means Consideration Shares that are subject to the Hold Restrictions,
excluding, for greater certainty, any Consideration Shares that are within the scope of
Section 3.2;
“Material Transaction” means:
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(a) |
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any take-over bid, issuer bid, amalgamation, plan of arrangement, business
combination, merger, tender offer, exchange offer, consolidation, recapitalization,
reorganization, liquidation, dissolution, or winding-up in respect of Corus or any of
its material Subsidiaries; |
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(b) |
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any direct or indirect sale of assets (or any lease, long-term supply
arrangement, licence, or other arrangement having the same economic effect as a sale)
of Corus or any of its Subsidiaries representing 20% or more of the consolidated
assets, revenues, or earnings of Corus; |
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(c) |
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any direct or indirect sale, issuance, or acquisition of shares or other equity
interests (or securities convertible or exchangeable into or exercisable for such
shares or interests) in Corus or any of its material Subsidiaries representing 20% or
more of the issued and outstanding equity or voting interests Corus or such material
Subsidiary or rights or interests therein or thereto; |
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(d) |
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any similar transaction or series or transaction involving Corus or any of its
Subsidiaries, directly or indirectly; and |
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(e) |
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any transaction or series of transactions which, pursuant to Applicable
Securities Laws or the policies of the TSX, requires approval by the Shareholders
(whether in the aggregate or by class vote); |
“NI 52-110” means National Instrument 52-110 Audit Committees;
“Notices” has the meaning set out in Section 7.1;
“Participating Interests” has the meaning set out in Section 5.1(a);
“Person” means any individual, sole proprietorship, partnership, firm, entity, joint
venture, unincorporated association, unincorporated syndicate, unincorporated organization,
trust, body corporate, Governmental Authority, and where the context requires, any of the
foregoing when they are acting as trustee, executor, administrator or other legal
representative;
“Piggy-Back Registration” has the meaning set out in Section 4.2(a);
“Purchase Agreement” has the meaning set out in the recitals;
“Qualifying Securities” has the meaning set out in Section 4.1(a);
“Registration Expenses” means all out-of-pocket expenses incident to the parties’
performance of, or compliance with, this Agreement in connection with a Distribution,
including all registration and filing fees, all fees and expenses of complying with
Applicable Securities Laws, all printing expenses, all internal expenses, all “road show”
and marketing expenses, all listing fees, all registrars’ and transfer agents’ fees, the
fees and disbursements of counsel for Corus and any selling security holders and of Corus’s
independent public accountants, including the expenses of any special audits and/or
“comfort” letters required by or incidental to such performance and compliance, but
excluding Selling Expenses;
“Selling Expenses” means all underwriting commissions, discounts or brokers’ commissions
incurred in connection with a Distribution of Corus Shares;
“Shareholder” means a holder of Class A Shares or Class B Shares;
“Shaw” has the meaning set out in the recitals;
“Shaw Nominee” means each Corus Director who is nominated by Shaw and elected or appointed
from time to time to the Board of Directors pursuant to the terms of this Agreement;
“Special Committee” has the meaning set out in Section 2.4;
“Strategic Initiative” means any plan, intention, discussion, program or process to enter
into new lines of business, expand existing lines of business, close a significant business
unit or any other strategic business alternative which, individually or in the aggregate,
would reasonably be expected to be material to Corus and its Subsidiaries taken as a whole;
“Subsidiaries” with respect to a Person means, at the time such determination is being made,
any other Person controlled by such first Person, in each case, whether directly or
indirectly;
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1.2 |
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“TSX” means the Toronto Stock Exchange and its successors; and
“Valid Business Reason” has the meaning set out in Section 4.1(c)(v)(B).
Rules of Construction |
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In this Agreement, unless otherwise expressly stated or the context otherwise requires:
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(a) |
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the terms “Agreement”, “this Agreement”, “the Agreement”, “hereto”, “hereof”,
“herein”, “hereby”, “hereunder” and similar expressions refer to this Agreement in its
entirety and not to any particular provision hereof; |
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(b) |
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references to an “Article” or “Section” followed by a number or letter refer to
the specified Article or Section to this Agreement; |
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(c) |
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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 of this Agreement; |
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(d) |
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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; |
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(e) |
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the word “including” is deemed to mean “including without limitation”; |
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(f) |
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the terms “party” and “the parties” refer to a party or the parties to this
Agreement; |
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(g) |
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any reference to this Agreement means this Agreement as amended, modified,
replaced or supplemented from time to time; |
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(h) |
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any reference to a statute, regulation or rule shall be construed to be a
reference thereto as the same may from time to time be amended, re-enacted or replaced,
and any reference to a statute shall include any regulations or rules made thereunder; |
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(i) |
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all dollar amounts refer to Canadian dollars; |
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(j) |
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any time period 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; |
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(k) |
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references to “underwriter” include agents acting on an agency or best efforts
basis, and references to “underwritten” offerings, issuances or distributions include
offerings, issuances or distributions made on an agency or best efforts basis; |
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(l) |
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whenever any action is required to be taken or period of time is to expire on a
day other than a Business Day, such action shall be taken or period shall expire on the
next following Business Day; and |
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(m) |
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the beneficial ownership of Corus by Shaw shall be calculated as a percentage,
the numerator of which shall be the aggregate number of Corus Shares beneficially owned
by Shaw and the denominator of which shall be the aggregate number of outstanding Corus
Shares |
The parties acknowledge that they are Affiliates by virtue of being under common Control,
however, for purposes of this Agreement and the interpretation of the provisions of this Agreement,
the parties agree that Shaw and its Subsidiaries shall be deemed not to be Affiliates of Corus and
its Subsidiaries and that Corus and its Subsidiaries shall be deemed not to be Affiliates of Shaw
and its Subsidiaries.
For purposes of this Agreement, Shaw shall be deemed not to beneficially own any Corus Shares
beneficially owned or controlled by any controlling shareholder or shareholders of Shaw.
This Agreement and the Purchase Agreement constitute the entire agreement between the parties
with respect to the subject matter hereof and thereof and supersede all prior agreements,
understandings, negotiations and discussions, whether written or oral. There are no conditions,
covenants, agreements, representations, warranties or other provisions, express or implied,
collateral, statutory or otherwise, relating to the subject matter hereof except as provided in
this Agreement and the Purchase Agreement.
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| 1.6 |
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Time of Essence |
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1.7 |
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Time shall be of the essence of this Agreement.
