This Facilitation Agreement (this Agreement) is made by and between HOLLINGER INTERNATIONAL INC. and HOLLINGER CANADIAN NEWSPAPERS, LIMITED PARTNERSHIP(together, on a joint and several basis, Hollinger) and 3815668 CANADA INC. (the Issuer) and acknowledged and agreed as to Sections 3(b) and 4 hereof by HOLLINGER CANADIAN PUBLISHING HOLDINGS CO. (formerly Southam Inc.) andHCN PUBLICATIONS COMPANY (together with Hollinger, the Hollinger Parties) and agreed as to Sections 3(a) and 3(b) hereof by CANWEST GLOBAL COMMUNICATIONS CORP. (CanWest), as of October 7, 2004.
WHEREAS, Hollinger Participation Trust (the Trust) issued 12 1/8% Senior Notes due 2010 (the TrustNotes) under an Amended and Restated Trust Agreement dated as of August 24, 2001 and a Supplemental Trust Agreement dated as of December 7, 2001, each between Hollinger International Inc. and First Union Trust Company, National Association, astrustee (collectively, as amended and supplemented from time to time, the Trust Agreement);
WHEREAS, the Participation Agreement dated as of August 17, 2001 by and among Hollinger and the Trust was amended and restated by the Amended and RestatedParticipation Agreement dated as of November 30, 2001 by and among Hollinger and the Trust (as amended and supplemented from time to time, the Participation Agreement) and the Trust owns the participation interest (theParticipation Interest) granted by the Participation Agreement in, as of the date hereof, CDN$785,179,588 aggregate principal amount of the Fixed Rate Subordinated Debentures due 2010 (the Old Notes) issued by the Issuer pursuantto an indenture dated November 15, 2000 among the parties thereto (as amended and supplemented from time to time, the Old Notes Indenture);
WHEREAS, the Issuer proposes to effect, through an affiliate, an exchange offer and consent solicitation (the Exchange Offer) in which theIssuers affiliate will offer to exchange for the Trust Notes new securities of the Issuer that will, upon amalgamation of the Issuer and CanWest Media Inc. become obligations of the resulting entity (which will also be named CanWest MediaInc.), upon the date of their first issuance (the New Notes) and references herein to the Issuer include the entity resulting from such amalgamation, as the context requires;
WHEREAS, the Issuer proposes to issue and sell additional New Notes in orderto fund the payments to Hollinger described in Section 3(a) hereof;
WHEREAS, pursuant to the Exchange Offer, the Issuer proposes to solicit from the holders of the Trust Notes consents to certain proposed amendments to the Trust Agreement (the Proposed Trust Amendments) and instructions toconsent to certain proposed amendments to the Old Notes and the Old Notes Indenture (the Proposed Indenture
Amendments and together with the instructions and the Proposed Trust Amendments, the Proposed Amendments and Instructions);
WHEREAS, the Proposed Amendments and Instructions will also include aninstruction to the trustee under the Trust Agreement (the Trust Trustee) to cause the conversion of the Participation Interest into ownership of the related Old Notes by the Trust, and to cause the dissolution, winding up and liquidationof the Trust and, if the Exchange Offer is consummated, the Issuer intends to cause its affiliate to instruct the Trust Trustee to take any actions necessary to complete the distribution of the Trusts assets, the termination of the Trust, andother transactions related thereto, including the monetization of the Trusts assets by sale of the Old Notes to the Issuer for consideration sufficient to result in the payments contemplated by this Agreement (the actions described in thisrecital, collectively, being the Plan), as a result of which Hollinger and the Issuer will each derive certain economic benefits;
WHEREAS, the Issuer and Hollinger wish to memorialize their mutual understanding as to the terms upon which the Trust will be wound up if the ExchangeOffer is consummated and to provide for Hollingers facilitation of the successful consummation of the Proposed Amendments and Instructions and the Plan;
NOW, in consideration of the following and for other good and valuable consideration, the parties hereby agree as follows:
