-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Hv2U4sTForTBjcyEna+rFJsv4FLskV5GdapKBaGzW5+WF6gu7nkCaTh5HWOxvcxh /WUm7yuezoXzHWztMPbYEQ== 0000950152-97-003731.txt : 19970513 0000950152-97-003731.hdr.sgml : 19970513 ACCESSION NUMBER: 0000950152-97-003731 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 18 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970512 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST UNION REAL ESTATE EQUITY & MORTGAGE INVESTMENTS CENTRAL INDEX KEY: 0000037008 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 346513657 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06249 FILM NUMBER: 97600235 BUSINESS ADDRESS: STREET 1: 55 PUBLIC SQUARE STREET 2: STE 1900 CITY: CLEVELAND STATE: OH ZIP: 44113 BUSINESS PHONE: 2167814030 MAIL ADDRESS: STREET 1: 55 PUBLIC SQUARE SUITE 1910 CITY: CLEVELAND STATE: OH ZIP: 44113 FORMER COMPANY: FORMER CONFORMED NAME: FIRST UNION REALTY DATE OF NAME CHANGE: 19691012 10-Q 1 FIRST UNION REAL ESTATE FORM 10-Q 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 ---------- For Quarter Ended March 31, 1997 Commission File Number 1-6249 -------------- ------ First Union Real Estate Equity and Mortgage Investments - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Ohio 34-6513657 - ------------------------------- ----------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification) No.) Suite 1900, 55 Public Square Cleveland, Ohio 44113-1937 - --------------------------------------- ------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (216) 781-4030 ----------------- - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---- --- Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. 21,625,503 Shares of Beneficial Interest outstanding as of March 31, 1997 - -------------------------------------------------------------------------------- Total number of pages contained in this report: 10 2 PART I - FINANCIAL INFORMATION - ------------------------------ Item 1. Financial Statements. - ------- --------------------- The combined financial statements included herein have been prepared by the registrant, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the registrant believes that the disclosures contained herein are adequate to make the information presented not misleading. It is suggested that these combined financial statements be read in conjunction with the combined financial statements and the notes thereto included in the registrant's latest annual report on Form 10-K. The unaudited "Combined Balance Sheets" as of March 31, 1997 and "Combined Statements of Income and Combined Statements of Changes in Cash" for the periods ended March 31, 1997 and 1996, of the registrant, and "Notes to Combined Financial Statements," are included herein. These financial statements reflect, in the opinion of the registrant, all adjustments (consisting of normal recurring accruals) necessary to present fairly the combined financial position and results of operations for the respective periods in conformity with generally accepted accounting principles consistently applied. Item 2. Management's Discussion and Analysis of Financial Condition and Results - ------- ----------------------------------------------------------------------- of Operations. -------------- Financial Condition - ------------------- In January 1997, the registrant sold a shopping center in Wilkesboro, NC for $9 million in cash. This sale resulted in a capital loss of $4.9 million, which was previously provided for by the registrant as part of a $14 million noncash unrealized loss on the carrying value of certain assets identified for disposition recorded in December 1995. The net proceeds were used to repay short-term bank loans. In January 1997, the registrant issued 3,910,000 shares of beneficial interest, resulting in net proceeds of $46.1 million. The net proceeds were used to repay short-term bank loans of $17 million, repay $5 million in mortgage loans and invest $24 million in short-term investments. In February 1997, the registrant received repayment of its wraparound mortgage loan investment secured by an apartment complex in Atlanta, GA. The registrant received $16.2 million in cash and a 10%, $1.8 million second mortgage secured by the management agreement on the apartment complex. The proceeds were used to repay $3.4 million in underlying mortgage debt and invest $12.8 million in short-term investments. Except as noted above, there has been no material change in the registrant's financial condition from December 31, 1996. Liquidity and Capital Resources - ------------------------------- Net cash provided by operations for the first quarter of 1997 of $7 million was $2 million greater than the same period of 1996. This increase is primarily attributed to an increase in net income before preferred dividend when comparing the first quarter of 1997 to that of 1996. Dividends paid in 1997 of $2.0 million represented 28% of net cash from operating activities. As described above in the first quarter of 1997, the registrant received $16.2 million from the repayment of a mortgage investment and $9 million from the sale of a mall. The proceeds were used to repay mortgage debt related to the mortgage investment and repay amounts outstanding under the bank credit agreement with the balance of the proceeds being invested temporarily in short-term investments. The registrant also invested $4.1 million in its existing portfolio, primarily to complete a tenant alteration at its office technology center in Denver, CO, which is continuing with a re-tenanting and conversion from a retail center to a modern commerce center. The net proceeds of $46.1 million from the January 1997 share offering were used to repay mortgage and bank loans with the balance of the proceeds being invested temporarily in short-term investments. In April 1997, the registrant's affiliated management company purchased voting control of Imperial Parking Ltd. for $75 million including the assumption of $26 million in debt. The purchase was funded through cash held in short-term investments at March 31, 1997 and through short-term borrowings. During the remaining nine months of 1997, the registrant has approximately $1.5 million of mortgage principle payments and $15 million of tenant and building improvements 2 3 to fund. These commitments will be funded through existing operations and bank credit facilities. Results From Operations - ----------------------- Net income applicable to shares of beneficial interest for the first quarter of 1997 was $1 million as compared to a net loss of $.9 million for the first quarter of 1996. Net income applicable to shares of beneficial interest in 1997 included a non-cash recognition of $.7 million of income from the repayment of a wraparound mortgage investment, as the proceeds of $18 million exceeded the registrant's basis in the wraparound mortgage investment. Additionally, in 1997, net income applicable to shares of beneficial interest was reduced by the accrual of a preferred dividend of $1.2 million. The preferred shares were issued in October 1996. Net income applicable to shares of beneficial interest for the first quarter of 1996 included two non-cash charges totaling $1.3 million for the write-off of a tenant allowance and the termination of an employment contract. Property net operating income, which is rents less property operating expenses and real estate taxes, was $.6 million and $.5 million greater than when comparing the first quarter of 1997 to that of 1996 on a comparable and non-comparable property basis, respectively. The office property portfolio benefited from increased occupancy at a former retail center in Denver, CO. which is in the process of being converted into a commerce center and produced $.5 million of increased income from property net operating income when comparing 1997 to 1996. The comparable retail portfolio produced an additional $.3 million in property net operating income primarily due to the addition of anchor tenants at shopping malls in Reading, PA and Morgantown, WV. The comparable parking portfolio had a decline of $.2 million in property net operating income when comparing 1997 to 1996 due to increased real estate tax expense and the expiration of a fixed minimum rent contract. The property net operating income for the apartment complex purchased in December 1996 was offset by the property net operating income lost from the sale of two office buildings with an attached parking garage in 1996 and the shopping mall sold in January 1997. In September 1996, the registrant invested in a joint venture that owns eight shopping malls and 50% of another mall. The joint venture produced $.3 million in investment income and $.8 million in management fees for the registrant's affiliated management company in the first quarter of 1997. Mortgage investment income declined when comparing 1997 to 1996 due primarily to the repayment of a wraparound mortgage investment in February 1997, as noted previously. Short-term investment income increased in 1997 as compared to 1996 due to the registrant having an average of $26 million invested in short-term securities in 1997 versus a minimal amount of short-term investments in 1996. The proceeds from income, the repayment of the wrap-around mortgage investment in February 1997 and the net proceeds of the issuance of shares of beneficial interest after repayment of bank and mortgage loans were invested temporarily in short-term securities in the first quarter of 1997. Mortgage interest expense increased in 1997 versus 1996 due to three mortgages obtained in the last nine months of 1996 for $36 million at an average rate of 7.6%. Interest on bank loans decreased when comparing 1997 to 1996. The registrant had an average of $6 million outstanding under its bank credit agreement in 1997 versus an average balance of $66 million in 1996. The net proceeds from the sale of preferred shares of beneficial interest in October 1996, $17 million from the proceeds of the sale of shares of beneficial interest in January 1997, and the $9 million proceeds from the sale of a shopping mall, were used to repay bank loans during the fourth quarter of 1996 and first quarter of 1997. Depreciation and amortization decreased by $.5 million compared to the first quarter of 1996. The decline is primarily attributed to the one-time, $.7 million write-off of a tenant allowance in 1996 due to the registrant replacing an anchor tenant at its shopping mall in Morgantown, WV. The one-time write-off in 1996 is partially offset by the increase in depreciation expense associated with the registrant's ongoing capital improvement program. General and administrative expenses for 1996 included a non-recurring, non-cash charge of $.7 million for the termination of an employment contract of a former executive. In 1997, general and administrative expenses included the additional expenses to manage the nine properties acquired by the joint venture. 3 4 PART II - OTHER INFORMATION - --------------------------- Item 1. Legal Proceedings. - ------- ------------------ None. Item 2. Changes in Securities. - ------- ---------------------- None. Item 3. Defaults Upon Senior Securities. - ------- -------------------------------- None. Item 4. Submission of Matters to a Vote of Security Holders. - ------- ---------------------------------------------------- The following matters were considered at the Annual Meeting of Shareholders held on April 8, 1997: 1. Election of Trustees --------------------
Name Total Votes For Against Abstentions ---- ----------- --- ------- ----------- Kenneth K. Chalmers 17,387,805 15,729,280 -- 1,658,525 William E. Conway 17,387,805 15,671,950 -- 1,715,855 Russel R. Gifford 17,387,805 15,696,629 -- 1,691,176
Continuing Term Trustees ------------------------ E. Bradley Jones 1998 James C. Mastandrea 1998 Herman T. Russell 1998 Daniel G. DeVos 1999 Allen H. Ford 1999 Spencer H. Heine 1999 2. Other Matters ------------- A Shareholder proposal to disallow proxy ballots which are unmarked as an affirmative vote for the issue under consideration. Total Votes For Against Abstentions ----------- --- ------- ----------- 7,986,479 1,987,221 6,988,013 1,011,245 Item 5. Other Information. ----------------- None. Item 6. Exhibits and Reports on Form 8-K. --------------------------------- (a) Exhibits: --------- Exhibit (3) - First Union Real Estate Equity and Mortgage Investments Amended By-Laws. Exhibit (10a) - Credit agreement between Imperial Parking Limited and BT Bank of Canada Exhibit (10b) - Put agreement entered into between BT Bank of Canada, Hong Kong Bank of Canada and First Union Real Estate Equity and Mortgage Investments. Exhibit (10c) - Share Purchase Agreement and amendments -- Impark Investments Inc. and First Union Real Estate Equity and Mortgage Investments. Exhibit (10d) - Put agreement entered into between Impark Investments Inc., the Onex Associates and First Union Real Estate Equity and Mortgage Investments. Exhibit (10e) - Senior subordinated note by 3357392 Canada Inc. to 3006302 Nova Scotia Company. Exhibit (10f) - Senior subordinated note by 504463 N.B. Inc. to 3006302 Nova Scotia Company. Exhibit (10g) - Shareholders Agreement dated April 17, 1997 between 3357392 Canada, Inc. and 3355489 Canada, Inc. and the individuals and trusts listed on Schedule A. Exhibit (10h) - Shareholders Agreement dated April 17, 1997 between 504308 N.B., Inc. First Union Management, Inc. and the individuals listed on Schedule A. Exhibit (10i) - Assignment dated March 27, 1997 between First Union Real Estate Equity and Mortgage Investments and First Union Management, Inc. Exhibit (10j) - Assignment dated April 16, 1997 between First Union Management, Inc. and 335489 Canada, Inc. Exhibit (10k) - Assignment dated April 16, 1997 between 335489 Canada, Inc. and 3357392 Canada, Inc. Exhibit (10l) - Amendment to assignment made May 8, 1997 between First Union Real Estate Equity and Mortgage Investments and Imperial Parking Limited. Exhibit (11) - Statements Re: Computation of Per Share Earnings Exhibit (12) - Statements Re: Statements of Ratios of Combined Income from Operations and Combined Net Income to Fixed Charges Exhibit (20) - Financial Statements (Unaudited) Combined Balance Sheets as of March 31, 1997 and December 31, 1996 Combined Statements of Income, for the Three Months ended March 31, 1997 and 1996 Combined Statements of Changes in Cash, for the Three Months ended March 31, 1997 and 1996 Notes to Combined Financial Statements (b) Reports on Form 8-K: -------------------- None. 5 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. First Union Real Estate Equity and Mortgage Investments ------------------------------- (Registrant) Date: May 9, 1997 By: /s/ James C. Mastandrea ---------------------------------- James C. Mastandrea, Chairman, President and Chief Executive Officer Date: May 9, 1997 By: /s/ Steven M. Edelman ---------------------------------- Steven M. Edelman, Executive Vice President - Chief Financial Officer Date: May 9, 1997 By: /s/ John J. Dee ---------------------------------- John J. Dee, Senior Vice President - Chief Accounting Officer 5 6 Index to Exhibits ----------------- Exhibit (3) - First Union Real Estate Equity and Mortgage Investments amended By-Laws Exhibit (10a) - Credit agreement between Imperial Parking Limited and BT Bank of Canada (10b) - Put agreement entered into between BT Bank of Canada, Hong Kong Bank of Canada and First Union Real Estate Equity and Mortgage Investments (10c) - Share Purchase Agreement and amendments-- Impark Investments Inc. and First Union Real Estate Equity and Mortgage Investment (10d) - Put agreement entered into between Impark Investements Inc., the Onex Associates and First Union Real Estate Equity and Mortgage Investements (10e) - Senior subordinated note by 3357392 Canada Inc. to 3006302 Nova Scotia Company (10f) - Senior subordinated note by 504463 N.B. Inc. to 3006302 Nova Scotia Company (10g) - Shareholders Agreement dated April 17, 1997 between 3357392 Canada, Inc. and 3355489 Canada, Inc. and the individuals and trusts listed on Schedule A. (10h) - Shareholders Agreement dated April 17, 1997 between 504308 N.B., Inc. First Union Management, Inc. and the individuals listed on Schedule A. (10i) - Assignment dated March 27, 1997 between First Union Real Estate Equity and Mortgage Investments and First Union Management, Inc. (10j) - Assignment dated April 16, 1997 between First Union Management, Inc. and 335489 Canada, Inc. (10k) - Assignment dated April 16, 1997 between 335489 Canada, Inc. and 3357392 Canada, Inc. (10l) - Amendment to assignment made May 8, 1997 between First Union Real Estate Equity and Mortgage Investments and Imperial Parking Limited. Exhibit (11) - Statements Re: Computation of per share earnings Exhibit (12) - Statements Re: Ratios of combined income from operations and combined net income to fixed charges Exhibit (20) - Financial Statements (unaudited) Combined Balance Sheets as of March 31, 1997 and December 31, 1996 Combined Statements of Income for the Three Months ended March 31, 1997 and 1996 Combined Statements of Changes in Cash for the Three Months ended March 31, 1997 and 1996 Notes to Combined Financial Statements Exhibit (27) - Financial Data Schedule 6 EX-3 2 EXHIBIT 3 1 Exhibit 3 FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS BY-LAWS 2 ARTICLE I MEETING OF BENEFICIARIES SECTION 1. ANNUAL MEETING. The annual meeting of the Beneficiaries of the Trust for the transacting of such business as shall be specified in the notice of the meeting shall be held as provided in the Declaration of Trust. SECTION 2. SPECIAL MEETINGS. Special meetings may be called at any time as provided in the Declaration of Trust. SECTION 3. PLACE OF MEETING. All meetings of the Beneficiaries shall be held at the office of the Trust in the City of Cleveland in the State of Ohio or at such other place in the State of Ohio as may be designated, in the case of an annual meeting, by the Trustees, or, in the case of a special meeting, by the Trustees calling such meeting or by the person or persons requesting such meeting pursuant to the Declaration of Trust. SECTION 4. NOTICE OF MEETINGS. Written notice of each annual or special meeting of the Beneficiaries, stating the time, place and purpose thereof shall be given in accordance with the Declaration of Trust. SECTION 5. PROCEDURE AT MEETINGS. At each meeting of the Beneficiaries, the Trustees shall appoint one of their number or one of the Beneficiaries to preside thereat. The Trustees shall appoint a Secretary for each such meeting, who shall be duly sworn to the faithful discharge of his duties and to keep the minutes of such meeting, which minutes shall be signed and attested by him and filed with the records of the Trust. SECTION 6. QUORUM. A majority of the outstanding shares of the Trust present in person or by proxy shall constitute a quorum for any annual or special meeting of Beneficiaries. SECTION 7. NOMINATIONS AND BENEFICIARY BUSINESS (a) With respect to any Annual or Special Meeting of Beneficiaries, (a "Meeting") nominations for election to the Board of Trustees and the proposal of matters to be considered by the Beneficiaries may be made only (I) by or at the direction of the Board of Trustees or (ii) by any Beneficiary who was a Beneficiary of record at the time of the giving of the notice described in this Section 7 and at the record date for the Meeting, as defined in the Declaration of Trust, who is entitled to vote at the Meeting and who complied with the notice procedures set forth in this Section 7. (b) For a nomination or proposal to be properly brought before a Meeting by a Beneficiary, other than a shareholder proposal included in the Trust's proxy statement 2 3 pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as amended, the Beneficiary must have given timely notice thereof in writing to the Secretary of the Trust, and such Beneficiary or his representative must be present in person at the Meeting. A Beneficiary's notice shall be timely if delivered to, or mailed and received at, the principal executive offices of the Trust not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding Annual Meeting of Beneficiaries, or Special Meeting held in lieu thereof. (c) A Beneficiary's notice to the Secretary shall set forth as to each nomination or proposal the Beneficiary intends to bring before the Meeting (I) as to any nomination, the name and address of any proposed nominee, the nominee's business affiliation, the information required as to nominees by Item 401 of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934, all as may be amended from time to time, and a certification of the proponent that such nominee meets all the qualifications for Trustees set forth in the Declaration of Trust, including, but not limited to, Section 8.10 thereof, (ii) as to any proposal, a brief description of the proposal desired to be brought before the Meeting, a statement of the reasons for making such proposal at the Meeting and a certification of the proponent that the proposal does not conflict with or violate any provision of the Declaration of Trust, (iii) the name and address, as they appear on the Trust's share transfer books of the Beneficiary offering such nomination or proposal and of the beneficial owners (if any) of the shares registered in such Beneficiary's name and the name and address of any other Beneficiaries (or beneficial owner of shares) known by such Beneficiary to be supporting such nomination or proposal on the date of the Beneficiary's notice, (iv) the class and number of shares of the Trust's capital shares which are beneficially owned by the Beneficiary and such beneficial owners (if any) on the date of such Beneficiary's notice and by any other Beneficiaries known by such Beneficiary to be supporting such nomination or proposal on the date of such Beneficiary's notice, and (v) any financial interest of the Beneficiary or any such beneficial owner in such proposal. Nothing contained in this Subsection (e) shall be deemed to supersede the provisions of Section 7.2 of the Declaration of Trust relating to business that may be transacted at a Special Meeting. (d) If the Board of Trustees, or a designated committee thereof, determines that any Beneficiary nomination or proposal was not timely made in accordance with the provisions of this Section 7, or that any proposed nominee does not meet the qualifications set forth in the Declaration of Trust, or that any proposal conflicts with or violates a provision of the Declaration of Trust, then such nomination or proposal shall not be presented for action at the Meeting in question. If the Board of Trustees, or a designated committee thereof, determines that the information provided in the Beneficiary's notice does not satisfy the informational requirements of this section in any material respect, the Secretary of the Trust shall promptly notify such Beneficiary of the deficiency in the notice. Such Beneficiary shall have the opportunity to cure such deficiency by providing additional information to the Secretary within the period of time, not to exceed five (5) days from the date such deficiency notice is given to such Beneficiary, determined by the Board or such committee. If the deficiency is not cured within such period, or if the Board of Trustees or such committee determines that the additional information provided by the Beneficiary, together with the information previously provided, does not satisfy the requirements of this Section 7 in any material respect, then such nomination or proposal shall not be presented for action at the Meeting in question. 3 4 (e) Notwithstanding the procedure set forth in the preceding paragraph, if neither the Board of Trustees nor such committee makes a determination as to the compliance of any Beneficiary nomination or proposal with the provisions of this Section 7, as set forth above, the presiding Officer of the Meeting shall determine and declare at the Meeting whether the Beneficiary nomination or proposal was made in compliance with the provisions of this Section 7, and if such presiding Officer determines and declares that such nomination or proposal was not made in compliance with such provisions, such nomination or proposal shall not be acted upon at the Meeting. ARTICLE II SECTION 1. REGULAR MEETINGS. Regular meetings of the Trustees may be held at such times and places within the State of Ohio as may be provided for in resolution adopted by the Trustees. SECTION 2. SPECIAL MEETINGS. Special meetings of the Trustees may be held at any time or place within the State of Ohio upon call of any two of the Trustees at the time and place designated in the notice of meeting. SECTION 3. NOTICE OF MEETINGS. Notice of each meeting, regular or special, shall be given by mailing or by sending to each Trustee (addressed to the address last furnished to the Trust by the Trustee) a letter at least 4 days before the meeting, or a telegram at least 24 hours before the meeting. Notice of any special or regular meeting, as provided in the Declaration of Trust, may be waived in writing or by telegram by any Trustee either before or after such meeting, and such notice shall be deemed to have been waived by the Trustees attending such meeting. Except as provided in Article V hereof, unless otherwise indicated in the notice thereof, any business may be transacted at any regular or special meeting. SECTION 4. QUORUM. At any meeting a majority of the Trustees then in office shall constitute a quorum. SECTION 5. COMPENSATION OF TRUSTEES. The Trustees are authorized to fix a reasonable retainer for members of the Board of Trustees and the Chairman and a reasonable fee for attendance at meetings. In addition to such compensation there shall be reimbursement for expenses for traveling to and from such meetings. SECTION 6. COMMITTEES OF THE BOARD OF TRUSTEES. 4 5 The Trustee may elect from their members committees of the Board and give them any or all powers of the Trustees during intervals between the meetings of the Trustees, except that such committees shall not be empowered to declare dividends or fill vacancies in the Board of Trustees or committees. All actions of such committees shall be reported to the Trustees at their next meeting and shall be subject to approval by the Trustees, provided that no right of any third person shall be affected by such alteration. SECTION 7. QUALIFICATIONS OF NOMINEES - AGE. No nominee for Trustee shall be more than 72 years of age at the time of his election as Trustee, nor shall any Trustee nominated for a subsequent term be more than 72 years of age at the time of his election for such subsequent term, provided that any Trustee elected prior to attaining age 72 may continue to serve the remainder of his term despite attaining the age of 72 before the expiration of his term. ARTICLE III OFFICERS - ----------- SECTION 1. DESIGNATION OF OFFICERS. The Trustees shall elect a Chairman of the Board, a President, a Secretary, a Treasurer, and such Vice Presidents and other officers, or assistant officers, as they shall deem advisable. Each officer and assistant officer shall have such functions and duties as the Trustees shall from time to time designate, and, in the absence of such designation, such duties as are usually associated with such office. Except as otherwise determined by the Trustees, any two or more offices may be held by the same person. SECTION 2. TENURE OF OFFICE. The officers of the Trust shall hold office at the pleasure of the Trustees, and until successors are chosen and qualified. A vacancy in any office, however created, may be filled by election by the Trustees. SECTION 3. DELEGATION OF DUTIES. The Trustees may delegate the duties of any officer to any other officer and generally may control the action of the officers and require the performance of duties in addition to those mentioned herein. SECTION 4. COMPENSATION. The Trustees are authorized to determine or to provide the method of determining the compensation of officers. SECTION 5. SIGNING CHECKS AND OTHER INSTRUMENTS. 5 6 The Trustees shall determine or provide the method of determining how checks, notes, bills of exchange and similar instruments issued by or on behalf of the Trust shall be signed, countersigned, or endorsed. SECTION 6. CONTROL BY TRUSTEES. Nothing contained herein shall be interpreted to relieve the Trustees, in any manner, of their duty to control and manage the Trust property. ARTICLE IV SHARES IN TRUST - --------------- SECTION 1. ISSUE OF CERTIFICATE OF BENEFICIAL OWNERSHIP The Chairman shall cause to be issued to each Beneficiary one or more certificates, under the seal of the Trust, signed as provided in Article III, Section 5 hereof, certifying the number of shares owned by such Beneficiary in the Trust. Such certificates shall be countersigned by the Transfer Agent and registered by the Registrar and shall be transferable on the books of the Trust as provided in the Declaration of Trust. ARTICLE V AMENDMENTS - ---------- SECTION 1. AMENDMENT OF BY-LAWS. The Trustees, by the affirmative vote of a majority, may at any meeting, provided the substance of the proposed amendment shall have been stated in a notice of the meeting, alter, change, or amend in any respect, or supersede by new by-laws, in whole or in part, any of these by-laws. ARTICLE VI MISCELLANEOUS PROVISIONS SECTION 1. FISCAL YEAR. The fiscal year of the Trust shall be as determined from time to time by the Trustees. SECTION 2. NOTICE AND WAIVER OF NOTICE. Whenever any notice is required by these by-laws to be given, personal notice is not required unless expressly so stated; and any notice so required shall be deemed to be sufficient if given by depositing the same in a post-office box in a sealed post-paid wrapper, addressed to the person entitled thereto (at his last known post-office address as shown by the register of the Trust) and such notice shall be deemed to have been given on the day of such mailing. SECTION 3. CHECKS FOR MONEY. 6 7 All checks, drafts or orders for the payment of money shall be signed by the Treasurer or Assistant Treasurer or by such other officer, officers, Trustee or Trustees as the Trustees may from time to time designate. SECTION 4. FORM OF CERTIFICATE OF BENEFICIAL INTEREST. The form of certificate of beneficial interest representing shares of $1 par value shall be substantially as follows: No. Shares ------------------------------------------------- FIRST UNION Real Estate Equity and Mortgage Investments THIS CERTIFIES THAT ________________________ is the registered holder of ______ Fully Paid and Non-assessable Share of Beneficial Interest, $1 Par Value. in FIRST UNION Real Estate Equity and Mortgage Investments a Trust established in business trust from under the laws of the State of Ohio under a Declaration of Trust dated as of August 1, 1961, as amended from time to time, a copy of which is on file with the Transfer Agents of the Trust by all the terms and provisions of which the holder or transferee hereof by accepting this certificate agrees to be bound. The Trust is not a bank or trust company and does not and will not solicit, receive or accept deposits as a business. The shares represented hereby are transferable on the records of the Trust only by the registered holder hereof or by his agent duly authorized in writing on delivery to a Transfer Agent of the Trust of this certificate properly endorsed or accompanied by duly executed instrument of transfer together with such evidence of the genuineness thereof and such other matters as may reasonably be required. The transferability of the shares represented hereby is subject to such regulation. as may from time to time be adopted by the Trustees of the Trust and set forth in the By-Laws to which reference is hereby made to prevent transfers of shares which would result in disqualification of the Trust for taxation as a real estate investment trust under the Internal Revenue Code an amended. This certificate is not valid unless countersigned by a Transfer Agent and registered by a Registrar of the Trust. IN WITNESS WHEREOF, the Trustees of this Trust have caused this certificate to be signed by facsimile signatures. [ON REVERSE SIDE] The By-Laws of the Trust provide, among other things, that no person may acquire Trust securities (including these securities) if, thereafter, he would beneficially own more than 9.8% of the Trust's shares of beneficial interest. In applying this restriction, convertible securities of the Trust beneficially owned by such person (including convertible securities) are to be treated as if already converted into shares of beneficial 7 8 interest. A copy of the By-Laws and information about the limitation on ownership may be obtained from the Secretary of the Trust. SECTION 5. REGULATIONS ON TRANSFER OF SHARES TO PREVENT DISCLAIM Notification of the Trust Under the Internal Revenue Code. The Chief Executive Officer of the Trust or an officer designated by him shall: a) From time to time cause to be prepared a list of holders of record (with their holdings) of shares of the Trust (preferred and common) and shall designate those holders which the officer acting shall have reason to believe are not also the beneficial owners of the holdings of record in their respective names; b) Review the list with counsel and impose such restrictions on transfer of shares as counsel shall advise should be imposed to prevent disqualification of the Trust as a Real Estate Investment Trust under Section 856 et seq. of the Internal Revenue Code. SECTION 6. RESTRICTIONS ON ISSUANCE AND TRANSFER OF SECURITIES. a) No person may own more than 9.8% of the outstanding Shares (the Limit), and no Securities shall be issued or transferred to any person if, following such issuance or transfer, such person's ownership of Shares would exceed the Limit. For purposes of computing the Limit, Convertible Securities owned by such person shall be treated as if the Convertible Securities owned by such person had been converted into Shares. b) If any Securities in excess of the Limit are issued or transferred to any person in violation of Paragraph a) hereof (the "Excess Securities"), such issuance or transfer shall be valid only with respect to such amount of Securities as does not result in a violation of Paragraph a) hereof, and such issuance or transfer shall be null and void with respect to such Excess Securities. If the last clause of the foregoing sentence is determined to be invalid by virtue of any legal decision, statute, rule or regulation, such person shall be conclusively deemed to have acted as an agent on behalf of the Trust in acquiring the Excess Securities and to hold such Excess Securities on behalf of the Trust. As the equivalent of treasury Securities for such purposes, the Excess Securities shall not be entitled to any voting rights; shall not be considered to be outstanding for quorums or voting purposes; and shall not be entitled to receive dividends. interest or any other distribution with respect to the Securities. Any person who receives dividends, interest or any other distribution in respect to Excess Securities shall hold the same as agent for the Trust and (following a permitted transfer) for the transferee thereof. Notwithstanding the foregoing, any holder of Excess Securities may transfer the same (together with any distributions thereon) to any person who, following such transfer, would not own Shares (within the meaning of Paragraph a) in excess of the Limit. Upon such permitted transfer, the Trust shall pay or distribute to the transferee any distributions on the Excess Securities not previously paid or distributed. 8 9 c) Ownership of Securities is conditional upon the owner or prospective owner having provided to the Trust definitive written information respecting his ownership of Securities. Failure to provide such information, upon reasonable request shall result in the Securities so owned being treated as Excess Securities pursuant to Paragraph b) for so long as such failure continues. d) For purposes of this Section 6: (i) Person. includes an individual, corporation, partnership, association, joint stock company, trust, unincorporated association or other entity. (ii) Shares. means Shares of Beneficial Interest, par value $1 per share. (iii) Convertible Securities. means any securities of the Trust that are convertible into Shares. (iv) Securities. means Shares and Convertible Securities. (v) Ownership. means beneficial ownership. Beneficial ownership, for this purpose, may be determined on the basis of the beneficial ownership rules applicable under the Securities Exchange Act of 1934, as amended, or such other basis as management reasonably determines to be appropriate to effectuate the purposes hereof. e) Nothing herein contained shall limit the ability of the Trust to impose, or to seek judicial or other imposition of additional restrictions if deemed necessary or advisable to protect the Trust and the interests of its security holders by preservation of the Trust's status as a qualified real estate investment trust under the Code. f) These restrictions on issuance and transfer of Securities shall be applied only on a prospective basis. Accordingly, Paragraphs a) and b) hereof shall not apply to Shares in excess of the limit that were owned (within the meaning of Paragraph a) by any person at the close of business on June 3, 1981, but Paragraph a) and b) shall prospectively apply to the transfer of such Shares and to further acquisitions of Securities by any such person. Similarly, Paragraphs a) and b) shall not apply to the conversion of Convertible Securities that were owned by any person at the close of business on such date or to the resultant Shares owned by such person, but Paragraph a) and b) shall prospectively apply to such Shares and to such person. g) Notwithstanding any other provision of this Section 6, a lower percentage (the Temporary Limit) shall operate in place of the 9.81 ownership Limit set forth in Paragraph a) hereof for so long as there are outstanding Securities excepted from the restrictions of this Section 6 pursuant to Paragraph f) hereof ("Exempt Securities"). The Temporary Limit shall initially be 6%, but upon the transfer of Exempt Securities the Temporary Limit shall be fixed by the Trustees from time to time but shall in no event exceed an amount equal to 25% of the difference between (i) 49% of the Shares outstanding and (ii) the number of Shares owned by any person who owns Exempt Securities. For purposes of this calculation, Convertible Securities owned by such person shall be treated as if the Convertible Securities owned by such person had been converted into Shares. 9 10 h) If any provision of this Section 6 or any application of any such provision is determined to be invalid by any federal or state court having jurisdiction over the issue, the validity of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. 10 11
INDEX PAGE ---- ARTICLE I - MEETING OF BENEFICIARIES Section 1. Annual Meeting 35 Section 2. Special Meetings 35 Section 3. Place of Meetings 35 Section 4. Notice of Meetings 35 Section 5. Procedure at Meetings 35 Section 6. Quorum 35 Section 7. Nominations and Beneficiary Business 35 ARTICLE II - TRUSTEES Section 1. Regular Meetings 35 Section 2. Special Meetings 36 Section 3. Notice of Meetings 36 Section 4. Quorum 36 Section 5. Compensation of Trustees 36 Section 6. Committees of the Board of Trustees 36 Section 7. Qualifications of Nominees-Age 36 ARTICLE III OFFICERS Section 1. Designation of Officers 37 Section 2. Tenure of Office 37 Section 3. Delegation of Duties 37 Section 4. Compensation 37 Section 5. Signing Checks and Other Instruments 37 Section 6. Control by Trustees 37 ARTICLE IV SHARES IN TRUST Section 1. Issue of Certificate of Beneficial Ownership 37 ARTICLE V AMENDMENTS Section 1. Amendment of By-Laws 38 ARTICLE VI MISCELLANEOUS PROVISIONS Section 1. Fiscal Year 38 Section 2. Notice and Waiver of Notice 38 Section 3. Checks for Money 38 Section 4. Form of Cetificate of Beneficial Interest 38 Section 5. Regulations on Transfer of Shares to Prevent Disclaim 39 Section 6. Restrictions on Issuance and Transfer Of Securities 40
EX-10.A 3 EXHIBIT 10.A 1 Exhibit 10a IMPERIAL PARKING LIMITED as Borrower - and - 504463 N.B. INC. as Guarantor - and - THE FINANCIAL INSTITUTIONS SET FORTH ON THE SIGNATURE PAGES HEREOF - and - BT BANK OF CANADA as Agent AMENDED AND RESTATED CREDIT AGREEMENT Dated as of April 17, 1997 2 Exhibit 10a TABLE OF CONTENTS
PAGE NO. ARTICLE 1 INTERPRETATION Section 1.1. Defined Terms. 2 Section 1.2. Gender and Number. 24 Section 1.3. Headings. 24 Section 1.4. Currency. 24 Section 1.5. Certain Phrases, etc. 24 Section 1.6. Accounting Terms. 25 Section 1.7. Deeming Provision. 25 Section 1.8. Rateable Portion of Accommodations. 25 Section 1.9. Incorporation of Schedules. 25 Section 1.10. Interpretation. 25 ARTICLE 2 CREDIT FACILITIES Section 2.1. Availability. 25 Section 2.2. Commitments and Facility Limits. 26 Section 2.3. Use of Proceeds. 26 Section 2.4. Mandatory Repayments. 27 Section 2.5. Mandatory Prepayments. 27 Section 2.6. Optional Prepayments and Reductions of Commitments. 27 Section 2.7. Fees. 28 Section 2.8. Payments under this Agreement. 29 Section 2.9. Application of Payments and Prepayment. 29 Section 2.10. Computations of Interest and Fees. 30 Section 2.11. Payments on Maturity. 30 ARTICLE 3 ADVANCES Section 3.1. The Advances. 30 Section 3.2. Procedure for Borrowing. 30 Section 3.3. Interest on Advances. 31 ARTICLE 4 BANKERS' ACCEPTANCES Section 4.1. Acceptances and Drafts. 31 Section 4.2. Form of Drafts. 32 Section 4.3. Procedure for Drawing. 32 Section 4.4. Presigned Draft Forms. 33 Section 4.5. Payment, Conversion or Renewal of Bankers' Acceptances. 33 Section 4.6. Circumstances Making Bankers' Acceptances Unavailable. 34 ARTICLE 5 LETTERS OF CREDIT Section 5.1. Letters of Credit. 34 Section 5.2. Procedure for Issue. 35 Section 5.3. Form of Letters of Credit. 35 Section 5.4 Use of Letters of Credit. 35 Section 5.5 Reimbursements of Amounts Drawn. 35 Section 5.6 Risk of Letters of Credit. 36 Section 5.7 Fees. 37 Section 5.8 Repayments. 37 ARTICLE 6 CONDITIONS OF LENDING Section 6.1 Conditions Precedent to the Initial Accommodation. 38
3 Section 6.2. Conditions Precedent to All Accommodations. 40 Section 6.3 Acquisition Facility. 40 Section 6.4. No Waiver. 42 ARTICLE 7 REPRESENTATIONS AND WARRANTIES Section 7.1. Representations and Warranties. 42 Section 7.2. Survival of Representations and Warranties. 49 ARTICLE 8 COVENANTS Section 8.1. Affirmative Covenants. 49 Section 8.2. Negative Covenants. 53 Section 8.3. Financial Covenants. 57 ARTICLE 9 EVENTS OF DEFAULT Section 9.1. Events of Default. 58 Section 9.2. Remedies Upon Demand and Default. 61 ARTICLE 10 THE AGENT AND THE LENDERS Section 10.1. Authorization and Action. 62 Section 10.2. No Liability. 63 Section 10.3. BT Bank of Canada. 63 Section 10.4. Discount Rate Determinations. 64 Section 10.5. Holding of Security; Sharing of Payments, etc. 64 Section 10.6. Lender Credit Decisions. 65 Section 10.7. Indemnification. 65 Section 10.8. Liability of the Lenders inter se. 65 Section 10.9. Successor Agents. 66 ARTICLE 11 MISCELLANEOUS Section 11.1. Amendment. 66 Section 11.2. Waiver. 66 Section 11.3. Evidence of Debt and Accommodation Notices. 67 Section 11.4. Notices, etc. 67 Section 11.5. Confidentiality. 68 Section 11.6. Costs, Expenses and Indemnity. 68 Section 11.7. Confirmation of Security Interests. 70 Section 11.8. Successors and Assigns. 70 Section 11.9. Right of Set-off. 72 Section 11.10. Accommodations by Lenders. 72 Section 11.11. Rateable Payments. 73 Section 11.12. Interest on Accounts. 73 Section 11.13. Advice. 73 Section 11.14. Governing Law. 73 Section 11.15. Counterparts. 74 ARTICLE 5 LETTERS OF CREDIT Section 5.1. Documentary Credits. 34 Section 5.2. Procedure for Issue. 34 Section 5.3. Form of Letters of Credit. 35 Section 5.4 Use of Letters of Credit. 35 Section 5.5 Reimbursements of Amounts Drawn. 35 Section 5.6 Risk of Letters of Credit. 35 Section 5.7 Fees. 36 Section 5.8 Repayments. 37 ARTICLE 6 CONDITIONS OF LENDING Section 6.1 Conditions Precedent to the Initial Accommodation. 37
4 Section 6.2. Conditions Precedent to All Accommodations. 39 Section 6.3 Acquisition Facility. 40 Section 6.4. No Waiver. 41 ARTICLE 7 REPRESENTATIONS AND WARRANTIES Section 7.1. Representations and Warranties. 41 Section 7.2. Survival of Representations and Warranties. 48 ARTICLE 8 COVENANTS Section 8.1. Affirmative Covenants. 49 Section 8.2. Negative Covenants. 53 Section 8.3. Financial Covenants. 57 ARTICLE 9 EVENTS OF DEFAULT Section 9.1. Events of Default. 57 Section 9.2. Remedies Upon Demand and Default. 60 ARTICLE 10 THE AGENT AND THE LENDERS Section 10.1. Authorization and Action. 61 Section 10.2. No Liability. 62 Section 10.3. BT Bank of Canada. 62 Section 10.4. Discount Rate Determinations. 63 Section 10.5. Holding of Security; Sharing of Payments, etc. 63 Section 10.6. Lender Credit Decisions. 64 Section 10.7. Indemnification. 64 Section 10.8. Liability of the Lenders inter se. 64 Section 10.9. Successor Agents. 65 ARTICLE 11 MISCELLANEOUS Section 11.1. Amendment. 65 Section 11.2. Waiver. 66 Section 11.3. Evidence of Debt and Accommodation Notices. 66 Section 11.4. Notices, etc. 66 Section 11.5. Confidentiality. 67 Section 11.6. Costs, Expenses and Indemnity. 67 Section 11.7. Confirmation of Security Interests. 69 Section 11.8. Successors and Assigns. 69 Section 11.9. Right of Set-off. 71 Section 11.10. Accommodations by Lenders. 71 Section 11.11. Rateable Payments. 72 Section 11.12. Interest on Accounts. 72 Section 11.13. Advice. 72 Section 11.14. Governing Law. 72 Section 11.15. Counterparts. 73 SCHEDULES Schedule 1 - Form of Borrowing Notice Schedule 2 - Form of Notice of Interest Rate Election Schedule 3 - Form of Drawing Notice Schedule 3A - Form of Issue Notice Schedule 4 - Notice Periods and Amounts Schedule 5 - List of Additional Loan Parties, Security Documents and other Credit Documents Schedule 6 - Insurance Schedule 7 - Location of Assets and Business Schedule 8 - Environmental Permits Schedule 9 - Owned Properties