Governing Law and Submission to Jurisdiction |
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(a) This Agreement shall be interpreted and enforced in accordance with, and the respective
rights and obligations of the parties shall be governed by, the laws of the Province of Ontario and
the federal laws of Canada applicable in that province.
(b) Each of the parties irrevocably and unconditionally (i) submits to the non-exclusive
jurisdiction of the courts of the Province of Ontario over any action or proceeding arising out of
or relating to this Agreement, (ii) waives any objection that it might otherwise be entitled to
assert to the jurisdiction of such courts and (iii) agrees not to assert that such courts are not a
convenient forum for the determination of any such action or proceeding.
If any provision of this Agreement is determined by a court of competent jurisdiction to be
invalid, illegal or unenforceable in any respect, all other provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially adverse to any party
hereto. Upon such determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties hereto as closely as possible in an acceptable manner
to the end that transactions contemplated hereby are fulfilled to the extent possible.
No waiver of any provision of this Agreement shall be binding unless it is in writing. No
indulgence or forbearance by a party shall constitute a waiver of such party’s right to insist on
performance in full and in a timely manner of all covenants in this Agreement. Waiver of any
provision shall not be deemed to waive the same provision thereafter, or any other provision of
this Agreement at any time.
This Agreement may be amended or supplemented only by a written agreement signed by each of
the parties.
This Agreement shall be binding upon the parties hereto and their respective permitted
successors and permitted assigns.
The entering into of this Agreement by Shaw should not be interpreted to mean that the Class B
Shares held by Shaw may not legally be sold or otherwise disposed of, including in any of the
relevant provinces and territories of Canada, without a prospectus and that such Class B Shares may
not thereafter be freely resold without a prospectus.
The following schedule is attached hereto and forms part of this Agreement:
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Schedule A
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-
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Registration Rights Procedures |
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ARTICLE 2
BOARD OF DIRECTORS & COMMITTEES
| 2.1 |
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Board of Directors Nominees |
(a) Corus agrees that upon the issuance of the Consideration Shares in accordance with the
terms of the Purchase Agreement, the Board of Directors shall immediately appoint three initial
Shaw Nominees to serve on the Board of Directors until the next annual general meeting of
Shareholders.
(b) Corus covenants and agrees to take all necessary steps to decrease the size of the Board
of Directors to a total of 12 Corus Directors (including the Shaw nominees) and cause the
resignation or retirement of one member of the Board of Directors that is not a Shaw Nominee, in
each case prior to July 31, 2016.
(c) Following the decrease of the size of the Board of Directors as contemplated in Section
2.1(b): (i) for so long as Shaw beneficially owns at least 30% of the outstanding Corus Shares,
Shaw shall be entitled to three Shaw Nominees; (ii) for so long as Shaw beneficially owns at least
20% but less than 30% of the outstanding Corus Shares, Shaw shall be entitled to two Shaw Nominees;
(iii) for so long as Shaw beneficially owns at least 10% but less than 20% of the outstanding Corus
Shares, Shaw shall be entitled to one Shaw Nominee; and (iv) if Shaw beneficially owns less than
10% of the outstanding Corus Shares, Shaw shall not be entitled to any Shaw Nominees.
(d) Corus hereby agrees to nominate and recommend for election, at each meeting of
Shareholders at which Corus Directors are to be elected, such number of Shaw Nominees as set forth
in Section 2.1(c) for election to the Board of Directors.
(e) Shaw agrees that both the initial Shaw Nominees and all subsequent Shaw Nominees, shall in
each case (i) be “Canadian” as defined in the Direction to the CRTC (Ineligibility of
Non-Canadians); and (ii) satisfy, as applicable, Corus’s eligibility criteria of general
application (as determined in good faith by the Board of Directors or an authorized committee
thereof and including, for greater certainty, any applicable laws, regulations or stock exchange
rules or policies) for director candidates (the “Director Eligibility Criteria”). In addition,
Shaw agrees that not less than two (one, if Section 2.1(c)(ii) applies) of the three Shaw Nominees
must meet the independence criterion set forth in Section 1.4 of NI 52-110, provided that if
Section 2.1(c)(iii) applies the foregoing independence criterion shall not be applicable, and that
not less than one of the three Shaw Nominees must meet the requirements of NI 52-110 to sit on the
Corus audit committee.
(f) Shaw shall advise Corus of the identity of each Shaw Nominee at least ten Business Days
prior to the date on which proxy solicitation materials are to be mailed by Corus (as advised by
Corus to Shaw at least 20 Business Days prior to such date) for purposes of any meeting of
Shareholders at which Corus Directors are to be elected. If Shaw does not advise Corus of the
identity of any Shaw Nominee prior to such deadline, then Shaw will be deemed to have nominated the
incumbent Shaw Nominee(s).
(g) In the event that any Shaw Nominee shall cease to serve as a Corus Director, whether due
to such Shaw Nominee’s death, disability, resignation or removal, Corus shall cause the Board of
Directors to appoint as soon as practicable a replacement Shaw Nominee in accordance with this
Agreement to fill the vacancy caused by such death, disability, resignation or removal, provided
that such Shaw Nominee satisfies the Director Eligibility Criteria and Shaw remains eligible to
nominate such Shaw Nominee pursuant to Section 2.1(c).
(h) In the event that Shaw ceases to have any rights to appoint one or more Shaw Nominees,
Shaw agrees to use its commercially reasonable efforts to, unless requested otherwise by Corus,
cause any Shaw Nominees who are then Corus Directors to resign from the Board of Directors
forthwith.
| 2.2 |
|
Management to Endorse and Vote |
Corus hereby agrees that management of Corus shall in respect of every meeting of Shareholders
at which the election of Corus Directors is to be considered, and at every reconvened meeting
following an adjournment or postponement thereof, endorse and recommend the Shaw Nominees
identified in Corus’s proxy materials for election to the Board of Directors so long as such Shaw
Nominees satisfy the Director Eligibility Criteria, and shall vote their Class A Shares and the
Class A Shares in respect of which management is granted a discretionary proxy in favour of the
election of such Shaw Nominees to the Board of Directors at every such meeting.
The Board of Directors has previously established an executive committee (the “Executive
Committee”), which meets on an “as needed” basis to address timely issues when it is not possible
to convene a meeting of the entire Board of Directors. For so long as Shaw beneficially owns Class
B Shares representing at least 15% of the outstanding Corus Shares, Shaw shall have the right to
appoint one Shaw Nominee to the Executive Committee or any successor committee thereto.