1. Representations and Warranties.
(a) Hollinger hereby represents and warrants that:
|(i)||it has provided to the Issuer, between September 23, 2004 and the date hereof, full, complete and accurate copies of (x) the Trust Agreement and any and all amendments thereto, (y)the Participation Agreement and any and all amendments thereto and (z) any and all other written understandings relating to either such agreement to which it is a party;|
|(ii)||to its knowledge (having inquired of the officers currently employed by Hollinger that have responsibility for dealing with the Trust and the Trust Trustee, inquired of the TrustTrustee, and reviewed relevant Hollinger files) there is no unpaid liability of, or claim against, the Trust other than the claims of the holders of the Trust Notes pursuant to the terms thereof;|
|(iii)||to its knowledge (having inquired of the officers currently employed by Hollinger that have responsibility for dealing with the Trust and the Trust Trustee and reviewed relevantHollinger files) the Trust has no Trust property other than the Participation Interest and its right to receive payments in respect of shortfalls resulting from currency differentials under Section 9.01 of the Trust Agreement;|
|(iv)||to its knowledge (having inquired of the officers currently employed by Hollinger that have responsibility for dealing with the Trust and the Trust Trustee and reviewed relevantHollinger files) no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Trust or any of its property is pending or threatened,|
|(v)||it is, and will be on the settlement date of the Exchange Offer (the Settlement Date) immediately prior to transfer of the Old Notes to the Trust in accordance with thePlan, the sole legal and beneficial owner (subject to the Participation Interest) of, and has good title to, the entire CDN$871,873,305 principal amount outstanding of the Old Notes, free and clear of (I) any mortgage, pledge, lien, securityinterest, charge, hypothecation, or other encumbrance, security agreement, security arrangement or adverse claim against title of any kind, (II) purchase or option agreement or put arrangement, (III) subordination agreement or arrangement or (IV)agreement to create or effect any of the foregoing and its ownership of the Old Notes is not subject to any prior sale, transfer, assignment or participation by Hollinger, or any agreement by Hollinger to assign, convey, transfer or participate, inwhole or in part, in each case other than the rights granted to the Trust under the Participation Agreement, and|
|(vi)||no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator is pending or to the best of Hollingers knowledge threatenedagainst Hollinger that would materially adversely affect its ownership of the Old Notes or the transactions contemplated hereby.|
(b) Each of Hollinger and the Issuer hereby represents and warrants that: (i) it has full power and authority and has taken all actionnecessary, to enter into and perform its obligations under this Agreement (and, in the case of Hollinger, the Participation Agreement); (ii) this Agreement (and, in the case of Hollinger, the Participation Agreement) has been duly and validlyauthorized, executed and delivered by it, constitutes its legal, valid and binding obligation and is enforceable against it in accordance with its terms (subject, as to the enforcement of remedies, to applicable bankruptcy, reorganization,insolvency, moratorium or other laws affecting creditors rights generally from time to time in effect and to general principles of equity); and (iii) the execution, performance and delivery of this Agreement will not (and, in the case ofHollinger, execution, performance and delivery of the Participation Agreement has not and will not) result in it violating any applicable law or breaching or otherwise impairing any of its obligations.
The respective agreements, representations, warranties, indemnities and other statements ofthe parties hereto set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of any party hereto and will
survive consummation of the Exchange Offer, Proposed Amendments and Instructions and Plan and delivery of the payments provided for in Section 3(a) hereof.
2. Undertakings by Hollinger.Hollinger hereby agrees to use its reasonable best efforts to facilitate the consummation of the Proposed Amendments and Instructions and the Plan, provided that (x) Hollinger shall not be required pursuant hereto (i) to undertake any action oreffort that would violate law or the terms of the Trust Agreement or the Participation Agreement or (ii) to provide any opinions of counsel and (y) Hollinger may provide, in giving any instruction hereunder that would otherwise irrevocably prejudiceits rights under the Old Notes, the Old Notes Indenture, the Participation Agreement or the Trust Agreement, that such instruction shall cease to have force and effect and be void ab initio should the Exchange Offer fail to be consummatedwithin 120 days of the date hereof. Such efforts shall include, but are not limited to, the following:
(a) Hollinger shall take all actions reasonably requested by the Issuer to facilitate identification of the beneficial owners of the TrustNotes by the Issuer and its agents in connection with the Exchange Offer.
(b) Immediately upon receipt of all required instructions or consents (i) in respect of the Trust Agreement, from the Trust Note holders and (ii) in respect of the Old CanWest Indenture, from the Trust Trustee,Hollinger shall take all actions reasonably requested by the Issuer to amend the Trust Agreement, the Old Notes and the Old CanWest Indenture pursuant to the Proposed Amendments and Instructions on the expiration date of the Exchange Offer, withoutregard to any additional time or period allowed to complete such actions under the relevant agreements.
(c) Immediately upon receipt of instructions from the Trust Trustee on the Settlement Date that the Trust is invoking its right under theParticipation Agreement to convert the Participation Interest into ownership of Old Notes by the Trust, Hollinger shall take all actions reasonably requested by the Issuer to transfer the Old Notes to the Trust on such date, without regard to anyadditional time or period allowed to complete such actions under the relevant agreements.