5 Schedule 10 - Leased Properties and Management Properties Schedule 11 - Permitted Indebtedness Schedule 12 - Share Ownership Schedule 13 - Material Agreements Schedule 14 - Tax Claims Schedule 15 - Intentionally Deleted Schedule 16 - Form of Compliance Certificate Schedule 17 - Qualifying Shareholder Arrangements Schedule 18 - Incorporation and Qualification Schedule 19 - Litigation Schedule 20 - Form of Assumption Agreement
6 AMENDED AND RESTATED CREDIT AGREEMENT Amended and Restated Credit Agreement dated as of April 17, 1997, among IMPERIAL PARKING LIMITED, a corporation amalgamated and existing under the laws of Canada, as Borrower, 504463 N.B. Inc., a corporation incorporated and existing under the laws of the Province of New Brunswick, as Guarantor, the financial institutions set forth on the signature pages hereof, as Lenders, and BT BANK OF CANADA, as Agent. WHEREAS this agreement amends and restates the Original Credit Agreement (as hereinafter defined) entered into by the Borrower, Canadian Imperial Bank of Commerce as both Lender and Agent and Hongkong Bank of Canada as Lender dated as of November 13, 1996; AND WHEREAS Canadian Imperial Bank of Commerce assigned certain rights and obligations as Lender and Agent under the Original Credit Agreement to BT Bank of Canada pursuant to an Assignment Agreement dated April 17, 1997; AND WHEREAS in connection with the acquisition by First Union Management, Inc. ("FUMI") of an indirect controlling interest in Imperial Holdings No. 2 Inc. pursuant to a share purchase agreement dated February 18, 1997, as amended, among First Union Real Estate Equity and Mortgage Investments ("FUR"), Impark Investments Inc. and certain management vendors, the Borrower is, for the benefit of its shareholders, participating in a recapitalization of Borrower and certain of its subsidiaries and affiliates (the "TRANSACTION"); AND WHEREAS the Guarantor has, inter alia, given a guarantee of even date herewith in favour of the Agent and the Lenders with respect to the obligations of the Borrower under the Credit Documents (defined hereinafter); AND WHEREAS, as part of such recapitalization, the Agent and the Lenders have agreed to continue to make available to the Borrower certain credit facilities on the revised terms and subject to the revised conditions set forth in this Agreement; AND WHEREAS the Lenders, the Borrower and the Agent desire to amend and restate all of the current facilities made available to the Borrower by the Agent and the Lenders on the terms and subject to the conditions set forth in this Agreement; NOW THEREFORE, in consideration of the Agreement set forth herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Agent, the Lenders and the Borrower hereby agree that the Original Credit Agreement is hereby amended and restated in its entirety as follows: ARTICLE I INTERPRETATION SECTION 1. DEFINED TERMS. As used in this Agreement, the following terms have the following meanings: "ACCOMMODATION" means (i) an Advance made by a Lender on the occasion of any Borrowing; (ii) the creation and purchase of Bankers' Acceptances or the purchase of completed Drafts by a Lender or by any other Person on the occasion of any Drawing; and (iii) the issue of a Letter of Credit by BT (each of which is a "TYPE" of Accommodation). "ACCOMMODATION NOTICE" means a Borrowing Notice or a Drawing Notice. 7 -2- "ACCOMMODATIONS OUTSTANDING" means at any time under a Credit Facility, an amount equal to (i) in relation to the Borrower and all Lenders, the sum of (u) the aggregate principal amount of all outstanding Advances; (v) the aggregate Face Amount of all outstanding Bankers' Acceptances, completed Drafts and, without duplication, BA Equivalent Notes which the Lenders have purchased or arranged to have purchased; and (w) the aggregate Face Amount of all Letters of Credit for which BT is contingently liable; and (ii) in relation to the Borrower and any Lender, the sum of (x) the aggregate principal amount of all outstanding Advances made by such Lender; (y) the aggregate Face Amount of all outstanding Bankers' Acceptances, completed Drafts and, without duplication, BA Equivalent Notes which such Lender has purchased or arranged to have purchased; and (z) in the case of BT only, the aggregate Face Amount of all Letters of Credit for which BT is contingently liable. "ACCOUNT" means any and all of the Borrower's accounts, contract rights, instruments, chattel papers and general intangibles, whether secured or unsecured, now existing or hereafter created, whether or not specifically sold or assigned to the Lenders. "ACQUISITION COMMITMENT" means, at any time, in respect of the Acquisition Facility, Cdn. $10,000,000 (as reduced pursuant to Section 2.6). "ACQUISITION FACILITY" means the Credit Facility to be made available to the Borrower hereunder for the purpose specified in Section 2.3. "ADDITIONAL LOAN PARTIES" means, at any time, the Guarantor and other Persons specified in Schedule 5 as guarantors and any Persons which may from time to time become guarantors of all of the obligations of the Borrower under this Agreement and/or the other Credit Documents and their respective successors and assigns, who have delivered to the Agent a guarantee and security over all of their property and assets together with an opinion of counsel, all in form and substance satisfactory to the Agent, acting reasonably, whether or not there are any Accommodations Outstanding at such time. "ADVANCES" means advances made by a Lender under Article 3 and "ADVANCE" means any one of such advances. Advances will be denominated in Canadian Dollars as a "CANADIAN PRIME RATE ADVANCE". "AFFILIATE" has the meaning ascribed thereto in the Securities Act (Ontario) as in effect on the date hereof. "AGENT" means BT, as agent for the Lenders hereunder, and any successor thereto appointed pursuant to Section 10.9. "AGREEMENT" means this credit agreement and all schedules and instruments in amendment or confirmation of it; "HEREOF", "HERETO" and "HEREUNDER" and similar expressions refer to this Agreement and not to any particular Article or Section; and the expressions "ARTICLE" and "SECTION" followed by a number mean and refer to the specified Article or Section of this Agreement. "ANCILLARY AGREEMENT" means an ancillary agreement entered into by BT, Hongkong Bank of Canada and FUR dated the 17th day of April, 1997. "ANNUALIZED CAPITAL EXPENDITURES" means for any period of months, commencing April 1, 1997, an amount equal to the aggregate amount of Capital 8 - 3 - Expenditures for such period multiplied by a fraction, the numerator of which is 12 and the denominator of which is the number of calendar months which have elapsed since April 1, 1997. "ANNUALIZED CONSOLIDATED EBITDA" means for any period of months, commencing April 1, 1997, an amount equal to Consolidated EBITDA for such period multiplied by a fraction, the numerator of which is 12 and the denominator of which is the number of calendar months which have elapsed since April 1, 1997. "ANNUALIZED CONSOLIDATED INTEREST CHARGES" means for any period of months commencing April 1, 1997, an amount equal to the Consolidated Interest Charges for such period multiplied by a fraction, the numerator of which is 12 and the denominator of which is the number of calendar months which have elapsed since April 1, 1997. "ARM'S LENGTH" has the meaning ascribed thereto in the Income Tax Act (Canada), as in effect on the date hereof. "ASSETS" means, with respect to each of the Borrower, the Guarantor and their respective Subsidiaries, all property and assets of the Borrower, the Guarantor and each such Subsidiary of every kind and wheresoever situate, whether now owned or hereafter acquired. "ASSIGNEE" has the meaning specified in Section 11.8(3). "AUTHORIZATION" means, with respect to any Person, any authorization, order, permit, approval, grant, license, consent, right, franchise, privilege, certificate, judgment, writ, injunction, award, determination, direction, decree, by-law, rule or regulation of any Governmental Entity having jurisdiction over such Person, whether or not having the force of Law. "BANKERS' ACCEPTANCE" has the meaning specified in Section 4.1. "BA EQUIVALENT NOTE" has the meaning specified in Section 4.3(3). "BENEFICIARY" means, in respect of each Letter of Credit, the beneficiary named in the Letter of Credit. "BORROWER" means, at any time, Imperial Parking Limited, its successors and permitted assigns, whether or not there are any Accommodations Outstanding hereunder at such time. "BORROWER'S ACCOUNTS" means the Borrower's Canadian Dollar accounts maintained by the Agent at its offices, the particulars of which shall have been notified by the Agent to the Borrower. "BORROWER'S BUSINESS" means, with respect to the Borrower and its Subsidiaries, the businesses presently and heretofore carried on by the Borrower and its Subsidiaries consisting of the operation of parking facilities on Owned Properties or under management contracts and/or leases, valet parking, providing ancillary and related services such as signs, repairs, and consulting, the manufacture of parking lot and parking garage equipment and the ownership of real property for the purpose of conducting a parking operation or as part of the assets acquired directly or indirectly as part of a Qualifying Acquisition. 9 - 4 - "BORROWER EXCESS CASH FLOW" means for any period Excess Cash Flow minus all amounts relating to the Guarantor and its Consolidated Subsidiaries. "BORROWER'S NOTE PURCHASE AGREEMENT" means a Note Purchase Agreement dated April 17, 1997 executed by the Borrower and Financeco respecting Cdn.$55,000,000 Senior Subordinated Partial PIK Notes due April 17, 2009. "BORROWING" means a borrowing consisting of one or more Advances. "BORROWING NOTICE" has the meaning specified in Section 3.2(1). "BT" means BT Bank of Canada. "BUILDINGS AND FIXTURES" means all plant, buildings, structures, erections, improvements, appurtenances and fixtures (including fixed machinery and fixed equipment) situate on the Owned Properties. "BUSINESS DAY" means any day of the year, other than a Saturday, Sunday or other day on which banks are required to close in Toronto, Ontario. "CANADIAN DOLLARS" and "Cdn.$" each means lawful money of Canada. "CANADIAN PRIME RATE" means, at any time, the rate of interest per annum equal to the greater of (i) the per annum rate of interest quoted, published and commonly known as the "prime rate" of the Agent which the Agent establishes at its main office in Toronto, Ontario as the reference rate of interest in order to determine interest rates for loans in Canadian Dollars to its Canadian borrowers, adjusted automatically with each quoted or published change in such rate, all without the necessity of any notice to the Borrower or any other Person; and (ii) the average of the 30 day discount rates on banker's acceptances as quoted on Reuters Screen CDOR Page at approximately 10:00 a.m. (Toronto time) plus 1.0%, adjusted automatically with each quoted, published or displayed change in such rate, all without necessity of any notice to the Borrower or any other Person. "CAPITAL EXPENDITURES" means expenditures made for the purchase, lease or acquisition of fixed assets or for research and development required to be capitalized in accordance with Generally Accepted Accounting Principles, other than capitalized leases with respect to an interest in real property for the purpose of conducting a parking operation and any expenditures made (whether with respect to payment of the purchase price or otherwise) in connection with the making of a Qualified Acquisition. "CHANGE OF CONTROL" means FUMI (or any successor thereto continuing from any amalgamation, merger or other reorganization thereof) ceasing to beneficially own, directly or indirectly, sufficient issued and outstanding securities in the capital of either the Borrower or Guarantor to give it effective voting control over such corporation. "CLAIM" means any claim of any nature whatsoever, including any demand, liability, obligation, cause of action, suit, proceeding, judgment, award, assessment and reassessment. "CLOSING DATE" means April 17, 1997. "COLLATERAL" means the Assets in respect of which any Lender has or will have a Security Interest pursuant to a Security Document. "COMMITMENT" means, at any time, the Term Commitment, the Acquisition 10 - 5 - Commitment and the Operating Commitment. "COMPLIANCE CERTIFICATE" means a certificate of the Borrower signed on its behalf by its chief financial officer, or any other officer acceptable to the Agent substantially in the form of Schedule 16. "CONNECTED AGREEMENTS" means all Security Documents and other agreements, certificates and instruments delivered or given pursuant to or in connection with this Agreement; and "Connected Agreement" means any one of such Security Documents, agreements, certificates or other instruments. "CONSOLIDATED DEPRECIATION AND AMORTIZATION EXPENSE" means, for any period of months, the depreciation and amortization expense of the Borrower, the Guarantor and their respective Consolidated Subsidiaries determined in accordance with Generally Accepted Accounting Principles. "CONSOLIDATED EBITDA" means, for any period of months, the Consolidated Net Income of the Borrower, the Guarantor and their respective Consolidated Subsidiaries (or with respect to the definition of Target EBITDA, the relevant target entity mutatis mutandis) increased by the sum of (i) Consolidated Interest Charges, (ii) Consolidated Income Tax Expense, and (iii) Consolidated Depreciation and Amortization Expense, (in each case, for such period and calculated prior to extraordinary items), and (iv) such out-of-pocket expenses incurred by such entities on a one time basis and which can reasonably be solely attributed to the carrying out of the Transaction. "CONSOLIDATED INCOME TAX EXPENSE" means, for any period of months, the aggregate of all taxes (including deferred taxes) based on income of the Borrower, the Guarantor and their respective Consolidated Subsidiaries for such period determined in accordance with Generally Accepted Accounting Principles. "CONSOLIDATED INDEBTEDNESS" means the aggregate of all Debts For Borrowed Money of the Borrower, the Guarantor and their respective Consolidated Subsidiaries less (x) Subordinated Debt, (y) cash and Permitted Marketable Securities on the balance sheet of the latest financial statements delivered to the Agent pursuant to Section 8.1(a), provided that such cash is maintained in an account at BT and such Permitted Marketable Securities are held by the Agent as custodian and (z) such other cash and Permitted Marketable Securities on the balance sheet of the latest financial statements delivered to the Agent pursuant to Section 8.1(a) to the extent that such cash does not exceed an aggregate amount of U.S. $250,000, is not deposited with BT and is held outside of Canada. "CONSOLIDATED INTEREST CHARGES" means, for any period of months for the Borrower, the Guarantor and their respective Consolidated Subsidiaries, the total of (i) all items properly classified as interest expense (whether expended or capitalized) in accordance with Generally Accepted Accounting Principles; and (ii) the imputed interest component for any element of Consolidated Indebtedness (such as capital leases and deferred revenues) which would not be classified as interest expense pursuant to Generally Accepted Accounting Principles, calculated using an interest rate equal to the then prevailing Canadian Prime Rate, in each case for such period, provided that, notwithstanding the foregoing, with respect to the FUR Subordinated Debt no interest will be included in this calculation. "CONSOLIDATED NET INCOME" means, for any period of months, the net income (loss) of the Borrower, the Guarantor and their respective Consolidated 11 - 6 - Subsidiaries determined in accordance with Generally Accepted Accounting Principles but excluding (i) any gain or loss arising from the sale of capital assets; (ii) any gain or loss arising from any write-up or write-down of assets; (iii) earnings of any other Person, substantially all of the assets of which have been acquired by the Borrower, the Guarantor or a Consolidated Subsidiary in any manner, to the extent that such earnings were realized by such other Person prior to the date of such acquisition; (iv) net earnings of any Person (other than a Consolidated Subsidiary) in which the Borrower, the Guarantor or a Consolidated Subsidiary has an ownership interest, to the extent that such earnings have not actually been received by the Borrower, the Guarantor or such Consolidated Subsidiary in the form of cash distributions; (v) the earnings of any Person to which assets of the Borrower, the Guarantor or a Consolidated Subsidiary have been sold, transferred or disposed of or into which the Borrower, the Guarantor or a Consolidated Subsidiary shall have merged, to the extent that such earnings arose prior to the date of such transactions; and (vi) any gain arising from the disposition of any securities of the Borrower, the Guarantor or a Consolidated Subsidiary. "CONSOLIDATED NET WORTH" means, at any time, with respect to any Person and its Consolidated Subsidiaries, the aggregate of (i) the total shareholders' equity determined as of such time in accordance with Generally Accepted Accounting Principles; plus (ii) the FUR Subordinated Debt; where shareholders equity for greater certainty and without duplication includes any shares in the capital of such Person or its Subsidiaries which are redeemable at the option of the holder in accordance with their terms; provided, however that the Borrower hereby acknowledges that Section 8.2(h) contains a restriction with respect to the redemption of shares by the Borrower. "CONSOLIDATED PARKING CONTRACTS" means, at any time, with respect to the Borrower, the Guarantor and their respective Consolidated Subsidiaries, the aggregate of (i) the total number of existing contracts and leases which are in full force and effect for the management or operation of parking lots or parking garages; and (ii) the number of parking lots or parking garages operated on properties owned by the Borrower, the Guarantor and their respective Consolidated Subsidiaries. "CONSOLIDATED SUBSIDIARY" means, at any date, in respect of any Person, a Subsidiary of such Person which is or should be consolidated with such Person in its consolidated financial statements prepared as of such date. "CONTINUING REPRESENTATIONS" means, collectively, the representations and warranties contained in Section 7.1(c), (f), (h), (j)(B), (u), (w), (x), (y), (aa), (ab), (ac), (ad) and (af). "CREDIT DOCUMENTS" means this Agreement, the Original Credit Agreement, the Drafts, the Bankers' Acceptances, the BA Equivalent Notes, the Security Documents, the Hedging Agreements, the Fee Letters and all other Connected Agreements. "CREDIT FACILITIES" means, collectively, the Term Facility, the Acquisition Facility and the Operating Facility. "DEBT" of any Person means (i) all indebtedness of such Person for borrowed money (even though the rights and remedies of the holder of such indebtedness in the event of default may be limited to the foreclosure or sale of specific property), including borrowings of commodities, bankers' acceptances, letters of credit or letters of guarantee (except for letters of 12 - 7 - guarantee issued by the Borrower in the normal course of the Business which secure the performance of certain obligations of the Borrower or any of its Subsidiaries, as the case may be, as lessee under certain Leases and/or management contracts); (ii) all indebtedness of such Person for the deferred purchase price of property or services other than for goods and services purchased in the ordinary course of business; (iii) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or Lender under such agreement in the event of default are limited to repossession or sale of such property); (iv) all current liabilities of such Person represented by a note, bond, debenture or other evidence of Debt; (v) all obligations under leases which have been or should be, in accordance with Generally Accepted Accounting Principles, recorded as capital leases in respect of which such Person is liable as lessee; and (vi) all Debt Guaranteed by such Person. "DEBT FOR BORROWED MONEY" of any Person means (without duplication) (i) all indebtedness of such Person for borrowed money, including bankers' acceptances, letters of credit or letters of guarantee (except for letters of guarantee issued by the Borrower to landlords in the normal course of business which secure the performance of certain obligations of the Borrower or any of its Subsidiaries, as the case may be as lessee under certain Leases and/or Management Contracts); (ii) all indebtedness of such Person for the deferred purchase price of property or services other than for goods and services purchased in the ordinary course of business; (iii) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or Lender under such agreement in the event of default are limited to repossession or sale of such property); (iv) all current liabilities of such Person represented by a note, bond, debenture or other evidence of Debt; and (v) all obligations under leases which have been or should be, in accordance with Generally Accepted Accounting Principles, recorded as capital leases in respect of which such Person is liable as lessee. "DEBT GUARANTEED" by any Person means all Debt of the kinds referred to in (i) through (v) of the definition of Debt which is directly or indirectly guaranteed by such Person or which such Person has agreed (contingently or otherwise) to purchase or otherwise acquire, or in respect of which such Person has otherwise assured a creditor or other Person against Loss. "DEBT REPAYMENT AMOUNT" means, as applicable, an optional prepayment of the Term Facility, an optional prepayment of the Acquisition Facility or an optional permanent reduction of any Letter of Credit issued under the Operating Facility. "DEFAULT" means an event which, with the giving of notice or passage of time, or both, would constitute an Event of Default. "DISTRIBUTION" means (i) any dividend or other distribution on issued shares of the Borrower, the Guarantor or any of their respective Subsidiaries; (ii) the purchase, redemption or retirement of any issued shares of the Borrower, the Guarantor or any of their respective Subsidiaries redeemed or purchased by the Borrower, the Guarantor or any such Subsidiary, as the case may be, or any payments made under any employee stock option agreement; (iii) any consulting fee, management fee or management bonus paid or payable to any director, officer, shareholder or Affiliate of the Borrower, the Guarantor or any of their respective Subsidiaries or any Person not dealing at Arm's Length 13 - 8 - with the Borrower, the Guarantor or any of their respective Subsidiaries or their respective directors, officers, shareholders or Affiliates; or (iv) any payment on account of any principal and interest on any loans or advances owing at any time by the Borrower, the Guarantor or any of their respective Subsidiaries to any of their respective directors, officers, shareholders or Affiliates. "DRAFT" means at any time a blank bill of exchange, within the meaning of the Bills of Exchange Act (Canada), drawn by the Borrower on a Lender or any other Person and bearing such distinguishing letters and numbers as such Lender or such Person may determine, but which at such time has not been completed or accepted by such Lender or such Person. "DRAWING" means (i) the creation and purchase of Bankers' Acceptances by a Lender or by any other Person pursuant to Article 4; or (ii) the purchase of completed Drafts by a Lender or by any other Person pursuant to Article 4. "DRAWING DATE" means any Business Day fixed pursuant to Section 4.3 for a Drawing . "DRAWING FEE" means, with respect to each Draft or Bankers' Acceptance drawn by the Borrower hereunder and purchased by any Person on any Drawing Date, an amount equal to 1.75% multiplied by the aggregate Face Amount of such Draft, calculated on the basis of the term to maturity of such Draft and a 365/366 day year. "DRAWING NOTICE" has the meaning specified in Section 4.3(1). "DRAWING PURCHASE PRICE" means, in respect of Bankers' Acceptances or Drafts to be purchased by a Lender or any other Person, the difference between (i) the result (rounded to the nearest whole cent, with one-half of one cent being rounded up) obtained by dividing the aggregate Face Amount of such Bankers' Acceptances or Drafts by the sum of one plus the product of (x) the Reference Discount Rate multiplied by (y) a fraction the numerator of which is the number of days in the term of maturity of such Bankers' Acceptances or Drafts, as the case may be, and the denominator of which is 365; and (ii) the applicable aggregate Drawing Fee. "ENCUMBRANCES" means liens, charges, mortgages, pledges, Security Interests, adverse claims, defects of title, restrictions, deposit arrangements, voting trusts, rights of set-off, any other rights of third parties relating to anti property and any other encumbrances of any kind. "ENVIRONMENTAL LAWS" means all applicable Laws relating to the environment, occupational health and safety matters or conditions, Hazardous Substances, pollution or protection of the environment. "ENVIRONMENTAL LIABILITIES AND COSTS" means all Losses and Claims imposed by, under or pursuant to Environmental Laws or otherwise relating to any environmental condition, fact or circumstance, including all Losses and Claims related to Remedial Actions and all reasonable fees, disbursements and expenses of counsel, experts, personnel and consultants. "ENVIRONMENTAL NOTICE" means, with respect to any Person, any claim, citation, directive, request for information, statement of claim, notice of investigation, letter or other written communication, from any Governmental Entity in connection with any violation or alleged violation of Environmental 14 - 8 - Laws. "ENVIRONMENTAL PERMITS" includes all permits, certificates, approvals, registrations and licences issued by any Governmental Entity to the Borrower, the Guarantor or any of their respective Subsidiaries or to the Business pursuant to Environmental Laws and relating to or required for the operation of the Business or the use of the Owned Properties, Leased Properties or other Assets. "ERISA" means the Employee Retirement Income Security Act (1974) and any amendments thereto and applicable regulations promulgated thereunder. "EVENT OF DEFAULT" has the meaning specified in Section 9.1. "EXCESS CASH FLOW" means, for any period, the sum of (i) Consolidated Net Income; (ii) Consolidated Depreciation and Amortization Expense; (iii) deferred income taxes; and (iv) 50% of the net change in Other Non-Cash Items during such period, all as are or would be included in a consolidated statement of changes in financial position of the Borrower, the Guarantor and their respective Consolidated Subsidiaries for such period less the aggregate for such period of (v) all Capital Expenditures made by the Borrower, the Guarantor and their respective Subsidiaries; and (vi) all cash amounts spent to acquire any interest in real property or to purchase any share, other securities or assets permitted in accordance with this Agreement. "EXCLUDED LOAN PARTIES" means Holdco 1, Holdco 2, Impark Management Inc. and Imperial Parking (Asia) Limited. "EXISTING SECURITY INTERESTS" means the Security Interests set forth in Schedule 11. "FACE AMOUNT" means (i) in respect of a Draft, a Bankers' Acceptance or a BA Equivalent Note, as the case may be, the amount payable to the holder thereof on its maturity, and (ii) in respect of a Letter of Credit, the maximum amount which the issuing Person is contingently liable to pay the Beneficiary. "FEE LETTERS" means the letter agreements between the Borrower and the Agent in respect of certain fees and other consideration payable to the Lenders. "FEES" means the fees payable by the Borrower under Section 2.7. "FINANCECO" means 3006302 Nova Scotia Company, a wholly owned subsidiary of FUR, incorporated and existing under the laws of the Province of Nova Scotia, and its permitted successors and assigns. "FINANCIAL QUARTER" means a period of three consecutive months in each Financial Year of the Borrower ending on March 31, June 30, September 30 and December 31, as the case may be, of such year. "FINANCIAL YEAR" means, in relation to the Borrower, its financial year commencing on January 1 of each calendar year and ending on December 31 of that calendar year. "FUMI" means First Union Management Inc. and its successors and permitted assigns. 15 - 10 - "FUR" means First Union Real Estate Equity and Mortgage Investments and its successors and permitted assigns. "FUR SUBORDINATED DEBT" means two separate debt obligations payable by the Borrower and the Guarantor separately to Financeco which are at all times subordinate in right of payment (including the payment of interest thereon) to the payment in full of the Accommodations Outstanding and all other amounts payable hereunder and under the other Credit Documents. "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means, at any time, accounting principles generally accepted in Canada as recommended in the Handbook of the Canadian Institute of Chartered Accountants at the relevant time applied on a consistent basis (except for changes made with the prior written consent of the Agent and approved by the Borrower's independent auditors in accordance with promulgations of the Canadian Institute of Chartered Accountants). "GOVERNMENTAL ENTITY" means any (i) multinational, federal, provincial, state, municipal, local or other government, governmental or public department, central bank, court, commission, board, bureau, agency or instrumentality, domestic or foreign; (ii) any subdivision, agent, commission, board, or authority of any of the foregoing; or (iii) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing. "GUARANTOR" means 504463 N.B. Inc., a corporation incorporated and existing under the laws of the Province of New Brunswick, and its permitted successors and assigns. "GUARANTOR'S BUSINESS" means with respect to the Guarantor and its Subsidiaries, the businesses presently and heretofore carried on by the Guarantor and its Subsidiaries consisting of ancillary and related services such as security, collection and distribution of parking lot and parking garage equipment or as part of the assets acquired directly or indirectly as part of a Qualifying Acquisition. "GUARANTOR'S NOTE PURCHASE AGREEMENT" means a Note Purchase Agreement dated April 17, 1997 executed by the Guarantor and Financeco respecting Cdn.$9,166,666 Senior Subordinated Partial PIK Notes due April 17, 2009. "HAZARDOUS SUBSTANCE" means any substance, waste, liquid, gaseous or solid matter, fuel, micro-organism, sound, vibration, ray, heat, odour, radiation, energy, vector, plasma and organic or inorganic matter, which is or is deemed to be, alone or in any combination, hazardous, hazardous waste, toxic, a pollutant, a deleterious substance, a contaminant or a source of pollution or contamination under any Environmental Law, whether or not such substance or other thing is defined as hazardous under the Environmental Law. "HEDGING AGREEMENTS" means one or more agreements between the Borrower and one or more of the Lenders in the form published by the International Swaps and Derivatives Association Inc. providing for "full two-way payments", with schedules and confirmations relating thereto approved by the Agent and evidencing (i) any interest rate hedge (including any interest rate snap, cap or collar); or (ii) any foreign exchange hedge. "HOLDCO 1" means 3355489 Canada Inc., a corporation incorporated and existing under the laws of Canada and its permitted successors and assigns. 16 - 11 - "HOLDCO 2" means 504308 N.B. Inc., a corporation incorporated and existing under the laws of the Province of New Brunswick and its permitted successors and assigns. "HOSTILE TAKE-OVER BID" means an acquisition which would be considered to be a take-over bid within the meaning of the Securities Act (Ontario) or any other applicable securities legislation, in respect of which the board of directors of the target recommends rejection of the take-over bid. "INTEREST COVERAGE RATIO" means (i) for periods beginning on April 1, 1997 and ending on the last day of each Financial Quarter up to and including the Financial Quarter ended March 31, 1998, the ratio of Annualized Consolidated EBITDA less Annualized Capital Expenditures to Annualized Consolidated Interest Charges; and (ii) for any Financial Quarter after the Financial Quarter ended March 31, 1998, the ratio of Consolidated EBITDA less Capital Expenditures to Consolidated Interest Charges for the twelve month period ending on the last day of such Financial Quarter. "ISSUE" means an issue of a Letter of Credit by BT, Participant or Assignee pursuant to Article 5. "ISSUE DATE" has the meaning specified in Section 5.2(1). "ISSUE NOTICE" has the meaning specified in Section 5.2(1). "LAWS" means all statutes, codes, ordinances, decrees, rules, regulations, municipal by-laws, orders, decisions, rulings or awards, policies, voluntary restraints, guidelines, or any provisions of the foregoing, including general principles of common and civil law and equity, binding on or affecting the Person referred to in the context in which such word is used; and "LAW" means any one of the foregoing. "LEASED PROPERTIES" means the real properties forming the subject matter of the Leases to which the Borrower, the Guarantor or one of the other Additional Loan Parties is a party in connection with the operation of the Borrower's Business or Guarantor's Business, as applicable, including on the date of this Agreement the real properties at the municipal addresses listed on Schedule 10. "LEASES" means the leases and subleases of real property to which each of the Borrower, the Guarantor and the Additional Loan Parties is a party, including on the date of this Agreement the leases and subleases set out on Schedule 10. "LENDER'S ACQUISITION COMMITMENT" means, at any time, the relevant amount designated as such and set forth opposite such Lender's name on the signature pages hereof, as reduced pursuant to Article 2. "LENDER'S OPERATING COMMITMENT" means, at any time, the relevant amount designated as such and set forth opposite such Lender's name on the signature pages hereof, as reduced pursuant to Article 2. "LENDER'S TERM COMMITMENT" means, at any time, the relevant amount designated as such and set forth opposite such Lender's name on the signature pages hereof, as reduced pursuant to Article 2. "LENDERS" mean, collectively the financial institutions set forth on the 17 - 12 - signature pages hereof and any financial institution which from time to time becomes a lender hereunder, and in the singular, any one of them. "LETTER OF CREDIT" means a standby letter of credit issued or to be issued by BT for the account of the Borrower pursuant to Article 5. "LEVERAGE RATIO" means (i) for periods beginning on April 1, 1997 and ending on the last day of each Financial Quarter up to and including the Financial Quarter ended March 31, 1998, the ratio of Consolidated Indebtedness to Annualized Consolidated EBITDA; and (ii) for any Financial Quarter after the Financial Quarter ended March 31, 1998, the ratio of Consolidated Indebtedness to Consolidated EBITDA for the twelve month period ending on the last day of such Financial Quarter; "LOAN YEAR" means a 365 day period commencing on the date of this Agreement, or any anniversary of the date of this Agreement as the context may require, and references to a Loan Year and a number shall mean and refer to that number which such Loan Year is after the date of this Agreement. "LOSS" means any loss or expense whatsoever (other than loss of profits, except to the extent that loss of profits are in connection with breakage costs calculated by the Agent or a Lender in accordance with its usual practices), whether direct or indirect, including expenses, costs, damages, judgments, penalties, fines, charges, claims, demands, liabilities and any and all legal fees and disbursements including, without limitation, preparation and enforcement of applicable documentation and legal advice relating to the Transaction. "MAJORITY LENDERS" means, at any time, Lenders who, taken together, are beneficially entitled to at least 66-2/3% of the aggregate Accommodations Outstanding at such time, or, if there are no Accommodations Outstanding at such time, Lenders whose Commitments, taken together, are at least 66-2/3% of the aggregate amount of the Commitments. "MANAGEMENT CONTRACTS" means the management contracts with respect to the management of parking lots to which the Borrower or an Additional Loan Party is a party, including on the date of this Agreement those listed and described on Schedule 10. "MANAGEMENT PROPERTIES" means the real properties upon which the Borrower or an Additional Loan Party carries on the business of managing parking lots pursuant to the Management Contracts, including on the date of this Agreement the real properties at the municipal addresses listed on Schedule 10. "MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the Business, operations, results of operations, assets, liabilities or financial condition of the Borrower, the Guarantor and their respective Subsidiaries, taken as a whole; (ii) the ability of the Borrower, Guarantor or any other Additional Loan Party to perform its or their respective obligations under any of the Credit Documents; (iii) the ability of the Agent or any of the Lenders to enforce their rights under any of the Credit Documents or realize upon the Collateral; or (iv) the value of the Collateral or the amount which the Agent or the Lenders would be likely to receive (after giving consideration to delays in payment and costs of enforcement) in the liquidation of such Collateral. "MATERIAL AGREEMENTS" has the meaning ascribed thereto in Section 7.1(x). 18 - 13 - "ONEX" means Onex Corporation, a corporation incorporated and existing under the laws of Ontario. "OPERATING COMMITMENT" means, at any time, in respect of the Operating Facility, Cdn. $6,500,000 (as reduced pursuant to Article 2). "OPERATING FACILITY" means the Credit Facility to be made available to the Borrower hereunder for the purposes specified in Section 2.3. "ORIGINAL CREDIT AGREEMENT" means the credit agreement among the Borrower, Canadian Imperial Bank of Commerce, as both Lender and Agent, and Hongkong Bank of Canada dated as of November 13, 1996. "ORIGINAL CREDIT AGREEMENT DEBT" means all indebtedness and liability of the Borrower outstanding pursuant to the Original Credit Agreement. "ORIGINAL CREDIT AGREEMENT SECURITY" means the Security Interests in favour of the Agent or the Lenders, or both, in the assets and properties securing the obligations of the Borrower and the Additional Loan Parties under the Original Credit Agreement or other credit documents delivered pursuant thereto. "OTHER NON-CASH ITEMS" means, collectively, accounts receivable, inventory and trade accounts payable. "OWNED PROPERTIES" means, collectively, the land and premises owned by the Borrower, the Guarantor and their respective Subsidiaries and the Buildings and Fixtures thereon, including on the date of this Agreement the land and premises listed on Schedule 9. "PARTICIPANT" has the meaning specified in Section 11.8(3). "PAYMENT ACCOUNT" means the Canadian Dollar accounts maintained by the Agent at its principal office, the particulars of which the Agent shall, from time to time, notify to the Borrower. "PERMITTED ENCUMBRANCES" means any one or more of the following: (a) Encumbrances for taxes, rates, assessments or governmental charges or levies not at the time due and delinquent or the validity of which is being contested at the time by the Borrower in good faith by proper legal proceedings; (b) Encumbrances resulting from any judgment rendered or Claim filed against the Borrower which the Borrower shall be contesting in good faith by proper legal proceedings; (c) undetermined or inchoate Encumbrances which have not at such time been filed or registered pursuant to Law against the Borrower or which relate to obligations not due or delinquent; (d) Encumbrances affecting real property which are (i) title defects or irregularities of a minor nature; or (ii) restrictions, easements, rights-ofway, servitudes or other similar rights in land (including, without restriction, rights-of-way and servitudes for railways, sewers, drains, gas and oil pipelines, gas and water mains, electric light and power and telephone or telegraph or cable television conduits, poles, wires, cables or other incidental 19 - 14 - equipment) granted to or reserved by other Persons; in each case where such Encumbrances in the aggregate do not materially impair the usefulness of the property for the purposes for which it is held and mortgages of and other Encumbrances against the said easements, rights-of-way, servitudes or other similar rights in real property; (e) the right reserved to or vested in any Governmental Entity by any statutory provision, or by the terms of any lease, license, franchise, grant or permit of the Borrower, to terminate any such lease, license, franchise, grant or permit, or to require annual or other payments as a condition to the continuance thereof; (f) liens or other Encumbrances for the excess of the amount of any past due taxes for which a final assessment has not been received over the amount of such taxes, rates, assessments, charges and levies as estimated and paid by the Borrower; (g) reservations in any original grants from the Crown of any land or interest therein, statutory exceptions to title, and reservations of mineral rights (including coal, oil and natural gas) in any grants from the Crown or from any other predecessors in title; (h) liens and privileges arising out of judgments or awards with respect to which an appeal or proceedings for review is being prosecuted in good faith and by appropriate proceedings and with respect to which there shall have been secured a stay of execution pending the appeal or proceedings for review or for which security acceptable to the Agent has been posted by the Borrower; (i) liens or deposits in connection with bids, tenders, contracts or expropriation proceedings of the Borrower or to secure workers' compensation, unemployment insurance or other similar statutory assessments, or to secure costs of litigation when required by law, and surety or appeal bonds in connection with such litigation; (j) warehouseman's, carriers' or other similar common law liens or privileges, where the action to enforce the same has not proceeded to final judgment, is being defended in good faith by the Borrower and by appropriate proceedings and in respect of which it shall have set aside on its books reserves deemed by it to be adequate therefor; (k) any other liens or privileges or other title irregularities, encroachments or encumbrances of a nature similar to the foregoing which are of a minor nature and will not in the aggregate materially and adversely affect the use of the property for the purposes for which it is held by the Borrower or any of its Subsidiaries; (l) deposits of cash or securities in connection with any liens or privileges referred to in paragraphs (a) and (h) above; (m) assignments of insurance provided to landlords (or their mortgagees) pursuant to the terms of any lease and liens or rights reserved in or exercised under any lease for rent or compliance with the terms of such lease; 20 - 15 - (n) mechanics', workers', repairers' or other like possessory liens, arising in the ordinary course of business for amounts the payment of which is either not delinquent or is being contested in good faith by appropriate proceedings; (o) plans of subdivision, site plans, municipal agreements or restrictive covenants affecting the use to which lands may be put, provided that such covenants are complied with and do not materially detract from the value of the land concerned or materially impair its use in the operation of the Business; (p) rights and interests created by notice registered by any Department of Highways or similar authority with respect to proposed highways and which do not materially detract from the value of the land concerned or materially impair its use in the operation of the Business; (q) zoning and building laws and ordinances and municipal by-laws (including site specific by-laws); (r) lis pendens that may be registered against any real property or interests therein of the Borrower or any of its Subsidiaries in respect of any action or proceeding against the Borrower or any of its Subsidiaries or in which it is a defendant, but with respect to which action or proceeding no judgment, award or attachment against the Borrower or such Subsidiary has been granted or made and which the Borrower or such Subsidiary is defending in good faith and by appropriate proceedings and for which security satisfactory to the Agent has been posted by the Borrower or its Subsidiary, as the case may be; (s) the granting by the Borrower in the ordinary course of its business of any lease, sub-lease, tenancy or right of occupancy to any Person in respect of property owned or leased by the Borrower and dealings by such Persons with their leasehold interests, including any notice thereof or any security interest therein provided that, with respect to any of the foregoing having annual rental payments greater than $50,000, the rights of any such Person shall have been subordinated to the rights of the Lenders under the Security Documents pursuant to a written subordination agreement in form and substance satisfactory to Lender, acting reasonably; (t) any Encumbrance resulting from security given to a utility when required by such utility in connection with the operation of the Business; (u) Encumbrances in favour of the Lenders created by the Security Documents; (v) Encumbrances existing on the date hereof and disclosed in Schedule 11 only to the extent such Encumbrances conform to their description in Schedule 11, and not any extension or renewal or replacement thereof or increase in the amount secured thereby; (w) Purchase Money Mortgages, securing Debt, in an aggregate amount not to exceed $1,000,000; (x) Encumbrances in favour of Financeco, subordinate to the encumbrances referred to in (u) above, given in connection with the 21 - 16 - FUR Subordinated Debt; and (y) other Encumbrances in an aggregate amount not to exceed $50,000. "PERMITTED INDEBTEDNESS" means the Consolidated Indebtedness as specifically described on Schedule 11 and not any extension or renewal or replacement thereof or increase in the amount. "PERMITTED MARKETABLE SECURITIES" means any securities held by the Borrower or any of its Subsidiaries which are publicly traded on a recognized stock exchange and do not represent greater than 5% of the issued and outstanding securities of the issuing corporation and any fixed income securities for which a public market exists. "PERSON" means an individual, partnership, corporation, joint stock company, trust, unincorporated association, joint venture or other entity or Governmental Entity. "PURCHASE MONEY MORTGAGE" means any Security Interest charging property acquired by the Borrower, which is or has been granted or assumed by the Borrower or which arises by operation of Law in favour of the transferor substantially concurrently with and for the purpose of the acquisition of such property, in each case where (i) the principal amount secured by such Security Interest is not in excess of the cost to the Borrower of the property acquired; and (ii) such Security Interest extends only to the property acquired. "QUALIFYING ACQUISITION" means (i) an acquisition by the Borrower of 100% of the issued and outstanding shares in the capital of a corporation or an acquisition of all or substantially all of the assets pertaining to a business, where, in each case (x) not less than 90% of the assets or revenues of the corporation or business are located or generated, as the case may be, in Canada or the United States or such other jurisdiction as the Agent may agree, acting reasonably; (y) at least 90% of the business acquired pursuant thereto is comprised of the Borrower's Business; and (z) the ratio of TEV/Target EBITDA of the corporation or business being acquired is not greater than 5.0:1.0, except in the case where new (additional) equity financing or Subordinated Debt is provided to fund the difference between the acquisition price and the TEV which would have been represented by 5.0 x Target EBITDA; (ii) if less than 100% of the issued and outstanding shares in the capital of any corporation is being acquired (x) the conditions set forth under (x), (y) and (z) of (i) above are satisfied; (y) at least 51 % of the issued and outstanding shares in the capital of such corporation is being acquired, except in an arrangement as described in subparagraph (iii) below; and (z) a shareholders' agreement containing the Qualifying Shareholder Arrangements has been or will be entered into by all relevant Persons within 30 days of the Qualifying Acquisition; and in any event, a Qualifying Acquisition does not include a Hostile Take-Over Bid; and (iii) an investment by the Borrower in a joint venture or other private business arrangement with FUR, FUMI or any Subsidiary or Affiliate thereof, to develop businesses involving, or ancillary to, the Borrower's Business, provided that such investment is limited to an amount no greater than Cdn.