For so long as Shaw beneficially owns Class B Shares representing at least 15% of the
outstanding Corus Shares, Shaw shall have the right to appoint one Shaw Nominee to any special
committee or other similarly constituted committee (each, a “Special Committee”) formed for the
purposes of evaluating regulatory issues, Strategic Initiatives or any Material Transactions
involving Corus and/or its Subsidiaries; provided that a Shaw Nominee may not serve on a Special
Committee if Shaw or an Affiliate of Shaw is (or is likely to become) an “interested party” (as
such term is defined in Multilateral Instrument 61-101- Protection of Minority Security Holders in
Special Transactions) in respect of the applicable Regulatory Issue, Strategic Initiative or
Material Transaction.
| 2.5 |
|
Directors Liability Insurance |
Each Shaw Nominee shall be entitled to the benefit of any directors’ liability insurance or
indemnity to which other Corus Directors are entitled.
ARTICLE 3
TRANSFERS OF CONSIDERATION SHARES; DRIP
| 3.1 |
|
Limitations on Transfer |
Except as provided in or permitted by Sections 3.2 or 3.3, Shaw hereby agrees that Shaw will
not directly or indirectly, without the prior written consent of Corus:
(a) sell, offer to sell, grant any option, right or warrant for the sale of, or otherwise
lend, transfer, assign or dispose of (including by making any short sale, engaging in any hedging,
monetization or derivative transaction or entering into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of ownership or the
Consideration Shares, whether or not cash settled) in a public offering or by way of private
placement or otherwise any Consideration Shares or any securities issued by Shaw convertible,
exchangeable or exercisable into Consideration Shares; or
(b) agree to or announce any intention to do any of the foregoing, except for the filing of a
Form 45-102F1 filed not earlier than seven days prior to the date on which the applicable Hold
Restriction expires in respect of the applicable Consideration Shares.
The restrictions set forth in Section 3.1 (the “Hold Restrictions”) shall not apply with
respect to (a) the tendering of any Consideration Shares to, or the selling of any Consideration
Shares pursuant to, a formal take-over bid for the Class B Shares supported by a majority of the
Corus Board, (b) the selling of any Consideration Shares pursuant to a plan of arrangement,
amalgamation or similar transaction of Corus, (c) the selling of any Consideration Shares to Corus
for purchase and cancellation under any normal course issuer bid or substantial issuer bid of the
Company in place from time to time or (d) the selling of any Consideration Shares in order to fund
the payment of claims for indemnity pursuant to Section 13.1 of the Purchase Agreement.
From and after the date that is: (a) 12 months following the Closing Date, the Hold
Restrictions shall not apply with respect to one-third of the Consideration Shares; (b) 18 months
following the Closing Date, the Hold Restrictions shall not apply with respect to two-thirds of the
Consideration Shares; and (c) 24 months following the Closing Date, the Hold Restrictions shall no
longer apply.
(a) On the date hereof, Shaw shall enroll 100% of the Consideration Shares in the existing
DRIP, and shall maintain enrolment of such shares in the DRIP until the earlier of (i) September 1,
2017, and (ii) the date such Consideration Shares are no longer Hold Shares.
(b) Until the date that is 24 months following the Closing Date, subject to applicable Law,
Corus shall not amend the Corus Share price discount under the DRIP from its current level (being a
discount of 2% to the average market price of the Corus Shares).
(c) The parties agree that any Corus Shares issued to Shaw pursuant to the DRIP shall not be
subject to the Hold Restrictions.
ARTICLE 4
DEMAND AND PIGGY-BACK REGISTRATION RIGHTS SECTION
| 4.1 |
|
Demand Registration Rights |
(a) Subject to Section 4.1(c), upon the written request (a “Demand Notice”) of Shaw made at
any time and from time to time, Corus will use commercially reasonable efforts, subject to
complying with Applicable Securities Laws and applicable stock exchange requirements (and Corus
will use commercially reasonable efforts to comply with such laws), to file such documents and take
such other steps as may be necessary under Applicable Securities Laws to qualify for Distribution
all or any whole number of Class B Shares held by Shaw which are not Hold Shares (the “Qualifying
Securities”). Corus and Shaw shall cooperate in a timely manner and in accordance with the
procedures set forth in Schedule A hereto in connection with each such Distribution (a “Demand
Registration”).
(b) After receipt of a Demand Notice referred to in Section 4.1(a), Corus shall have five
Business Days (or two Business Days in the context of a Bought Deal) to determine whether it wishes
to Distribute Class B Shares under the prospectus prepared in connection with such Demand
Registration by giving written notice to Shaw, specifying the number of Class B Shares it wishes to
Distribute, provided that if the lead underwriter or underwriters, acting in good faith, advises
Shaw in writing that, in its or their judgment, the inclusion of the Class B Shares to be
Distributed by Corus in the Demand Registration should be limited (i) due to market conditions, or
(ii) because the number of Class B Shares proposed to be distributed is likely to have a
significant adverse effect on the successful marketing of the Distribution (including the price
range acceptable to Shaw), then the maximum number of Class B Shares that the lead underwriter
advises or lead underwriters advise should be Distributed will be allocated as follows: (1) first,
to the number of Qualifying Securities; and (2) second, to the number of Class B Shares to be
Distributed by Corus, if any, that may be accommodated in such Distribution.