(d) Hollinger shall take all actions reasonably requested by the Issuer to facilitate the dissolution of the Trust, the winding up andliquidation of the Trust, the distribution of the Trusts assets and the termination of the Trust in accordance with the Plan and this Agreement.
(e) Hollinger shall take all actions reasonably requested by the Issuer to cause the trustee under the Old Notes Indenture (theIndenture Trustee) and the Trust Trustee to communicate with and cooperate with the Issuer in the consummation of the Proposed Amendments and Instructions and the Plan.
(f) Subsequent to the date hereof, Hollinger shall not consent to any amendment (other than the ProposedAmendments and Instructions) to the Participation Agreement or the Trust Agreement without the prior written consent of
the Issuer and shall provide to the Issuer a copy of any notice issued or received by Hollinger pursuant to the Participation Agreement or the TrustAgreement promptly upon issuance or receipt, provided that this provision shall cease to have further force and effect should the Exchange Offer fail to be consummated within 120 days of the date hereof.
(g) Hollinger shall take all other actions reasonablyrequested by the Issuer to facilitate consummation of the Proposed Amendments and Instructions and the Plan.
If the Exchange Offer fails to be consummated within 120 days of the date hereof, the Issuer and Hollinger shall cooperate and use reasonable best effortsto make effective any reversal of force and effect of a Hollinger instruction pursuant to the first sentence of this section.
The terms of the Proposed Trust Amendments and the Proposed Indenture Amendments will provide that they will become effective upon the acceptance of TrustNotes tendered in the Exchange Offer on the expiration date of the Exchange Offer but that their effect will be retroactively revoked if the Residual Amount and the Non-Participated Notes Purchase Amount are not paid on the Settlement Date.
3. Wind Up of Trust and Distributions toHollinger.
(a) If the Exchange Offer isconsummated, and the Trust is wound up as a result, the parties hereto agree, and CanWest agrees, that the resulting distribution by the Trust to Hollinger shall consist exclusively of a cash payment in the amount of the Residual Amount (as definedin Annex A). In addition, Hollinger agrees to sell to the Issuer, and the Issuer agrees to purchase, CDN$86,693,717 principal amount of Old Notes (consisting of the Old Notes that are not subject to the Participation Interest) for an aggregate cashpurchase price in an amount determined as set forth in Annex A under the heading Non-Participated Notes Purchase Amount, for settlement on the Settlement Date (if the Exchange Offer is consummated). Further, to the extent that Hollingerreceives the Residual Amount (as defined in Annex A) in cash from the Trust, Hollinger agrees to pay the Reimbursement Amount (as defined in Annex A) in cash to the affiliate of the Issuer that acquires the Trust Notes in respect of a portion ofsuch affiliates cost in acquiring the Trust Notes.
(b) Upon the payment of the Residual Amount and the Non-Participated Notes Purchase Amount as described in Section 3 (a), Hollinger hereby expressly waives and releases any other claims under the Trust Agreement,the Old Notes Indenture or the Old Notes, or arising out of the dissolution of the Trust, the winding up and liquidation of the Trust, the distribution of the Trusts assets or the termination of the Trust or consummation of the Plan, againstthe Trust, the Trust Trustee, the Indenture Trustee, the Issuer or any of their affiliates (including, but not limited to, CanWest), and agrees to remise, release and forever discharge the Issuer, its affiliates
(including, but not limited to, CanWest) and the Trust, and their successors and assigns, of and from any claim, demand, action and cause of action, andliability of every kind and nature, for and on account of any and every matter whatsoever arising from the Trust Agreement, the Old Notes, the Old Notes Indenture and the Participation Agreement, or arising out of the dissolution of the Trust, thewinding up and liquidation of the Trust, the distribution of the Trusts assets or the termination of the Trust or the consummation of the Plan; provided, however, that nothing contained in this Agreement is intended to affect any liability orresponsibility under the Transaction Agreement dated July 30, 2000 between Hollinger, Hollinger Canadian Publishing Holdings Co. (formerly Southam Inc.), HCN Publications Company and CanWest Global Communications Corporation, for the avoidance ofdoubt, all existing claims thereunder, including for any adjustment of the Purchase Price (as defined in the Transaction Agreement), shall continue undisturbed and, to the extent previously payable through cancellation or issuance of Old Notes, bepayable in cash. The parties agree that no adjustment to the principal amount outstanding of Old Notes shall be undertaken pursuant to the Transaction Agreement or Section 2.18 of the Old Notes Indenture subsequent to the date hereof.