$2,000,000 and the investment satisfies the tests set out in subparagraph (i) (x) and (y) above. "QUALIFYING SHAREHOLDER ARRANGEMENTS" means a shareholders agreement in respect of a corporation in which the Borrower is acquiring less than 100% of the issued and outstanding shares which agreement shall be in compliance with the provisions set forth in Schedule 17. 22 - 17 - "REFERENCE DISCOUNT RATE" means, in respect of any Bankers' Acceptances or Drafts to be purchased by a Lender or any other Person pursuant to Article 4, (i) which is a Schedule I Bank, the average discount rate on bankers' acceptances as quoted on Reuters' Screen CDOR Page at approximately 10:00 a.m. (Toronto time) on the relevant Drawing Date or (ii) which is a Schedule II Bank, the lesser of (x) their bid rate; and (y) the discount rate calculated in (i) above plus 0.07%. "RELEASE" when used as a verb includes release, spill, leak, emit, deposit, discharge, leach, migrate or dispose into the environment and the term "Release" when used as a noun has a correlative meaning. "RELEVANT REPAYMENT DATE" means, in respect of the repayment of all Accommodations made under (i) the Operating Facility; (ii) the Term Facility; and (iii) the Acquisition Facility, the third anniversary of the Closing Date. "REMEDIAL ACTION" means any action, whether voluntary or compelled, that is reasonably necessary to (i) clean up, remove, treat or in any other way deal with Hazardous Substances in the environment; (ii) prevent any Release of Hazardous Substances where such Release would violate any Environmental Laws or would endanger or threaten to endanger public health or welfare or the environment; or (iii) perform remedial studies, investigations, restoration and post-remedial studies, investigations and monitoring on, about or in connection with any of the Owned Properties, Leased Properties or other Assets. "SCHEDULE I BANK" means a bank under the Bank Act (Canada) listed in Schedule I thereto. "SCHEDULE II BANK" means a bank under the Bank Act (Canada) listed in Schedule II thereto. "SECURITY" means, at any time, the Security Interests in favour of the Agent or the Lenders, or both, in the assets and property securing the obligations of the Borrower, Guarantor and the other Additional Loan Parties under this Agreement or under any of the other Credit Documents. "SECURITY DOCUMENTS" means the agreements and other instruments described in Schedule 5 and any other agreements granting security to the Agent or the Lenders, or both, for the obligations of the Borrower, Guarantor and the other Additional Loan Parties under this Agreement or under any of the other Credit Documents. "SECURITY INTEREST" means any hypothec, mortgage, pledge, security interest, assignment, encumbrance, lien, charge or deposit arrangement or any other arrangement or condition that in substance secures payment or performance of an obligation and includes the interest of a vendor or lessor under any conditional sale agreement, capitalized lease or other title retention agreement. "SECURITY TRUST INDENTURE" entered into by BT, Hongkong Bank of Canada, FUR and Montreal Trust Company of Canada dated as of the 17th day of April, 1997. "SUBORDINATED DEBT" means both (a) the principal amount outstanding at any time of Debt payable by the Borrower, Guarantor or any of their respective Subsidiaries (and for the purposes of a Qualifying Acquisition, the relevant 23 - 18 - target entity) which is non-cash interest bearing and is subordinate and junior in right of payment (including the payment of interest thereon) to the payment in full of the Accommodations Outstanding and all other amounts payable hereunder and under the other Credit Documents, on terms and conditions satisfactory to the Agent, acting reasonably; and (b) the FUR Subordinated Debt. "SUBSIDIARY" means, at any time, as to any Person, any corporation or other Person, if at such time the first mentioned Person owns, directly or indirectly, securities or other ownership interests in such corporation or other Person, having ordinary voting power to elect a majority of the board of directors or persons performing similar functions for such corporation or other Person. "TARGET EBITDA" means, with respect to the target entity of a Qualifying Acquisition, the Consolidated EBITDA for such target entity calculated based on all existing contracts and arrangements of such target entity, adjusted to exclude or include, as the case may be, all specifically identifiable cost items with respect to the rent payments and employee salaries which will be eliminated or added under management by the Borrower and such other cost items as the Agent may approve, acting reasonably, but excluding all one-time or extraordinary cost or revenue items incurred in connection with such Qualifying Acquisition. The above components of Consolidated EBITDA (including all such cost or revenue items) shall be detailed in an officer's certificate of the Borrower delivered to the Agent prior to effecting the Qualifying Acquisition and such components shall be calculated for such purposes with respect to such target entity (instead of with respect to the Borrower, Guarantor and their respective Consolidated Subsidiaries) on a consolidated and annualized basis. "TERM COMMITMENT" means, at any time, in respect of the Term Facility, Cdn. $33,500,000 (as reduced pursuant to Article 2). "TERM FACILITY" means the Credit Facility to be made available to the Borrower hereunder for the purposes set out in Section 2.3. "TEV" means total enterprise value of a Person determined by calculating (i) in respect of an acquisition of shares of such Person, the sum of (x) the implied value of 100% of the outstanding share capital of such Person, calculated based on the per share price paid for the shares of such Person acquired as part of such acquisition, and (y) the market value on the date of such acquisition of the Debt of such Person, less (z) all cash or cash equivalents of such Person; and (ii) in respect of an acquisition of assets of such Person (x) the aggregate purchase price paid for such assets, less (y) without duplication, cash or cash equivalent of such Person acquired by the Borrower as part of a Qualifying Acquisition. "TOTAL REMAINING DEBT" means $50,000,000 less all mandatory prepayments of the Term Facility and the Acquisition Facility made pursuant to Section 2.5. "TRANSACTION" means the transaction as defined in the recitals above. "WORKING CAPITAL LINE" means a working capital line of credit not exceeding $6,500,000 Cdn. provided to the Borrower by a bank from time to time. 2. GENDER AND NUMBER. Any reference in the Credit Documents to gender shall include all genders, and words importing the singular number only 24 - 19 - shall include the plural and vice versa. SECTION 3. HEADINGS. The provisions of a Table of Contents, 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 interpretation of this Agreement. SECTION 4. CURRENCY. All references in the Credit Documents to dollars, unless otherwise specifically indicated, are expressed in Canadian currency. SECTION 5. CERTAIN PHRASES, ETC. In any Credit Document (i) (y) the words "including" and "includes" mean "including (or includes) without limitation" and (z) the phrase "the aggregate of", "the total of", "the sum of", or a phrase of similar meaning means "the aggregate (or total or sum), without duplication, of"; (ii) except where specifically stated otherwise, whether any act, occurrence, conduct, event or state of affairs is "material", "adverse" or "materially adverse" or any grammatical variation of such words, shall be determined by the Agent, acting reasonably; and (iii) in the computation of periods of time from a specified date to a later specified date, unless otherwise expressly stated, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding". SECTION 6. ACCOUNTING TERMS. All accounting terms not specifically defined in this Agreement shall be construed in accordance with Generally Accepted Accounting Principles. SECTION 7. DEEMING PROVISION. Sections in this Agreement may be properly referred to in other documents, including, without limitation, the Credit Documents, as numbers 1.1, 1.2, 1.3, 1.4, etc., or alternatively numbers 1.01, 1.02, 1.03, 1.04, etc. SECTION 8. RATEABLE PORTION OF ACCOMMODATIONS. References in this Agreement to a Lender's rateable portion of tions. Advances, Drawings, Drafts, Banker's Acceptances and Documentary credits or rateable share of payments of principal, interest, Fees or any other amount payable hereunder, shall mean and refer to a rateable portion or share as nearly as may be rateable in the circumstances, as determined in good faith by the Agent. Each such determination by the Agent shall be prima facie evidence of such rateable share. SECTION 9. INCORPORATION OF SCHEDULES. The schedules attached hereto shall, for all purposes hereof, form an integral part of this Agreement. SECTION 10. INTERPRETATION. The parties intend that this Agreement constitutes an amendment and restatement of the Original Credit Agreement. This Agreement supersedes the Original Credit Agreement relating to the subject matter hereof. This shall not constitute a novation or extinguishment of the Original Credit Agreement. The Original Credit Agreement, as amended and restated hereby, shall remain in full force and effect and is hereby ratified and confirmed. The Original Credit 25 - 20 - Agreement is hereby amended and restated in its entirety, on the terms and conditions herein contained. ARTICLE 2 CREDIT FACILITIES SECTION 1. AVAILABILITY. (1) The Borrower acknowledges and confirms that the Original Credit Agreement Debt, which has been advanced prior to the Closing Date, shall continue to be outstanding as part of the Accommodations Outstanding hereunder. No indebtedness of the Borrower outstanding under the Original Credit Agreement is extinguished or discharged hereby and the principal of any Accommodations Outstanding thereunder shall be deemed Accommodations Outstanding hereunder with no extinguishment, discharge or novation. (2) Subject to the next following sentence, each Lender severally agrees, on the terms and conditions of this Agreement, to make Accommodations rateably to the Borrower in accordance with such Lender's Operating Commitment, Lender's Term Commitment and Lender's Acquisition Commitment. Accommodations shall be made available as (i) Advances, pursuant to Article 3; (ii) Drawings pursuant to Article 4; and (iii) Letter of Credit, pursuant to Article 5. (3) The failure of any Lender to make an Accommodation shall not relieve any other Lender of its obligation, if any, in connection with such Accommodation, but no Lender shall be responsible for such other Lender' s failure in respect of such Accommodation. (4) The Agent shall give each Lender prompt notice of (i) any Accommodation Notice received from the Borrower and of each Lender's rateable portion of any Accommodation; and (ii) any other notice received by it hereunder. SECTION 2. COMMITMENTS AND FACILITY LIMITS. (1) The Term Facility shall not revolve and any amount prepaid or repaid under the Term Facility cannot be reborrowed and shall reduce the Term Commitment (and each Lender's Term Commitment), by the amount prepaid or repaid. The Acquisition Facility shall not revolve and any amount prepaid or repaid under the Acquisition Facility cannot be reborrowed and shall reduce the Acquisition Commitment (and each Lender's Acquisition Commitment), by the amount prepaid or repaid. The Operating Facility shall not revolve. (2) A conversion from one Type of Accommodation to another Type of Accommodation shall not constitute a repayment or prepayment hereunder. Subject to the terms of this Agreement, the Borrower shall have the right at all times to determine the manner and proportions in which it will utilize the different Types of Accommodations hereunder. SECTION 3. USE OF PROCEEDS. (1) The Borrower shall use the proceeds of any Accommodation under the Operating Facility for the purpose of (i) supporting its working capital requirements under the Working Capital Line; (ii) financing costs and expenses associated with this Agreement; (iii) the issuance of Letters of Credit in accordance with Article 5; and (iv) making payments in respect of existing Debt. 26 - 21 - (2) The Borrower shall use the proceeds of any Accommodation under the Term Facility for the purpose of (i) making payments in respect of existing Debt; and (ii) financing transaction costs and expenses associated with this Agreement. (3) The Borrower shall use the proceeds of any Accommodation under the Acquisition Facility for the purposes of financing Qualifying Acquisitions. SECTION 4. MANDATORY REPAYMENTS. (1) On the Relevant Repayment Date, the Operating Facility shall terminate, and all amounts owing, including fees, with respect to the Operating Facility shall be immediately due and payable. (2) Subject to Section 2.9(1), the Borrower shall repay, and there shall become due and payable on the Relevant Payment Date, the Accommodations Outstanding under the Term Facility, together with all interest and fees accrued thereon and all other amounts payable hereunder. (3) The Borrower shall repay, and there shall become due and payable on the Relevant Repayment Date, the Accommodations Outstanding under the Acquisition Facility, together with all interest and Fees accrued thereon and all other amounts payable hereunder. (4) The Borrower shall pay or repay on April 16, 2000 all amounts owing hereunder and not previously paid or repaid. SECTION 5. MANDATORY PREPAYMENTS. (1) The Borrower shall prepay Accommodations ments. Outstanding under the Term Facility in accordance with Section 8.2(d)(iv). (2) The Borrower shall prepay annually, upon and together with each delivery of financial statements in accordance with 8.1(a), (i) the Accommodations Outstanding under the Term Facility; and (ii) provided that the Accommodations Outstanding under the Term Facility have been paid in full, the Accommodations Outstanding under the Acquisitions Facility, in each case, in an amount equal to 50% of the Excess Cash Flow in respect of each such Financial Year, subject to a maximum amount of 90% of Borrower Excess Cash Flow in each such Financial Year. SECTION 6. OPTIONAL PREPAYMENTS AND REDUCTIONS OF COMMITMENTS. (1) The Borrower may, subject to the provisions of this Agreement, prepay the Accommodations Outstanding or reduce the respective Lender's Commitments under either the Term Facility or the Acquisition Facility, in each case in whole or rateably in part, upon the number of Business Days' notice to the Agent specified in Schedule 4 stating the proposed date and aggregate principal amount of the prepayment or reduction, and if such notice is given the Borrower shall pay the Lenders in accordance with such notice the amount, if any, by which the Accommodations Outstanding under such Credit Facility exceed the proposed reduced Term Commitment or Acquisition Commitment, as the case may be. Each partial prepayment or reduction shall be in an aggregate principal amount of Cdn. $100,000 or an integral multiple thereof. (2) The Borrower may not, pursuant to this Section 2.6, prepay the 27 - 22 - amount of any Drawing, except on the maturity date for the relevant Bankers' Acceptances, Drafts or BA Equivalent Notes. (3) Neither the Acquisition Facility nor the Term Facility is prepayable after October 16, 1999, subject to payments required to be made under Section 2.5. (4) To the extent that optional prepayments are made, and not as mandated under Section 2.5, on or before October 16, 1999, of either the Acquisition Facility or the Term Facility, an additional payment by way of a fee shall be made by the Borrower to the Agent for the account of the appropriate Lender or Lenders at the time of making such prepayment equal to: (a) in the case of a prepayment on or before April 16, 1998, an amount equal to $105,000 Cdn. TIMES the Debt Repayment Amount DIVIDED by the Total Remaining Debt at such time, provided that such calculated amount with respect to all such prepayments shall in no event cumulatively exceed $105,000 Cdn. in aggregate; (b) in the case of a prepayment after April 16, 1998 but on or before April 16, 1999, an amount equal to $120,000 Cdn. TIMES the Debt Repayment Amount DIVIDED by the Total Remaining Debt at such time, provided that such calculated amount with respect to all such prepayments shall in no event cumulatively exceed $120,000 Cdn. in aggregate; (c) in the case of a prepayment after April 16, 1999 but on or before October 16, 1999, an amount equal to 0.55 of 1% per annum of the Debt Repayment Amount calculated for the period from the Closing Date to the date of such prepayment, compounded annually. SECTION 7. FEES. (1) The Borrower shall pay to the Agent for the account of the Lenders a standby fee of 0.125% per annum on the unutilized portion of both the Acquisition Facility. (2) The above standby fee shall be calculated daily in Canadian Dollars and shall be payable in Canadian Dollars, monthly in arrears on the first Business Day of each month and on the Relevant Repayment Date. (3) The Borrower shall pay the fees and other consideration payable pursuant to the applicable Fee Letters. SECTION 8. PAYMENTS UNDER THIS AGREEMENT. (1) Unless otherwise expressly provided in this Agreement, the Borrower shall make any payment required to be made by it to the Agent or any Lender by depositing the amount of such payment in the relevant currency to the relevant Payment Account not later than 2:00 p.m. (Toronto time) on the date such payment is due. The Borrower shall make each payment to be made hereunder in respect of Accommodations in Canadian Dollars. The Agent shall cause to be distributed to each Lender, promptly on the date of receipt by the Agent of each payment on account of the Accommodations Outstanding or any other amount due to the Lender hereunder, an amount equal to the amount then due each Lender and, if such distribution is not so made on such date, shall pay interest thereon to such Lender for each day, from the date such amount is received by, the Agent until the date of distribution, at the prevailing interbank rate for late payments. Any amount 28 - 23 - received by the Agent for the account of the Lenders shall be held in trust for the benefit of the Lenders until such distribution. (2) Unless otherwise expressly provided in this Agreement, the Agent shall make any Accommodation or other payment to the Borrower hereunder by crediting the relevant Borrower's Account (or causing of the Borrower's Account to be credited) with the amount of such payment in the relevant currency not later than 1:00 p.m. (Toronto time) on the date such payment is to be made. (3) The Borrower hereby authorizes each Lender, if and to the extent payment owed to such Lender by the Borrower is not made when due hereunder, to charge from time to time any amount so due against any or all of the Borrower's accounts with such Lender. SECTION 9. APPLICATION OF PAYMENTS AND PREPAYMENT. (1) All amounts received by the Agent from or on behalf of the Borrower and not previously applied pursuant to this Agreement shall be applied by the Agent as follows (i) first, in reduction of the Borrower's obligation to pay any unpaid interest accrued on the principal amount of Advances or on any other amount owing hereunder and any Fees which are due and owing; (ii) second, in reduction of the Borrower's obligation to pay any Claims or Losses referred to in Sections 11.6(2), (3) and (4); (iii) third, in reduction of the Borrower's obligation to pay any amounts due and owing on account of any unpaid principal amount of Advances which is due and owing; (iv) fourth, in reduction of the Borrower's obligation to pay any other unpaid Accommodations Outstanding which are due and owing; (v) fifth, in reduction of any other obligation of the Borrower under this Agreement; and (vi) sixth, to the Borrower or such other Persons as may lawfully be entitled to the remainder, or as any court of competent jurisdiction may otherwise direct. SECTION 10. COMPUTATIONS OF INTEREST AND FEES. (1) All computations of interest shall be made by the Agent Fees. taking into account the actual number of days occurring in the period for which such interest is payable pursuant to Section 3.3 and on the basis of a 365/366 day year. (2) All computations of fees shall be made by the Agent on the basis of a 365/366 day year, taking into account the actual number of days (including the first day but excluding the last day) occurring in the period for which such fees are payable, adjusted, in the case of the Fee payable pursuant to Section 2.7, to the date of any reduction in the Acquisition Commitment pursuant to Section 2.6. The difference between any Fee paid by the Borrower prior to the date of any such reduction and the amount of the Fee payable by the Borrower after giving effect to such reduction shall be repaid rateably by the Lenders to the Borrower promptly upon any such reduction. (3) For purposes of the Interest Act (Canada), (i) the principle of deemed reinvestment of interest does not apply to any interest calculation under this Agreement; and (ii) the rates of interest stipulated in this Agreement are intended to be nominal rates and not effective rates or yields. SECTION 11. PAYMENTS ON MATURITY. On the Relevant Payment Date, the Borrower will pay to the Agent for the benefit of the Lenders, in addition to all amounts payable at such time pursuant to this Agreement, an amount by way of fee equal 29 - 24 - to 0.55 of 1% per annum of the aggregate amounts outstanding under all the Credit Facilities for the period from the Closing Date to the Relevant Repayment Date calculated on a daily basis and compounded annually. ARTICLE 3 ADVANCES SECTION 1. THE ADVANCES. (1) Each Lender severally agrees, on the terms and conditions of this Agreement, to make Advances to the Borrower under the Acquisition Facility from time to time on any Business Day. (2) Each Borrowing shall consist of Advances made to the Borrower on the same day rateably by the Lenders. Each Advance shall be in the aggregate minimum amount and in an integral multiple of the amount set forth in Schedule 4. SECTION 2. PROCEDURE FOR BORROWING. (1) Subject to waiver at the discretion of the ing. Agent, each Borrowing shall be made on the number of days prior notice specified in Schedule 4, given not later than 2:00 p.m. (Toronto time) by the Borrower to the Agent. Each notice of a Borrowing (a "Borrowing Notice") shall be in substantially the form of Schedule 1, shall be irrevocable and binding on the Borrower and shall specify (i) the requested date of such Borrowing; (ii) the Credit Facility under which such Borrowing is to be made; and (iii) the aggregate amount of such Borrowing. Upon receipt by the Agent of funds from the Lenders, and fulfilment of the applicable conditions set forth in Article 6, the Agent will make such funds available to the Borrower in accordance with Article 2. SECTION 3. INTEREST ON ADVANCES. (1) The Borrower shall pay interest on the unpaid principal amount of each Canadian Prime Rate Advance made to it from the date of such Canadian Prime Rate Advance until such principal amount shall be repaid in full subject as provided in the next following sentence, at a rate per annum equal at all times to the sum of the Canadian Prime Rate in effect from time to time plus .75 of 1% per annum calculated, on the daily balance, and payable monthly in arrears (i) on the first Business Day of each month in each year; and (ii) when such Canadian Prime Rate Advance becomes due and payable in full. Any amount of principal of or interest on any such Canadian Prime Rate Advance which is not paid when due (whether at stated maturity, by acceleration or otherwise) shall bear interest (both before and after judgment), from the date on which such amount is due until such amount is paid in full, payable on demand, at a rate per annum equal to the sum of the Canadian Prime Rate in effect from time to time and .75 of 1% per annum. 30 - 25 - ARTICLE 4 BANKERS' ACCEPTANCES SECTION 1. ACCEPTANCES AND DRAFTS. (1) Each Lender severally agrees, on the terms and conditions of this Agreement and from time to time on any Business Day prior to the Relevant Repayment Date (i) in the case of a Lender which is willing and able to accept Drafts, to create acceptances ("BANKERS' ACCEPTANCES") by accepting Drafts and to purchase such Bankers' Acceptances in accordance with Section 4.3(2); (ii) in the case of a Lender which is unwilling or unable to accept Drafts, to purchase completed Drafts (which have not and will not be accepted by such Lender or any other Lender or Person) in accordance with Section 4.3(2); (iii) in the case of a Lender which has participated or assigned all or any part of its interest in the Credit Facilities to a Participant or Assignee which is willing and able to accept Drafts, to arrange for the creation of Bankers' Acceptances by such Participant or Assignee and for the purchase of such Bankers' Acceptances by such Participant or Assignee, to the extent of such participation or assignment, in accordance with Section 4.3(2); and (iv) in the case of a Lender which has participated or assigned all or any part of its interest in the Credit Facilities to a Participant or Assignee which is unwilling or unable to accept Drafts, to arrange for the purchase by such Participant or Assignee of completed Drafts (which have not and will not be accepted by such Lender or any other Lender or Person), to the extent of such participation or assignment, in accordance with Section 4.3(2). (2) Each Drawing shall be in a minimum aggregate Face Amount and in an integral multiple of the amount set forth in Schedule 4, and shall consist of the creation and purchase of Bankers' Acceptances or the purchase of Drafts on the same day, in each case for the Drawing Purchase Price, effected or arranged by the Lenders in accordance with Section 4.3 and their respective Lender's Term Commitment and Lender's Acquisition Commitment. (3) If the Agent determines, in good faith, which determination shall be final, conclusive and binding upon the Borrower and the Lenders, that the Bankers' Acceptances to be created and purchased or Drafts to be purchased on any Drawing (upon a conversion or otherwise) will not be created and purchased rateably by the Lenders (or any of their respective Participants or Assignees) in accordance with Sections 4.1(2) and 4.3, then the requested Face Amount of Bankers' Acceptances and Drafts relating to such Drawing shall be reduced to the nearest lesser amount that will permit such rateable sharing and the amount by which the requested Face Amount shall have been so reduced shall be converted or continued, as the case may be, as a Canadian Prime Rate Advance under the Term Facility or the Acquisition Facility, as the case may be. SECTION 2. FORM OF DRAFTS. Each Draft presented by the Borrower (i) shall be in an integral multiple of Cdn. $100,000; (ii) shall be dated the date of the Drawing; and (iii) shall mature and be payable by the Borrower (in common with all other Drafts presented in connection with such Drawing) on a Business Day which occurs approximately 30, 60, 90 or 180 days after the Drawing Date and on or prior to the Relevant Repayment Date and which would not conflict with the repayment schedule set out in Section 2.4. SECTION 3. PROCEDURE FOR DRAWING. (1) Each Drawing shall be made on notice (a ng. "Drawing Notice") given by the Borrower to the Agent not 31 - 26 - later than 2:00 p.m. (Toronto time) on the number of days notice specified in Schedule 4. Each Drawing Notice shall be in substantially the form of Schedule 3, shall be irrevocable and binding on the Borrower and shall specify (i) the Drawing Date; (ii) the Credit Facility under which such Drawing is to be made; (iii) the aggregate Face Amount of Drafts to be created; and (iv) the contract maturity date for such Drafts. (2) Not later than 2:00 p.m. (Toronto time) on an applicable Drawing Date, each Lender shall (i) complete one or more Drafts in accordance with the Drawing Notice, accept such Drafts and purchase the Bankers' Acceptances thereby created for the Drawing Purchase Price; (ii) complete one or more Drafts in accordance with the Drawing Notice and purchase such Drafts for the Drawing Purchase Price; (iii) arrange for a Participant or Assignee to complete one or more Drafts in accordance with the Drawing Notice, to accept such Drafts and to purchase the Bankers' Acceptances thereby created for the Drawing Purchase Price; or (iv) arrange for a Participant or Assignee to complete one or more Drafts in accordance with the Drawing Notice and arrange for such Participant or Assignee to purchase such Drafts for the Drawing Purchase Price. In each case, upon receipt of such Drawing Purchase Price and upon fulfilment of the applicable conditions set forth in Article 6, the Agent shall make such funds available to the Borrower in accordance with Article 2. (3) The Borrower shall, at the request of a Lender, issue one or more non-interest bearing promissory notes (each a "BA EQUIVALENT NOTE"), in such form as such Lender may specify, in a principal amount equal to the Face Amount of, and in exchange for, any unaccepted Drafts which such Lender has purchased or has arranged to have purchased in accordance with Section 4.3(2). (4) Bankers' Acceptances purchased by a Lender, Participant or Assignee hereunder may be held by it for its own account until the contract maturity date or sold by it at any time prior thereto in any relevant market therefor in Canada, in such Person's sole discretion. SECTION 4. PRESIGNED DRAFT FORMS. To enable the Lenders to make Drawings in the manner specified in this Article 4, the Borrower shall supply each Lender with such number of Drafts as such Lenders may reasonably request, duly endorsed and executed on behalf of the Borrower. Each Lender shall exercise such care in the custody and safekeeping of Drafts as it would exercise in the custody and safekeeping of similar property owned by it. Each Lender will, upon request by the Borrower, promptly advise the Borrower of the number and designations, if any, of the uncompleted Drafts then held by it. The signature of any duly authorized officer of the Borrower on a Draft may be mechanically reproduced in facsimile and Drafts and Bankers' Acceptances bearing such facsimile signature shall be binding upon the Borrower as if they had been manually signed by such officer. Notwithstanding that any of the individuals whose manual or facsimile signature appears on any Draft as one of such officers may no longer hold office at the date thereof or at the date of its acceptance by the Lender hereunder or at any time thereafter, any Draft or Bankers' Acceptance so signed shall be valid and binding upon the relevant Borrower. SECTION 5. PAYMENT, CONVERSION OR RENEWAL OF BANKERS' ACCEPTANCES. (1) Upon the maturity of a Bankers' Acceptance, Draft or BA Equivalent Note, the Borrower may (i) elect to issue a replacement Bankers' Acceptance, Draft or BA Equivalent Note by giving a Drawing Notice in accordance with Section 4.3(1); 32 - 27 - (ii) elect to have all or a portion of the Face Amount of such Bankers' Acceptance, Draft or BA Equivalent Note converted to an Advance, by giving a Borrowing Notice in accordance with Section 3.2; or (iii) pay, on or before 2:00 p.m. (local time) on the maturity date for such Bankers' Acceptance, Draft or BA Equivalent Note, an amount in Canadian Dollars equal to the Face Amount of such Bankers' Acceptance, Draft or BA Equivalent Note (notwithstanding that a Lender or any Participant or Assignee may be the holder thereof at maturity). Any such payment shall satisfy the Borrower's obligations under the Bankers' Acceptances to which it relates and the relevant Lender shall thereafter be solely responsible for the payment of such Bankers' Acceptances. (2) If the Borrower fails to pay any Bankers' Acceptance when due, or to issue a replacement Bankers' Acceptance, Draft or BA Equivalent Note in the Face Amount of such Bankers' Acceptance, Draft or BA Equivalent Note pursuant to Section 4.5(1), the unpaid amount due and payable in respect thereof shall be converted, as of such date, and without any necessity for the Borrower to give a Borrowing Notice in accordance with Section 3.2, to a Canadian Prime Rate Advance made by the Lenders rateably under the applicable Credit Facility and shall bear interest calculated and payable as provided in Article 3. SECTION 6. CIRCUMSTANCES MAKING BANKERS' ACCEPTANCES UNAVAILABLE. (1) If a Lender determines in good faith, which determination shall be final, conclusive and binding upon the Borrower, and notifies the Agent and the Borrower that, by reason of circumstances affecting the money market, there is no market for Bankers' Acceptances, then, (a) the right of the Borrower to request a Drawing shall be suspended until such Lender determines that the circumstances causing such suspension no longer exist and such Lender so notifies the Agent and the Borrower; and (b) any Drawing Notice which is outstanding shall be cancelled and the Drawing requested therein shall not be made. (2) The Agent shall promptly notify the Borrower and the Lenders of the suspension of the Borrower's right to request a Drawing and of the termination of any such suspension. ARTICLE 5 LETTERS OF CREDIT SECTION 1. LETTERS OF CREDIT. BT which has an Operating Commitment agrees, on the terms and conditions of this Agreement, to issue (or arrange for a Participant or Assignee to issue) Letters of Credit denominated in Canadian dollars, under the Operating Facility, for the account of the Borrower from time to time on any Business Day prior to the Relevant Repayment Date. SECTION 2. PROCEDURE FOR ISSUE. (1) Each Issue shall be made on notice (an "ISSUE NOTICE") given by the Borrower to the Agent not later than 2:00 p.m. (Toronto time) on the number of days notice specified in Schedule 4. The Issue Notice shall be in substantially the form of Schedule 3A, shall be irrevocable and binding on the Borrower and shall specify (i) the requested date of Issue (the "Issue Date"), (ii) the Face Amount of each Letter of Credit, (iii) the expiration date, and (iv) the name and address of the Beneficiary. The 33 - 28 - Borrower shall not request a maturity date for a Letter of Credit which would be after the Relevant Repayment Date. (2) Not later than 2:00 p.m. (Toronto time) on the Issue Date, BT shall issue (or cause its Participants and Assignees to issue) a Letter of Credit completed in accordance with the Issue Notice in the appropriate form. Upon receipt of the Letter of Credit and upon fulfilment of the conditions set forth in Article 6, the Agent shall deliver the Letters of Credit to or to the order of the Borrower. (3) No Letter of Credit shall require that payment against a conforming draft be made on the same Business Day upon which the draft was presented, unless such presentation is made before 2:00 p.m. (Toronto time) on such Business Day. (4) Prior to the Issue Date, the Borrower shall provide a precise description of the documents and the verbatim text of any certificates to be presented by the Beneficiary which, if presented by the Beneficiary, would require a Lender, Participant or Assignee, as the case may be, to make payment under the Letter of Credit. BT, Participant or Assignee may require changes in any such document or certificate. SECTION 3. FORM OF LETTERS OF CREDIT. Each Letter of Credit (i) shall be dated the Issue Date, (ii) shall have an expiration date on a Business Day which occurs no later than the earlier of (x) one year after the Issue Date, and (y) the Relevant Payment Date; and (iii) shall comply with the definition of Letter of Credit. SECTION 4 USE OF LETTERS OF CREDIT. The Borrower shall use Letters of Credit for the sole purpose of supporting (i) its day to day operating finance requirements, (ii) the Borrower's workers' compensation liabilities or directors' and officers' insurance, (iii) the obligations of third party insurers in any jurisdiction requiring third party insurers, (iv) Debt of the Borrower in respect of industrial revenue or development bonds or financings, or (v) performance, payment, deposit or surety obligations of the Borrower, in any case if required by Law or in accordance with custom and practice in its industry. SECTION 5 REIMBURSEMENTS OF AMOUNTS DRAWN. (1) At or before 2:00 p.m. (Toronto time) on the date specified by a Beneficiary as a drawing date under a Documentary Credit, the Borrower shall pay to the Lenders an amount in same day funds equal to the amount to be drawn by the Beneficiary in Canadian dollars. (2) If the Borrower fails to pay to BT the amount drawn under any Letter of Credit, the unpaid amount due and payable shall, automatically as of such date, and without the necessity for the Borrower to give any Borrowing Notice pursuant to Section 3.2, be deemed to be a Canadian Prime Rate Advance advanced by BT upon the basis set out in Section 3.3 above. SECTION 6 RISK OF LETTERS OF CREDIT. (1) In determining whether to pay under a Letter of Credit, BT, Participant and Assignee shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit. 34 - 29 - (2) The reimbursement obligation of the Borrower under any Letter of Credit shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including (i) any lack of validity or enforceability of a Letter of Credit, (ii) the existence of any claim, set-off, defense or other right which the Borrower may have at any time against a Beneficiary or any transferee of a Letter of Credit, the Lender or any other Person, whether in connection with the Credit Documents, the transactions contemplated therein or any other transaction (including any underlying transaction between the Borrower and the Beneficiary), (iii) any draft, demand, certificate or any other document presented with a Letter of Credit proving to be forged, fraudulent or invalid or any statement in it being untrue or inaccurate, (iv) the existence of any act or omission or any misuse of, a Letter of Credit or misapplication of proceeds by the Beneficiary, including any fraud in any draft, demand, certificate or any other document presented with a Letter of Credit, (v) payment by BT under the Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of the Letter of Credit unless such payment constitutes fraud, gross negligence or wilful misconduct of BT, or (vi) the existence of a Default or Event of Default. (3) BT, Participant and Assignee shall be responsible for (i) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits under it or proceeds of it, in whole or in part, which may prove to be invalid or ineffective for any reason, (ii) errors, omissions, interruptions or delays in transmission or delivery of any messages by mail, telecopy or otherwise, (iii) errors in interpretation of technical terms, (iv) any loss or delay in the transmission of any document required in order to make a drawing, and (v) any consequences arising from causes beyond the control of the Lender, including the acts or omissions, whether rightful or wrongful, of any Governmental Entity. None of the above shall affect, impair, or prevent the vesting of any of the BT's rights or powers under this Agreement. Any action taken or omitted by BT, Participant or Assignee under or in connection with any Letter of Credit or the related certificates, if taken or omitted in good faith, shall not put BT, Participant or Assignee under any resulting liability to the Borrower provided that BT, Participant or Assignee acts in accordance with the standards of reasonable care specified in the UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993 Revision), ICC Publication 500 (or any replacement publication). SECTION 7 FEES. (1) The Borrower shall pay to BT, a Fee equal to .125 of 1% per annum of its Face Amount, for the period during which a Letter of Credit is outstanding. Such Fee shall be calculated daily and payable in advance on the Issue Date in Canadian dollars and shall be non-refundable. (2) The Borrower shall pay to BT a Fee equal to 1.625% per annum for the period during which a Letter of Credit is outstanding. Such Fee shall be calculated, on a 365/366 day year basis based on the daily total utilization by the Borrower of its Working Capital Line to the extent it is supported by a Letter of Credit issued hereunder, and payable in arrears on the 15th day of each month with respect to the immediately preceding calendar month. (3) The Borrower shall pay to BT, upon the issuance, amendment or transfer of each Letter of Credit issued by BT and each drawing made thereunder, BT's standard and prevailing documentary and administrative charges for issuing, amending, transferring or drawing under, as the case may be, 35 - 30 - Letters of Credit of similar amount, term and risk. SECTION 8 REPAYMENTS. (1) If the Borrower shall be required to repay the Accommodations pursuant to Article 2 or Article 9, then the Borrower shall pay to BT, to the extent required in those Articles, an amount equal to BT's, Participant's or Assignee's contingent liability in respect of (i) any outstanding Letter of Credit, and (ii) any Letter of Credit which is the subject matter of any order, judgment, injunction or other such determination (a "JUDICIAL ORDER") restricting payment under and in accordance with such Letter of Credit or extending BT's, Participant's or Assignee's liability under such Letter of Credit beyond its stated expiration date. Payment in respect of each Letter of Credit shall be due in Canadian dollars. (2) BT, Participant or Assignee shall, with respect to any Letter of Credit, upon the later of: (a) the date on which any final and non-appealable order, judgment or other such determination has been rendered or issued either terminating the applicable Judicial Order or permanently enjoining BT, Participant or Assignee from paying under such Letter of Credit; and (b) the earlier of (i) the date on which either (x) the original counterpart of the Letter of Credit is returned to BT, Participant or Assignee for cancellation, or (y) BT, Participant or