(c) Notwithstanding Section 4.1(a), Corus will not be obligated to effect a Demand
Registration:
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(i) |
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within a period of six months after the date of
completion of a previous Distribution; |
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(ii) |
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during a regularly scheduled black-out period in which
insiders of Corus are restricted from trading in securities of Corus under
the insider trading policy or other policy of Corus; |
| |
(iii) |
|
unless the Distribution of Qualifying Securities would
reasonably be expected to result in gross proceeds of at least $40 million
to Shaw (or, in the case of a Distribution of Qualifying Securities to fund
the payment of claims for indemnity pursuant to Section 13.1 of the
Purchase Agreement, at least $25 million to Shaw); |
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(iv) |
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other than in a province of Canada; or |
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(v) |
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in the event that the Board of Directors determines in
good faith that there is a Valid Business Reason (as defined below) and
that it is, therefore, in the best interests of Corus to defer the filing
of a prospectus at such time, in which case Corus’s obligations under this
Section 4.1 will be deferred until the earlier of: |
| |
(A) |
|
five Business Days after the date that such
Valid Business Reason ceases to exist; and |
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(B) |
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the expiry of a period of not more than 90 days
from the date of receipt of the Demand Notice; provided that such right
of deferral may not be exercised more than once in any 12-month period. |
For purposes of this Section 4.1(c)(v), “Valid Business Reason” means a
determination that the effect of the filing of a prospectus:
| |
(I) |
|
would impede or
materially adversely affect a pending or proposed
acquisition, disposition, financing, merger,
recapitalization, consolidation, reorganization, or similar
transaction involving Corus or any of its Subsidiaries that
is material to Corus and its Subsidiaries taken as a whole,
or the negotiations, discussions or pending proposals with
respect thereto; or |
| |
(II) |
|
would require the
disclosure of material non-public information that Corus has
a bona fide business purpose for preserving as confidential; |
provided that Corus will give written notice of its determination to defer
filing and of the fact that the Valid Business Reason for such deferral no
longer exists, in each case, promptly after the occurrence thereof. If at
any time prior to receiving written notice that a Valid Business Reason for
a deferral no longer exists, Shaw advises Corus in writing that it has
determined to withdraw such request for a Demand Registration, then such
Demand Registration and the request therefor will be deemed to be withdrawn
and such request will be deemed not to have been given for purposes of
determining whether Shaw has exercised its right to a Demand Registration
pursuant to this Section 4.1.
(d) Any Demand Registration pursuant to Section 4.1(a) shall:
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(i) |
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specify the number of Class B Shares which Shaw intends
to Distribute; |
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(ii) |
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describe the nature or methods of the proposed offer
and sale thereof and the provinces and territories of Canada in which such
offer shall be made; |
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(iii) |
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contain an undertaking of Shaw to provide all such
information regarding its holdings and the proposed manner of Distribution
thereof as may be reasonably required in order to permit Corus to comply
with all Applicable Securities Laws; |
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(iv) |
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specify whether such offer and sale shall be made by an
underwritten public offering; and |
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(v) |
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be carried out in accordance with the procedures set
forth in Schedule A to this Agreement. |
(e) In the case of an underwritten public offering initiated pursuant to this Section 4.1,
Shaw shall have the right to jointly select the managing underwriter or underwriters of such
Qualifying Securities. Corus will have the right to retain counsel of its choice to assist it in
fulfilling its obligations under this Section 4.1.
(f) Notwithstanding anything to the contrary contained herein, a Demand Registration will not
be considered as having been effected until a receipt has been issued for a final prospectus by the
Canadian Securities Regulatory Authorities or a prospectus supplement to a base shelf prospectus
has been filed with the Canadian Securities Regulatory Authorities in accordance with National
Instrument 44-102 – Shelf Distributions, in each case, pursuant to which the Qualifying Securities
are to be sold; and provided further that at any time prior to the issuance of such a receipt or
filing of such a prospectus supplement, Shaw may withdraw its request for Demand Registration by
advising Corus in writing that it has determined to withdraw such request, in which case (i) such
Demand Registration and the request therefor will be deemed to be withdrawn, and (ii) such request
will be deemed not to have been given for purposes of determining whether Shaw has exercised its
right to a Demand Registration pursuant to this Section 4.1, provided that this provision shall
only apply to one such withdrawal in a calendar year and, thereafter, subsequent withdrawals in
such calendar year will count as an exercise of the Demand Registration right.
| 4.2 |
|
Piggy-Back Registration Rights |
(a) Commencing on and after the date which is twelve months after the date hereof, if Corus
proposes to make a Distribution, other than by way of a Bought Deal, Corus will promptly give Shaw
five Business Days’ prior written notice of the proposed Distribution, including proposed pricing.
Upon the written request of Shaw given within five Business Days after receipt of the notice of the
proposed Distribution from Corus, subject to Section 4.2(c), Corus will use commercially reasonable
efforts to, in conjunction with the proposed Distribution, cause to be qualified in such offering
the applicable number of Class B Shares of Shaw in accordance with the procedures set forth in
Schedule A to this Agreement (a “Piggy-Back Registration”), provided that if the lead underwriter
or underwriters of such proposed Distribution, acting in good faith, advise Corus in writing that,
in its or their judgment, the inclusion of the Qualifying Securities held by Shaw in the proposed
Distribution should be limited (i) due to market conditions, or (ii) because the number of Class B
Shares proposed to be Distributed is likely to have a significant adverse effect on the successful
marketing of the proposed Distribution (including the price acceptable to Corus), then the maximum
number of Class B Shares that the lead underwriter advises or lead underwriters advise should be
Distributed will be allocated as follows: (i) first, to the number of Class B Shares that Corus
proposes to Distribute; and (ii) second, subject to the preceding sentence, to the number of
Qualifying Securities, if any, that may be accommodated in such Distribution.
(b) If the proposed Distribution is not completed within 180 days of a notice of a Piggy-Back
Registration, the related notice of a Piggy-Back Registration delivered by Shaw hereunder shall be
deemed to be withdrawn.
(c) If Corus is proposing to undertake a Bought Deal, Corus shall give such notice to Shaw,
including anticipated pricing, as is practical in the circumstances given the speed and urgency
under which Bought Deals are conducted. Shaw shall have the lesser of two Business Days from the
date Corus advises it of such proposed Bought Deal, or the time as is practicable under the
circumstances to notify Corus of the number of Qualifying Securities that Shaw requests to be
included in such Bought Deal; unless otherwise agreed to by Corus, such amount not to exceed the
proportion in the Bought Deal that the Class B Shares held by Shaw represent of all outstanding
Corus Shares. Corus shall use commercially reasonable efforts to include such Class B Shares in
any Bought Deal, and, if so included, the procedures set forth in Schedule A to this Agreement
shall apply to such Distribution; provided that if the lead underwriter or underwriters of such
proposed Bought Deal, acting in good faith, advises Corus in writing that, in its or their
judgment, the inclusion of the Qualifying Securities held by Shaw in the proposed Bought Deal
should be limited (i) due to market conditions, or (ii) because the number of Class B Shares
proposed to be distributed is likely to have a significant adverse effect on the successful
marketing of the proposed Distribution (including the price acceptable to Corus), then the maximum
number of Class B Shares that the lead underwriter advises or lead underwriters advise should be
Distributed will be allocated as follows: (i) first, to the number of Class B Shares that Corus
proposes to Distribute; and (ii) second, to the number of Qualifying Securities, if any, that may
be accommodated in such Distribution.