If, as a result of the Proposed Amendments and Instructions beingimplemented, the Participation Interest is converted into ownership of Old Notes by the Trust and the Residual Amount and the Non-Participated Notes Purchase Amount are not paid to Hollinger within five business days thereafter, CanWest agrees toreimburse Hollinger for any damages to Hollinger directly resulting from (x) the reset of the interest rate applicable to the Old Notes caused by such conversion or (y) the release of the guarantee in respect of the Old Notes caused by suchconversion.
(c) The Issuer is under noobligation to proceed with the Exchange Offer and if the Issuer proceeds with the Exchange Offer it may at any time and in its sole discretion, terminate, amend, extend or suspend the Exchange Offer, or waive any related condition.
4. Confidentiality. Each of the Hollinger Partieshereby agrees to keep confidential and not disclose to any third party (other than its attorneys and accountants upon their agreement to keep such matters confidential) or refer to publicly any non-public information provided to it by or on behalfof the Issuer or its affiliates relating to the Exchange Offer, the Proposed Amendments and Instructions or the Plan (the Confidential Information), including the contents of this Agreement, without the Issuers prior writtenconsent, not to be unreasonably withheld or delayed. Notwithstanding the foregoing, Hollinger may:
(a) immediately after the signing of this Agreement, publicly issue on one or more newswire services and file with the Canadian securitiesregulatory authorities a press release substantially in the form of Annex B attached hereto;
(b) file a brief summary of this Agreement (substantially in the form of Annex B hereto)with the U.S. Securities and Exchange Commission under cover of Form 8-K, which brief summary shall not include a copy of this Agreement;
(c) file a brief summary of this Agreement substantially in the form of Annex B attached hereto with the Canadian securities regulatoryauthorities as a Material Change Report on Form 51-102F3, which report shall not include a copy of this Agreement, but which shall include the press release referred to in paragraph (a) above;
(d) simultaneously with Hollingers next filing withthe U.S. Securities and Exchange Commission under cover of either Form 10-K or Form 10-Q, file a copy of this Agreement as an exhibit to such Form 10-K or Form 10-Q, along with a brief summary of this Agreement in such Form 10-K or Form 10-Q, whichsummary shall be substantially in the form of Annex B hereto;
(e) include disclosure substantially in the form of Annex B attached hereto in any disclosure document prepared in connection with, or in response to, any offer made to acquire units of Hollinger Canadian Newspapers,Limited Partnership; and
(f) disclose theConfidential Information, including providing a copy of this Agreement, as may be required or appropriate in response to any summons, subpoena, request from a regulatory body or otherwise in connection with any litigation, arbitration, governmentalinvestigation or other court or similar proceeding or to comply with any applicable law, order, regulation, ruling, stock exchange rule, regulatory request or accounting disclosure rule or standard (including, without limitation, any securities law,regulation or rule) that is not provided for in the preceding clauses (each, a Required Disclosure), provided that Hollinger shall use its reasonable best efforts to notify the Issuer prior to making a Required Disclosure and shallcooperate with the Issuer in seeking an appropriate protective order or confidential treatment, where applicable.
Notwithstanding the foregoing, any restriction contained in this provision on disclosing copies of this Agreement or the terms set forth therein shallterminate upon the earlier to occur of (i) the filing by Hollinger of a copy of this Agreement with the U.S. Securities and Exchange Commission as an exhibit to Form 10-K or Form 10-Q by as contemplated in clause (iii) above, (ii) the filing of acopy of this Agreement by the Issuer or CanWest with the U.S. Securities and Exchange Commission or comparable Canadian securities regulatory authority or (iii) the Settlement Date.
5. Governing Law: THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THESTATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED THEREIN.
6. Expenses: Each party hereto shall bear its own expenses in carrying out theterms hereof.
7. Counterparts: ThisAgreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.
Agreed and accepted as of the date first written above:
|HOLLINGER INTERNATIONAL INC.|
HOLLINGER CANADIAN NEWSPAPERS,
By its general partner, Hollinger Canadian
3815668 CANADA INC.
Acknowledged andagreed as to Section 3(b) and 4 above:
HOLLINGER CANADIAN PUBLISHING
(formerly Southam Inc.)
HCN PUBLICATIONS COMPANY
Acknowledged and agreed as to Section 3(a) and 3(b) above:
CANWEST GLOBAL COMMUNICATIONS