Assignee is released by the Beneficiary from any further obligations, and (ii) the expiry (to the extent permitted by any applicable Law) of the Letter of Credit, pay to the Borrower an amount equal to the difference between the amount paid to BT, Participant or Assignee pursuant to Section 5.8(1) and the amounts paid by BT, Participant or Assignee under the Letter of Credit. ARTICLE 6 CONDITIONS OF LENDING SECTION 1 CONDITIONS PRECEDENT TO THE INITIAL ACCOMMODATION. The obligation of each Lender to make its initial Accommodation under the Credit Facilities on or after the date of this Amended and Restated Credit Agreement is subject to (i) the conditions precedent in Section 6.2; and (ii) the condition precedent that the Agent and the Lenders shall be satisfied with, or the Borrower and the Additional Loan Parties shall have delivered to the Agent, as the case may be, on or before the day of such initial Accommodation, the following, in form, substance and dated as of a date satisfactory to the Lenders and their counsel, registered, where applicable, as deemed appropriate by such counsel, and in sufficient quantities for each Lender: (a) a certified copy of (i) the charter documents and by-laws of the Borrower and each Additional Loan Party; (ii) the resolutions of the board of directors (or any duly authorized committee thereof) of the Borrower and of each of the Additional Loan Parties approving the borrowing and other matters contemplated by this Agreement and approving the entering into of all other Credit Documents to which it is a party and the completion of all transactions contemplated thereunder; and (iii) all other instruments evidencing necessary 36 - 31 - corporate action of the Borrower and the Additional Loan Parties and of required Authorizations, if any, with respect to such matters; (b) a certificate of an officer of the Borrower and each Additional Loan Party certifying the names and true signatures of its officers authorized to sign this Agreement and the other Credit Documents; (c) a certificate of status, compliance, good standing or like certificate with respect to the Borrower and each Additional Loan Party issued by the appropriate government officials of the jurisdiction of its incorporation and of each jurisdiction in which it owns any material assets or carries on any material business; (d) the Credit Documents; (e) favourable opinions of counsel to the Borrower and each of the Additional Loan Parties in the form and substance satisfactory to the Agent; (f) satisfactory review by the Agent of all corporate searches undertaken against the Borrower and each of the Additional Loan Parties; (g) evidence satisfactory to the Agent as to the shareholdings in the capital of the Borrower; (h) the Agent shall have received payment of all fees and reimburseable expenses to the date hereof; (i) the Agent shall be satisfied, acting reasonably, that no material adverse change in the financial condition, business, operations or otherwise of the Borrower, the Guarantor and their respective Subsidiaries, taken as a whole, has occurred; (j) pro-forma balance sheets of Holdco 1, Holdco 2 and the Guarantor provided under the certificate of an officer of the applicable corporation; (k) the Agent shall be satisfied in its sole judgment that all necessary actions have been taken to complete the Transaction, on terms satisfactory to the Agent, and the recapitalization of the Borrower and various subsidiaries and affiliates and shall be satisfied with the terms and conditions of all applicable documentation including the Ancillary Agreement and the Security Trust Indenture and any other documents entered into by BT in connection with this transaction; (l) satisfaction of the Agent and its legal counsel with the validity and enforceability of the Security Documents; and (m) such other closing documents, instruments and legal opinions in respect to the Transaction or otherwise as the Agent or its counsel may reasonably require. SECTION 2. CONDITIONS PRECEDENT TO ALL ACCOMMODATIONS. (1) The obligation of each Lender to make Accommodations or otherwise give effect to any Accommodation Notice hereunder shall be subject to the conditions precedent that on the date of such Accommodation Notice and Accommodation, and after giving effect thereto and to the application of any proceeds therefrom, (i) in the case of Accommodations (other than conversions or renewals of Drawings under Section 4.5, the Continuing Representations are, 37 - 32 - subject to the next following sentence, true and correct on and as of such date, all as though made (unless such representation relates only to a specified date) on and as of such date; (ii) no event or condition has occurred and is continuing, or would result from such Accommodation or giving effect to such Accommodation Notice, which constitutes a Default or an Event of Default; and (iii) such Accommodation, or otherwise giving effect to such Accommodation Notice, will not violate any applicable Law then in effect. If a Continuing Representation not qualified by a Material Adverse Effect standard is not true and correct for the purposes of this Section 6.2, the condition precedent described in item (i) above shall be deemed to have been satisfied provided that no event or circumstance has arisen subsequent to the Closing Date which would result in such Continuing Representation not being true and correct and which could reasonably be expected to have a Material Adverse Effect on and as of such date, as though made (unless such representation relates only to a specified date) on and as of such date. (2) Each of the giving of any Accommodation Notice by the Borrower and the acceptance by the Borrower of any Accommodation shall be deemed to constitute a representation and warranty by the Borrower that, on the date of such Accommodation Notice or Accommodation, as the case may be, and after giving effect thereto and to the application of any proceeds therefrom, the statements set forth in Section 6.2(1) are true and correct. SECTION 3 ACQUISITION FACILITY. The obligation of the Lenders to make Accommodations under the Acquisition Facility shall, in addition to the conditions precedent set out in Sections 6.1 and 6.2 hereof, be subject to the additional conditions precedent that on or prior to the date of any proposed Qualifying Acquisition: (a) if the proposed Qualifying Acquisition is for the purchase of shares of a corporation representing less than 100% of the issued and outstanding shares of such corporation, the Borrower shall have provided to the Agent a confirmation, signed by an officer acceptable to the Agent, certifying that the Qualifying Shareholder Arrangements are, or within 30 days of the Closing Date of such acquisition, shall be, in place in respect of such corporation and shall deliver to the Agent, as soon as reasonably possible thereafter, a certified copy of such Qualifying Shareholder Arrangements; (b) the Borrower shall have provided to the Agent for the benefit of the Lenders (x) in the case of a proposed acquisition of assets other than shares in the capital of a corporation, a first ranking Security Interest on the assets being acquired subject to Permitted Encumbrances, if any, Encumbrances which may be consented to by the Agent, acting reasonably, and Encumbrances on real property being acquired pursuant to such Qualifying Acquisition which are uneconomic to discharge (provided that the aggregate of the Debt incurred in respect of the Accommodation under the Acquisition Facility used to finance such acquisition and the Debt related to such Encumbrances is not greater than 5.0 x Target EBITDA) and, (y) in the case of a proposed acquisition of assets comprising shares in the capital of a corporation, (i) an unconditional guarantee of the corporation being acquired of all of the obligations of the Borrower under the Credit Documents or, in the case of the acquisition of a corporation incorporated other than under the laws of Canada or under the laws of a province where, in each case, the ability of such corporation to grant a full and unconditional guarantee the obligations of the Borrower under the Credit Documents is restricted, a guarantee of such corporation of the obligations of the Borrower under the Credit Documents to the Lenders limited to a maximum amount which such corporation has the power 38 - 33 - and authority to guarantee; (ii) a first ranking Security Interest securing the obligations of such corporation under such guarantee on all of the assets of the acquired corporation, subject to Permitted Encumbrances, if any, Encumbrances which may be consented to by the Agent, acting reasonably, and Encumbrances on real property being acquired pursuant to such Qualifying Acquisition which is uneconomic to discharge (provided that the aggregate of the Debt incurred in respect of the Accommodation under the Acquisition Facility used to finance such acquisition and the Debt related to such Encumbrances is not greater than 5.0 x Target EBITDA); and (iii) a pledge of such shares, all in form and substance satisfactory to the Agent, acting reasonably in all cases, together with an opinion satisfactory to the Agent, acting reasonably; (c) the Borrower shall have provided a certificate of an officer of the Borrower as contemplated by the definition of Target EBITDA; (d) no Default or Event of Default shall have occurred or be continuing or will result after giving effect to the proposed acquisition, and without limiting the generality of the foregoing, after completion of any proposed acquisition, the Borrower will remain in compliance with the provisions of Section 8.3; (e) the Borrower shall have delivered to the Agent with respect to and as it relates to the Persons involved in the Qualifying Acquisition, the documents set forth in Section 6.1(a), (b) and (c); and (f) the Borrower shall have delivered to the Agent (i) environmental audits as may be reasonably required by the Agent; (ii) landlord consents and acknowledgements for all Leases, other than Leases entered into in connection with the operation of parking lots, in form and substance satisfactory to the Agent, acting reasonably, if any, as may be required by the Agent; and (iii) non-disturbance agreements from any mortgagees registered on title to any real property owned by the corporation, the assets or shares of which are being acquired by the Borrower. SECTION 4. NO WAIVER. The making of an Accommodation or otherwise giving effect to any Accommodation Notice hereunder, without the fulfilment of one or more conditions set forth in Section 6.1, 6.2 or 6.3, shall not constitute a waiver of any such condition and the Agent and the Lenders reserve the right to require fulfilment of such condition in connection with any subsequent Accommodation Notice or Accommodation. ARTICLE 7 REPRESENTATIONS AND WARRANTIES SECTION 1. REPRESENTATIONS AND WARRANTIES. Each of the Borrower and Guarantor represents and warrants with respect to itself and its Subsidiaries to each Lender, acknowledging and confirming that each Lender is relying thereon without independent inquiry in entering into this Agreement and providing Accommodations hereunder, that: (a) INCORPORATION AND QUALIFICATION. Each of the Borrower, Guarantor and the other Additional Loan Parties is a corporation duly 39 - 34 - incorporated and validly existing under the laws of the jurisdictions as set forth in Schedule 18 and is duly qualified, licensed or registered to carry on business under the Laws applicable to it in all jurisdictions in which the nature of its Assets or business makes such qualification necessary except where failure to be so qualified would not have a Material Adverse Effect. (b) CORPORATE POWER. The Borrower, Guarantor and each of the other Additional Loan Parties have all requisite corporate power and authority to (i) own and operate its properties and Assets and to carry on its business as now being conducted by it; and (ii) to enter into and perform its obligations under this Agreement and the other Credit Documents to which it is a party. (c) CONFLICT WITH OTHER INSTRUMENTS. The execution and delivery of the Credit Documents by the Borrower, Guarantor and each other Additional Loan Party which is a party thereto and the performance by the Borrower and each Additional Loan Party of their respective obligations thereunder and compliance with the terms, conditions and provisions thereof, will not (i) conflict with or result in a breach of any of the terms, conditions or provisions of (t) its constating documents or by-laws, (u) any applicable law, rule or regulation having the force of Law where failure to comply would have a Material Adverse Effect, (v) any contractual restriction binding on or affecting it or its properties where failure to comply would have a Material Adverse Effect, or (w) any judgment, injunction, determination or award which is binding on it; or (ii) result in, require or permit (x) the imposition of any Encumbrance (other than a Permitted Encumbrance) in, on or with respect to the properties now owned by it (other than pursuant to the Security Documents), (y) the acceleration of the maturity of any Debt of the Borrower or any Additional Loan Party binding on or affecting it, or (z) any third party to terminate or acquire rights under any Material Agreement. (d) AUTHORIZATION, GOVERNMENTAL APPROVALS, ETC. The execution and delivery of each of the Credit Documents by the Borrower, Guarantor and each other Additional Loan Party which is a party thereto and the performance by the Borrower, Guarantor and each other Additional Loan Party of their respective obligations hereunder and thereunder have been duly authorized by all necessary corporate action and no Authorization, under any applicable Law, and no registration, qualification, designation, declaration or filing with any Governmental Entity, is or was necessary in connection with the execution of the Credit Documents or the performance thereof, except (i) such Authorizations as have been obtained and are in full force and effect, unamended, at the date hereof and (ii) where failure to obtain such Authorization would not have a Material Adverse Effect. (e) EXECUTION AND BINDING OBLIGATION. This Agreement and the other Credit Documents have been duly executed and delivered by the Borrower, Guarantor and each other Additional Loan Party which is a party thereto and constitute legal, valid and binding obligations of the Borrower, Guarantor and each other Additional Loan Party which is a party thereto, enforceable against it in accordance with their respective terms, subject to (i) applicable Laws relating to bankruptcy, insolvency, reorganization, moratorium or creditors' rights generally; and (ii) the discretion that a court may exercise in the granting of equitable remedies. (f) CONDUCT OF BUSINESS. Since the date of the last audited statements of the Borrower, the Business has been carried on in the ordinary course. 40 - 35 - (g) LOCATION OF BUSINESS. Except as notified to the Agent, the only jurisdictions (or registration districts within such jurisdictions) in which the Borrower or any of its Subsidiaries has any place of business or stores any tangible personal property having a value in excess of $50,000 are as set forth in Schedule 7. (h) AUTHORIZATIONS, ETC. The Borrower, Guarantor and each of their respective Subsidiaries possess all Authorizations of federal, provincial and local governments and regulatory authorities as may be necessary to properly conduct the Business, except where the failure to obtain such Authorizations would not have a Material Adverse Effect. (i) TRADEMARKS, PATENTS, ETC. To the best knowledge of the Borrower and Guarantor, the Borrower, Guarantor and each of their respective Subsidiaries possesses all the trademarks, trade names, copyrights, patents, licences, or rights in any thereof, material to the conduct of the Business as now conducted and presently proposed to be conducted. To the best knowledge of the Borrower and Guarantor, neither it nor any of its Subsidiaries is infringing or, as of the date hereof, is alleged to be infringing on the rights of any Person with respect to any patent, trademark, trade name, copyright (or any application or registration respecting any thereof), discovery, improvement, process, formula, know-how, data, plan, specification, drawing or the like. (j) OWNERSHIP OF PROPERTY. (A) Each of the Borrower, Guarantor and their respective Subsidiaries owns all of its Assets with good and marketable title thereto, free and clear of all Encumbrances, except for Permitted Encumbrances. (B) None of the Borrower, Guarantor or any of their respective Subsidiaries owns any real property other than the Owned Properties and is not bound by any agreement to own or lease any real property except for the Leases and except as disclosed quarterly in the Compliance Certificate. (k) LEASED PROPERTIES. Each Lease in respect of the Leased Properties, as it applies to the Borrower, Guarantor or any of their respective Subsidiaries, is in good standing in all material respects and all material amounts owing thereunder having been paid by the Borrower, Guarantor or their respective Subsidiaries. (I) USE OF LANDS. Except as set forth in Schedules 9 and 10, respectively, the uses to which the Owned Properties and, to the actual knowledge of the Borrower or Guarantor, the Leased Properties have been put are not in material breach of any Environmental Laws or other Laws or official plans. (m) WORK ORDERS. There are no outstanding work orders requiring, in aggregate, expenditures exceeding $50,000 relating to the Owned Properties from or required by any police or fire department, sanitation, health, environmental or factory authorities or from any other federal, provincial or municipal authority, nor are any matters relating to the Owned Properties under discussion with any such departments or authorities relating to work orders which could reasonably be expected to result in expenditures exceeding $50,000. (n) EXPROPRIATION. As at the date hereof, no part of the Owned Properties or the Buildings and Fixtures located thereon has been taken or expropriated by any federal, provincial, municipal or other competent authority nor has any written notice or proceeding in respect thereof been delivered to the Borrower, Guarantor or any of their respective Subsidiaries nor is the 41 - 36 - Borrower or Guarantor aware of any intent or proposal to give any such notice or commence any proceedings. (o) ENCROACHMENTS. Except for Permitted Encumbrances or as specified in Schedule 9, to the knowledge of the Borrower or Guarantor, the Buildings and Fixtures are located entirely within the Owned Properties in conformity with applicable set-back and coverage requirements and no dwellings of abutting owners encroach upon the Owned Properties. (p) COMPLIANCE WITH LAWS. The Borrower, Guarantor and their respective Subsidiaries are in compliance with all applicable Laws, non-compliance with which would result in a Material Adverse Effect. (q) NO DEFAULT. Neither the Borrower, Guarantor nor any of their respective Subsidiaries is in violation of its constating documents or by-laws. (r) NO VIOLATION OF AGREEMENTS. None of the Borrower, Guarantor or any of their respective Subsidiaries is in material default under any indenture, mortgage, deed of trust or other similar instrument to which it is a party or by which it or any of its property may be bound. (s) SUBSIDIARIES, ETC. The only Subsidiaries of the Borrower and Guarantor are set forth in Schedule 12. The only Subsidiaries which have net asset values or revenues, in either case, greater than $50,000 are Additional Loan Parties. Such Subsidiaries are wholly-owned except as set out in Schedule 12, and no other Person has any interest in any of the Subsidiaries that is not disclosed in Schedule 12. Except for those affiliates of the Borrower and Guarantor set forth on Schedule 12 which are not Subsidiaries of the Borrower and Guarantor, neither the Borrower nor Guarantor does owns or holds any shares of, or any other interest in, any other Person other than Permitted Marketable Shares. (t) NO BURDENSOME AGREEMENTS. Neither the Borrower, Guarantor nor any of their respective Subsidiaries is a party to any agreement or instrument or subject to any restriction (including any restriction set forth in its constating documents or by-laws) which could reasonably be expected to have a Material Adverse Effect. (u) NO LITIGATION. As of the closing date, all material actions, suits and proceedings to which the Borrower, Guarantor or any of their respective Subsidiaries are a party and for which the Borrower, Guarantor or any of their Subsidiaries has been served notice are set forth on Schedule 19. Except as disclosed in Schedule 19, there are no actions, suits or proceedings pending, taken or, to the Borrower's or Guarantor's knowledge, threatened, before or by any Person in Canada or elsewhere, whether or not having the force of law, and to the actual knowledge of the Borrower and Guarantor no law or regulation which may affect the Borrower, Guarantor or any of their respective Subsidiaries has been enacted, promulgated or applied which challenges, or to the actual knowledge of the Borrower and Guarantor, has been proposed, which may challenge the validity of the transactions contemplated under the Credit Documents or which could be reasonably anticipated to have a Material Adverse Effect. (v) EXISTING SECURITY INTERESTS. The Existing Security Interests relate solely to (i) Purchase Money Mortgages; (ii) the Owned Properties; and (iii) as otherwise described in Schedule 11. (w) PENSION PLANS. Neither the Borrower, Guarantor nor any of their 42 - 37 - respective Subsidiaries has ever maintained or contributed to any pension plans or beneficial plans including, without limitation, (i) a multi-employer plan as defined under Section 3(37) of ERISA; (ii) a defined benefit plan as defined under Section 3(35) of ERISA; or (iii) a plan to which Section 302 of ERISA or Section 417 of the Internal Revenue Code of the United States of America applies. (x) MATERIAL AGREEMENTS. Neither the Borrower, Guarantor nor any of their respective Subsidiaries is a party or otherwise subject to or bound or affected by any agreement or instrument which is material to the Business, operations, results of operations, assets, liabilities or financial condition of the Borrower, Guarantor or any of their respective Subsidiaries taken as a whole ("MATERIAL AGREEMENT") except as set out in Schedule 13 or as notified to the Agent. Except as set forth in Schedule 13 or as notified to the Agent, all such Material Agreements are in full force and effect, unamended, and none of the Borrower, Guarantor or any such Subsidiary, or to the best of the Borrower's or Guarantor's knowledge, any other party to any Material Agreement is in material default with respect thereto. (y) BOOKS AND RECORDS. All books and records of the Borrower, Guarantor and their respective Subsidiaries have been fully, properly and accurately kept and completed in accordance with Generally Accepted Accounting Principles and there are no material inaccuracies or discrepancies of any kind contained or reflected therein. The Borrower's, Guarantor's and their respective Subsidiaries' records, systems, controls, data or information are not recorded, stored, maintained, operated or otherwise wholly or partly dependent upon or held by any means (including any electronic, mechanical or photographic process, whether computerized or not) which (including all means of access thereto and therefrom) are not under the direct control of the Borrower in all material respects. (z) TAX LIABILITY. Except as disclosed in Schedule 14, the Borrower, Guarantor and each of their respective Subsidiaries has filed all tax returns which are required to be filed and has paid all taxes, interest and penalties, if any, which have become due pursuant to such returns or pursuant to any assessment received by it and adequate provision for payment has been made for taxes not yet due. (aa) CORPORATE STRUCTURE. Except as notified to the Agent, the only shareholders of the Borrower, Guarantor and their respective Subsidiaries are as set forth in Schedule 12. Schedule 12 hereto sets forth the complete particulars at the date hereof of (i) such shareholders; and (ii) the interest of each shareholder in the Borrower, Guarantor and their respective Subsidiaries. Except as described in Schedule 12, none of the shareholders is a party to any shareholders or other agreement relating to the shares owned by such shareholder in the Borrower, Guarantor or any of their respective Subsidiaries. (ab) DISCLOSURE. All (i) forecasts and projections supplied to the Agent by or on behalf of the Borrower and Guarantor were prepared in good faith, adequately disclosed all assumptions relevant thereto and are reasonable estimates (at the date hereof) of the prospects for the Borrower's Business and the Guarantor's Business respectively; and (ii) other written information heretofore supplied to the Agent and the Lenders by or on behalf of the Borrower and Guarantor is true and accurate in all material respects. There is no fact known to the Borrower or Guarantor which has not been fully disclosed to the Agent which has had or is reasonably likely to have a Material Adverse 43 - 38 - Effect. There is no change in the business and affairs of the Borrower, Guarantor or any of their respective Subsidiaries which could reasonably be anticipated to have a Material Adverse Effect since the date of the last financial statements delivered to the Lenders. (ac) COMPLIANCE WITH ENVIRONMENTAL LAWS. To the actual knowledge of the Borrower and Guarantor, respectively, the Borrower's Business and the Guarantor's Business have always been and are now being operated, and the Owned Properties, Leased Properties and other Assets are now and have always been used by the Borrower, Guarantor and their respective Subsidiaries in material compliance with all Environmental Laws. Neither the Borrower, Guarantor nor any of their respective Subsidiaries nor any of their directors or officers, in such capacity, has ever (i) been convicted of any offense for non-compliance with any Environmental Laws; (ii) been fined or otherwise penalized for non-compliance with Environmental Laws; or (iii) settled any prosecution in respect thereof prior to conviction. Without limiting the generality of the foregoing: (1) ENVIRONMENTAL PERMITS. The Borrower, Guarantor and each of their respective Subsidiaries holds, and has conducted and is now conducting its business and undertaking in material compliance with, all material Environmental Permits. All Environmental Permits are (i) listed in Schedule 8; and (ii) valid and in full force and effect and no proceeding is pending or to the actual knowledge of the Borrower, Guarantor or any of their respective Subsidiaries is threatened which will review, make subject to limitations or conditions, suspend, revoke, terminate or limit any of such Environmental Permits. (2) DEALING WITH SUBSTANCES. Neither the Borrower, Guarantor nor any of their respective Subsidiaries has used any of the Owned Properties, Leased Properties or other Assets or permitted them to be used to generate, manufacture, refine, treat, transport, store, handle, recycle, dispose of, deposit, transfer, produce or process Hazardous Substances or wastes, except in material compliance with all Environmental Laws. (3) ENVIRONMENTAL REPORTS. The Borrower, Guarantor and each of their respective Subsidiaries has made all substantive reports required by Environmental Laws to all appropriate Governmental Entities on the happening of all events which are required to be so reported pursuant to Environmental Laws. The Agent and the Lenders have been provided with correct and complete copies of all such substantive reports and correspondence relating thereto. (4) RECORD KEEPING. To the extent responsible for record keeping, the Borrower, Guarantor and each of their respective Subsidiaries has in all material respects maintained all environmental and operating documents and records relating to the Owned Properties, Leased Properties and other Assets and the Business in the manner and for the periods required by all Environmental Laws. (ad) ENVIRONMENTAL LIABILITIES. Neither the Borrower, Guarantor nor any of their respective Subsidiaries has incurred or is incurring any material liability pursuant to any Environmental Law. There is no past or present fact, condition or circumstance relating to the Owned Properties, the other Assets or the Business or, to the Borrower's or Guarantor's actual knowledge, the Leased Properties, that could result in any material liability under any Environmental 44 - 39 - Laws in force as of the date this representation and warranty is given or renewed by the Borrower. (ae) DISCLOSURE REGARDING PROPERTIES. To the actual knowledge of the Borrower or Guarantor, none of the Owned Properties, Leased Properties or other Assets or any other property currently or formerly owned or leased by or under the charge, management or control of the Borrower, Guarantor or any of their respective Subsidiaries or their agents and employees (i) has ever been used by any Person as a landfill site, a waste disposal site, or as a location for the disposal of Hazardous Substances or waste; (ii) has ever had asbestos, PCB waste, radioactive substances or underground storage vessels, active or abandoned, located thereon; or (iii) has ever been subject to a material Release of any Hazardous Substance by, or caused or permitted by, the Borrower, Guarantor or any of their respective Subsidiaries. (af) REMEDIAL ACTION. No Remedial Action is presently being taken by the Borrower, Guarantor or any of their respective Subsidiaries and no Environmental Notice has been received by the Borrower, Guarantor or any of their respective Subsidiaries nor to the actual knowledge of the Borrower or Guarantor are there any grounds which could reasonably be expected to give rise to an Environmental Notice that any Remedial Action is required to be taken by the Borrower, Guarantor or any of their respective Subsidiaries as a condition of continued compliance by the Borrower, Guarantor or any of their respective Subsidiaries with any Environmental Permits or Environmental Laws. SECTION 2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and warranties herein set forth or contained in any certificates or documents delivered to the Agent and the Lenders pursuant hereto shall not merge in or be prejudiced by and shall survive any Accommodation hereunder and shall continue in full force and effect so long as any amounts are owing by the Borrower to the Lenders hereunder. ARTICLE 8 COVENANTS SECTION 1. AFFIRMATIVE COVENANTS. So long as any amount owing hereunder remains unpaid or any Lender has any obligation to the Borrower under this Agreement, and unless consent is given in accordance with Section 11.1 hereof, the Borrower and the Guarantor shall: (a) FINANCIAL REPORTING. Furnish to the Agent (with sufficient copies for each of the Lenders) (i) as soon as practicable and in any event within 45 days after the end of each of the first three Financial Quarters in each Financial Year (y) a consolidated balance sheet of Holdco 1, Holdco 2, the Borrower, Guarantor and their respective Consolidated Subsidiaries as of the end of such Financial Quarter, and (z) the related consolidated statements of earnings and changes in financial position for such Financial Quarter and for the period commencing at the end of the previous Financial Year and ending with the end of such Financial Quarter; in each case (except for the statement of changes in financial position) setting forth in comparative form the figures for the corresponding Financial Quarter and corresponding portion of the previous Financial Year; (ii) as soon as practicable and in any event within 120 days after the end of each Financial Year, a copy of the audited consolidated financial statements of the Borrower, Guarantor and their 45 - 40 - respective Consolidated Subsidiaries for such Financial Year reported on by the Borrower's independent auditors and unaudited consolidated financial statements of Holdco 1 and Holdco 2; (iii) as soon as practicable and in any event no more than 30 days prior to the end of each Financial Year of the Borrower, consolidated financial projections, including the balance sheet, income statement and cash flow statements for each of the next 12 months of the next Financial Year together with the detailed budget for such Financial Year providing supplementary detailed schedules as necessary and required by the Agent; and (iv) together with each such delivery of financial statements, a Compliance Certificate. (b) ENVIRONMENTAL REPORTING. Promptly, and in any event within 10 days of each occurrence, (i) notify the Agent of any proceeding or order before any Governmental Entity requiring the Borrower, Guarantor or their respective Subsidiaries to comply with or take action under any Environmental Laws where such compliance or action requires expenditures in the amount of Cdn. $500,000 or more, the violation thereof involves the possibility of the imposition of a fine or fines aggregating Cdn. $500,000 or more or the closing of any property referred to in Schedule 9 or 10 for a period in excess of 48 hours where such closure would have a Material Adverse Effect; and (ii) notify the Agent of any material occurrence relating to environmental matters that does not require notification under (i) above, together with each delivery of financial statements pursuant to Section 8.1(a). Such material occurrences shall include occurrences where any of the Borrower, Guarantor or their respective Subsidiaries (iii) receives a written notice or claim to the effect that the Borrower, Guarantor or any of their respective Subsidiaries is liable to any Person as a result of the Release or threatened Release of any Hazardous Substance into the environment in, on, under or adjacent to the Owned Properties or Leased Properties; (iv) receives any written notice that the Borrower, Guarantor or any of their respective Subsidiaries is subject to investigation by any Governmental Entity evaluating whether any Remedial Action is needed to respond to the Release or threatened Release of any Hazardous Substance into the environment in, on, under or adjacent to the Owned Properties or Leased Properties; (v) receives any written notice that all or any portion of the Owned Properties or Leased Properties is subject to an order or a Security Interest under or pursuant to any Environmental Law; (vi) receives any written notice of a condition with respect to the Owned Properties or Leased Properties which might reasonably result in a notice of violation by the Borrower, Guarantor or any of their respective Subsidiaries of any Environmental Law; (vii) receives any written notice of the commencement of any judicial or administrative proceeding alleging a violation by the Borrower, Guarantor or any of their Subsidiaries of any Environmental Law with respect to the Owned Properties or Leased Properties; or (viii) undertakes any activities as a result of new or proposed changes to any existing Environmental Law that could have a material adverse effect on the condition of the Borrower, Guarantor or any of their respective Subsidiaries. (c) ADDITIONAL REPORTING REQUIREMENTS. Deliver to the Agent (with sufficient copies for each of the Lenders) (i) as soon as possible, and in any event within five days after the occurrence of each Default or Event of Default, a statement of the chief financial officer or chief operating officer of the Borrower or any other officer acceptable to the Agent setting forth the details of such Default or Event of Default and the action which the Borrower or Guarantor, as the case may be, proposes to take or has taken with respect thereto; (ii) promptly notify the Agent in writing of any default, or event, condition or occurrence which with notice or lapse of time, or both, would constitute a default under any agreement in respect of Debt to which the Borrower, Guarantor or any of their respective Subsidiaries is a party and 46 - 41 - under which the Borrower, the Guarantor or any such Subsidiary owes (contingently or otherwise) at least Cdn. $500,000 (or the equivalent amount in any other currency); (iii) from time to time upon request of the Agent, evidence of the maintenance of all insurance required to be maintained by Section 8.1(m), including such originals or copies as the Agent may request of policies, certificates of insurance, riders and endorsements relating to such insurance and proof of premium payments; (iv) promptly upon the issuance thereof, copies of all notices, reports, press releases, circulars, offering documents and other documents filed with, or delivered to, the British Columbia Securities Commission or to a similar Governmental Entity in any other jurisdiction with respect to the Borrower, Guarantor or any of their respective Subsidiaries; (v) such information as the Agent may require, provided by the lender of the Working Capital Line, to enable the Agent to calculate the Fee referred to in Section 5.7(2) above on a monthly basis; and (vi) such other information respecting the condition or operations, financial or otherwise, of the Business, the Borrower, Guarantor or any of their Subsidiaries as the Agent, on behalf of the Lenders, may from time to time reasonably request. (d) CORPORATE EXISTENCE. Preserve and maintain, and cause each of its Subsidiaries to preserve and maintain, its corporate existence except for Subsidiaries having an asset value and gross revenues, in each case, of less than $50,000. (e) COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its Subsidiaries to comply, with the requirements of all applicable Laws, non-compliance with which would cause a Material Adverse Effect. (f) STATUS OF ACCOUNTS AND COLLATERAL. With respect to the Collateral (i) immediately notify the Agent if any account in excess of Cdn. $100,000 arises out of contracts with any Governmental Entity, and execute any instruments and take any steps reasonably required by the Majority Lenders in order that all moneys due or to become due with respect to any such Account shall be assigned to the Lenders and notice thereof be given to any such Governmental Entity; and (ii) report immediately to the Agent any matters materially adversely affecting the value, enforceability or collectibility of any material portions of the Collateral (g) CREDIT POLICY AND ACCOUNTS RECEIVABLE. Maintain, at all times, credit policies consistent with good business practices, adhere to such policies and collect, and cause each of its Subsidiaries to collect, accounts receivable in the ordinary course of business. (h) CONDUCT OF BUSINESS. Conduct, and cause each of its Subsidiaries to conduct, in each Financial Year, no other business other than the Business. (i) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its and their properties used or useful in the Business in all material aspects in good repair, working order and condition (reasonable wear and tear excepted), and in material compliance with Environmental Laws and, from time to time, make all needed and proper repairs, renewals, replacements, additions and improvements thereto, so that the Business may be properly and advantageously conducted at all times in accordance with prudent business management. (j) AUDITORS. Appoint and maintain as its auditors a firm of national standing. 47 - 42 - (k) PAYMENT OF TAXES AND CLAIMS. Pay and discharge, and cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or upon the Assets or upon its Subsidiaries; and (ii) all lawful Claims which, if unpaid, might by Law become an Encumbrance (other than a Permitted Encumbrance) upon the Assets, except any such tax or Claim which is being contested in good faith and by proper proceedings. (l) VISITATION AND INSPECTION. During business hours and upon reasonable written notice, permit each Lender to visit the properties of the Borrower or any of its Subsidiaries, and to discuss the affairs, finances and accounts of the Borrower or any of its Subsidiaries with the officer appointed as (or performing the functions of) the chief financial officer thereof. (m) MAINTENANCE OF INSURANCE. Maintain, in respect of itself and each of its Subsidiaries, insurance at all times with responsible insurance carriers in such amounts and covering such risks as are usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Borrower or such Subsidiaries, as the case may be, operate, such policies to show the Agent and the Lenders as loss payees or additional insureds, as their interests may appear thereof under a mortgage clause, where applicable, in a form approved by the Insurance Bureau of Canada and as soon as practicable after written request from the Agent, furnish or cause to be furnished evidence thereof to the Agent. Schedule 6 sets forth a complete list of the insurance policies carried with respect to the Borrower and its Subsidiaries as of the Closing Date. (n) FURTHER ASSURANCES. At its cost and expense, upon request of the Agent, duly execute and deliver or cause to be duly executed and delivered to the Agent such further instruments and do and cause to be done such further acts as may be necessary or proper in the reasonable opinion of the Agent to carry out more effectually the provisions and purposes of the Credit Documents. (o) IMPERIAL PARKING (TAIWAN) LIMITED. Cause Imperial Parking (Taiwan) Limited to grant to the Agent a guarantee and security therefor in form and substance satisfactory to the Agent, acting reasonably, and deliver such documentation as the Agent may reasonably request in connection with such guarantee and security if the sale of the shares of Imperial Parking (Taiwan) Limited is not completed prior to May 14, 1997. SECTION 2. NEGATIVE COVENANTS. So long as any amount owing hereunder remains unpaid or any Lender has any obligation to the Borrower under this Agreement and, unless consent is given in accordance with Section 11.1 hereof, neither the Borrower nor Guarantor shall: (a) DEBT. Create, incur, assume or suffer to exist or permit any of its Subsidiaries to create, incur, assume or suffer to exist any Debt other than (i) Debt to the Lenders hereunder; (ii) Debt incurred in respect of one or more Purchase Money Mortgages up to an aggregate outstanding amount, at any time, of Cdn. $1,000,000 (or the equivalent amount in any other currency); (iii) Permitted Indebtedness; (iv) subject to Section 8.2(t), FUR Subordinated Debt; (v) Debt incurred with respect to performance bonds posted, in the ordinary course of the Business; (vi) Debt Guaranteed by the Borrower of the obligations of employees in connection with the purchase of shares in the capital of the Borrower in an amount not to exceed $2,000,000; and (vii) Debt incurred with 48 - 43 - respect to the Working Capital Line up to a maximum of $6,500,000 Cdn. (b) ENCUMBRANCES. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Encumbrance on any of their respective Assets, other than Permitted Encumbrances. (c) MERGERS, ETC. Subject to the next following sentence, enter into, or permit any of its Subsidiaries to enter into, any transaction (whether by way of reconstruction, reorganization, consolidation, amalgamation, winding-up, merger, transfer, sale, lease or otherwise) whereby all or any substantial part of its undertaking or Assets would become the property of any other Person; provided however that the Borrower, Guarantor and any other Additional Loan Party other than Excluded Loan Parties may enter into any such transaction with each other. (d) DISPOSAL OF ASSETS GENERALLY. Sell, exchange, lease, release or abandon or otherwise dispose of, or permit any of its Subsidiaries to sell, exchange, lease, release or abandon or otherwise dispose of any Assets to any Person other than (i) any bona fide sales, exchanges, leases, abandonments or other dispositions in the ordinary course of business, for the purpose of carrying on the Business; (ii) property or Assets which have no material economic value in the Business or are obsolete; (iii) assets having a fair market value of not greater than $100,000 in the aggregate in any Financial Year; and (iv) assets, including shares of Subsidiaries which are not Additional Loan Parties provided that 100% of the net proceeds of such dispositions are applied forthwith as a prepayment of Accommodations Outstanding under the Term Facility. (e) TRANSACTIONS WITH INSIDERS. Directly or indirectly (i) purchase, acquire or lease any material property from; (ii) sell, transfer or lease any material property to; or (iii) permit any of its Subsidiaries to purchase, acquire or lease any material property from, or sell, transfer or lease any material property to, any Person not at Arm's Length with the Borrower, Guarantor or any of their respective Subsidiaries, except at prices and on terms not less favourable to the Borrower, Guarantor or such Subsidiary, as the case may be, than those which would have been obtained in an Arm's Length transaction with an Arm's Length purchaser; provided that the Borrower and its Subsidiaries, may (iv) make financial accommodations for employees in connection with housing loan programs, stock option or purchase plans or other similar employee benefit programs; and (v) in the case of the Borrower or any Additional Loan Party other than Excluded Loan Parties, enter into such transactions with each other, subject to, in each case, the provisions of Section 8.2(i). (f) CHANGE IN BUSINESS. Make, or permit any of its Subsidiaries to make, any material change in the nature of the Business. (g) SHARE CAPITAL. Issue, or permit any of its Subsidiaries to issue, any shares, or any options, warrants or securities convertible into shares, except in the case of the Subsidiaries of the Borrower, to the Borrower or to an Additional Loan Party other than Excluded Loan Parties. (h) DISTRIBUTIONS. Declare, make or pay, or permit any of its Subsidiaries to declare, make or pay, any Distributions, except (i) directors' fees in an aggregate amount not to exceed $30,000; (ii) performance bonuses paid by the Borrower, Guarantor or any of their respective Subsidiaries in the 49 - 44 - ordinary course of business as part of remuneration for services rendered at fair market value; (iii) Distributions by an Additional Loan Party or by the Borrower to the Borrower or to an Additional Loan Party other than Excluded Loan Parties; (iv) payments made under management or employment agreements entered into by the Borrower, Guarantor or any of their respective Subsidiaries with senior employees in the ordinary course of business; (v) loans made to employees as specified in Section 8.2(e)(iv); (vi) non-cash dividend payments to Onex on the Borrower's outstanding non-voting common shares held by Onex made by way of the issue of additional non-voting common shares, provided that such additional shares have the same characteristics as the non-voting common shares held by Onex on the date of this Agreement; and (vii) cash interest payments on account of the FUR Subordinated Debt in amounts permitted pursuant to Section 8.2(t). (i) INVESTMENTS. Make any loans, incur any obligations (contingent or otherwise), or make any investments in any Person or permit any of its Subsidiaries to do the same, except for (i) foreign currency hedges, interest rate swaps or similar interest rate and currency hedging obligations or agreements in the ordinary course of good financial management; (ii) indebtedness and obligations incurred in the ordinary course of business and Debt permitted under Sections 8.2(a); (iii) those investments contemplated to be made under the Acquisition Facility in accordance with Section 2.3(3); (iv) Permitted Marketable Securities; (v) loans permitted under Section 8.2(e) or (h); (vi) any investment which is covered by paragraph (iii) of the "Qualifying Acquisition" definition above; or (vii) inter-company loans to or investments in (x) an Additional Loan Party other than Excluded Loan Parties where, in each case, such Additional Loan Party is not located outside of Canada; (y) an Additional Loan Party other than Excluded Loan Parties where, in each case, such Additional Loan Party is located in the United States, provided that such inter-company loans are evidenced by a promissory note assigned to the Agent as security; and (z) other Consolidated Subsidiaries provided that in connection with any inter-company loans, such Subsidiaries have executed and delivered to the Agent guarantees of all of the obligations of the Borrower under this Agreement and/or the other Credit Documents and security over all of their property and assets together with an opinion with respect thereto satisfactory to the Agent, acting reasonably. (j) LEASE-BACKS. Enter into or permit any of its Subsidiaries to enter into any arrangements, directly or indirectly, with any Person, whereby the Borrower, Guarantor or such Subsidiary, as the case may be, shall sell or transfer any property, whether now owned or hereafter acquired, used or useful in the Business, in connection with the rental or lease of the property so sold or transferred or of other property for substantially the same purpose or purposes as the property so sold or transferred. (k) SUBSIDIARIES. (i) Incorporate or acquire, after the date hereof, any Subsidiaries or commence to carry on the Business, otherwise than through the Borrower and its Subsidiaries existing as of the date hereof, except for the incorporation or acquisition of Subsidiaries in North America or such other jurisdictions as the Agent may agree to, acting reasonably, where in each case, such Subsidiary has executed and delivered to the Agent a guarantee of all of the obligations of the Borrower under this Agreement and/or the other Credit Documents and security over all of its property and assets satisfactory to the Agent and accompanied by opinions satisfactory to the Agent, in each case, acting reasonably, prior to or contemporaneously with such Subsidiary having net asset values or revenues, in either case, greater than $50,000; or (ii) permit any Subsidiary to exist after the date hereof having net asset values or 50 - 45 - revenues, in either case, greater than $50,000 unless such Subsidiary is an Additional Loan Party. (l) MAINTENANCE AND OWNERSHIP OF SUBSIDIARIES. Except as permitted under Section 8.2(d), sell or otherwise dispose of any shares of any of its Subsidiaries or permit any of such Subsidiaries to issue, sell or otherwise dispose of the shares of any other Subsidiary, except to the Borrower or an Additional Loan Party other than Excluded Loan Parties. (m) COMPROMISE OF ACCOUNTS. Compromise or adjust or permit any of its Subsidiaries to compromise or adjust any material Accounts of the Borrower or such Subsidiary (or extend the time for payment thereof) or grant any discounts, allowances or credits thereon, in each case other than in the ordinary course of business. (n) BUSINESS OUTSIDE CERTAIN JURISDICTIONS. Have any place of business or keep or store any tangible properly outside of those jurisdictions (or registration districts within such jurisdictions), as set forth in Schedule 7 opposite the Borrower, Guarantor or the Subsidiary, as the case may be, or permit any of its Subsidiaries to do the same (i) except upon 30 days' written notice thereof to the Agent; and (ii) unless the Borrower, Guarantor or such Subsidiary has done all such acts and things and executed and delivered all such deeds, transfers, assignments and instruments as the Agent may reasonably require for perfecting a Security Interest in such property in favour of the Agent and the Lenders. (o) FINANCIAL YEAR. Change its Financial Year. (p) AMENDMENTS. Allow any amendments to any Material Agreement. (q) PAYMENTS IN ORDINARY COURSE OF BUSINESS, ETC. Place or permit any of its Subsidiaries to place any funds on trust with third parties outside of the ordinary course of business. (r) ACQUISITION OF REAL PROPERTY. Acquire any real property unless such real property will be used for the purposes of conducting parking operations in conjunction with the Business. (s) ONEX COMMON SHARES. Permit any dividends to be paid to Onex in respect of the non-voting common shares issued by the Borrower to Onex other than the dividends in the form of additional non-voting common shares issued by the Borrower and having the same characteristics as the non-voting common shares held by Onex on the date of this Agreement. (t) FUR SUBORDINATED DEBT. Permit any increase in the FUR Subordinated Debt established under the Borrower's Note Purchase Agreement and the Guarantor's Note Purchase Agreement, as applicable, unless the same terms apply to the increased Subordinated Debt and the increase is utilized to make repayments of the Accommodations Outstanding under the Credit Facilities; or make interest payments on the outstanding principal amount of the FUR Subordinated Debt in excess of the required payments set out in the Borrower's Note Purchase Agreement and the Guarantor's Note Purchase Agreement, as applicable, provided that the foregoing is not intended to prevent the accrual of interest on account of the usual operation of the provisions in the Borrower's Note Purchase Agreement and the Guarantor's Note Purchase Agreement. SECTION 3. FINANCIAL COVENANTS. 51 - 46 So long as any amount owing hereunder remains unpaid or any Lender has any obligation to the Borrower under this Agreement, and unless consent is given in accordance with Section 11.1 hereof, the Borrower shall: (a) MAINTENANCE OF NET WORTH. Ensure that, on the last day of each Financial Year, calculated as at such day, the aggregate Consolidated Net Worth of Holdco 1, Holdco 2 and their respective Consolidated Subsidiaries is at least an amount equal to the sum of Cdn. $50,000,000 determined in accordance with Generally Accepted Accounting Principles. (b) MAINTENANCE OF DEBT FOR BORROWED MONEY TO NET WORTH RATIO. Ensure that, as at the last day of each Financial Quarter, the ratio, calculated as at such day, of the aggregate Consolidated Indebtedness to the aggregate Consolidated Tangible Net Worth of Holdco 1, Holdco 2 and their respective Consolidated Subsidiaries is not more than 0.75:1. (c) MAINTENANCE OF INTEREST COVERAGE RATIO. Ensure that Holdco 1, Holdco 2 and their respective Consolidated Subsidiaries have, as at the end of each Financial Quarter, a minimum Interest Coverage Ratio of 2.75:1. (d) MAINTENANCE OF LEVERAGE RATIO. Ensure that Holdco 1, Holdco 2 and their respective Consolidated Subsidiaries have, as at the end of each Financial Quarter a Leverage Ratio of not more than 5.00:1. (e) MAINTENANCE OF PARKING CONTRACTS. Ensure the existence on a consolidated basis on the last day of each Financial Quarter of an aggregate of at least 1,200 Consolidated Parking Contracts. ARTICLE 9 EVENTS OF DEFAULT SECTION 1. EVENTS OF DEFAULT. If any of the following events (each an "Event of Default") shall occur and be continuing: (a) the Borrower shall fail to pay any amount of Accommodations Outstanding when such amount becomes due and payable hereunder and in any case, such failure shall remain unremedied for two Business Days; (b) the Borrower shall fail to pay any interest or Fees or any other amounts payable when the same becomes due and payable hereunder and, in any case, such failure shall remain unremedied for a period of five Business Days; (c) any representation or warranty or certification made or deemed to be made by the Borrower, Guarantor or any other Additional Loan Party or any director or officer thereof in this Agreement or any other Credit Document shall prove to have been incorrect in any material respect when made or deemed to be made; and, if the circumstances giving rise to such incorrect representation or warranty are capable of modification or rectification (such that, thereafter such representation or warranty would be correct), such representation or warranty remains uncorrected for a period of 30 days; 52 - 47 - (d) the Borrower or the Guarantor shall fail to perform, observe or comply with any of the covenants contained in Sections 8.2(c), (g), (h), (k), (l) or Section 8.3; (e) the Borrower or Guarantor shall fail to perform, observe or comply with any of the covenants contained in Sections 8.2(a), (b), (d), (e), (f), (i), (j), (m), (n), (o), (p), (q) and (r), (s) and (t) and such failure shall remain unremedied for 30 days, provided that the circumstances giving rise to such failure are capable of rectification; (f) the Borrower or Guarantor shall fail to perform, observe or comply with any of the covenants contained in Section 8.1 (except Section 8.1(n)) and such failure shall remain unremedied for 30 days; (g) the Borrower, Guarantor or any other Additional Loan Party shall fail to perform or observe any other term, covenant or agreement contained in any Credit Document to which it is a party and such failure shall remain unremedied for 45 days following written notice thereof by the Agent to the Borrower; (h) the Borrower or any of its Subsidiaries shall fail to pay the principal of or premium or interest on any Debt of the Borrower or such Subsidiary, as applicable, (excluding any Debt hereunder) which is outstanding in an aggregate amount exceeding $500,000 Cdn. (or the equivalent amount in any other currency), when such amount becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt or otherwise agreed to in writing by the relevant creditor; or any other event shall occur or condition shall exist, and shall continue after the applicable grace period, if any, specified in any agreement or instrument relating to any such Debt, if the effect of such event is to accelerate, or permit the acceleration of such Debt, or any such Debt shall be declared to be due and payable prior to the stated maturity thereof; (i) the, Guarantor or any of its Subsidiaries shall fail to pay the principal of or premium or interest on any Debt of the Guarantor or such Subsidiary, as applicable, (excluding any Debt hereunder) which is outstanding in an aggregate amount exceeding $1,500,000 Cdn. (or the equivalent amount in any other currency), when such amount becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt or otherwise agreed to in writing by the relevant creditor; or any other event shall occur or condition shall exist, and shall continue after the applicable grace period, if any, specified in any agreement or instrument relating to any such Debt, if the effect of such event is to accelerate, or permit the acceleration of such Debt, or any such Debt shall be declared to be due and payable prior to the stated maturity thereof; (j) the Borrower, Guarantor or any of their respective Subsidiaries shall fail to perform or observe any material term, covenant or agreement contained in any Material Agreement on its part to be 53 - 48 - performed or observed and the effect of such failure is that such material contract is terminated; or any Material Agreement shall be terminated or revoked or permitted to lapse (other than as approved by the Agent), and, in each case, such termination or revocation or lapse has, or is reasonably likely to have, a Material Adverse Effect; (k) the Borrower, Guarantor or any other Additional Loan Party shall (i) become insolvent or generally not pay its debts as such debts become due; (ii) admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; (iii) institute or have instituted against it any proceeding seeking (x) to adjudicate it a bankrupt or insolvent, (y) any liquidation, winding-up, reorganization, arrangement, adjustment, protection, relief or composition of it or its Debts under any Law relating to bankruptcy, insolvency or reorganization or relief of debtors, or (z) the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or for any substantial part of its Assets, and in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 60 days, or any of the actions sought in such proceeding (including the entry of an order for relief against it or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its Assets) shall occur, or (iv) take any corporate action to authorize any of the foregoing actions; (l) any judgment or order for the payment of money in excess of $500,000 shall be rendered against the Borrower, Guarantor or any of their respective Subsidiaries and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order and such proceedings have not been discontinued, dismissed or settled; or (ii) there shall be any period of fifteen consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; (m) the Borrower, Guarantor or any of their respective Subsidiaries incurs any Environmental Liability and Costs, or is subject to a final judgment requiring it to complete any Remedial Action, which in each case will have or may be reasonably expected to have a rectification cost, in excess of $500,000; (n) there shall be any Change of Control; (o) there shall have occurred, in the opinion of the Majority Lenders, acting reasonably, any material adverse change in the Assets, Business, operations, undertaking or condition (financial or otherwise) of the Borrower, Guarantor and their respective Subsidiaries, taken as a whole; or (p) the report of the Borrower's or Guarantor's auditors delivered in connection with the audited consolidated financial statements of the Borrower or the Guarantor, as applicable, in respect of any Financial Year contains a qualification which relates to a matter which materially and adversely affects the financial conditions of the Borrower, Guarantor and their respective Subsidiaries, taken as 54 - 49 - a whole, then, the Agent may, and shall at the request of the Majority Lenders, (i) terminate the Lenders' obligations to make further Accommodations under the Credit Facilities; (ii) (at the same time or at any tired after such termination) declare the Accommodations Outstanding, all interest and Fees accrued thereon and all other amounts payable under this Agreement in respect of the Credit Facilities to be immediately due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; and (iii) with respect to any outstanding Bankers' Acceptances or Letters of Credit, the Borrower shall pay to the Agent for the benefit of the Lenders an amount equal to the aggregate of the Face Amounts of each such outstanding Bankers' Acceptance and equal to BT's contingent liability under each outstanding Letter of Credit which amount shall be held by the Agent until the Lenders have no further obligation under any such Bankers' Acceptance or Letter of Credit, at which time the Agent will pay to the Borrower an amount equal to any excess of the amount so received by the Agent hereunder in respect of the Bankers' Acceptances and Letters of Credit over the total amounts necessary to reimburse the Lenders for amounts paid by them under or in connection with any Bankers' Acceptance or Letter of Credit. SECTION 2. REMEDIES UPON DEMAND AND DEFAULT. (1) Upon declaration in writing to the Borrower that the Accommodations Outstanding under the Credit Facilities are immediately due and payable pursuant to Section 9.1, the Agent shall at the request of, or may with the consent of, the Majority Lenders, commence such legal action or proceedings as it, in its sole discretion, may deem expedient, including the commencement of enforcement proceedings under the Security Documents, or any other security granted by the Borrower or others to the Agent or the Lenders, or both, all without any additional notice, presentation, demand, protest, notice of dishonour, entering into of possession of any of the property or Assets, or any other action, notice of all of which the Borrower hereby expressly waives. (2) The rights and remedies of the Agent and the Lenders hereunder and under the other Credit Documents are cumulative and are in addition to and not in substitution for any other rights or remedies. Nothing contained herein or in the Security Documents or any other security hereafter held by the Agent and the Lenders, with respect to the indebtedness or liability of the Borrower to the Agent and the Lenders, or any part thereof, nor any act or omission of the Agent or the Lenders with respect to the Security Documents, the Security or such other security, shall in any way prejudice or affect the rights, remedies and powers of the Agent and the Lenders hereunder or under the Security Documents or such Security. ARTICLE 10 THE AGENT AND THE LENDERS SECTION 1. AUTHORIZATION AND ACTION. (1) Each Lender hereby irrevocably appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to it by the terms hereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement, the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so 55 - 50 - acting or refraining from acting) upon the joint instructions of the Majority Lenders and such instructions shall be binding upon all Lenders. The Agent shall not be required to take any action pursuant to such instructions or otherwise (i) which exposes it to personal liability; (ii) which is contrary to this Agreement or applicable Law; or (iii) which would require the Agent to become registered to do business in any jurisdiction or would subject the Agent to taxation by reason thereof. (2) The Agent shall have no duties or obligations other than as expressed herein, and without limitation, the Agent does not undertake, and the Lenders relieve the Agent from, any implied duties (including fiduciary duties) and there shall not be construed against the Agent any implied covenants or terms. The Agent may execute or perform, and may delegate the execution and performance of, any of its powers, rights, discretions or duties hereunder and under the Credit Documents through or to any of its own employees or other Persons designated by it. References in any Credit Document to the Agent shall include references to any such Persons to whom the Agent shall have delegated any of its powers, rights, discretions and duties. (3) The Agent shall not be obliged (i) to take or refrain from taking any action or to exercise or to refrain from exercising any right or discretion under this Agreement or the other Credit Documents; or (ii) to incur or subject itself to any cost or expenditure in connection herewith and therewith, unless it is first specifically indemnified or furnished with security by the Lenders on a rateable basis, in form and substance satisfactory to it (which may include further agreements of indemnity or the deposit of funds or security or other suitable measures). SECTION 2. NO LIABILITY. Neither the Agent nor its directors, officers, agents or employees shall be liable to any Lender for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their own gross negligence or wilful misconduct. Without limiting the generality of the foregoing, the Agent (i) may treat any Lender as the payee of amounts attributable to such Lender's Commitment hereunder unless and until the Agent receives an agreement in the form contemplated in Section 11.8; (ii) may consult with legal counsel (including legal counsel for the Borrower), independent accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for the form, substance, accuracy or completeness of any Credit Document or any other documents, information or financial data made available to the Lenders, or for any statements, warranties or representations made in or in connection with this Agreement; (iv) shall not have any duty to ascertain or to inquire as to the existence of a Default or an Event of Default or the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of the Borrower or to inspect the Assets (including the books and records) of the Borrower; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of any of the Credit Documents; and (vi) shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be sent by facsimile transmission, by telex or by hand) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 3. BT BANK OF CANADA. 56 - 51 - With respect to its Lender's Operating Commitment, Lender's Term Commitment and Lender's Acquisition Commitment and the Accommodations made by it, BT has the same rights and powers under this Agreement as any other Lender hereunder and may exercise the same as though it were not the Agent and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated, include it in its individual capacity. BT and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with the Borrower or any Person who may do business with or own securities of the Borrower, all as if it were not the Agent, and without any duty to account therefor to the Lenders. SECTION 4. DISCOUNT RATE DETERMINATIONS. The Agent shall give prompt notice to the Borrower and the Lenders of the interest or discount rate determined by the Agent for an applicable Advance or Drawing Date and the applicable interest and discount rates, if any, furnished by BT for determining the applicable rate. SECTION 5. HOLDING OF SECURITY; SHARING OF PAYMENTS, ETC. (1) The Security Interests and Security constituted by the Security Documents shall be held by the Agent for the rateable benefit of the Lenders, in accordance with their respective terms, and any proceeds from any realization thereof shall be applied to the Accommodations Outstanding, all interest and Fees accrued thereon and all other amounts payable under this Agreement in respect of the Credit Facilities and under the Credit Documents to each Lender rateably based on the amount of Accommodations Outstanding under all of the Credit: Facilities and Credit Documents, all interest and Fees accrued thereon and all other amounts payable under this Agreement and the other Credit Documents owing to each Lender to the aggregate amount of Accommodations Outstanding under all of Credit Facilities and Credit Documents, all interest and Fees accrued thereon and all other amounts payable under this Agreement and the other Credit Documents owing to all of the Lenders (whether such Security is held in the name of the Agent or in the name of any one or more of the Lenders and without regard to any priority to which any Lender ma) otherwise be entitled under applicable Law). (2) Each Lender agrees with the other Lenders that it will not, without the prior consent of the other Lenders, take or obtain any Security Interest on any property of the Borrower to secure the obligations of the Borrower hereunder, except for the benefit of all Lenders or as may otherwise be required by Law. (3) If any Lender obtains any payment (whether voluntary, involuntary or through the exercise of any right of set-off hereunder or the realization of any Security Interest) on account of Accommodations made by it (other than amounts paid pursuant to Section 10.7) in excess of its rateable share of payments on account of the Accommodations made by all the Lenders, such Lender shall account to and pay over to the other Lenders their rateable shares thereof and shall upon request forthwith purchase from the other Lenders such participations in the Accommodations made by such other Lenders as shall be necessary to cause such purchasing Lender to share the excess payment rateably with such other Lenders. If all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and each Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal 57 - 52 - to such Lender's rateable share (according to the proportion that the amount such Lender's required repayment bears to the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Lender so purchasing a participation from another Lender pursuant to this Section 10.5 may, to the fullest extent permitted by Law, exercise all its rights of payment (including any right of set-off hereunder) with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation and the Borrower hereby expressly acknowledges the creation of such right. SECTION 6. LENDER CREDIT DECISIONS. Each Lender acknowledges that it has, independently and without reliance upon the Agent and based on the financial statements of the Borrower and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. SECTION 7. INDEMNIFICATION. Each Lender shall indemnify and save the Agent harmless (to the extent not reimbursed by the Borrower) rateably (according to the amount of its Lender's Term Commitment) from any Claim or Loss suffered by, imposed upon or asserted against the Agent as a result of, in respect of, connected with or arising out of the Credit Documents or any action taken or omitted by the Agent under the Credit Documents, provided that no Lender shall be liable for any portion of such Loss resulting from the gross negligence or wilful misconduct of the Agent in its capacity as Agent. Without limitation of the foregoing, each Lender agrees to reimburse the Agent upon demand for its rateable share of any out-of-pocket expenses (including counsel fees and disbursements) incurred by the Agent in connection with the preparation, execution, administration or enforcement of, or legal advice in respect of rights or responsibilities under, the Credit Documents, to the extent that the Agent is not reimbursed for such expenses by the Borrower. SECTION 8. LIABILITY OF THE LENDERS INTER SE. Each of the Lenders hereby agrees with each of the other Lenders that, except as otherwise herein expressly provided, none of the Lenders has or shall have any duty or obligation, or shall in any way be liable to any of the other Lenders, in connection with the Credit Documents or any action taken or omitted to be taken in, under or in connection herewith. SECTION 9. SUCCESSOR AGENTS. The Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower, such resignation to be effective upon the appointment of a successor Agent. Upon notice of any such resignation the Majority Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Majority Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent's notice of resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be a Lender. Upon the acceptance of any appointment hereunder by a successor Agent, such successor shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent and the retiring Agent shall be 58 - 53 - discharged from its duties and obligations under this Agreement. After any retiring Agent's resignation hereunder, the provisions of this Article 10 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. ARTICLE 11 MISCELLANEOUS SECTION 1. AMENDMENT. (1) Subject to subsections (2) (3), no amendment or waiver of any provision of this Agreement or any of the other Credit Documents, nor consent to any departure by the Borrower or any party thereto from such provisions, shall be effective unless approved by the Majority Lenders. Any amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. (2) No amendment, waiver or consent shall, unless in writing and signed by all the Lenders, (i) increase a Lender's Operating Commitment, Lender's Term Commitment or Lender's Acquisition Commitment or subject any Lender to any additional obligation; (ii) reduce the amount of, or interest on, any Accommodation Outstanding or any Fees hereunder; (iii) postpone any date fixed for any payment of principal of, or interest on, any Accommodation Outstanding or any Fees payable to the Lenders or to the Agent for the account of the Lenders; (iv) permit any release of Collateral having a value in excess of $500,000 under the Security Documents or the Security; (v) change the definition of Majority Lenders; or (viii) amend this Section 11.1(2). (3) No amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Majority Lenders, affect the rights or duties of the Agent under the Credit Documents. SECTION 2. WAIVER. (1) No failure on the part of any Lender or the Agent to exercise, and no delay in exercising, any right under any of the Credit Documents shall operate as a waiver of such right; nor shall any single or partial exercise of any right under any of the Credit Documents preclude any other or further exercise thereof or the exercise of any other right. (2) Except as otherwise expressly provided in this Agreement, the covenants, representations and warranties of the parties contained in this Agreement shall not merge on and shall survive the initial Accommodation hereunder and, notwithstanding such initial Accommodation, or any investigation made by or on behalf of any party, shall continue in full force and effect. The closing of this transaction shall not prejudice any right of one party against any other party in respect of anything done or omitted hereunder or in respect of any right to damages or other remedies. SECTION 3. EVIDENCE OF DEBT AND ACCOMMODATION NOTICES. (1) The indebtedness of the Borrower resulting from all Accommodations under the Credit Facilities shall be evidenced by the records of the Lenders (or the Agent acting on behalf of the Lenders) which shall, absent manifest error, constitute prima facie evidence of such indebtedness. (2) Prior to the receipt of any Accommodation Notice the Agent may act upon the basis of telephonic notice (containing the same information as 59 - 54 - required to be contained in such Accommodation Notice) believed by it in good faith to be from such authorized persons representing the Borrower as shall have been indicated to the Agent prior thereto. In the event of conflict between the Agent's record of the applicable terms of any Accommodation and such Accommodation Notice, the Agent's record shall prevail, absent manifest error. SECTION 4. NOTICES, ETC. Any notice, direction or other instrument required or permitted to be given hereunder shall, except as otherwise permitted hereunder, be in writing and given by delivering it or sending it by telecopy or other similar form of communication addressed, if to the Borrower or Guarantor, to it at: Suite 300, 601 West Cordova Street, Vancouver, British Columbia, V6B lG1, Attention: Chief Executive Officer, Telephone: (604) 681-7311, Telecopier: (604) 681-4098, with a copy to First Union Management Inc., at 55 Public Square, Suite 1910, Cleveland, Ohio, Attention: Legal Department, Telecopier: (216) 781-7364, if to the Agent, to it at: BT Bank of Canada, Royal Bank Plaza, Suite 1700, North Tower, P.O. Box 100, Toronto, Ontario M5J 2J2, Attention: Harvey Naglie, President and Chief Executive Officer, and, if to the Lenders, at the addresses shown on the signature pages hereof. Any such notice, direction or other instrument shall be deemed to have been effectively given, if sent by telecopy or other similar form of telecommunication, on the next Business Day following such transmission or, if delivered, to have been received on the date of such delivery. Any party may change its address for service from time to time by notice given in accordance with the foregoing and any subsequent notice shall be sent to the party at its changed address. SECTION 5. CONFIDENTIALITY. Each Lender agrees to ensure that any financial statement or other information relating to the Business, Assets or condition, financial or otherwise, of the Borrower, Guarantor and their respective Subsidiaries which may be delivered to such Lender pursuant to this Agreement which is not publicly filed or otherwise made available to the public generally will, to the extent permitted by Law, be treated confidentially by such Lender and will not, except with the prior written consent of the Borrower and Guarantor, be distributed or otherwise made available by such Lender to any Person other than such Lender's employees, authorized agents, counsel or other representatives (provided such other representatives have agreed to keep all information confidential) required, in the reasonable opinion of such Lender, to have such information. The Agent and each Lender is hereby authorized to deliver a copy of any financial statement or any other information relating to the Business, Assets or financial condition of the Borrower, Guarantor and its Subsidiaries which may be furnished to it under this Agreement or otherwise, to (i) any actual or potential Participant or Assignee provided written or verbal notice thereof is given to the Borrower and Guarantor and the Participant or Assignee agrees to keep all such information confidential in accordance with the provisions hereof; (ii) at the direction of any court, regulatory body or agency having jurisdiction over such Lender; and (iii) any Affiliate of such Lender required, in the reasonable opinion of such Lender, to have such information, provided such Affiliate agrees to keep all such information confidential in accordance with the provisions hereof. SECTION 6. COSTS, EXPENSES AND INDEMNITY. (1) The Borrower shall, whether or not the transactions hereby contemplated are consummated, indemnify and hold each Lender and the Agent harmless from, and shall pay upon notice by the Agent any amounts required to compensate such Person for, any Claim or Loss 60 - 55 - suffered by, imposed on or asserted against the Agent and each Lender as a result of, in respect of, connected with or arising out of (i) the preparation, execution and delivery of, preservation of rights under, enforcement of, and refinancing, renegotiation or restructuring of, the Credit Documents and any amendment, waiver or consent relating thereto; (ii) reasonable fees associated with any advice of Agent's counsel as to the rights and duties of the Agent and the Lenders with respect to the Transaction and the administration of the Credit Facilities, the Credit Documents or any transaction contemplated thereunder; (iii) a default (whether or not constituting a Default or an Event of Default) by the Borrower or Guarantor hereunder; and (iv) any proceedings brought against the Agent or any of the Lenders due to its entering into this Agreement, performing its obligations under this Agreement, providing any Accommodation or any use of any Accommodation by the Borrower, save and except in each case for the gross negligence, fraud or misconduct of the Agent or any Lender. (2) The Borrower shall indemnify and hold the Lenders and the Agent and each of their respective officers, directors, employees and agents (collectively, the `'Indemnified Parties") harmless from and against any and all Environmental Liabilities and Costs incurred or suffered by, or asserted against, any of the Indemnified Parties (except for Environmental Liabilities and Costs attributable to the gross negligence, fraud or wilful misconduct of the Indemnified Parties) in connection with the Credit Facilities, including all Environmental Liabilities and Costs with respect to or as a direct or indirect result of, (i) the presence on or under or the Release or likely Release of Hazardous Substances from any properties now, or any time heretofore or hereafter, owned, leased, operated or used by the Borrower, Guarantor or any of their respective Subsidiaries; or (ii) the breach by any mortgagor, owner or lessee of such properties in their use of such properties of any Environmental Laws. (3) If, with respect to any Lender (i) any change in Law, or any change in the interpretation or application of any Law occurring or becoming effective after the date hereof; or (ii) compliance by such Lender with any direction, request or requirement (whether or not having the force of Law) of any Governmental Entity made or becoming effective after the date hereof, has the effect of causing Loss to such Lender by (v) increasing the cost to such Lender of performing its obligations under this Agreement or in respect of any Accommodations Outstanding (including the costs of maintaining any capital, reserve or special deposit requirements in connection therewith), (w) requiring such Lender to maintain or allocate any capital or additional capital or affecting its allocation of capital in respect of its obligations under this Agreement or in respect of any Accommodations Outstanding or otherwise reducing the effective return to such Lender under this Agreement or in respect of any Accommodations Outstanding, (x) reducing any amount payable to such Lender under this Agreement or in respect of any Accommodations Outstanding by any amount it deems material, acting reasonably (other than a reduction resulting from a higher rate of income or capital tax relating to such Lender's income or capital in general), (y) causing such Lender to make any payment or to forego any return on, or calculated by reference to, any amount received or receivable by such Lender under this Agreement or in respect of any Accommodations Outstanding, or (z) otherwise reducing the effective return to such Lender under this Agreement or in respect of any Accommodations Outstanding or on its total capital as a result of entering into this Agreement, then such Lender may give written notice to the Borrower specifying the nature of the event giving rise to such Loss and the Borrower may either, (iii) on demand, pay such amounts as such Lender may specify to be necessary to compensate it for any such Loss; or (iv) provided no Loss has yet been suffered by a Lender or the 61 - 56 - Borrower has paid the compensating amount to the Lender, repay the Accommodations Outstanding and terminate such Lender's Commitments. A certificate as to the amount of any such Loss, submitted in good faith by a Lender to the Borrower, shall constitute evidence of such amounts absent manifest error. (4) The Borrower shall pay to each Lender no later than three Business Days after receiving written notice from the Agent any amounts required to compensate such Lender for any Loss suffered or incurred by such Lender as a result of (i) any payment being made (due to acceleration of the maturity of any Accommodation pursuant to Article 9, a mandatory or optional prepayment of principal or otherwise) in respect of a Bankers' Acceptance, Draft, BA Equivalent Note or Letter of Credit or Advance, otherwise than on the maturity or expiration thereof; (ii) the failure of the Borrower to give any notice in the manner and at the times required by this Agreement; (iii) the failure of the Borrower to effect an Accommodation in the manner and at the time specified in any Accommodation Notice; or (iv) the failure of the Borrower to make a payment or a mandatory repayment in the manner at the time specified in this Agreement or any notice given by the Borrower to the Agent in accordance with the terms of this Agreement. A certificate as to the amount of any such Loss submitted in good faith by a Lender to the Borrower shall constitute evidence of such amount. (5) The provisions of this Section 11.6 shall survive the termination of this Agreement and the repayment of all Accommodations Outstanding. The Borrower acknowledges that neither its obligation to indemnify, nor any actual indemnification by it, of any Lender, the Agent or any other Indemnified Party hereunder in respect of such Person's Losses for the legal fees and expenses of such Person's counsel shall in any way affect the confidentiality or privilege relating to any information communicated by such Person to its counsel. SECTION 7. CONFIRMATION OF SECURITY INTERESTS. The Borrower hereby acknowledges and agrees that the Original erests. Credit Agreement Debt is secured by the Original Credit Agreement Security and that the Original Credit Agreement Security continues to be in full force and effect, unamended, and shall stand as continuing collateral security for the Original Credit Agreement Debt, the Accommodations Outstanding and all other liabilities and obligations under the Credit Document. SECTION 8. SUCCESSORS AND ASSIGNS. (1) This Agreement shall become effective when it shall have been executed by the Borrower, the Agent and each Lender and thereafter shall be binding upon and enure to the benefit of the Borrower, the Lenders and the Agent and their respective successors and permitted assigns. (2) The Borrower shall not have the right to assign its rights or obligations hereunder or any interest herein without the prior written consent of all the Lenders, which consent may be arbitrarily withheld. (3) A Lender may, subject to Section 11.8(7), upon prior written consent of the Agent and the Borrower, such consent not to be unreasonably withheld, (i) grant participations in all or any part of its interest in the Credit Facilities to one or more financial institutions (each a "PARTICIPANT"), or (ii) assign all or any part of its interest in the Credit Facilities to one or more financial institutions (each an "ASSIGNEE"), provided that the amount 62 - 57 - of each such participation or assignment shall be equal to or greater than Cdn. $5,000,000 and, to the extent of any such participation or assignment (unless otherwise stated therein), the Participant or Assignee shall have the same rights and benefits and be subject to the same limitations hereunder and under the other Credit Documents as it would have if it was a Lender hereunder, provided that no such Participant or Assignee shall be entitled to receive any greater payment, on a cumulative basis, pursuant to Section 11.6 than the Lender which granted such participation or assignment would have been entitled to receive. (4) The Borrower shall, at the cost and expense of the relevant Lender, provide such certificates, acknowledgments and further assurances in respect of this Agreement and the Credit Facilities as such Lender may reasonably require in connection with any participation or assignment pursuant to this Section 11.8. (5) Except in the case of an Assignee which has delivered an assumption agreement pursuant to Section 11.8(6), prior to the occurrence of a Default or an Event of Default, a Lender granting a participation or making an assignment shall act on behalf of all of its Participants and Assignees in all dealings with the Borrower in respect of the Credit Facilities. (6) A Lender may deliver to the Borrower an agreement substantially in the form of Schedule 20 by which any Assignee of such Lender assumes the obligations and agrees to be bound by all the terms and conditions of this Agreement, all as if such Assignee had been an original party hereto. Upon any such assignment and assumption of the obligations of such Lender by an Assignee, the assigning Lender and the Borrower shall be released from their respective obligations hereunder (to the extent of such assignment and assumption) and thereafter shall not have any liability or obligations to each other to such extent, except in respect of matters arising prior to such assignment. (7) No Lender (in this Section 11.8(7) called the "Assigning Lender") shall grant participations in all or any part of its interest in the Credit Facilities or assign or transfer all or any part of its interest in the Credit Facilities except as follows: (i) any such participation or assignment must be offered in writing to the other Lender (in this section 11.8(7) called the "Receiving Lender"); (ii) if the Receiving Lender gives the Assigning Lender notice within 30 days of receipt of the offer that it will take all but not less than all of such participation or assignment so offered, then the Assigning Lender will assign the appropriate amount of its Credit Facilities to the Receiving Lender on the terms set out herein; (iii) the Assigning Lender is free to grant a participation or assign its interest in the Credit Facilities and the Credit Documents contemplated hereby which is not taken by the Receiving Lender to a financial institution provided any such assignment is in compliance with the provisions hereof. SECTION 9. RIGHT OF SET-OFF. Upon the occurrence and during the continuance of any Event of Default, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the 63 - 58 - account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under any of the Credit Documents, irrespective of whether or not such Lender shall have made any demand under any of the Credit Documents. Each Lender agrees promptly to notify the Borrower after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Lenders under this Section 11.9 are in addition to other rights and remedies (including all other rights of set-off) which the Lenders may have. SECTION 10. ACCOMMODATIONS BY LENDERS. Unless the Agent shall have received notice from a . Lender prior to the date of any Borrowing or Drawing that such Lender will not make available to the Agent such Lender's rateable portion of such Borrowing or Drawing, the Agent may assume that such Lender has made such portion available to the Agent on the date of such Borrowing or Drawing and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent such Lender shall not have made its rateable portion available to the Agent, such Lender shall pay such corresponding amount to the Agent forthwith on demand. If such Lender shall pay such corresponding amount to the Agent, the amount so paid shall constitute such Lender's Advance as part of such Borrowing or Drawing for purposes of this Agreement. If such Lender shall not pay such corresponding amount to the Agent forthwith on demand and such amount shall have been made available to the Borrower, the Borrower shall pay such corresponding amount to the Agent forthwith on demand and the Borrower hereby agrees that any such amount received and so reimbursed would not and will not constitute an Accommodation hereunder. The Agent shall also be entitled to recover from such Lender or the Borrower, as the case may be, interest on such corresponding amount, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent, at a rate per annum equal to the Agent's cost of funds. SECTION 11. RATEABLE PAYMENTS. Unless the Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Lenders hereunder that the Borrower will not make such payment in full, the Agent may assume that the Borrower has made such payment in full on such date and the Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due to such Lender. If and to the extent the Borrower shall not have so made such payment in full, each Lender shall repay to the Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Agent, at a rate per annum equal to the Agent's cost of funds. SECTION 12. INTEREST ON ACCOUNTS. Except as may be expressly provided otherwise in this Agreement, all amounts owed by the Borrower to the Agent and to any of the Lenders, which are not paid when due (whether at stated maturity, on demand, by acceleration or otherwise) shall bear interest (both before and after default and judgment), from the date on which such amount is due until such amount is paid in full, payable on demand, at a rate per annum equal at all times to the sum of the Canadian Prime Rate in effect from time to time plus .75 of 1% per annum. 64 - 59 - SECTION 13. ADVICE. Each Lender has advised the other Lender of the nature and extent of all indebtedness of the Borrower and the Additional Loan Parties to it as at the date of this Agreement and each Lender consents to the nature and extent of such indebtedness. SECTION 14. GOVERNING LAW. This Agreement shall be governed by and interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. 65 - 60 - SECTION 11.15. COUNTERPARTS. This Agreement may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instruments. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. IMPERIAL PARKING LIMITED Per: Authorizing Signing Officer c/s Per: /s/ Authorized Signer Authorizing Signing Officer 504463 N.B. INC. Per: /s/ Authorized Signer Authorizing Signing Officer c/s Per: /s/ Authorized Signer Authorizing Signing Officer COMMITMENTS THE LENDERS BT BANK OF CANADA Operating Commitment: Cdn. $6,500,000 Per: /s/ Authorized Signer Authorizing Signing Officer Term Per: /s/ Authorized Signer Commitment: -------------------------- Cdn. $16,750,000 Authorizing Signing Officer Address: Acquisition Royal Bank Plaza Commitment: Suite 1700, North Tower Cdn. $5,000,000 P.O. Box 100 Toronto, Ontario M5J 2 J2 66 - 61 - Telephone: (416) 865-2222 Telecopier: (416) 865-0779 Attention: Harvey Naglie President and Chief Executive Officer Operating Commitment: NIL HONG KONG BANK OF CANADA Term Commitment: Per: /s/ Authorized Signer Cdn. $16,750,000 Authorizing Signing Office Per: /s/ Authorized Signer Acquisition Authorizing Signing Office Commitment: Cdn. $5,000,000 Address: Suite 200 885 West Georgia Street Vancouver, British Columbia V6C 3G1 Telephone: (604) 641-1811 Telecopier: (604) 641-3095 Attention: Vice President, Commercial Banking