The Demand Registration rights and Piggy-Back Registration rights granted to Shaw pursuant to
this Article 4 shall terminate and be of no further force or effect at such time as Shaw no longer
beneficially owns Class B Shares representing at least 5% of the outstanding Corus Shares.
ARTICLE 5
PRE-EMPTIVE RIGHTS
(a) Provided that Shaw beneficially owns Class B Shares representing at least 10% of the
outstanding Corus Shares, no equity or participating securities or securities convertible or
exchangeable into equity or participating securities (collectively, “Participating Interests”) will
be issued by Corus and no option or other right for the purchase of or subscription for any
Participating Interest will be granted at any time after the date hereof except upon compliance
with the following provisions.
(b) Provided that Shaw beneficially owns Class B Shares representing at least 10% of the
outstanding Corus Shares, if Corus proposes to offer any Participating Interests, Shaw shall be
entitled to participate in such issuance on a pro rata basis, but only to the extent necessary to
maintain its then proportional fully-diluted equity interest in Corus. In the event that the
issuance in question consists of the issuance of Class A Shares, then Shaw shall be entitled to
acquire that number of Class B Shares that will allow it to maintain its then proportional
fully-diluted equity interest in Corus. At least five Business Days prior to the closing of any
such proposed offering, Corus shall deliver to Shaw a notice in writing offering Shaw the
opportunity to subscribe for a pro rata number of Participating Interests. The offer will contain
a description of the terms and conditions relating to the Participating Interests and will, to the
extent known, state the price at which the Participating Interests are offered and the date on
which the purchase of Participating Interests is to be completed and will state that Shaw, if it
wishes to subscribe for Participating Interests, may do so only by giving written notice of the
exercise of the subscription right granted hereby to Corus within five Business Days after the date
of the offer, provided that if Corus receives a “bought deal” letter (which for the purposes of
Sections 5.1(b) and (c) means a fully underwritten commitment from an underwriter or underwriters)
relating to such Distribution, Shaw shall have the lesser of two Business Days from the time Corus
advises it of such “bought deal” or the time as is practicable under the circumstances to provide
the written notice to Corus specified in this Section 5.1(b). Shaw will be entitled to participate
in the issuance of the Participating Interests by way of private placement at the same price and on
the same terms as such Participating Interests are to be offered by Corus to any party.
(c) If Corus proposes to grant an option or other right for the purchase of or subscription
for Participating Interests, such option or other right will also be made available to Shaw as
nearly as may be possible in accordance with the foregoing.
(d) If Shaw exercises its right to subscribe for Participating Interests granted under Section
5.1(b), then Corus shall, subject to the receipt and continued effectiveness of all required
approvals (including the approval(s) of the TSX and any other stock exchange or over-the-counter
market on which the Corus Shares (or either class of them) are then listed and/or traded and any
required approvals under Applicable Securities Laws), which approvals Corus shall use all
commercially reasonable efforts to promptly obtain (including by applying for any necessary price
protection confirmations, seeking Shareholder approval (if required) in the manner described below,
and having management and each Corus Director voting their Corus Shares and all votes received by
proxy in favour of the issuance of the Participating Interests to Shaw), issue to Shaw, against
payment of the subscription price payable in respect thereof, that number of Participating
Interests so subscribed for by Shaw.
(e) If Corus is required by the TSX or otherwise to seek Shareholder approval for the issuance
of the Participating Interests to Shaw, then Corus shall call and hold a meeting of Shareholders to
consider the issuance of the Participating Interests to Shaw as soon as reasonably practicable,
and, in any event, such meeting shall be held within 60 days after the date that Corus is advised
that it will require Shareholder approval; provided, however, that if the Shareholders vote against
the issuance of the Participating Interests to Shaw, then Corus shall not be required to issue to
Shaw, and Shaw shall not be entitled to receive, such Participating Interests.
| 5.2 |
|
Non-Applicability of Pre-Emptive Right |
The provisions of Section 5.1 will not apply in the following circumstances:
| |
(a) |
|
to any issues of Participating Interests or to the grant of any option or other
right for the purchase of or subscription for any Participating Interests: |
| |
(i) |
|
pursuant to any plan from time to time in effect
relating to reinvestment by holders of Corus Shares of dividends or
distributions of Corus in Corus Shares, including any “bonus” entitlements; |
| |
(ii) |
|
in connection with any security-based compensation
arrangement that are Corus Share distributions in lieu of cash
distributions; |
| |
(iii) |
|
pursuant to a shareholder rights plan of Corus; |
| |
(iv) |
|
upon the exercise by a holder of a conversion, exchange
or other similar privilege pursuant to the terms of a security in respect
of which Shaw did not exercise, failed to exercise, or waived, its rights
under Section 5.1 or in respect of which such pre-emptive rights did not
apply; |
| |
(v) |
|
upon the issuance of any Corus Shares or securities
exchangeable into Corus Shares as consideration for the acquisition of any
assets, securities, property or properties; or |
| |
(vi) |
|
pursuant to any over-allotment option granted to the
underwriters in a securities offering. |
| |
(b) |
|
in the event that the rights of Shaw under Section 5.1 are waived by Shaw. |
ARTICLE 6
CORUS SUCCESSORS
| 6.1 |
|
Certain Requirements in Respect of a Combination |
Subject to Section 6.3, in the event that Corus enters into a transaction whereby all or
substantially all of its undertaking, property and assets would become the property of any other
Person or all of its shares are acquired by another Person in exchange for, in whole or in part,
securities of such other Person, it shall ensure that such other Person or continuing entity (the
“Corus Successor”) executes, prior to or contemporaneously with the consummation of such
transaction, an agreement supplemental hereto and such other instruments (if any) as are reasonably
necessary or advisable to evidence (i) the substantial preservation and non-impairment in any
material respect of the rights of Shaw hereunder with respect to the Corus Successor, as if the
Corus Successor was Corus hereunder, and (ii) the assumption by the Corus Successor of liability
for all amounts payable and property deliverable hereunder and the covenant of such Corus Successor
to pay and deliver or cause to be delivered the same and its agreement to observe and perform all
the covenants and obligations of Corus under this Agreement.
| 6.2 |
|
Vesting of Powers in Successor |
Whenever the conditions of Section 6.1 have been duly observed and performed, if required by
Section 6.1, the parties hereto and the Corus Successor will execute and deliver a supplemental
agreement hereto and thereupon the Corus Successor will possess and from time to time may exercise
each and every right and power and will be subject to each and every obligation of Corus hereunder
and any act or proceeding under any provision hereunder required to be done or performed by the
Corus Directors or any officers of Corus may be done and performed with like force and effect by
the trustees, directors or officers, as applicable, of such Corus Successor.