EX-10.B 4 EXHIBIT 10.B 1 Exhibit 10b ANCILLARY AGREEMENT THIS AGREEMENT made the 17th day of April, 1997. B E T W E E N: BT BANK OF CANADA (hereinafter referred to as "BT") OF THE FIRST PART - AND - HONGKONG BANK OF CANADA (hereinafter referred to as "HKB") OF THE SECOND PART - AND - FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS, a business trust existing under the laws of the State of Ohio, (hereinafter referred to as "FUR") OF THE THIRD PART WHEREAS: A. The Borrower, BT and HKB have entered into the Amended and Restated Credit Agreement (as defined below); B. In connection with the Amended and Restated Credit Agreement, the parties hereto have agreed to enter this Agreement and the Security Trust Indenture (as defined below); NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of these respective covenants, agreements, representations, warranties and indemnities of the parties hereinafter contained and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by each party), the parties hereby agree as follows: 2 -2- ARTICLE 1 INTERPRETATION 1.1 DEFINED TERMS - For the purposes of this Agreement, unless the context otherwise requires, the following terms shall have the meanings set out below and grammatical variations of such terms shall have corresponding meanings: (a) "ACQUISITION FACILITY" has the meaning given to such term in the Amended and Restated Credit Agreement; (b) "ADDITIONAL EQUITY" means at any time, with respect to FUR, the net proceeds from the issuance of equity securities subsequent to April 17, 1997; (c) "AGREEMENT" means this Agreement, and all schedules attached hereto as it may be amended from time to time; (d) "AFFILIATE" has the meaning given to such term in the CBCA; (e) "AGENT" means the Agent under the Amended and Restated Credit Agreement; (f) "AGGREGATE ACCOMMODATIONS OUTSTANDING" means all Accommodations Outstanding under the Amended and Restated Credit Agreement, plus all interest, fees (excluding any fee payable under Section 2.11 of the Amended and Restated Credit Agreement) and other amounts payable under the Amended and Restated Credit Agreement to BT and HKB all as determined at the time of the Put Closing Date without regard to or taking into account reductions in such amount under any proposal, plan of compromise, arrangement or moratorium in respect of the Borrower under any insolvency or reorganization, including without limitation, the Bankruptcy and Insolvency Act (Canada), the Companies Creditors Arrangement Act (Canada) or the Winding-up and Restructuring Act (Canada) or similar laws in other jurisdictions; (g) "AMENDED AND RESTATED CREDIT AGREEMENT" means the credit agreement dated as of November 13, 1996 among the Borrower, as borrower, Canadian Imperial Bank of Commerce ("CIBC") and HKB, as lenders, and CIBC, as agent, as assigned in part to BT by CIBC, in its capacity as lender and as agent, by assignment agreement dated as of the date hereof (the "CIBC/BT Assignment Agreement"), and as amended and restated by an amended and restated credit agreement, dated as of the date hereof, and as may be amended or restated or assigned from time to time; 3 -3- (h) "ASSIGNED INTEREST" means with respect to either BT or HKB that person's right, title and interest in and to the Amended and Restated Credit Agreement including without limitation (i) the Aggregate Accommodations Outstanding, (ii) all Security given by the Borrower to the Agent pursuant to the Amended and Restated Credit Agreement, and (iii) the guarantee given by the Guarantors to the Agent pursuant to the Amended and Restated Credit Agreement; (i) "ASSIGNMENT AGREEMENT" means the form of assignment agreement set out in Schedule "A" attached hereto, or such other form of assignment agreement as the parties may mutually agree upon; (j) "ASSOCIATE" has the meaning given to such term in the CBCA; (k) "BORROWER" means Imperial Parking Limited and its successors; (l) "BT" means BT Bank of Canada and its successors; (m) "BUSINESS DAY" means any day, other than Saturday or Sunday, on which banks are generally open for business in Toronto, Ontario and Cleveland, Ohio; (n) "CANADIAN DOLLAR EQUIVALENT" means, on any date, the amount of Canadian dollars which can be purchased with a specified amount of United States dollars at the spot buying rate for Canadian dollars quoted by BT at approximately 12:00 noon (Toronto time) on such day if it is a business day or the immediately preceding business day if such day is not a business day; (o) "CBCA" means the Canada Business Corporations Act, as in effect on the date hereof; (p) "COLLATERAL AMOUNT" means, as at the third day following the delivery of a Collateralization Notice, the aggregate of: (i) the full amount outstanding under the Term Facility; (ii) the maximum amount that is available under the Acquisition Facility; and (iii) the maximum amount that is available under the Operating Facility, all pursuant to the terms of the Amended and Restated Credit Agreement; (q) "COLLATERALIZATION NOTICE" as the meaning set out in Section 6.1; 4 -4- (r) "COLLATERALIZATION EVENT" means any of: (i) the Net Worth of FUR as calculated as at the end of any three month period ending on the last day of March, June, September or December in each year being less than the total of: (A) $150,000,000; and (B) 80% of Additional Equity; (ii) a Material Adverse Change occurring concerning FUR; (iii) any event or series of events by which (i) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d)(2) of the United States Securities Exchange Act of 1934 (the "Exchange Act") becomes, whether by means of any issuance or direct or indirect transfer of securities, merger, consolidation, liquidation, dissolution or otherwise, the "beneficial owner" (as such term is used in Rule 13d-3 under the Exchange Act, except that a person shall be deemed to be a beneficial owner of all securities that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly through one or more intermediaries, of more than 30% of the total voting rights attaching to the then-outstanding voting securities of FUR or FUMI, or (ii) during any period of two consecutive years, individuals who at the beginning of such period constituted FUR's board of trustees or FUMI's board of directors (together with any new trustees or new directors whose election by the FUR's board of trustees or FUMI's board of directors (as the case may be) or whose nomination for election by FUR's or FUMI's stockholders, as applicable, was approved by a vote of 66-2/3% of FUR's trustees or FUMI's directors (as applicable) then still in office who were either trustees or directors (as applicable) at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason (other than death or disability) to constitute a majority of FUR's trustees or FUMI's directors (as applicable) then still in office; (iv) without the prior written consent of BT and HKB, FUR selling assets in a transaction or series of transactions having a value (determined in a manner similar to that adopted in determining Total Asset Value for purposes of this Section 1.1(r)(iv)) greater than 25% of its Total Asset Value; (v) the total liabilities of FUR less the current liabilities of FUR (excluding any current liabilities of FUR relating to the current portion of long 5 -5- term debt of FUR), all determined in accordance with United States generally accepted accounting principles, being greater than 65% of its adjusted total asset value where adjusted total asset value is equal to (A) the sum of (y) the Total Asset Value determined in accordance with United States generally accepted accounting principles and (z) all accumulated depreciation relating to the total assets of FUR less (B) FUR's current assets; (vi) FUMI and its Affiliates ceasing to own shares of the Borrower carrying at least 66 2/3% of the votes attaching to all the outstanding voting shares of the Borrower; (vii) any Immediate Put Event, except that (A) if such Immediate Put Event is one described in Section 1.1(y)(ii), it shall not be deemed to give rise to a Collateralization Event if it is cured within 15 business days after written notice of the same has been given to FUR, and (B) if such Immediate Put Event is one described in Section 1.1(y)(iii), it shall not be deemed to give rise to a Collateralization Event if it is cured within five business days after written notice of the same has been given to FUR; and (viii) any event of default or other circumstance under any agreement to which FUR is a party (other than this Agreement or the Security Trust Indenture) that automatically or otherwise has resulted in an acceleration of the time for payment of any monetary obligation of FUR in an amount exceeding $10,000,000 unless the same has been remedied or waived within five business days after arising. (s) "ELIGIBLE SECURITIES" means bonds, debentures or other evidences of indebtedness of or fully guaranteed as to the payment of principal and interest by the full faith and credit of the Government of the United States of America or the Government of Canada, provided the same are denominated in United States dollars or Canadian dollars and have a term to maturity at the time of deposit by FUR with the Trustee or at the time of purchase by the Trustee, as the case may be, of not more than one year; (t) "FUMI" means First Union Management, Inc. and its successors; (u) "GUARANTEES AND GUARANTEE SECURITY" means, collectively, the guarantees given by the Guarantors to the Agent pursuant to the Amended and Restated Credit Agreement and all security therefor; (v) "GUARANTORS" means guarantors identified in Schedule D to the CIBC/BT Assignment Agreement; 6 (w) "HKB" means Hongkong Bank of Canada and its successors; (x) "IMMEDIATE PUT CLOSING DATE" has the meaning given to such term in Section 3.2; (y) "IMMEDIATE PUT EVENT" means the occurrence of any of the following: (i) a default or breach by FUR of any of its covenants and obligations under this Agreement or the Security Trust Indenture arising upon or otherwise relating to the failure by FUR to (A) make any payment required to be made by it pursuant to any provision of this Agreement or the Security Trust Indenture, (B) deposit with the Trustee any Eligible Securities required to be so deposited pursuant to this Agreement or the Security Trust Indenture or (C) file any financing statement, financing change statement or any other document or to do any other act or thing necessary or advisable, in the reasonable opinion of counsel to BT or HKB, to perfect or to maintain the perfection of the Pledge or to ensure that for so long as the Security Trust Indenture remains in effect the Pledge constitutes a first priority Security Interest in the Collateral (the terms "Pledge", "Security Interest" and "Collateral" having the respective meanings given to them in the Security Trust Indenture); (ii) a default or breach by FUR of any of its covenants and obligations under this Agreement or the Security Trust Indenture other than a default or breach described in paragraph (y)(i) above; or (iii) an inaccuracy or breach in any representation and warranty made by FUR herein or in the Security Trust Indenture; (iv) FUR (1) taking any action for the termination, winding-up, liquidation or dissolution of FUR, or ceasing to carry on business, or ceasing to pay its current obligations in the ordinary course of business as they generally become due, (2) making a general assignment for the benefit of creditors or becoming insolvent or unable to meet its obligations as they generally become due, (3) filing a petition in voluntary liquidation or bankruptcy, (4) filing a petition or answer or consent seeking the reorganization of FUR, or the readjustment of any of the indebtedness of FUR, (5) commencing any case or proceeding in respect of FUR under applicable insolvency or bankruptcy laws now or hereafter existing (including the Companies' Creditors Arrangement Act), (6) consenting to the appointment of any receiver, receiver-manager, administrator, custodian, liquidator or trustee of all or any part of its assets or property (provided that the mere grant by FUR of security interests over all or part of their respective assets or property to a 7 -7- trustee, other than to a trustee-in-bankruptcy, in accordance with the provisions of normal course security arrangements shall not of itself constitute an Immediate Put Event), (7) taking any corporate or other organizational action for the purpose of effecting any of the foregoing including by (A) convening any meeting of FUR for the purpose of considering any resolution for (or to petition for) its winding-up, liquidation or dissolution or (b) the passing by the security holders of FUR of a resolution for its winding-up, liquidation or dissolution, or (8) being adjudicated as bankrupt or insolvent; (v) if any petition for any proceedings in bankruptcy or liquidation or for the winding-up, reorganization or readjustment of indebtedness of FUR shall be filed, or any case or proceeding shall be commenced, under any applicable bankruptcy or insolvency laws now or hereafter existing (including the Companies' Creditors Arrangement Act), against FUR, or any receiver, receiver-manager, administrator, custodian, liquidator or trustee shall be appointed for FUR or for all or any part of FUR's assets or property, or any order for relief or for the winding-up, dissolution or liquidation shall be entered in a proceeding with respect to FUR under the provisions of the United States Bankruptcy Code, the CBCA, the Bankruptcy and Insolvency Act (Canada), the Companies' Creditors Arrangement Act (Canada) or any other applicable or similar bankruptcy or insolvency laws, in each case, as amended, and such proceeding or appointment shall not be dismissed or discharged, as the case may be, within 45 days after the filing thereof of such appointment; (vi) the commencement by or on behalf of FUR in any court of competent jurisdiction of any action or proceeding to challenge, or the inclusion in pleadings filed by or on behalf of FUR with any court of competent jurisdiction of a request for relief that challenges, the validity of this Agreement or the Security Trust Indenture; (z) "IMMEDIATE PUT NOTICE" has the meaning given to such term in Section 3.2; (aa) "IMMEDIATE PUT RIGHT" has the meaning given to such term in Section 3.2; (bb) "MATERIAL ADVERSE CHANGE" means any state of fact, change, event or occurrence which has a material adverse effect on (i) the business, operations, results of operations, assets, liabilities, prospects or financial condition of FUR considered on a consolidated basis with its subsidiaries, or (ii) the ability of FUR to perform its obligations under this Agreement (including without limitation its obligations under Articles 3 and 4 hereof); 8 -8- (cc) "NET WORTH" means at any time, with respect to FUR, the total equity of FUR determined as of such time in accordance with accounting principles generally accepted in the United States, at the relevant time applied on a consistent basis; (dd) "OPERATING FACILITY" has the meaning given to such term in the Amended and Restated Credit Agreement; (ee) "PERSON" means an individual, a firm, a corporation, a syndicate, a partnership, an association, a joint venture, a trust, a government or governmental agency and every other legal or business entity whatsoever; (ff) "PURCHASE PRICE" means, with respect to the purchase and sale of any portion of the Assigned Interest upon the exercise of the Put Right or Immediate Put Right by either BT or HKB hereunder, the sum of (i) the portion of the Aggregate Accommodations Outstanding owing to the Vendor, and (ii) $135,000 less all prepayment amounts previously paid to the Lenders (as defined in the Amended and Restated Credit Agreement) multiplied by a fraction equal to the portion of the Aggregate Accommodations Outstanding owing to the Vendor over the Aggregate Accommodations Outstanding; (gg) "PUT CLOSING DATE" means January 17, 2000; (hh) "PUT NOTICE" has the meaning given to such term in Section 3.1; (ii) "PUT OPTION PRICE" has the meaning given to such term in Section 2.1; (jj) "PUT PERIOD" means any time during the 30-day period which runs from November 18, 1999 to December 17, 1999; (kk) "PUT RIGHT" has the meaning given to such term in Section 3.1; (ll) "QUARTERLY REPORT" has the meaning given to such term in Section 8.1; (mm) "SECURITY" means all security given by the Borrower to the Agent pursuant to the Amended and Restated Credit Agreement; (nn) "SECURITY TRUST INDENTURE" means the agreement dated as of the date hereof among FUR, BT, HKB and Montreal Trust Company of Canada; (oo) "TAX ACT" means the Income Tax Act (Canada), as amended from time to time; (pp) "TERM FACILITY" has the meaning given to such term in the Amended and Restated Credit Agreement; 9 -10- (qq) "TOTAL ASSET VALUE" means at any time with respect to FUR the total assets of FUR determined in accordance with United States generally accepted accounting principles or, in the discretion of FUR, the aggregate current fair market value of the total assets of FUR determined by FUR confirmed in a manner and by an independent third party acceptable to each of BT and HKB; (rr) "TRUSTEE" means Montreal Trust Company of Canada, acting in its capacity as collateral agent under the Security Trust Indenture; and (ss) "VENDOR means the party, being either BT, in its capacity as lender and as Agent, or HKB that has exercised its Put Right with respect to its Assigned Interest. 1.2 HEADINGS - The division of this Agreement into sections, paragraphs and clauses and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. The terms "this Agreement", "hereof", "herein", "hereunder" and similar expressions refer to this Agreement and not to any particular section or other portion hereof and include any agreement or instrument supplemental or ancillary hereto. 1.3 CURRENCY - Unless otherwise indicated, all dollar amounts referred to in this Agreement are expressed in United States funds. 1.4 GOVERNING LAW - This Agreement shall be construed and interpreted in accordance with the laws of the State of Ohio. Each of the parties hereby irrevocably attorns to the non-exclusive jurisdiction of the courts of the State of Ohio. 1.5 SEVERABILITY - If any provision contained herein is determined to be void or unenforceable in whole or in part, it shall not be deemed to affect or impair the validity of any other provision herein and each such provision is deemed to be separate and distinct. 1.6 ENTIRE AGREEMENT - This Agreement and the Security Trust Indenture constitute the entire agreement between the parties with respect to the subject matter hereof. 1.7 BUSINESS DAYS - Any action or payment required or permitted to be taken or made hereunder on a day that is not a business day may be taken or made on the next succeeding business day. 1.8 NUMBER AND GENDER - 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. 10 -10- ARTICLE 2 PUT OPTION PRICE 2.1 PUT OPTION PRICE - In consideration of the grant by FUR to BT and HKB of the Put Right and the other covenants and agreements of FUR contained in this Agreement, each of BT and HKB hereby agree to pay to FUR $225,000 (in the aggregate, the "Put Option Price"). 2.2 SATISFACTION OF PUT OPTION PRICE - BT and HKB hereby agree to deliver to FUR, upon the execution and delivery of this Agreement by FUR, in full payment and satisfaction of the Put Option Price, one or more certified cheques or bank drafts made payable to or to the order of FUR in immediately available funds in the aggregate amount of the Put Option Price less applicable withholding taxes. ARTICLE 3 PUT RIGHTS 3.1 PUT RIGHT - At any time during the Put Period, each of BT and HKB shall have the right (the "Put Right") exercisable by notice (the "Put Notice") in writing delivered to FUR and the Trustee to require FUR to purchase all but not less than all of the Assigned Interest of such person on the Closing Date, which purchase is to be made at the Purchase Price. 3.2 IMMEDIATE PUT RIGHT - Upon the occurrence of any Immediate Put Event, each of BT and HKB shall have the right (the "Immediate Put Right"), exercisable by notice (the "Immediate Put Notice") in writing delivered to FUR at any time following the occurrence of the Immediate Put Event until the fifth day following the giving of notice by FUR to BT and HKB of such Immediate Put Event, to require FUR to purchase all but not less than all of the Assigned Interest of such person on the applicable Immediate Put Closing Date, which purchase is to be made at the applicable Purchase Price. A copy of the Immediate Put Notice shall be provided to the Trustee as soon as reasonably practicable after being given to FUR. The Immediate Put Notice shall set out the Immediate Put Closing Date for the purchase and sale of such Assigned Interest, which date shall not be more than 10 days following the date of delivery to FUR of the Immediate Put Notice (the "Immediate Put Closing Date"). The due delivery of an Immediate Put Notice shall override any other Put Notice theretofore or thereafter given, and the closing of the purchase and sale transaction effected by the giving of the Immediate Put Notice shall occur in accordance with such Immediate Put Notice notwithstanding any other provision hereof to the contrary. 3.3 PURCHASE AND SALE UPON EXERCISE - Upon the exercise of the Put Right or Immediate Put Right, the Vendor shall sell, and FUR shall purchase, the Assigned Interest as required to be so purchased and sold pursuant to the terms of this Section 11 -11- 3. Any such purchase and sale of the Assigned Interest shall be completed on such other terms and conditions as are set out in Section 4. ARTICLE 4 CLOSING ARRANGEMENTS 4.1 PLACE AND TIME OF CLOSING - The closing of the purchase and sale of the Assigned Interest shall take place at the offices of Fasken Campbell Godfrey at 10:00 a.m. (Toronto time) on the Put Closing Date (or in the case of an Immediate Put Right on the Immediate Put Closing Date), or at such other place and time as FUR and the Vendor may mutually determine, the actual time of closing on such Closing Date being hereinafter referred to as the "Time of Closing". 4.2 CLOSING DELIVERIES At the Time of Closing: (i) FUR shall pay the Purchase Price for the Assigned Interest by delivery to the Vendor of a certified cheque or bank draft in immediately available Canadian funds in the amount of the Purchase Price; and (ii) each Vendor shall deliver to FUR: (A) an acknowledgement in writing of the receipt by such Vendor of any payment made pursuant to Subsection 4.2(i) and that such delivery to the Vendor constitutes good delivery to such Vendor of the Purchase Price for the Assigned Interest being sold by such Vendor; (B) a representation and warranty in writing from such Vendor that it is not a non-resident of Canada within the meaning of the Tax Act; and (iii) FUR and the Vendor or Vendors, if both BT and HKB exercise their respective Put Rights, shall enter into the Assignment Agreement. ARTICLE 5 REPRESENTATIONS AND WARRANTIES 5.1 Representations and Warranties by FUR - FUR represents and warrants to each of BT and HKB as follows and acknowledges and confirms that they are relying on such representations and warranties in connection with the transactions contemplated hereby: 12 -12- (a) FUR is a business trust duly formed and validly existing under the laws of the State of Ohio and has all necessary power and authority to own or lease its property, to enter into this Agreement and the Security Trust Indenture and to perform its obligations hereunder and thereunder; (b) all necessary proceedings have been taken by FUR to enable it to enter into this Agreement and the Security Trust Indenture and to perform its obligations hereunder and thereunder; (c) the execution and delivery of this Agreement and the Security Trust Indenture by FUR and the consummation of the transactions contemplated hereby and thereby will not, with or without the giving of notice, lapse of time or both, breach or violate any of the provisions of, constitute a default under, conflict with or cause the acceleration of any obligation of FUR under: (i) the Security Trust Indenture, as amended, or any resolution of the board of trustees (or any committee thereof) of FUR; (ii) any agreement to which FUR is a party or by which it is bound; (iii) any judgment, decree, order or award of any court, governmental body or arbitrator having jurisdiction over FUR; or (iv) any applicable law, statute, ordinance, regulation or rule; (d) each of this Agreement and the Security Trust Indenture has been duly executed and delivered by FUR and is a legal, valid and binding obligation of FUR, enforceable against FUR by BT and HKB in accordance with its terms; (e) there is no requirement for FUR to make any filing with, give any notice to or obtain any licence, permit, certificate, registration, authorization, consent or approval of, any government or regulatory authority nor is the consent or approval of any other third party required as a condition to the lawful consummation by FUR of the transactions contemplated by this Agreement or the Security Trust Indenture; and (f) the execution of this Agreement, the Security Trust Indenture and the Amended and Restated Credit Agreement and the completion of the transactions contemplated thereby will not affect the qualification of FUR as a "real estate investment trust" under the Internal Revenue Code of 1986, as amended. 5.2 REPRESENTATIONS AND WARRANTIES RELATING TO BT AND HKB - Each of BT and HKB represents and warrants to FUR in respect of itself as follows and acknowledges 13 -13- that FUR is relying on such representations and warranties in connection with the matters contemplated hereby: (a) at the Put Closing Date or the Immediate Put Closing Date, it will be legally authorized to enter into and deliver the Assignment Agreement to which it is a party; and (b) at the Put Closing Date or the Immediate Put Closing Date, it will be the legal and beneficial owner of its Assigned Interest and that it will not have granted in respect of such Assigned Interest any adverse claims, liens or other encumbrances of any kind. 5.3 ABSENCE OF REPRESENTATIONS AND WARRANTIES CONCERNING THE ASSIGNED INTEREST - Except as set forth in Section 5.2, neither BT nor HKB makes any representation or warranty to FUR concerning the form, substance, accuracy or completeness of the Amended and Restated Credit Agreement, the Security, the Guarantees and the Guarantee Security, or the other Credit Documents (as defined in the Amended and Restated Credit Agreement) or any other document or information made available to FUR and shall not be responsible to FUR for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of any of the Amended and Restated Credit Agreement, the Security, the Guarantees and the Guarantee Security or of the Credit Documents (as defined in the Amended and Restated Credit Agreement). Any Assigned Interest acquired hereunder by FUR from either BT or HKB shall be acquired on an "as-is-where-is" basis subject to Section 5.2. ARTICLE 6 COLLATERALIZATION 6.1 REQUIRED NOTIFICATIONS AND COOPERATION (a) Either BT or HKB may deliver to FUR written notice of the occurrence of a Collateralization Event (the "Collateralization Notice") as soon as reasonably practicable thereafter. Such notice shall contain a brief description of the event or circumstance giving rise to such Collateralization Event. (b) Each of BT and HKB shall have the right, if in its sole judgment a Collateralization Event may exist or may possibly occur in the future at any time, from time to time to require by notice in writing delivered to FUR that FUR provide or cause to be provided to it such information relating to FUR as may be reasonably necessary to permit BT and HKB to assess the likelihood of the prospective occurrence of a Collateralization Event or to verify that such an event has occurred. 6.2 DEPOSIT OF ELIGIBLE SECURITIES - On the 3rd day following the delivery by either BT or HKB of a Collateralization Notice, FUR shall deliver to and deposit with the 14 -14- Trustee to be held by the Trustee in accordance with the Security Trust Indenture Eligible Securities having an aggregate face value (or in the case of Eligible Securities denominated in United States dollars, the Canadian Dollar Equivalent thereof) equal to the Collateral Amount. 6.3 DEPOSIT OF ADDITIONAL ELIGIBLE SECURITIES - In the event that as at the end of any calendar quarter the aggregate value of all Eligible Securities then held by the Trustee under the Security Trust Indenture is less than the Collateral Amount as a result of the diminution of the Canadian Dollar Equivalent (calculated as at the end of the calendar quarter) value of any Eligible Securities then held by the Trustee that are denominated in United States dollars, then FUR shall, within 3 days of delivery to BT and HKB of a Quarterly Report relating to such calendar quarter, deliver Eligible Securities having an aggregate cost (not including commissions, fees and expenses of acquisition) at least equal to the difference between the aggregate of all Eligible Securities held by the Trustee at the end of the calender quarter and the Collateral Amount. If FUR shall hedge the foreign exchange risk relating to the deposit with the Trustee of Eligible Securities denominated other than in Canadian dollars in a manner other than as set forth in this Section 6.3 but with similar effect, then it may request the consent of BT and HKB to the waiver of the provisions of this Section 6.3, which consent is not to be unreasonably withheld. ARTICLE 7 RECOURSE 7.1 RIGHTS AGAINST THE BORROWER - The rights of BT and HKB under this Agreement shall be in addition to, and not in substitution for, all rights which BT and HKB or either of them may possess with respect to the Borrower, the Guarantors and other parties under the Amended and Restated Credit Agreement, the Security, the Guarantees and Guarantee Security or any other Credit Documents. The obligations of FUR under this Agreement shall not be diminished or affected by, and neither BT nor HKB shall be liable or accountable to FUR for any failure to take, any action or exercise any remedies under the Amended and Restated Credit Agreement, the Security, the Guarantees and Guarantee Security or any other Credit Documents. 7.2 RECOURSE AGAINST FUR - In addition to the rights of BT and HKB pursuant to the Security Trust Indenture, upon the occurrence of any Immediate Enforcement Default under the Security Trust Indenture, each of BT and HKB shall have recourse in executing any judgment against FUR to all the property and assets of FUR. 15 -15- ARTICLE 8 ADDITIONAL COVENANTS 8.1 QUARTERLY REPORTS - FUR shall deliver to BT and HKB as soon as practicable following the end of each calendar quarter (but in any event nor more than 45 days thereafter), a report (a "Quarterly Report") certified by any two senior officers of FUR setting out the Total Asset Value and Net Worth for FUR and, if a Collateralization Event has occurred, the aggregate value of all Eligible Securities then held by the Trustee under the Security Trust Indenture and accompanied by all supporting calculations and further information as may be reasonably necessary to permit BT and HKB to verify the Total Asset Value, Net Worth and the value of Eligible Securities as set out therein. 8.2 CONFIDENTIALITY - BT and HKB shall treat all information received pursuant to the provisions of this Agreement (including, without limitation, any financial statements of the Borrower and any information provided by FUR pursuant to Section 6.1) as confidential and shall not use or disclose to any person (other than its directors, officers, agents, employees or representatives (collectively, the "Representatives") who have a need to know it) or permit any of its Representatives to use or disclose to any person, directly or indirectly, any such information at any time hereafter; provided, however, that nothing in this Section 8.2 shall preclude BT, HKB or any Representative from using or disclosing any such information: (a) if such information is available to the public or in the public domain at the time of such disclosure or use, without breach of this Agreement; (b) if disclosure is required to be made by any law, regulation, governmental body or authority or stock exchange or dealer quotation system on which securities of BT, HKB or any of its Affiliates are . listed or quoted or by court order; or (c) if disclosure is made to a court which is determining the rights of the parties under this Agreement or if use or disclosure otherwise may be reasonably necessary in connection with the rights, remedies, obligations and liabilities of BT or HKB under this Agreement or any other agreement contemplated hereby. 8.3 IMPLEMENTATION - Each of the parties hereto agrees to execute and deliver all such instruments and other documents and to do all such other acts and things as may be necessary or advisable from time to time to give effect fully to the provisions and intent of this Agreement. 16 -16- ARTICLE 9 MISCELLANEOUS 9.1 NOTICES - (a) Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be delivered in person or transmitted by telecopy or similar means of recorded electronic communication, addressed as follows: (i) If to BT: BT Bank of Canada Royal Bank Plaza Suite 1700, North Tower P.O. Box 100 TORONTO ON M5J 2J2 Attention: H. Naglie President and Chief Executive Officer ------------------------------------------------ Telecopy No.: (416) 865-0779 with a copy to: BT Securities Corporation Real Estate Investment Banking 280 Park Avenue, 21W New York, New York 10017 Attention: J. Baevsky Vice-President, Corporate Finance -------------------------------------------- Telecopy No.: (212) 454-1733 with a copy to: Osler, Hoskin & Harcourt Suite 6600, P.O. Box 50 TORONTO ON M5X 1B8 Attention: J. Lisson --------------------- Telecopy No.: (416) 862-6666 17 -17- (ii) If to HKB: Hongkong Bank of Canada Suite 200 885 West Georgia Street Vancouver, British Columbia V6C 3G1 Attention: B. Young -------------------- Telecopy No.: (604) 641-3095 with a copy to: Clark, Wilson 885 West Georgia Street, Suite 800 VANCOUVER BC V6C 3H1 Attention: D. Howard --------------------- Telecopy No.: (604) 687-6314 (iii) If to FUR: First Union Real Estate Equity and Mortgage Investments 55 Public Square, Suite 1910 Cleveland, Ohio 44113-1937 Attention: Senior Vice President General Counsel and Secretary ----------------------------------------- Telecopy No.: (216) 781-7364 with copies to: Fasken, Campbell, Godfrey Suite 3700, P.O. Box 20 Toronto Dominion Bank Tower Toronto-Dominion Centre TORONTO ON M5K 1N6 Attention: W. Palmer --------------------- Telecopy No.: (416) 364-7813 18 -18- - and to - Mayer, Brown & Platt 190 South LaSalle Street Chicago, Illinois 60603-3441 Attention: T. Anderson ----------------------- Telecopy No.: (312) 706-8101 (b) any such notice or other communication so delivered or transmitted shall be deemed to have been given and received on the day on which it was delivered personally or by reputable overnight courier or transmitted by facsimile (or, if such day is not a business day, on the next following business day); and (c) any party may at any time change its address for service from time to time by giving notice to the other parties in accordance with this Section 8.1. 9.2 ASSIGNMENT AND ENFORCEABILITY - This Agreement shall be binding upon and enforceable by the parties and their respective successors and permitted assigns. No party may assign any of its rights or benefits under this Agreement or delegate any of its duties or obligations under this Agreement to any person except as expressly permitted hereby. BT and HKB may assign all or any part of their rights under this Agreement to any assignee to which their respective Assigned Interests are transferred in accordance with Section 11.8 of the Amended and Restated Credit Agreement. 9.3 TIME OF THE ESSENCE - Time shall be of the essence of this Agreement. 9.4 AMENDMENTS AND WAIVER - This Agreement may be amended by instrument in writing executed by FUR, BT and HKB and not in any other manner. The waiver of any covenant or agreement made in favour of any party may be effected only by instrument in writing executed by such party and no failure to exercise any right or remedy or any delay in doing so, and no partial exercise of any such right or remedy shall be construed as a waiver thereof, and no waiver in any one instance shall be construed as a waiver in any subsequent or other instance unless the instrument in writing effecting the same expressly so provides. 9.5 COUNTERPARTS - This Agreement may be executed in counterparts, each of which shall constitute an original and all of which taken together shall constitute one and the same instrument. Delivery of this Agreement may be effected by facsimile transmission. 19 -19- 9.6 TERMINATION - This Agreement shall terminate only: (a) by agreement in writing made by FUR, BT and HKB; (b) automatically at such time (but without prejudice to the rights of the parties relating to any defaults hereunder existing at such time) as all of the Assigned Interest at any time held by BT and HKB shall have been purchased by FUR pursuant to the exercise of the Put Right and the Purchase Price in respect of all such Assigned Interest shall have been paid and satisfied in full as provided for herein including, without limitation, in Section 4.2 hereof; or (c) on prepayment or payment in full of the Aggregate Accommodations Outstanding. 9.7 RESTRICTION ON LIABILITY - Notwithstanding anything herein to the contrary contained, this Agreement is made and executed on behalf of FUR, a business trust organized under the laws of the State of Ohio, by its officers on behalf of the trustees thereof, and none of the trustees or any additional or successor trustee hereafter appointed, or any beneficiary, officer, employee or agent of FUR shall have any liability in his personal or individual capacity but instead, all parties shall look solely to the property and assets of FUR (including, without limitation, those assets subject to the Security Trust Indenture) for satisfaction of claims of any nature arising under or in connection with this Agreement. 20 -20- IN WITNESS WHEREOF this Agreement has been executed by the parties. BT BANK OF CANADA PER: /S/ Authorized Signer ------------------------- HONGKONG BANK OF CANADA PER: /S/ Authorized Signer ------------------------- FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS PER: /S/ Authorized Signer ------------------------- PER: /S/ Authorized Signer ------------------------- 21 SCHEDULE "A" FORM OF ASSIGNMENT AGREEMENT ASSIGNMENT AND ASSUMPTION AGREEMENT Assignment and Assumption Agreement dated as of ______________, 19__ made among ___________, (the "Assignor"), a Lender under the Amended and Restated Credit Agreement referred to and defined hereafter, Imperial Parking Limited (the "Borrower") and First Union Real Estate Equity and Mortgage Investments (the "Assignee"), a business trust existing under the laws of the State of Ohio. WHEREAS pursuant to an amended and restated credit agreement dated as of November 13, 1996 (as amended, supplemented and restated from time to time, the "Amended and Restated Credit Agreement") among the Borrower, BT Bank of Canada ("BT"), as agent (the "Agent") and the financial institutions specified therein (the "Lenders"), the Lenders have provided certain credit facilities to the Borrower; WHEREAS pursuant to an ancillary agreement dated as of April 17, 1997 (as amended, supplemented and restated from time to time, the "Ancillary Agreement"), among BT, HongKong Bank of Canada ("HKB") and the Assignee, the parties agreed that BT and HKB have the right to require the Assignee to purchase the Assigned Interest of each of BT and HKB under certain terms and conditions as set out therein; AND WHEREAS the Assignor has agreed to assign and sell to the Assignee its right, title and interest in the Assigned Interest and the Assignee has agreed to accept and purchase the Assigned Interest and to assume all liabilities and obligations of the Assignor in respect of the Assigned Interest; NOW THEREFORE, in consideration of the foregoing premises, the sum of $10.00 in lawful money of Canada now paid by the Assignor to the Assignee and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: SECTION 1. DEFINITIONS. Terms defined in the Ancillary Agreement which appear herein without definition shall have the meanings ascribed thereto in the Ancillary Agreement. SECTION 2. CONVEYANCE OF INTEREST IN ASSIGNED INTEREST. The Assignor hereby assigns, sells, conveys and transfers to the Assignee its Assigned Interest. 22 -2- SECTION 3. ASSUMPTION. The Assignee hereby accepts and assumes the Assigned Interest by payment to the Assignor of $_______ and the Assignee hereby agrees to be bound by the terms and conditions of the Amended and Restated Credit Agreement as if it was the Assignor and acknowledges and expressly assumes in the name, place and stead of the Assignor all obligations and liabilities attaching to the Assigned Interest and agrees to perform the terms, conditions and agreements on its part to be performed as Assignor in respect thereof under the Amended and Restated Credit Agreement. SECTION 4. RELEASE BY THE BORROWER. The Borrower hereby acknowledges the release of the Assignor from all obligations and liabilities attaching to the Assigned Interest and acknowledges the assumption of all such liabilities and obligations by the Assignee. SECTION 5. RECOGNITION AS LENDER. The parties hereto acknowledge that the Assignee is, by virtue of compliance with the provisions of Section 11.8 of the Amended and Restated Credit Agreement, as of and from the date hereof, a Lender under and as defined in the Amended and Restated Credit Agreement. SECTION 6. GOVERNING LAW. This assignment and assumption agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and of Canada applicable therein and shall be treated in all respects as an Ontario contract. SECTION 7. ENUREMENT. This assignment and assumption agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. SECTION 8. COUNTERPARTS. This assignment and assumption agreement may be executed in counterparts, each of which shall be deemed an original and which, taken together, shall constitute one and the same instrument. 23 -3- IN WITNESS WHEREOF the parties have executed this assignment and assumption agreement under the hands of their proper officers duly authorized in that behalf as of the date first above written. [ASSIGNOR] Per: ------------------------------------ Authorized Signing Officer FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS Per: ------------------------------------ Authorized Signing Officer IMPERIAL PARKING LIMITED Per: ------------------------------------ Authorized Signing Officer EX-10.C 5 EXHIBIT 10.C 1 Exhibit 10c IMPARK INVESTMENTS INC. AND FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS ---------------------------------------- SHARE PURCHASE AGREEMENT ---------------------------------------- February 18, 1997 2 TABLE OF CONTENTS