Sections 6.1 shall only apply if immediately following the consummation of a transaction
contemplated by Section 6.1, Shaw will hold more than 5% of the outstanding votes attached to all
securities of the Corus Successor immediately following the completion of such transaction.
ARTICLE 7
GENERAL
All notices, demands or other communications (“Notices”) to be given or delivered under or by
reason of the provisions of this Agreement shall be in writing and shall be deemed to have been
given when delivered personally to the recipient or by email addressed to the recipient. Such
notices, demands and other communications shall be delivered to the parties at the respective
addresses or email addresses indicated below:
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(a) |
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in the case of a Notice to Corus at: |
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Corus Entertainment Inc.
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Corus Quay
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25 Dockside Drive
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Toronto, ON M5A 0B5
|
Attention:
Fax:
E-mail:
and to:
|
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President and Chief Executive Officer
[Fax number redacted.]
[E-mail address redacted.]
|
Attention:
Fax:
E-mail:
|
|
General Counsel
[Fax number redacted.]
[E-mail address redacted.] |
| |
|
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|
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With a copy to, in the case of notice to Corus to:
|
Osler, Hoskin & Harcourt LLP
|
1 First Canadian Place
PO Box 50, Suite 6300
100 King Street West
Toronto, ON M5X 1B8
Attention: |
|
Douglas Bryce |
Fax: |
|
|
416.862.6666 |
|
E-mail: |
|
dbryce@osler.com |
| |
(b) |
|
in the case of a Notice to Shaw at: |
| |
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Shaw Communications Inc.
|
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Suite 900, 630 – 3rd Avenue S.W.
|
Calgary, AB T2P 4L4
Attention:
Fax:
E-mail:
and to:
|
|
Senior Vice President and General Counsel
[Fax number redacted.]
[E-mail address redacted.]
|
Attention:
Fax:
E-mail:
|
|
Senior Vice President, Corporate Development & Capital Markets
[Fax number redacted.]
[E-mail address redacted.] |
| |
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With a copy, in the case of notice to Shaw to:
|
Davies Ward Phillips & Vineberg LLP
|
155 Wellington Street West
|
Toronto, ON M5V 3J7
Attention: |
|
Vincent Mercier and Peter Hong |
Fax: |
|
|
416.863.0871 |
|
E-mail: |
|
vmercier@dwpv.com and phong@dwpv.com |
Any such 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 emailing or sending by other
means of recorded electronic communication, provided that such day in either event is a Business
Day and the communication is so delivered, emailed or sent before 5:00 p.m. (local time at the
address of the party receiving such communication) on such day. Otherwise, such communication
shall be deemed to have been given and made and to have been received on the next following
Business Day. Any such communication sent by mail shall be deemed to have been given and made and
to have been received on the fifth Business Day following the mailing thereof; provided however
that no such communication shall be mailed during any actual or apprehended disruption of postal
services. Any such communication given or made in any other manner shall be deemed to have been
given or made and to have been received only upon actual receipt.
Each party shall act in good faith in performing its obligations and exercising its rights
herein and shall promptly do, make, execute or deliver, or cause to be done, made, executed or
delivered, all such further acts, documents and things as the other party may reasonably require
from time to time for the purpose of giving effect to this Agreement and shall use reasonable
commercial efforts and take all such steps as may be reasonably within its power to implement to
their full extent the provisions of this Agreement.
| 7.3 |
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Ownership of Class B Shares |
Shaw shall, at the request of Corus from time to time but no more frequently than monthly,
deliver a certificate to Corus certifying the number of Class B Shares beneficially owned by Shaw.
Except as specifically contemplated by Section 6.1, this Agreement is not assignable by either
party except with the prior written consent of the other.
This Agreement shall terminate upon Shaw beneficially owning less than 5% of the outstanding
Corus Shares.
This Agreement may be executed in separate counterparts, each of which shall be deemed an
original and all of which, when taken together, shall constitute one and the same agreement.
Delivery of an executed signature page to this Agreement by a party by facsimile or electronic
transmission shall be as effective as delivery of a manually executed copy of this Agreement by
such party.
[Remainder of page left intentionally blank]
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly executed as
of the date first above written.
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| SHAW COMMUNICATIONS INC. |
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SCHEDULE A
REGISTRATION RIGHTS PROCEDURES
| 1. |
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Demand Registration Procedures |
Whenever Corus is under an obligation pursuant to the provisions of this Agreement to effect the
qualification of Class B Shares in connection with a Distribution of any Qualifying Securities on
behalf of Shaw:
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(a) |
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Corus shall prepare and file as expeditiously as practicable (and, in any
event, not later than 45 days after the receipt of a Demand Notice in the case of a
Distribution other than by way of a Bought Deal) with the appropriate Canadian
Securities Regulatory Authorities all documents reasonably necessary, including, if
required, a prospectus or short form prospectus and any amendment or supplement
thereto, to qualify for Distribution the Qualifying Securities and, in so doing, act as
expeditiously as is practicable and in good faith to settle all deficiencies and obtain
those receipts and clearances and provide those customary undertakings and commitments
as may be reasonably required by any Canadian Securities Regulatory Authority, all as
may be necessary to permit the Distribution of the Qualifying Securities in compliance
with all Applicable Securities Laws. Notwithstanding the foregoing, in the event the
Distribution is to be made pursuant to a Bought Deal in accordance with this Agreement,
Corus shall attend to such preparations and filings as soon as is practical in the
circumstances taking into account the speed and urgency under which Bought Deals are
conducted; |
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(b) |
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prior to the filing of a prospectus and up to the date of completion of the
Distribution of the Qualifying Securities, Corus shall permit Shaw to review and
participate in the preparation of the prospectus and any related offering materials or
filings and shall allow Shaw and any underwriters or agents involved to conduct any due
diligence investigations reasonably requested; |
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(c) |
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during the period from the date of initiation of the Distribution and up to the
date of completion of the Distribution of the Qualifying Securities, Corus shall
promptly notify Shaw in writing of: |
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(i) |
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any filing made by Corus of information relating to the
Distribution with any Canadian Securities Regulatory Authority and any
correspondence with any Canadian Securities Regulatory Authority regarding
the Distribution; |
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(ii) |
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any material change within the meaning of Applicable
Securities Laws (actual, anticipated, contemplated or threatened, financial
or otherwise) in the business, affairs, operations, assets, liabilities
(contingent or otherwise), capital or prospects of Corus and its
Subsidiaries, taken as a whole; |
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(iii) |
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any material fact within the meaning of Applicable
Securities Laws which has arisen or has been discovered and would have been
required to have been stated in the prospectus and any related offering
materials or filings had the fact arisen or been discovered on, or prior
to, the date of such document; and |
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(iv) |
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any change in any material fact within the meaning of
Applicable Securities Laws (which for the purposes of this Agreement shall
be deemed to include the disclosure of any previously undisclosed material
fact) contained in the prospectus or any related offering materials or
filings which fact or change is, or may be, of such a nature as to render
any statement in any such document misleading or untrue in any material
respect or which would result in a misrepresentation within the meaning of
Applicable Securities Laws in any such document, or which would result in
any such document not complying with Applicable Securities Laws. |
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(d) |
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during the period from the date of initiation of the Distribution to the date
of completion of the Distribution of the Qualifying Securities, Shaw shall promptly
notify Corus in writing of: |
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(i) |
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any filing made by Shaw of information relating to the
Distribution with any Canadian Securities Regulatory Authority and any
correspondence with any Canadian Securities Regulatory Authority regarding
the Distribution; |
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(ii) |
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any material fact, within the meaning of Applicable
Securities Laws, in respect of Shaw which has arisen or has been discovered
and would have been required to have been stated in the prospectus and any
related offering materials or filings had the fact arisen or been
discovered on, or prior to, the date of such document; and |
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(iii) |
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any change in any material fact, within the meaning of
Applicable Securities Laws, (which for the purposes of this Agreement shall
be deemed to include the disclosure of any previously undisclosed material
fact), in respect of Shaw, contained in the prospectus or any related
offering materials or filings which fact or change is, or may be, of such a
nature as to render any statement in any such document misleading or untrue
in any material respect or which would result in a misrepresentation within
the meaning of Applicable Securities Laws in any such document, or which
would result in any such document not complying with Applicable Securities
Laws. |
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(e) |
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Corus and Shaw shall in good faith discuss any fact or change in circumstances
(actual, anticipated, contemplated or threatened, financial or otherwise) which is of
such a nature that there is reasonable doubt whether written notice need be given under
Section 1(c) or Section 1(d) of this Schedule A; |
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(f) |
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promptly, and in any event within any applicable time limitation, Corus shall
comply, to the satisfaction of Shaw, acting reasonably, with all applicable filings and
other requirements under Applicable Securities Laws as a result of a material change,
the discovery of a material fact or the change in a material fact referred to under
Section 1(c) or 1(d) of this Schedule A, provided that Corus shall not file any
amendment to the prospectus or other document without first complying with its
obligations in Section 1(c) of this Schedule A; |
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(g) |
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Corus shall furnish to Shaw such number of copies of any preliminary
prospectus, prospectus and any supplements or amendments thereto, any documents
incorporated by reference in such prospectus and such other documents as Shaw may
reasonably request in order to facilitate the Distribution of the Qualifying
Securities; |
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(h) |
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if an underwritten public offering is contemplated, Corus shall execute and
perform the obligations under an underwriting agreement in a form reasonably
satisfactory to Shaw containing customary representations, warranties and indemnities
for the benefit of Shaw, Corus and the underwriter(s); |
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(i) |
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subject to Applicable Securities Laws, Corus shall keep the prospectus
effective until Shaw has completed the sale of Class B Shares under the prospectus, but
no longer than 60 days from the date of the prospectus, provided that Shaw uses
commercially reasonable efforts to complete the such sale as soon as reasonably
practicable; |
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(j) |
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Corus shall use commercially reasonable efforts to furnish to the
underwriter(s) involved in the Distribution all documents as they may reasonably
request; |
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(k) |
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Corus shall take such other customary actions and execute and deliver such
other customary documents as may be reasonably necessary to give full effect to the
rights of Shaw under this Agreement; |
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(l) |
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Corus shall use its commercially reasonable efforts to list the Qualifying
Securities on each securities exchange or quotation system on which Class B Shares are
then-listed or quoted, if such Class B Shares are not already so listed or quoted; |
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(m) |
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Corus shall use commercially reasonable efforts to prevent the issuance of any
cease trading order suspending the use of any prospectus and, if any such order is
issued, to obtain the withdrawal of any such order; and |
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(n) |
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Corus shall use its commercially reasonable efforts to furnish, at the request
of Shaw, on the date that such Class B Shares are delivered to the underwriters for
sale in connection with the Distribution: |
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(i) |
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an opinion, dated such date, of Corus’s counsel for the
purposes of such Distribution, in form and substance as is customarily
given to underwriters in an underwritten public offering, addressed to Shaw
and the underwriters, if any; and |
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(ii) |
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a letter, dated such date, from Corus’s auditors, in
form and substance as is customarily given by auditors to underwriters in
an underwritten public offering, addressed to Shaw and the underwriters, if
any. |
| 2. |
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Rights and Obligations of Shaw |
Shaw will furnish to Corus such information and execute such documents regarding the Qualifying
Securities and the intended method of disposition thereof as Corus may reasonably request in order
to effect the requested qualification for sale or other disposition in accordance with this
Agreement and Applicable Securities Laws. If an underwritten public offering is contemplated, Shaw
shall execute an underwriting agreement containing customary representations, warranties and
indemnities (and contribution covenants) for the benefit of the underwriters and Corus; provided
that the obligation to indemnify shall be limited in amount to the gross proceeds received by Shaw
from the sale of Qualifying Securities pursuant to such Distribution. Shaw will have the right to
withdraw from a proposed underwritten public offering at any time prior to the signing of the
underwriting agreement, without incurring any obligation to Corus or any proposed underwriter,
except as set forth below.