Page 1. Interpretation..................................................................................2 1.1 Defined Terms..........................................................................2 1.2 Currency..............................................................................10 1.3 Sections and Headings.................................................................10 1.4 Number and Gender.....................................................................11 1.5 Entire Agreement......................................................................11 1.6 Time of Essence.......................................................................11 1.7 Applicable Law........................................................................11 1.8 Severability..........................................................................11 1.9 Amendment and Waivers.................................................................11 1.10 Knowledge.............................................................................11 1.11 Best Efforts..........................................................................12 1.12 Documents Made Available for Review...................................................12 1.13 References to Contracts and Statutes..................................................12 1.14 Deposit...............................................................................12 1.15 Schedules.............................................................................12 2. Purchase and Sale of Purchased Shares..........................................................13 2.1 Purchase and Sale of Purchased Shares.................................................13 2.2 Purchase Price........................................................................13 2.3 Payment of Purchase Price.............................................................13 2.4 Working Capital Adjustment............................................................14 2.5 Amounts Held by Escrow Agent..........................................................16 3. Representations and Warranties of the Vendors..................................................16 3.1 Representations and Warranties Relating to the Vendors................................16 4. General Representations and Warranties of the Vendors..........................................17 4.1 Organization..........................................................................18 4.2 Authorization; No Violation...........................................................18 4.3 Authorized and Issued Capital of Holdco and the Company...............................18 4.4 Authorized and Issued Capital of Subsidiaries.........................................19 4.5 No Options, Etc.......................................................................19 4.6 Title to Property.....................................................................19 4.7 Accounts Receivable...................................................................19
3 4.8 Intellectual Property.................................................................19 4.9 Insurance.............................................................................20 4.10 Material Contracts....................................................................20 4.11 Compliance with Laws; Permits.........................................................21 4.12 Consents and Approvals................................................................22 4.13 Financial Statements..................................................................22 4.14 Corporate Records.....................................................................22 4.15 Absence of Changes....................................................................22 4.16 Taxes.................................................................................23 4.17 Litigation............................................................................24 4.18 Non-Arm's Length Transactions.........................................................25 4.19 Environmental.........................................................................25 4.20 Employee Plans........................................................................27 4.21 Union Contracts.......................................................................28 4.22 Employees.............................................................................29 4.23 Location of Real Property.............................................................29 4.24 Real Property.........................................................................29 4.25 No Expropriation......................................................................31 4.26 Leased Property.......................................................................31 4.27 Commissions...........................................................................31 4.28 GST Registration......................................................................31 4.29 Bank Accounts. ......................................................................31 4.30 Condition and Status of Assets........................................................32 4.31 Joint Venture Interest................................................................32 4.32 Holdco................................................................................32 5. Representations and Warranties of the Purchaser................................................32 5.1 Organization..........................................................................32 5.2 Authorization; No Violation...........................................................32 5.3 Consents and Approvals................................................................33 5.4 Sources of Funds......................................................................33 6. Survival of Representations and Warranties.....................................................33 6.1 Survival of Representations and Warranties of the Vendors.............................33 6.2 Survival of Representations and Warranties of the Purchaser...........................34 7. Covenants......................................................................................34 7.1 Access................................................................................34 7.2 Curative Efforts......................................................................35 7.3 Delivery of Books and Records.........................................................35
4 7.4 Conduct Prior to Closing..............................................................36 7.5 Covenants of the Purchaser Prior to Closing...........................................37 7.6 Regulatory Filings....................................................................38 7.9 Purchaser's Knowledge.................................................................40 7.10 Tail Directors' and Officers' Insurance...............................................40 8. Conditions of Closing in Favour of the Purchaser...............................................40 8.1 Representations and Warranties........................................................40 8.2 Covenants.............................................................................41 8.3 Regulatory Consents...................................................................41 8.4 Other Consents. The .................................................................41 8.5 Material Adverse Change...............................................................41 8.6 No Action or Proceeding...............................................................41 8.7 Shareholders' Agreement, Etc..........................................................41 8.8 Options...............................................................................41 8.9 Legal Matters.........................................................................41 8.10 Legal Opinion.........................................................................42 8.11 Resignations..........................................................................42 8.12 Section 116 Certificates..............................................................42 8.13 Non-Performance.......................................................................42 9. Conditions of Closing in Favour of the Vendors.................................................42 9.1 Representations and Warranties........................................................42 9.2 Covenants.............................................................................43 9.3 Regulatory Consents...................................................................43 9.4 No Action or Proceeding...............................................................43 9.5 Legal Matters.........................................................................43 9.6 Legal Opinion.........................................................................43 9.7 Non-Performance.......................................................................43 10. Closing Arrangements...........................................................................44 10.1 Place of Closing......................................................................44 10.2 Implementation........................................................................44 10.3 Further Assurances....................................................................44 10.4 Early Termination.....................................................................44 10.5 Non-Competition Agreement.............................................................45 11. Indemnification................................................................................46
5 11.1 Indemnification by the Vendors........................................................46 11.2 Indemnification by the Purchaser......................................................47 11.3 Notice of Claim.......................................................................48 11.4 Direct Claims.........................................................................49 11.5 Third Party Claims....................................................................49 11.6 Settlement of Third Party Claims......................................................50 11.7 Co-operation..........................................................................50 11.8 Limitations...........................................................................50 11.9 Indemnity Payment Adjustments.........................................................50 11.11 Exclusivity...........................................................................51 11.12 Mitigation............................................................................51 11.13 Liquidated Damages....................................................................51 12. Miscellaneous..................................................................................52 12.1 Authority of Investco.................................................................52 12.2 Management............................................................................52 12.3 Notices...............................................................................53 12.4 Transaction Costs.....................................................................54 12.5 Consultation..........................................................................54 12.6 Disclosure............................................................................55 12.7 Assignment and Enforceability.........................................................55 12.8 Onex Corporation......................................................................55 12.9 Management Vendors....................................................................55 12.10 Construction..........................................................................56 12.11 Counterparts..........................................................................56 12.12 Restriction on Liability..............................................................57
6 SHARE PURCHASE AGREEMENT ------------------------ THIS AGREEMENT made the 18th day of February, 1997, B E T W E E N: IMPARK INVESTMENTS INC., a corporation existing under the laws of the Province of Ontario, (hereinafter referred to as "Investco"), OF THE FIRST PART, - and - THE PERSONS LISTED ON SCHEDULE 1 HERETO WHO HEREAFTER BECOME VENDORS HEREUNDER, OF THE SECOND PART, - and - FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS, a business trust existing under the laws of the State of Ohio, (hereinafter referred to as the "Purchaser"), OF THE THIRD PART. THIS AGREEMENT WITNESSES THAT in consideration of the respective covenants, agreements, representations, warranties and indemnities of the parties hereinafter contained and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by each party), the parties hereby agree as follows: 7 -2- 1. Interpretation -------------- 1.1 DEFINED TERMS. For the purposes of this Agreement, unless the context otherwise requires, the following terms shall have the respective meanings set out below and grammatical variations of such terms shall have corresponding meanings: (1) "ACT" means the Business Corporations Act (Ontario), as in effect on the date hereof; (2) "AFFILIATE" has the meaning attributed to that term in the Act; (3) "ASSOCIATE" has the meaning attributed to that term in the Act; (4) "AUDITED FINANCIAL STATEMENTS" means the audited consolidated financial statements of Holdco as at and for the nine month period ended December 31, 1996, including the notes thereto and the reports of Holdco's auditors thereon, a copy of which is annexed hereto as Schedule 1.1(e); (5) "BUSINESS" means the businesses carried on, directly or indirectly, by Holdco, the Company and its Subsidiaries consisting of the operation of parking facilities on the Real Properties or under management contracts and/or leases, valet parking, providing services ancillary to the operation of parking facilities such as maintenance, ticketing, security, collection and consulting, the distribution and manufacture of parking lot and parking garage equipment and the ownership of real property for purposes relating to the parking business; (6) "BUSINESS DAY" means any day other than a Saturday or a Sunday on which banks generally are open for business in Toronto, Ontario; (7) "CLAIM" has the meaning set out in Section 11.3; (8) "CLOSING" means the completion of the transactions contemplated by Section 2; (9) "CLOSING DATE" means the date on which all the conditions set out in Sections 8 and 9 are satisfied or waived in writing by the Vendors or the Purchaser, as the case may be, but in any event not later than April 2, 1997; (10) "CLOSING DEBT" means the aggregate indebtedness, as at the close of business on the earlier of March 31, 1997 and the day immediately preceding the Closing Date, of Holdco, the Company and the Subsidiaries, on a consolidated basis, to the creditors identified in Schedule 1.1(j), including the current portion thereof and all accrued and unpaid interest on the principal amount thereof, less the amount (up to 8 -3- a maximum of the sum of "A" and "B", where "A" is $1,000,000 and "B" is the aggregate amount received by Holdco in respect of the subscription price for the common shares to be issued to Investco or the Management Vendors at or prior to the Time of Closing) of cash balances and short term deposits or depositary instruments held by Holdco, the Company or the Subsidiaries with Canadian chartered banks or other financial institutions on the Closing Date; (11) "CLOSING DEBT CERTIFICATE" means a certificate of the Chief Financial Officer of the Company as to the amount of the Closing Debt in the form attached hereto as Schedule 1.1(l) to be delivered at the Time of Closing; (12) "CODE" means the United States Internal Revenue Code of 1986, as amended; (13) "COMPANY" means Imperial Parking Limited; (14) "CONTRACT" means any agreement, indenture, contract, lease, deed of trust, licence (excluding a Permit), option or instrument; (15) "DIRECT CLAIM" has the meaning set out in Section 11.3; (16) "EMPLOYEE PLANS" means all bonus, deferred compensation, incentive compensation, share purchase, share appreciation and share option, severance or termination pay, hospitalization or other medical benefits, life or other insurance, dental, disability, salary continuation, vacation, supplemental unemployment benefits, profit-sharing, mortgage assistance, employee loan, employee assistance, pension, retirement or supplemental retirement plan or agreement (including any defined benefit or defined contribution pension plan and any group registered retirement savings plan), and each other employee benefit plan or agreement (whether oral or written, formal or informal, funded or unfunded, registered or unregistered) sponsored, maintained or contributed to or required to be contributed to by Holdco, the Company or any of the Subsidiaries for the benefit of any of the present or former employees, officers or directors of Holdco, the Company, any of the Subsidiaries or any of their respective ERISA Affiliates in such capacities whether or not insured and whether or not subject to any applicable law, and includes an employee benefit plan as defined in section 3(3) of ERISA except that the term "Employee Plans" shall not include any statutory plans with which Holdco, the Company or any Subsidiary is required to comply, including the Canada/Quebec Pension Plan or plans administered pursuant to applicable Employment Legislation; (17) "EMPLOYMENT LEGISLATION" means, collectively, the Canada Labour Code, the Labour Relations Act (Ontario), the Canada Human Rights Act, the Employment 9 -4- Standards Act (Ontario), the Workers' Compensation Act (Ontario), the Pay Equity Act (Ontario), the Pension Benefits Act (Ontario), the Human Rights Code (Ontario), the Occupational Health and Safety Act (Ontario), the Employment Equity Act (Canada), the Pension Benefits Standards Act (Canada), the Pension Benefits Standards Act (British Columbia), the Workers= Compensation Act (British Columbia), the Workplace Act (British Columbia), the Unemployment Insurance Act (Canada) and the respective regulations and orders promulgated thereunder and any similar federal, provincial, state or other legislation applicable in any province of Canada or in any other jurisdiction in which the Business is conducted; (18) "ENCUMBRANCE" means any encumbrance, lien, charge, hypothec, pledge, mortgage, title retention agreement, security interest of any nature, reservation, easement, right of occupation or usage, option, pre-emptive right or privilege; (19) "ENVIRONMENTAL AUTHORITIES" means governmental or regulatory authorities having jurisdiction over Holdco, the Company, the Subsidiaries or their assets under any Environmental Laws, including any department, commission, bureau, board, administrative agency or body of any of the foregoing and including, without limitation, the British Columbia Ministry of Environment, Lands and Parks (and the ministry, government department or agency having similar responsibilities in any other jurisdiction in which the Business is conducted); (20) "ENVIRONMENTAL LAWS" means all applicable federal, provincial, state, municipal and local treaties, conventions, laws, statutes, by-laws, regulations and all policies, guidelines, standards, orders, directives, decisions and the like rendered or promulgated by any ministry, department or administrative or regulatory agency to the extent relating to the protection or preservation of the environment (or any part thereof) including the treatment, storage, disposal or discharge Hazardous Substances in force as at the date hereof, including the Resource Conservation and Recovery Act (U.S.A.), the Comprehensive Environmental Response Compensation and Liability Act (U.S.A.), any so-called "Superfund" or "Superlien" law and the Toxic Substances Control Act (U.S.A.); (21) "ENVIRONMENTAL PERMITS" means all Permits required under Environmental Laws; (22) "ERISA" means the Employee Retirement Income Security Act of 1974; (23) "ERISA AFFILIATE" means, with respect to any person, any corporation, trade or business which, together with such person, is a member of a controlled group of corporations or a group of trades or businesses under common control within the meaning of sections 414(b) or (c) of the Code. 10 -5- (24) "ESCROW AGENT" means Kelly Affleck Greene or their successor under the Escrow Agreement; (25) "ESCROW AGREEMENT" means the agreement dated the date of this Agreement between Investco, the Purchaser and the Escrow Agent; (26) "ESCROW AMOUNT" means the amount of money delivered by or on behalf of the Escrow Agent at the Time of Closing to the Vendors representing the principal amount deposited by the Purchaser with the Escrow Agent pursuant to Section 1.14, together with all interest or other income earned thereon to but excluding the date on which such amount is released to the Vendors in accordance with the terms of the Escrow Agreement upon the closing of the purchase and sale of the Purchased Shares; (27) "ETA" means the Excise Tax Act (Canada), as amended from time to time; (28) "FORECAST WORKING CAPITAL STATEMENT" means the document attached hereto as Schedule 1.1(bb); (29) "GAAP" means generally accepted accounting principles which have been established in Canada, including those approved from time to time by the Canadian Institute of Chartered Accountants or any successor body thereto; and, for the purposes hereof in respect of Holdco, the Company and the Subsidiaries, it is agreed that all amounts shall be determined on a basis consistent with that used in the preparation of the Audited Financial Statements (except for changes made with the prior written consent of the parties hereto and which are also certified by the auditors of Holdco to be consistent with generally accepted accounting principles as recommended in the Handbook of the Canadian Institute of Chartered Accountants); (30) "GROSS MARGIN CONTRIBUTION" means, with respect to any Operating Agreement, the gross revenues attributable to such Operating Agreement less direct operating expenses (including Taxes) incurred in the performance of the obligations of the Company or the relevant Subsidiary thereunder or, in the case of management contracts, management fees; (31) "GST" means any Taxes payable under Part IX of the ETA or under any provincial legislation similar to or integrated with Part IX of the ETA; (32) "HAZARDOUS SUBSTANCES" means any waste, hazardous substance, contaminant, toxic substance, special waste, dangerous good, deleterious substance or pollutant regulated or controlled pursuant to any Environmental Law; 11 -6- (33) "HOLDCO" means Imperial Holdings No. 2 Inc.; (34) "INCLUDING" and "INCLUDES" shall be deemed to be followed by the statement "without limitation" and neither of such terms shall be construed to limit any word or statement which it follows to the specific or similar items or matters immediately following it; (35) "INDEMNIFIED PARTY" has the meaning set out in Section 11.3; (36) "INSTRUMENT OF ADHESION" has the meaning set out in Section 12.9; (37) "INTELLECTUAL PROPERTY" means, collectively, all trade marks, trade names, business names, patents, service marks, brand marks, copyrights, industrial designs, trade secrets and other industrial or intellectual property owned or used under licence or Contract by Holdco, the Company or the Subsidiaries and all applications therefor and all goodwill of Holdco, the Company or the Subsidiaries connected therewith, including all licences or similar rights used by or granted to Holdco, the Company or any of the Subsidiaries in connection with the Business as now carried on; (38) "LEASE" means any lease, agreement to lease, licence or similar agreement in respect of any office premises to which the Company or any of the Subsidiaries is a party (excluding ticketing offices leased pursuant to any lease that constitutes an Operating Agreement); (39) "LEASED PROPERTY" means all premises leased by the Company or any of the Subsidiaries pursuant to a Lease; (40) "LOSSES" means, in respect of any matter, all claims, demands, proceedings, losses, damages (other than special, indirect or consequential damages), liabilities, costs and expenses arising directly or indirectly as a consequence of such matter; (41) "MAJOR ACCOUNTING FIRM" means any of Price Waterhouse, Ernst & Young, Coopers & Lybrand, Arthur Andersen or Deloitte & Touche; (42) "MANAGEMENT VENDORS" means all persons who are directors or employees of Holdco, the Company or the Subsidiaries and who hereafter become holders of shares in the capital of Holdco in accordance and compliance with Section 12.9 on or before February 21, 1996; 12 -7- (43) "MATERIAL ADVERSE EFFECT" means a material adverse effect on any of the Business, operations or financial condition of the Company and the Subsidiaries taken as a whole; (44) "MATERIAL CONTRACT" has the meaning given to such term in Section 4.10; (45) "NET WORKING CAPITAL DEFICIENCY" means the amount reflected on the Working Capital Statement as the excess of current liabilities, excluding the current portion of long term debt over current assets (as such terms are used therein, which shall be consistent with the manner in which they are used in the Audited Financial Statements); (46) "ONEX ASSOCIATES" means each of the persons listed in paragraph 1 of Schedule 3.1(b) and in Schedule 3.2; (47) "OPERATING AGREEMENTS" means all parking management agreements and licences and leases of real property entered into by the Company or any of the Subsidiaries for the purpose of providing parking services to the public; (48) "PENSION PLAN" means an Employee Plan that is a "Registered Pension Plan" as that term is defined in subsection 248(1) of the Tax Act or an Employee Plan which is an employee pension benefit plan within the meaning of section 3(2) of ERISA; (49) "PERMIT" means any licence, permit, approval, consent, certificate, registration or authorization issued by any governmental or regulatory authority; (50) "PERMITTED ENCUMBRANCES" means, collectively: (1) Encumbrances for Taxes, assessments and governmental charges due and being contested in good faith and diligently by appropriate proceedings (and for the payment of which adequate provision has been made and provided that such contestation effectively postpones enforcement of any such Encumbrances); (2) servitudes, easements, restrictions, rights-of-way and other similar rights in real property or any interest therein, provided the same are not of such nature as to materially detract from the value of the real property or materially impair its use in the operation of the Business as now carried on and do not have a Material Adverse Effect; (3) Encumbrances for Taxes or public utility charges not due and payable or delinquent; 13 -8- (4) undetermined or inchoate Encumbrances or charges in respect of real property or any interest therein that are incidental to current construction or current operations and statutory Encumbrances in respect of real property or any interest therein claimed or held by any governmental authority which have not at the time been filed or registered against the title to the property or interest or served upon Holdco, the Company or any of the Subsidiaries pursuant to law and which relate to obligations not due and payable or delinquent; (5) assignments of insurance provided to landlords (or their mortgagees) pursuant to the terms of any Lease and liens or rights reserved in any Lease or available to landlords at law for rent or for compliance with the terms of such Lease; (6) security given in the ordinary course of the Business to any public utility, municipality or government or to any statutory or public authority in connection with the provision of power, water or similar services consumed in the operation of the Business (excluding, for greater certainty, security for borrowed money); (7) the reservations in any original grants from the Crown of any real property or interest therein; (8) purchase money security interests and other vendor security for the unpaid purchase price of goods acquired in the ordinary course of the Business; (9) carriers', warehousemen's, mechanics', materialmens', repairmens', or other like liens arising in the ordinary course of the Business in respect of liabilities not yet due or that are due but are being contested in good faith, if adequate provision has been made therefor; (10) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of the Business; (11) zoning and building by-laws and ordinances, municipal by-laws (including site specific by-laws) and regulations and restrictive covenants which will not materially and adversely affect the ability to use the real property in the operation of the Business as now used; (12) title defects or irregularities in respect of any real property that is of a minor nature and in the aggregate does not materially adversely affect the value of any such 14 -9- real property or materially impair its use in the operation of the Business as now used; (13) subdivision, site plan control, development or similar agreements entered into from time to time in respect of any real property and which have been complied with to date; (14) statutory exceptions to title which do not individually or in the aggregate materially detract from the value of the real property or materially impair its use in the operation of the Business; and (15) the Encumbrances identified as Permitted Encumbrances on Schedule 1.1(xx); (51) "PERSON" shall be broadly interpreted and includes an individual, a corporation, a limited liability company, a partnership, a trust, a joint venture, an association, an unincorporated organization, the government of a country or any subdivision thereof, any agency or department of any such government, any regulatory agency or any other juridical entity and the heirs, executors, administrators or legal representatives of an individual; (52) "PRO RATA SHARE" means, at any time in respect of any Vendor, the percentage obtained by multiplying by 100 the quotient obtained by dividing the number of common shares of Holdco held by such Vendor by the total number of common shares of Holdco issued and outstanding at such time; provided that for the purpose of determining, at any time, the Pro Rata Share of Investco, Investco shall be deemed to hold all common shares of Holdco other than those held by the Management Vendors, and further provided that at and after the Time of Closing the Pro Rata Share of any Vendor shall be that Vendor's Pro Rata Share as at the Time of Closing, determined as aforesaid; (53) "PURCHASE PRICE" has the meaning ascribed thereto in Section 2.2; (54) "PURCHASED SHARES" means, at any time, all the issued and outstanding shares in the capital of Holdco; (55) "REAL PROPERTY" means all real property owned by the Company or any of the Subsidiaries; (56) "SUBSIDIARIES" means, collectively, the corporations and companies identified as Subsidiaries in Schedule 4.4; 15 -10- (57) "TAX" or "TAXES" means all taxes, charges, fees, levies, imposts and other assessments, including all income, sales, use, goods and services, value added, capital, capital gains, alternative, net worth, transfer, profits, withholding, payroll, employer health, excise, franchise, real property and personal property taxes, and any other taxes, customs duties, fees, assessments, royalties, duties, fees, deductions, compulsory loans or similar charges, including Canada Pension Plan and provincial pension plan contributions, employment and unemployment insurance payments, health insurance premiums and workers compensation premiums, together with any instalments with respect thereto, and any interest, fines and penalties, imposed by any governmental authority (including federal, state, provincial, municipal and foreign governmental authorities (or any agency or political subdivision thereof)), and whether disputed or not; (58) "TAX ACT" means the Income Tax Act (Canada), as amended from time to time; (59) "THIRD PARTY" has the meaning set out in Section 11.3; (60) "THIRD PARTY CLAIM" has the meaning set out in Section 11.3; (61) "TIME OF CLOSING" means 9:30 a.m. (Toronto time) on the Closing Date, or such other time on the Closing Date as the Vendors and the Purchaser may mutually determine; (62) "VENDORS" means, collectively, the Management Vendors and Investco (or any Affiliate of Investco to which the rights, benefits, liabilities and obligations of Investco hereunder are assigned pursuant to Section 12.7); and (63) "WORKING CAPITAL STATEMENT" has the meaning given to such term in Section 2.4(a). 1.2 CURRENCY. Unless otherwise indicated, all dollar amounts referred to in this Agreement are expressed in Canadian funds. 1.3 SECTIONS AND HEADINGS. The division of this Agreement into Sections and the insertion of headings are for reference purposes only and shall not affect the interpretation of this Agreement. Unless otherwise indicated, any reference in this Agreement to a Section or Schedule refers to the specified Section of or Schedule to this Agreement. 1.4 NUMBER AND GENDER. In this Agreement, words importing the singular number only shall include the plural and vice versa and words importing gender shall include all genders. 16 -11- 1.5 ENTIRE AGREEMENT. This Agreement together with the documents contemplated hereby to be executed by the parties hereto constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements, understandings, negotiations and discussions, whether written or oral except for the confidentiality agreement dated February 7, 1997 between Investco, Impark Holdings Inc., Holdco, the Company, the Purchaser and First Union Management, Inc., and a Confidentiality and Standstill Agreement dated January 30, 1997 between the Company and the Purchaser. Investco agrees to be bound by such Confidentiality and Standstill Agreement on the same basis as the Company. There are no conditions, covenants, agreements, representations, warranties or other provisions, express or implied, collateral, statutory or otherwise, relating to the subject matter hereof except as provided herein or in any other agreement referred to in this Section 1.5. For greater certainty, upon the execution and delivery of this Agreement by the Purchaser and the Vendors, the letter of intent dated February 5, 1997 between the Purchaser and Onex Corporation shall be terminated and of no further force or effect. 1.6 TIME OF ESSENCE. Time shall be of the essence of this Agreement. 1.7 APPLICABLE LAW. This Agreement shall be construed, interpreted and enforced in accordance with, and the respective rights and obligations of the parties shall be governed by, the laws of the Province of Ontario and the federal laws of Canada applicable in such province, and each party hereby irrevocably and unconditionally submits to the non-exclusive jurisdiction of the courts of such province and all courts competent to hear appeals therefrom. 1.8 SEVERABILITY. If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such determination shall not impair or affect the validity, legality or enforceability of the remaining provisions hereof, and each provision is hereby declared to be separate, severable and distinct. 1.9 AMENDMENT AND WAIVERS. No amendment or waiver of any provision of this Agreement shall be binding on any party unless consented to in writing by such party. No waiver of any provision of this Agreement shall constitute a waiver of any other provision, nor shall any waiver constitute a continuing waiver unless otherwise specified in such waiver. 1.10 KNOWLEDGE. Where any representation and warranty is expressed to be given by the Vendors hereunder to their knowledge or is otherwise expressed to be limited in scope to matters known to the Vendors, the knowledge of the Vendors shall be comprised solely of those matters actually known to the Chief Executive Officer, the President and the Chief Financial Officer of the Company. The Vendors hereby represent and warrant that each such individual has made appropriate enquiries of such other officers of Holdco, the Company and the Subsidiaries who would reasonably be expected to have responsibility for or knowledge of the matters relevant to such representation and warranty. 17 -12- 1.11 BEST EFFORTS. For all purposes of this Agreement, an obligation on the part of any party to use its best efforts to obtain any waiver, consent, approval, permit, licence or other document or to do any other act or thing shall not require such party to make any payment to any person for the purpose of procuring the same, other than payments for amounts due and payable to such person, payments for incidental expenses incurred by such person and payments required by any applicable law or regulation. 1.12 DOCUMENTS MADE AVAILABLE FOR REVIEW. For the purposes of the representations and warranties set out in Sections 3 and 4, a document shall be considered to have been made available by the Vendors to the Purchaser if the original or a copy of such document was included in the materials made available for review by representatives of the Purchaser. 1.13 REFERENCES TO CONTRACTS AND STATUTES. All references contained in this Agreement to any Contract or statute shall be taken, unless otherwise indicated herein, to be references to such Contract or statute, as the same may be amended, supplemented or replaced from time to time. 1.14 DEPOSIT. Immediately upon the execution and delivery of this Agreement by the Vendors and the Purchaser, the Purchaser shall deliver to the Escrow Agent a certified cheque or bank draft in, or shall pay to the Escrow Agent by wire transfer of immediately available funds (to the account specified by the Escrow Agent), the amount of $2,000,000, which amount shall be held by the Escrow Agent pursuant to and in accordance with the terms of the Escrow Agreement. 1.15 SCHEDULES. The following Schedules are attached to and form part of this Agreement: Schedule 1 - Vendors Schedule 1.1(e) - Audited Financial Statements Schedule 1.1(j) - Closing Debt Schedule 1.1(l) - Closing Debt Certificate Schedule 1.1(bb) - Forecast Working Capital Statement Schedule 1.1(xx) - Additional Permitted Encumbrances Schedule 3.1(a) - Ownership of Purchased Shares at Closing Schedule 3.1(b) - Options on Holdco Shares Schedule 3.2 - Current Ownership of Purchased Shares Schedule 4.2 - Violations Schedule 4.4 - Subsidiaries Schedule 4.5 - Options Schedule 4.8 - Intellectual Property Schedule 4.9 - Insurance Policies Schedule 4.10 - Material Contracts Schedule 4.12(a) - Regulatory Consents Schedule 4.12(b) - Contractual Consents
18 -13- Schedule 4.16 - Tax Matters Schedule 4.17 - Litigation Schedule 4.18 - Related Party Transactions Schedule 4.19 - Environmental Matters Schedule 4.20 - Employee Plans Schedule 4.21 - Collective Agreements Schedule 4.22(a) - Employees Schedule 4.22(b) - Employment Agreements Schedule 4.23 - Real Property Schedule 4.24 - Required Repairs and Maintenance Schedule 4.26 - Leased Real Property Schedule 4.28 - GST Registrations Schedule 4.29 - Bank Account Schedule 4.31 - Joint Venture Interests Schedule 10.6 - Form of Acknowledgement Schedule 10.7 - Form of CIBC Purchase Agreement Schedule 12.9 - Instrument of Adhesion