| 3. |
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Expenses of Registration |
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(a) |
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Subject to Sections 3(b), (c) and (d) of this Schedule A, all Registration
Expenses incurred in respect of a Distribution shall be borne by Corus, provided that
in all cases Shaw shall bear the fees and expenses of its counsel. |
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(b) |
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Subject to Sections 3(c) and (d) of this Schedule A, Registration Expenses
incurred in respect of a Demand Registration shall be borne by Corus and Shaw in
proportion to the number of Class B Shares sold, directly or indirectly, by each
pursuant to the prospectus filed in connection with such Demand Registration. |
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(c) |
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If a Distribution initiated by Corus is not completed, other than solely as a
result of a default by Shaw under this Agreement or under an underwriting agreement or
other enforceable agreement with the underwriters in respect of the Distribution, all
Registration Expenses shall be borne by Corus. If a Distribution is not completed
solely as a result of a default by Shaw under this Agreement or under an underwriting
agreement or other enforceable agreement with the underwriters in respect of the
Distribution, all Registration Expenses and all out-of-pocket expenses of Corus and its
counsel related to the Distribution shall be borne by Shaw. |
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(d) |
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If a Demand Registration is not completed, other than as a result of a default
by Corus under this Agreement or under an underwriting agreement or other enforceable
agreement with the underwriters in respect of the Distribution, all Registration
Expenses shall be borne by Shaw. If a Demand Registration is not completed as a result
of a default by Corus under this Agreement or under an underwriting agreement or other
enforceable agreement with the underwriters in respect of the Distribution, all
Registration Expenses and all out-of-pocket expenses of Corus and Shaw and their
respective counsel related to the Distribution shall be borne by Corus. |
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(e) |
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Selling Expenses, if any, shall in all cases be borne by Corus and Shaw pro
rata in respect of the Class B Shares being Distributed by Corus and Shaw,
respectively. |
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(a) |
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Corus will indemnify Shaw, each of its officers, employees, directors and
agents, with respect to a registration which has been effected pursuant to this
Agreement, and each underwriter, if any, of Corus’ securities covered by such
registration, against all expenses, claims, losses, damages or liabilities (or actions
in respect thereof) including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any prospectus or any
amendment or supplement thereto, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein, or necessary to make the
statements therein not misleading in light of the circumstances in which they were
made, or any violation or alleged violation by Corus of Applicable Securities Laws in
connection with any such registration, and Corus will reimburse Shaw, each of its
officers, employees, directors, and agents, and each such underwriter, for any
reasonable legal and any other expenses incurred in connection with investigating,
preparing for or defending any such claim, loss, damage, liability or action, provided
that Corus will not be liable in any such case to the extent that any such claim, loss,
damage, liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission in any information relating solely to
Shaw or the underwriter, which information has been provided to Corus in writing by
Shaw or the underwriter, respectively, contained in such prospectus, or any amendment
or supplement thereto; and provided, further, that Corus will not be liable with
respect to any loss, claim, damage or liability with respect to any Person who
purchased Qualifying Securities and to whom there was not sent or who was not given a
copy of any amended, supplemented or final prospectus, as applicable, with respect to
such Qualifying Securities, if (i) such loss, claim, damage or liability results from
an untrue statement or an omission or alleged untrue statement or omission contained in
any preliminary or other prospectus that was corrected in such amended, supplemented or
final prospectus and (ii) Corus had previously furnished copies of such amended,
supplemented or final prospectus to Shaw or the underwriters for Shaw. |
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(b) |
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Shaw will, if Qualifying Securities held by Shaw are included in the securities
as to which such registration is being effected, indemnify Corus, each of its directors
and officers, and each underwriter, if any, of Corus’s securities covered by such a
registration, against all expenses, claims, losses, damages and liabilities or actions
in respect thereof, including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any prospectus or any
amendment or supplement thereto or based on any omission (or alleged omission) to state
therein a material fact required to be stated therein, or necessary to make the
statements therein not misleading in light of the circumstances in which they were
made, or any violation or alleged violation by Shaw of Applicable Securities Laws in
connection with any such registration and Shaw will reimburse Corus, such directors,
officers, employees, agents and such underwriters for any reasonable legal and any
other expenses incurred in connection with investigating, preparing for or defending
any such claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission or alleged untrue statement or omission in
any information relating solely to Shaw contained in such prospectus, or any amendment
or supplement thereto, made in reliance upon and in conformity with written information
furnished to Corus by Shaw for use therein; provided, however, that the liability of
Shaw for indemnification under this Section 4(b) will not exceed the net proceeds from
the offering actually received by Shaw. |
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(c) |
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Each party entitled to indemnification under this Section 4 (the “Indemnified
Party”) will give written notice to the party required to provide indemnification (the
“Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any
claim as to which indemnity may be sought, and will permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting therefrom, provided
that counsel for the Indemnifying Party, who will conduct the defense of such claim or
litigation, will be approved by the Indemnified Party (whose approval will not be
unreasonably withheld), and the Indemnified Party may participate in such defense at
such party’s expense, and provided further that the failure of any Indemnified Party to
give notice as provided herein will not relieve the Indemnifying Party of its
obligations under this Section 4 unless the failure to give such notice is materially
prejudicial to an Indemnifying Party’s ability to defend such action. An Indemnified
Party will have the right to retain its own counsel, with fees and expenses to be paid
by the Indemnifying Party, if representation of such Indemnified Party by the counsel
retained by the Indemnifying Party would be inappropriate due to actual or potential
conflicting interests between such Indemnified Party and any other party represented by
such counsel in such proceeding. No Indemnifying Party, in the defense of any such
claim or litigation, will, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such Indemnified
Party of a release from all liability in respect to such claim or litigation. No
Indemnified Party shall settle any claim or litigation resulting therefrom without the
prior written consent of the Indemnifying Party, not to be unreasonably withheld. |
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(d) |
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If the indemnification provided for in this Section 4 is held by a court of
competent jurisdiction to be unavailable to an Indemnified Party with respect to any
loss, liability, claim, damage, or expense referred to therein, then the Indemnifying
Party, in lieu of indemnifying such Indemnified Party hereunder, will contribute to the
amount paid or payable by such Indemnified Party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party on the one hand and of the Indemnified Party on the
other in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations, provided, however, that the liability of Shaw under this Subsection
4(d) will not exceed the net proceeds from the offering received by Shaw. The relative
fault of the Indemnifying Party and of the Indemnified Party will be determined by
reference to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information supplied
by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent
with respect to, knowledge regarding and opportunity to correct, such information. |
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(e) |
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Notwithstanding the foregoing, to the extent that the provisions regarding
indemnification and contribution contained in the underwriting agreement entered into
in connection with the underwritten public offering are in conflict with the foregoing
provisions, the provisions of the underwriting agreement shall prevail. |
2
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