2. Purchase And Sale Of Purchased Shares ------------------------------------- 2.1 PURCHASE AND SALE OF PURCHASED SHARES. At the Time of Closing, the Vendors shall sell, assign and transfer to the Purchaser, and the Purchaser shall purchase from the Vendors, the Purchased Shares then owned by the Vendors as set out in Schedule 3.1(a). 2.2 PURCHASE PRICE. Subject to any other adjustment made in accordance with the terms of this Agreement, the aggregate price payable for the Purchased Shares (the "Purchase Price") shall be $105,000,000 less the amount of the Closing Debt (as shown in the Closing Debt Certificate). 2.3 PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid and satisfied at the Time of Closing by: (1) the delivery by the Escrow Agent to or to the order of each Vendor of a certified cheque or bank draft, in either case drawn on a Canadian chartered bank in immediately available funds, payable to the order of such Vendor in the amount of such Vendor's Pro Rata Share of the Escrow Amount, and (2) the delivery to or to the order of each Vendor by the Purchaser of a certified cheque or bank draft, in either case drawn on a Canadian chartered bank in immediately available funds, payable to the order of such Vendor in the amount of such Vendor's Pro Rata Share of the difference between the Purchase Price and the aggregate amount paid under Section 2.3(a) or, in the case of Investco, by the wire 19 -14- transfer of immediately available funds in the amount of Investco's Pro Rata Share of such difference to such account as may be specified by Investco (subject, in the case of Vendors that are non-residents of Canada within the meaning of the Tax Act and who have not delivered to the Purchaser a certificate meeting the requirements of Section 8.12, to any withholdings required to be made under the Tax Act), against delivery to the Purchaser of a certificate or certificates representing the Purchased Shares duly endorsed for transfer to the Purchaser or as it may direct. 2.4 WORKING CAPITAL ADJUSTMENT. (1) The Vendors and the Purchaser agree to use all reasonable efforts to cause the Chief Financial Officer of the Company to prepare and deliver to the Purchaser and the Vendors, as soon as reasonably practicable after March 31, 1997, a statement of the consolidated working capital of the Company as at March 31, 1997 (the "Working Capital Statement"). The Working Capital Statement shall be prepared substantially in the form of the Forecast Working Capital Statement and shall be prepared on a basis consistent with the basis on which the Forecast Working Capital Statement was prepared (including that each line item of the Working Capital Statement reflects the same ledger accounts used to calculate the corresponding line item in the Forecast Working Capital Statement, with no changes to accruals or reserves other than in the normal course for Taxes relating to periods after December 31, 1996 and with no inclusion of cash received by Holdco on or prior to March 31, 1997 in respect of the subscription price for the common shares to be issued to Investco or the Management Vendors). (2) If the Net Working Capital Deficiency as reflected in the Working Capital Statement prepared in accordance with Section 2.4(a), (i) exceeds $8,989,000, each Vendor shall pay its Pro Rata Share of the amount of such excess to the Purchaser or (ii) is less than $7,989,000, the Purchaser shall pay to each Vendor that Vendor's Pro Rata Share of the amount by which the Net Working Capital Deficiency is less than $7,989,000. Any payment required by this Section 2.4 shall be deemed to be an adjustment to the Purchase Price and shall be made promptly following finalization of the Working Capital Statement (taking into account the resolution of any objection made in accordance with the following provisions of this Section 2.4) by delivery to the party entitled thereto of a certified cheque or bank draft, drawn on a Canadian chartered bank in immediately available funds, payable to such party. (3) The Purchaser and Investco shall have a period of 10 days following the date of receipt of the Working Capital Statement to review and raise any objection to the same. For the purposes of such review, the Purchaser and Investco and their authorized representatives shall have full access to the Chief Financial Officer of the 20 -15- Company and all working papers, ledgers, schedules and other documentation that were used or relied upon in connection with the preparation of the Working Capital Statement. If no objection to the Working Capital Statement is given by either such party within such 10-day period, the Working Capital Statement shall be deemed to have been approved by each party as of the last day of such period. (4) If either such party (the "Objecting Party") objects to any aspect of the Working Capital Statement within such 10-day period by giving notice to the Company and the other such party setting out in reasonable detail the nature of such objection, the Objecting Party shall have the right to engage within 14 days after the receipt of the Working Capital Statement any Major Accounting Firm (the "First Reviewing Firm") to review and prepare, within 30 days after the commencement of their engagement, a written report on the basis of the preparation of the Working Capital Statement and, if the First Reviewing Firm determines that there has been an error in the original preparation of the Working Capital Statement, the First Reviewing Firm shall provide a revised Working Capital Statement on the basis set out in Section 2.4(a) which, subject to the following sentence, shall be binding on the parties hereto. If the Purchaser or Investco (whichever is not the Objecting Party) objects to any aspect of the report or the revised Working Capital Statement by the First Reviewing Firm, then such party (the "Second Objecting Party") may engage, within 14 days after the receipt of the report and revised Working Capital Statement prepared by the First Reviewing Firm, any other Major Accounting Firm (the "Second Reviewing Firm") to review the report and Working Capital Statement prepared by the First Reviewing Firm. The Second Reviewing Firm shall consult with the First Reviewing Firm with a view to settling a final Working Capital Statement on the basis set out in Section 2.4(a). If the First Reviewing Firm and the Second Reviewing Firm cannot agree within 14 days after the engagement of the Second Reviewing Firm on the basis upon which the Working Capital Statement should be prepared, the matter shall be referred to a third Major Accounting Firm (the "Arbitrating Firm") selected by mutual agreement of the First Reviewing Firm and the Second Reviewing Firm (and failing any such agreement within such 14-day period, either such party may make application to the Ontario Court (General Division) on not less than three days= notice to the other party for the appointment of the Arbitrating Firm). The Arbitrating Firm shall prepare a Working Capital Statement on the basis set out in Section 2.4(a) which shall be final, conclusive and binding upon the parties hereto. For greater certainty, no Vendor other than Investco shall be entitled to raise any objection under Section 2.4(c) or this Section 2.4(d). (5) For the purposes of this Section 2.4(e), the Vendors shall be considered collectively as a single party, any objection to any Working Capital Statement made by Investco shall be considered to have been made on behalf of all the Vendors, and any amount required to be paid under this Section 2.4(e) by the Vendors shall be paid 21 -16- by the Vendors in their Pro Rata Shares. The Objecting Party shall pay all fees and expenses of the First Reviewing Firm and the Second Objecting Party shall pay all fees and expenses of the Second Reviewing Firm. The Objecting Party and the Second Objecting Party shall each pay 50% of the fees and expenses of the Arbitrating Firm. 2.5 AMOUNTS HELD BY ESCROW AGENT. Unless (a) otherwise dealt with by the Escrow Agent in accordance with section 3.2 of the Escrow Agreement, (b) applied in partial satisfaction of the Purchase Price in accordance with Section 2.3(a) hereof, or (c) applied in accordance with Section 11.13 hereof, all amounts held by the Escrow Agent upon the termination pursuant to Section 8.12 or 9.7 of the parties' obligations under this Agreement (other than under Sections 12.2, 12.3, 12.4 or 12.5 hereof) shall forthwith be paid to (x) the Vendors in their Pro Rata Shares if the proximate cause of the non-performance or non-fulfilment of the condition giving rise to the right of termination under Section 8.12 or 9.7 was any inaccuracy in any representation or warranty of the Purchaser made herein or any breach by the Purchaser in the performance of any of its obligations hereunder, and (y) the Purchaser in any other case. 3. Representations and Warranties of the Vendors --------------------------------------------- 3.1 REPRESENTATIONS AND WARRANTIES RELATING TO THE VENDORS. Each of the Vendors represents and warrants to the Purchaser in respect of itself as follows and acknowledges that the Purchaser is relying on such representations and warranties in connection with the transactions contemplated hereby: (1) at the Time of Closing, such Vendor will be the registered and beneficial owner of that number of the Purchased Shares as is set out opposite such Vendor's name in Schedule 3.1(a) and such Vendor will have good and marketable title thereto, free and clear of all Encumbrances; (2) except as set out in Schedule 3.1(b), no person (other than the Purchaser) has any Contract or option, or any right or privilege (whether by law, pre-emptive or contractual) capable of becoming a Contract or option, for the purchase or the acquisition of any of the Purchased Shares which will be at the Time of Closing held by such Vendor and no such Purchased Shares are or will be at any time after the date hereof and prior to the Time of Closing, subject to any shareholders' agreement, voting trust or similar arrangement except as described in Schedule 3.1(b); (3) the execution and delivery of this Agreement by such Vendor and the consummation of the transactions contemplated hereby will not, with or without the giving of notice, lapse of time or both, (i) breach or violate any of the provisions of, constitute a default under, or conflict with or cause the acceleration of any obligation of such Vendor under: (A) any Contract to which such Vendor is a party or by which 22 -17- such Vendor is bound; (B) any judgment, decree, order or award of any court, governmental body or arbitrator having jurisdiction over such Vendor; (C) any Permit held by such Vendor; or (D) any applicable law, statute, ordinance, regulation or rule; or (ii) create or impose any Encumbrance on any of the Purchased Shares which are or will be at the Time of Closing owned by such Vendor; (4) this Agreement has been duly executed and delivered by such Vendor and is a legal, valid and binding obligation of such Vendor, enforceable against such Vendor by the Purchaser in accordance with its terms; and (5) except as set out in an Instrument of Adhesion delivered by any Vendor, such Vendor is not a non-resident of Canada within the meaning of the Tax Act. 3.2 ADDITIONAL REPRESENTATIONS BY INVESTCO. Investco hereby represents and warrants to the Purchaser as follows and acknowledges that the Purchaser is relying on such representations and warranties in connection with the transactions contemplated hereby: (1) the Purchased Shares outstanding on the date hereof are, as at the date of this Agreement, held of record as set out in Schedule 3.2; (2) Investco has the right to purchase, and to cause each of the Onex Associates to sell to it, the Purchased Shares beneficially owned by such Onex Associates; (3) Investco is a corporation validly existing under the laws of the Province of Ontario and has all necessary corporate power and authority to enter into this Agreement and to perform its obligations hereunder; and (4) all necessary proceedings of the directors and shareholders of Investco have been taken to enable Investco to enter into this Agreement and to perform its obligations hereunder. 4. General Representations and Warranties of the Vendors ----------------------------------------------------- The Vendors represent and warrant to the Purchaser as follows and acknowledge that the Purchaser is relying on such representations and warranties in connection with the transactions contemplated hereby: 4.1 ORGANIZATION. Holdco is a corporation duly incorporated and organized and existing under the laws of the Province of Ontario and has all necessary corporate power and authority to own or lease its property, to carry on its business as now being conducted by it and to enter into and perform its obligations under this Agreement. The Company is a company duly incorporated and organized and validly existing and in good standing under the laws of the Province 23 -18- of British Columbia and has all necessary corporate power and authority to own or lease its property and to carry on the Business as now being conducted by it. Each of the Subsidiaries is a corporation duly incorporated or amalgamated and organized and validly existing and in good standing under the laws of its jurisdiction of incorporation as set out in Schedule 4.4 and has all necessary corporate power and authority to own or lease its property and to carry on its business as now being conducted by it. Each of Holdco, the Company and the Subsidiaries is duly registered or qualified to carry on business in each jurisdiction in which the nature of its business or the property and assets owned or leased by it makes such registration or qualification necessary, except to the extent that the absence of any such registration or qualification does not have a Material Adverse Effect. 4.2 AUTHORIZATION; NO VIOLATION. Except as disclosed in Schedule 4.2, the execution and delivery of this Agreement and the performance by the Vendors of their covenants under this Agreement and the consummation of the transactions contemplated hereby will not, with or without the giving of notice, lapse of time or both, (i) breach or violate any of the provisions of, constitute a default under, conflict with or cause the acceleration or modification of any obligation or the termination or modification, in any material respect, of any right of Holdco, the Company or any of the Subsidiaries (or entitle any other person to accelerate or modify any such obligation or terminate or modify any such right) under (A) the constating or organizational documents of Holdco, the Company or any of the Subsidiaries or any resolution of the shareholders or directors (or any committee thereof) of Holdco, the Company or any of the Subsidiaries, (B) any Material Contract, (C) any judgment, decree, order or award of any court, governmental body or arbitrator having jurisdiction over Holdco, the Company or any of the Subsidiaries, (D) any material Permit held by Holdco, the Company or any of the Subsidiaries or (E) any applicable law, statute, ordinance, regulation or rule (except, as regards this subclause (E), with respect to the occurrence of a taxation year-end consequent upon a change of control of Holdco, the Company and the Subsidiaries); or (ii) create or impose any Encumbrance on any material property or asset of Holdco, the Company or any of the Subsidiaries. 4.3 AUTHORIZED AND ISSUED CAPITAL OF HOLDCO AND THE COMPANY. The authorized capital of Holdco consists of and is limited to an unlimited number of common shares and an unlimited number of preference shares, of which 33,580,000 (and no more) common shares and no preference shares are outstanding as fully paid and non-assessable. The authorized capital of the Company consists of and is limited to 150,000,000 shares divided into 100,000,000 common shares and 50,000,000 Class A preferred shares, issuable in series, of which 11,970,269 common shares and no Class A preferred shares (and no more) are outstanding as fully paid and non-assessable. All the issued and outstanding common shares of the Company are owned beneficially by Holdco and held of record by Canadian Imperial Bank of Commerce, as agent. 4.4 AUTHORIZED AND ISSUED CAPITAL OF SUBSIDIARIES. Neither Holdco nor the Company owns, directly or indirectly, any equity securities or ownership interests in any person, except as set out in Schedule 4.4 and except for Holdco's ownership of common shares of the Company. The authorized and issued capital of each of the Subsidiaries is as set out on Schedule 4.4. All issued and 24 -19- outstanding shares of the Subsidiaries have been duly issued and are validly outstanding as fully paid and non-assessable. Except as set out in Schedule 4.4, all of such issued and outstanding shares are owned by the Company, whether directly or indirectly through one or more other Subsidiaries, as the beneficial owner with a good and marketable title thereto, free and clear of all Encumbrances. 4.5 NO OPTIONS, ETC. Except as disclosed in Schedule 4.5, no person has any Contract or option, or any right or privilege (whether by law, pre-emptive or contractual) capable of becoming a Contract or option, including convertible securities, warrants or convertible obligations of any nature, for the purchase, subscription, allotment or issuance of any unissued shares or other securities of Holdco, the Company or any of the Subsidiaries. 4.6 TITLE TO PROPERTY. The property and assets reflected in the Audited Financial Statements are owned beneficially by the Company and the Subsidiaries, except such as may have been disposed of in the ordinary course of business since the date of the Audited Financial Statements, free and clear of all Encumbrances other than Permitted Encumbrances and other than Encumbrances relating to Taxes (which are addressed in Section 4.16). The aggregate book value of the property and assets of Holdco, the Company and the Subsidiaries located in the United States is less than U.S. $15,000,000 and Holdco, the Company and the Subsidiaries have not made aggregate sales in or into the United States of U.S. $25,000,000 or more in the most recent calendar year. 4.7 ACCOUNTS RECEIVABLE. All material accounts receivable, accounts, book debts and other debts due or accruing to Holdco, the Company and the Subsidiaries are bona fide, have arisen in the normal course of the Business, and are not subject to set-off or counterclaim. 4.8 INTELLECTUAL PROPERTY. Schedule 4.8 sets out a complete and accurate list, in all material respects, of all Intellectual Property and includes particulars that are complete and accurate in all material respects of all registrations or applications for registration of any Intellectual Property made by Holdco, the Company or any Subsidiary and of all licences of Intellectual Property to which Holdco, the Company or any Subsidiary is a party. The Company (or a Subsidiary) is the beneficial owner of the rights constituting the Intellectual Property, free and clear of all Encumbrances. Except as set out on Schedule 4.8, no person other than Holdco or a Subsidiary has been granted any interest in or right to use all or any of the Company's or any Subsidiary's rights to the Intellectual Property. The Vendors have no knowledge of any claim of infringement or breach by Holdco, the Company or any of the Subsidiaries of any industrial or intellectual property rights of any other person or of any basis on which such a claim may reasonably be made. The Vendors have no knowledge of any person that is now infringing the Intellectual Property. 4.9 INSURANCE. Schedule 4.9 sets out all insurance policies (specifying the insurer, the amount of coverage, the type of insurance, the deductible, and, if available, the policy number) maintained by Holdco, the Company and the Subsidiaries on their respective properties and assets or personnel. The Vendors have provided or made available to the Purchaser a true copy of each 25 -20- insurance policy referred to in Schedule 4.9 or a certificate of insurance relating thereto. Holdco, the Company and the Subsidiaries are in compliance in all material respects with such insurance policies, have paid all premiums when due and have not failed to give any notice or present any material claim under any such insurance policy in a due and timely fashion. 4.10 MATERIAL CONTRACTS. Except for Contracts disclosed in Schedule 1.1(xx), 4.9, 4.10, 4.20, 4.21, 4.22(b), 4.26 and 4.31 (collectively, the "Material Contracts"), none of Holdco, the Company or any of the Subsidiaries is a party to or bound by any of the following: (1) any Contract for the purchase of materials, supplies, inventory, equipment or services (other than parking lot services) for aggregate consideration of more than $250,000 in respect of any one Contract or creating ongoing obligations to purchase for a term in excess of three years; (2) any Operating Agreement to which there was attributable in the 1996 calendar year a Gross Margin Contribution of $45,000 or more (as reflected in the books and records of the Company, consistent with past practice, and determined on a consistent basis as between Operating Agreements); (3) any trust indenture, mortgage, promissory note, loan agreement, debenture, security agreement or other Contract relating to the borrowing of money or any security therefor, or a leasing transaction of the type required to be capitalized in accordance with GAAP; (4) any Contract for capital expenditures, excluding Contracts for capital expenditures not exceeding $250,000 in the case of any such Contract or $1,000,000 in the aggregate in the case of all such Contracts; (5) any Contract for the sale of any assets material to the Company and the Subsidiaries taken as a whole, other than inventory in the ordinary course of business; (6) any Contract pursuant to which Holdco, the Company or any of the Subsidiaries is a lessor or lessee of any machinery, equipment or assets having a value in excess of $250,000; or (7) any agreement of guarantee, support, indemnification, assumption or endorsement of, or any other similar commitment with respect to, the obligations, liabilities (whether accrued, absolute, contingent or otherwise) or indebtedness of any person other than Holdco, the Company and the Subsidiaries. Holdco, the Company and the Subsidiaries have complied in all material respects with all of their respective material obligations and are entitled to all material benefits under, and 26 -21- are not in material default or breach and have not received notice of any alleged material default or breach in respect of, any Material Contract. All Material Contracts are, to the Vendors' knowledge, in good standing and in full force and effect, and no event, condition, circumstance or occurrence exists which would constitute a material default or breach under any Material Contract. As soon as practicable following the date hereof, and in any event by February 17, 1997, the Vendors will have provided or made available to the Purchaser a copy of each written Contract. Except as otherwise disclosed in this Agreement (including the Schedules hereto), the execution and delivery of this Agreement, and the performance by the Vendors of their obligations hereunder and the consummation of the transactions contemplated hereby will not, with or without the giving of notice, lapse of time or both, breach or violate any of the provisions of, constitute a default under, conflict with or cause the acceleration or modification of any obligation or the termination or modification, in any material respect, of any right of Holdco, the Company or any of the Subsidiaries (or entitle any other person to accelerate or modify any such right) under, and Holdco, the Company and the Subsidiaries have complied with their obligations and are entitled to all benefits under, and are not in default or breach and have not received notice of any cancellation or termination or intention to cancel or terminate (whether or not arising from a default or breach) or alleged default or breach in respect of any Contract, to the extent that any of the same individually or in the aggregate would cause a Material Adverse Effect. 4.11 COMPLIANCE WITH LAWS; PERMITS. (1) Holdco, the Company and each of the Subsidiaries have complied in all material respects with all applicable laws, statutes, ordinances, regulations, rules, judgments, decrees and orders (other than Environmental Laws which are addressed in Section 4.19) in each jurisdiction in which the Business is carried on, except for violations which would not have a Material Adverse Effect. (2) The Company and the Subsidiaries have all material Permits (other than Environmental Permits which are addressed in Section 4.19) required to own or lease their assets and carry on the Business. Each Permit (other than Environmental Permits which are addressed in Section 4.19) held by the Company or any Subsidiary is valid, subsisting and in good standing and the Company or the Subsidiary which holds such Permit, as the case may be, is in substantial compliance with the terms thereof, except for violations which would not have a Material Adverse Effect. Neither the Company nor any of the Subsidiaries has received written notice that any proceeding is pending or threatened to revoke or limit any such Permit. 4.12 CONSENTS AND APPROVALS. There is no requirement to make any filing with, give any notice to or obtain any licence, permit, certificate, registration, authorization, consent or approval of, any governmental or regulatory authority (other than Environmental Authorities which are addressed in Section 4.19) as a condition to the lawful consummation of the transactions contemplated by this Agreement, except for those requirements described in Schedule 4.12(a). Except as described in Schedule 4.12(b), there is no requirement under any Material Contract or 27 -22- material Permit to which Holdco, the Company or any of the Subsidiaries is a party or by which any of their respective assets are bound to give any notice to, or to obtain the consent or approval of, any party to such Contract or Permit (other than Environmental Permits which are addressed in Section 4.19) in connection with the completion of the transactions contemplated by this Agreement. 4.13 FINANCIAL STATEMENTS. The Audited Financial Statements have been prepared in accordance with GAAP and present fairly in all material respects the assets, liabilities and financial condition of the Company on a consolidated basis, as at the respective dates thereof and the sales, earnings and results of operations of the Company for the period covered thereby. The Vendors have provided the Purchaser with a copy of the management representation letter delivered by the Company to its auditors in connection with the Audited Financial Statements. 4.14 CORPORATE RECORDS. The minute books and corporate records of Holdco, the Company and the Subsidiaries contain complete and accurate minutes (or copies thereof) of all meetings and proceedings of the shareholders and directors (or any committee thereof) of Holdco, the Company and the Subsidiaries and the share certificate books, registers of transfers, registers of shareholders and registers of directors of the Holdco, Company and the Subsidiaries are complete and accurate in all material respects. 4.15 ABSENCE OF CHANGES. Since December 31, 1996, Holdco, the Company and the Subsidiaries have carried on the Business and conducted their operations and affairs only in the ordinary and normal course, consistent with past practice, and, except as disclosed in the Audited Financial Statements there has not been: (1) any material adverse change in any of the Business, operations or financial condition of Holdco, the Company and the Subsidiaries taken as a whole; (2) any material damage, destruction or loss (whether or not covered by insurance) affecting any property or asset material to Holdco, the Company and the Subsidiaries taken as a whole; (3) any declaration or payment of any dividend or other distribution in respect of any securities of Holdco, the Company or any of the Subsidiaries or any direct or indirect redemption, purchase or other acquisition of any such securities; (4) any write-down of the value of inventory or any other property or asset of the Company or any of the Subsidiaries or any write-off as uncollectible of any accounts or notes receivable of the Company or any of the Subsidiaries, and no events have occurred which could reasonably be expected to result in such a write-down or write-off, except for write-downs and write-offs and expected write-downs and write-offs that, in the aggregate, do not exceed $500,000; 28 -23- (5) any cancellation or compromise of any debts or claims, or any amendment, termination or waiver of any rights (including rights under any Contracts or Permits), of the Company or any of the Subsidiaries in amounts involving in excess of $200,000 in the aggregate or, if a monetary value for the same is not readily ascertainable, that do not have, in the aggregate, a Material Adverse Effect; (6) any general increase in the compensation of employees of Holdco, the Company or any of the Subsidiaries (including any increase pursuant to any Employee Plan) or any material increase in the compensation or bonus payable to any officer, employee, consultant or agent of Holdco, the Company or any of the Subsidiaries, other than increases in the ordinary and normal course of the Business consistent with past practice; (7) any material change in the accounting or Tax practices followed by the Company or any of the Subsidiaries; or (8) any incurrence of indebtedness, liability or obligation, in any case for borrowed money, other than for working capital purposes in the ordinary course of business under credit facilities existing on December 31, 1996. 4.16 TAXES. Except as set out in Schedule 4.16, Holdco, the Company and each of the Subsidiaries have duly filed or caused to be filed on a timely basis all Tax returns required to be filed by them in all relevant jurisdictions, all of which were true, correct and complete in all material respects, and have paid all Taxes due and payable by them. Holdco, the Company and each of the Subsidiaries have made provision for Taxes payable by them for all periods for which Tax returns are not yet required to be filed or payments are not yet required to be made. Except as set out in Schedule 4.16, there are no actions, suits, proceedings, investigations or claims pending or, to the knowledge of the Vendors, threatened against Holdco, the Company or any of the Subsidiaries in respect of Taxes. Holdco, the Company and each of the Subsidiaries have withheld or collected all amounts required to be withheld or collected by them on account of Taxes and have remitted all such amounts to the appropriate Tax authority when required by law to do so. There are no Encumbrances for unpaid Taxes, other than Permitted Encumbrances. The Canadian and United States federal income and capital Tax liability of Holdco, the Company and each of the Subsidiaries has been assessed by Revenue Canada and the United States Internal Revenue Service, as applicable, and any Canadian provincial income and capital Tax liability of Holdco, the Company and each of the Subsidiaries has been assessed by the appropriate taxing authority, for all taxation periods ending on or prior to the dates set out in Schedule 4.16, and, except as described in Schedule 4.16, there are no agreements, waivers or other arrangements (collectively, "waivers") providing for an extension of time with respect to the filing of any Tax return by, the payment of any Tax, governmental charge or deficiency by, or the issuance of an assessment or reassessment against, Holdco, the Company or any of the Subsidiaries. There are no circumstances existing other than in the ordinary course of business which could result in the application of section 78 of the Tax Act or any equivalent 29 -24- provincial provision to Holdco, the Company of any of the Subsidiaries. None of sections 80 through to and including section 80.04 of the Tax Act, or any equivalent provincial provision, have applied to Holdco, the Company or any of the Subsidiaries. None of Holdco, the Company or any of the Subsidiaries has acquired an asset from a person with which it deals at non-arm's length for consideration greater than the fair market value of such asset at the time of its acquisition. None of Holdco, the Company or any Subsidiary has entered into an agreement contemplated by section 191.3 of the Tax Act or any equivalent provincial provision. Neither Holdco, the Company nor any Subsidiary has agreed, or is required, to make any adjustment in a post-Closing period under section 481(a) of the Code by reason of a change in the accounting method or otherwise. None of Holdco, the Company or any Subsidiary has entered into a transaction which is being accounted for as an instalment obligation under section 453 of the Code nor is Holdco, the Company nor any Subsidiary party to an interest rate swap, currency swap or other similar transaction. None of Holdco, the Company or any of the Subsidiaries is subject to any material liability for Taxes of any person (other than Holdco, the Company or any Subsidiary) including, without limitation, liability arising from the application of U.S. Treasury Regulation section 1.1502-6 or any analogous provision of state, local or foreign law. None of Holdco, the Company or any of the Subsidiaries is or has been a party to any tax sharing agreement which is binding and in effect on the date hereof. No material claim has ever been made by an authority in a jurisdiction where Holdco, the Company or any Subsidiary does not file Tax returns that it is or may be subject to taxation by that jurisdiction. 4.17 LITIGATION. Except as described in Schedule 4.17, and except for such claims, demands, actions, suits, proceedings, investigations or grievances arising after the date hereof for which there is no reasonable basis in fact, law or equity, there are no claims, demands, actions, suits, proceedings, investigations or grievances underway, pending or, to the knowledge of the Vendors, threatened in writing against the Company or any of the Subsidiaries at law or in equity or before or by any federal, provincial, municipal or other governmental department, court, commission, board, bureau, agency or instrumentality, domestic or foreign, or by or before any arbitrator or arbitration board which, if adversely determined, would have a Material Adverse Effect. 4.18 NON-ARM'S LENGTH TRANSACTIONS. Since the date of the last Audited Financial Statements, none of Holdco, the Company or any of the Subsidiaries has made any payment or loan to, or borrowed any monies from, any officer, director, employee, shareholder or any other person not dealing at arm=s length (within the meaning of the Tax Act) with Holdco, the Company, the Subsidiaries and the Vendors, except as disclosed in Schedule 4.18 and except for usual employee reimbursements and compensation paid in the ordinary and normal course of the Business. Except as described in Schedule 4.18 and except for Contracts of employment, none of Holdco, the Company or any of the Subsidiaries is a party to any material Contract with any officer, director, employee, shareholder or any other person not dealing at arm's length with Holdco, the Company and the Subsidiaries (within the meaning of the Tax Act). 4.19 ENVIRONMENTAL. Except as described in Schedule 4.19: 30 -25- (1) Holdco, the Company and the Subsidiaries have complied and are in compliance with all applicable Environmental Laws other than violations which would not have a Material Adverse Effect and there is no past or present fact, condition or circumstance that, to the Vendors' knowledge, could result in any liability of Holdco, the Company or any of the Subsidiaries under any applicable Environmental Laws which would have a Material Adverse Effect; (2) Holdco, the Company and the Subsidiaries have obtained all material Environmental Permits required for the operation of the Business, all of which are described in section (b) of Schedule 4.19. Each such Environmental Permit is valid, subsisting and in good standing and none of Holdco, the Company or any of the Subsidiaries is in default or breach of any Environmental Permit, other than defaults or breaches that would not have a Material Adverse Effect, and no proceeding is pending or, to the Vendors' knowledge, threatened to revoke, amend or limit any material Environmental Permit; (3) none of Holdco, the Company or any of the Subsidiaries has used or permitted to be used any of its past or present properties (including the Real Property and the Leased Property) or facilities to generate, use, dispose of or handle any material quantities of Hazardous Substance except in compliance with Environmental Laws or where non-compliance would not have a Material Adverse Effect; (4) none of Holdco, the Company or any of the Subsidiaries has received in the three years preceding the date hereof any written notice of, or been prosecuted for an offence alleging, non-compliance with any Environmental Law. In the ten years preceding the date of this Agreement: (i) none of Holdco, the Company or any of the Subsidiaries has been required to pay any amount, whether in respect of a fine, penalty, damages or otherwise, in respect of any proceeding or prosecution for or allegation of non-compliance with any Environmental Law, (ii) there have been no orders or directions of Environmental Authorities communicated in writing to Holdco, the Company or any of the Subsidiaries relating to environmental matters requiring any work, repairs, construction or capital expenditures to be made with respect to the Business or any property of the Company or any of the Subsidiaries and (iii) none of Holdco, the Company or any of the Subsidiaries has made any material expenditure to remediate any contamination caused by the release into the environment of any Hazardous Substance; (5) except in compliance with Environmental Laws or as would not have a Material Adverse Effect, none of Holdco, the Company or any of the Subsidiaries has caused, allowed or permitted, or has any knowledge of, the release into the environment, in any manner whatsoever, or the presence of any Hazardous Substance on, under, around or from any of its past or present properties (including the Real Property and the Leased Property), assets or facilities. All Hazardous Substances used in whole or in part by Holdco, the Company or any of the Subsidiaries or resulting from the Business have been disposed of, treated and stored in compliance with all Environmental Laws, other than for violations that would not have a Material Adverse Effect. Section (e) of Schedule 4.19 identifies, to the knowledge of the Vendors, all of the locations where Hazardous 31 -26- Substances used in whole or in part by Holdco, the Company or any of the Subsidiaries are being stored or disposed of. No Hazardous Substances used in whole or in part by Holdco, the Company or any of the Subsidiaries has been disposed of at any location in the United States other than as identified in section (e) of Schedule 4.19; (6) there is no requirement to make any filing with, give any notice to or obtain any Environmental Permit as a condition to the lawful consummation of the transactions contemplated by this Agreement, except for those requirements described in section (f) of Schedule 4.19. Except as described in section (f) of Schedule 4.19, there is no requirement under any material Environmental Permit to which Holdco, the Company or any of the Subsidiaries is a party or by which they are bound to give any notice to, or to obtain the consent or approval of, any party to such Environmental Permit in connection with the completion of the transactions contemplated by this Agreement; and (7) the Vendors have provided or made available (or will have as soon as practicable after the date hereof and, in any event by February 17, 1997) to the Purchaser copies of all written environmental audits, evaluations, assessments, studies or tests relating to the Real Property and the Leased Property in their possession or under their control. 4.20 EMPLOYEE PLANS. (1) Except as set forth in Schedule 4.20, none of Holdco, the Company, any of the Subsidiaries or any of their respective ERISA Affiliates is a party to or bound by, nor does Holdco, the Company, any of the Subsidiaries or any of their respective ERISA Affiliates have any liability or contingent liability with respect to, any Employee Plans that are material to the Business and that impose any binding legal obligation on Holdco, the Company, any Subsidiary or any of their respective ERISA Affiliates. Schedule 4.20 contains a true and complete list of each such Employee Plan. None of the Employee Plans is a Pension Plan or a multiemployer plan (within the meaning of Section 3(37) of ERISA). None of Holdco, the Company or any Subsidiary has a formal plan or commitment, whether legally binding or not, to create any additional Employee Plan or to modify or change in any material respect any existing Employee Plan that would affect any employee or former employee of the Business, except such modification or amendment as may be required to secure the continued registration of any existing Employee Plan with each applicable governmental authority. (2) A copy of each of the following documents will be delivered to the Purchaser as soon as practicable and, in any event, by February 17, 1997; (1) each Employee Plan (including all amendments thereto); 32 -27- (2) subject to applicable law, all general employee communications since January 1, 1996 relating to the Employee Plans, whether or not such communications have been, or are required to be, filed with any applicable governmental authority; (3) if the Employee Plan is funded through a trust or any third party funding arrangement, a copy of the trust or other funding agreement (including all amendments thereto); and (4) all material contracts relating to the Employee Plans with respect to which Holdco, the Company or any Subsidiary may have any liability, including insurance contracts, investment management agreements, monitoring agreements, subscription and participation agreements and record keeping agreements. (3) There are no pending or, to the Vendors' knowledge, threatened claims by or on behalf of any person regarding the non-compliance by Holdco, the Company, any Subsidiary or any of their respective ERISA Affiliates with its material obligations under or relating to any Employee Plan. (4) All contributions to, and payments from, each Employee Plan which may have been required to be made in accordance with the terms of any such Employee Plan and applicable laws have been made in a timely manner and in accordance in all material respects with the terms of the Employee Plan and applicable laws. (5) There are no pending or, to the Vendors' knowledge, threatened investigations by any governmental or regulatory agency or authority involving or relating to any Employee Plan or the assets thereof. (6) The consummation of the transactions contemplated by this Agreement will not constitute an event under any Employee Plan or individual agreement with any present or former employee that will or may in itself result in any severance or other payment or in the acceleration, vesting or increase in benefits with respect to any present or former employee. (7) All Employee Plans are in compliance in all material respects with all applicable laws and have been administered in form and in operation in compliance in all material respects with all applicable laws. (8) There have been no non-exempt "prohibited transactions" (as described in section 406 of ERISA or section 4975 of the Code) with respect to any Employee Plan and none of Holdco, the Company, any Subsidiary or any of their respective ERISA Affiliates has engaged in any non-exempt prohibited transaction with respect to any Employee Plan. 33 -28- (9) None of Holdco, the Company or any of the Subsidiaries has incurred any liability or taken any action or has any knowledge of any action or event that could cause any one of them to incur any liability with respect to any employee benefit plan as defined in Section 3(3) of ERISA maintained, sponsored or contributed to by any of their respective ERISA Affiliates, other than the Employee Plans. 4.21 UNION CONTRACTS. Except as described in Schedule 4.21, neither the Company nor any of the Subsidiaries has entered into any collective agreement or voluntary recognition agreement or accreditation orders with any labour union or employee association or made any commitments to or conducted any negotiations with any labour union or employee association with respect to any future collective agreement. Except as set out in Schedule 4.21, the Vendors have no knowledge of any current attempts to organize, establish or certify any labour union or employee association with respect to any employees of the Company or any of the Subsidiaries or of any contractor or agency with which the Company or any of the Subsidiaries has a contract for the provision of personnel or the services of personnel, nor is any such union or association presently certified with regard to a bargaining unit. There are no grievances, outstanding complaints before any board or tribunal, applications, proceedings or orders against the Company or any of the Subsidiaries of which such party has received written or other formal notice under any collective agreement which could, individually or collectively, have a Material Adverse Effect. There are no arbitration proceedings or awards pending against the Company or any of the Subsidiaries under any collective agreement. 4.22 EMPLOYEES. Schedule 4.22(a) contains a complete and accurate list of all individuals who are full-time employees or individuals engaged on Contract to provide personal services to the Company or any of the Subsidiaries or other agents or representatives of the Company and the Subsidiaries (in this Section 4.22, "employees") whose annual salaries (excluding bonuses) exceed $100,000, excluding unionized employees. Holdco does not have and has never had any employees. If requested by the Purchaser, the Vendors shall cause the Company to provide to the Purchaser a complete and accurate list of all employees, specifying the salary or hourly wages, length of hire and title or classification of each employee (but which may exclude, prior to March 3, 1997, the names of such employees) and, in the case of each non-active employee, the reason they are non-active, whether they are expected to return to work and, if so, during which month, and any benefits to which they are entitled (except, as regards non-active employees, to the extent such disclosure may be prohibited by applicable law). Except for the collective agreements described in Schedule 4.21 and the employment agreements described in Schedule 4.22(b), neither the Company nor any of the Subsidiaries is a party to any Contract with any employee other than oral Contracts of indefinite duration which are terminable by the employer without cause on reasonable notice as determined in accordance with applicable law. Except as described in Schedule 4.17 and except for claims by employees under Workers Compensation Legislation which, if adversely determined, would not, either individually or in the aggregate, have a Material Adverse Effect, there are no appeals, complaints, claims or charges pending or outstanding or, to the knowledge of the Vendors, 34 -29- anticipated, nor are there any orders, decisions, directions, investigations, applications, proceedings or convictions currently registered or outstanding by any tribunal or agency against or in respect of the Company or any of the Subsidiaries under or in respect of any Employment Legislation. 4.23 LOCATION OF REAL PROPERTY. Schedule 4.23 sets forth the municipal addresses of the Real Property (complete and accurate legal descriptions of which are to be delivered in accordance with Section 7.7). Except as disclosed in Schedule 4.23 and except for leasehold interests under Leases and Operating Agreements, none of Holdco, the Company or any of the Subsidiaries owns, or has agreed to acquire, any real property or interest in real property other than the Real Property. 4.24 REAL PROPERTY. The Company and the Subsidiaries have the exclusive right to possess, use and occupy, and have good and marketable title in fee simple to, all the Real Property, free and clear of all Encumbrances other than Permitted Encumbrances. Except as set out in Schedule 4.24, all buildings, structures, improvements and appurtenances situated on the Real Property (and all equipment necessary for the operation thereof as operated on the date hereof) are in reasonable operating condition and in a state of good maintenance and repair having regard to their age, normal wear and tear and the uses to which they are put, are adequate and suitable for the purposes for which they are currently being used and the Company and the Subsidiaries have adequate rights of ingress and egress for the operation of the Business in the ordinary course. Except as set out in Schedule 4.24, none of such buildings, structures, improvements or appurtenances (or any equipment therein), nor the operation or maintenance thereof, violates in any material respect any restrictive covenant or any provision of any federal, provincial or municipal law, ordinance, rule, regulation or by-law, or encroaches in any material respect on any property owned by others. Without limiting the generality of the foregoing: (1) the Real Property, the current uses thereof and the conduct of the Business comply in all material respects with all regulations, statutes, enactments, laws and by-laws (excluding Environmental Laws which are dealt with in Section 4.19) and there are no outstanding applications for a re-zoning of any Real Property which could have a Material Adverse Effect; (2) no material alteration, repair, improvement or other work has been ordered, directed or requested in writing to be done or performed to or in respect of the Real Property or to any of the plumbing, heating, elevating, water, drainage or electrical systems, fixtures or works by any municipal, provincial or other competent authority, which alteration, repair, improvement or other work has not been completed or will be completed in accordance with the regular maintenance program of the Company, and the Vendors have no knowledge of any notification having been given to the Company or any of the Subsidiaries of any such outstanding work being ordered, directed or requested, other than those which have been complied with; 35 -30- (3) all material accounts for work and services performed and materials placed or furnished upon or in respect of the Real Property at the request of the Company or any of the Subsidiaries have been or will be fully paid and satisfied in the ordinary course of the Business and no person is entitled to claim a lien under the Construction Lien Act (Ontario) or similar legislation in any other jurisdiction in which the Business is conducted against the Real Property or any part thereof, other than current accounts payable in respect of which the payment due date has not yet passed and other than such as are Permitted Encumbrances; (4) the Real Property is fully serviced and has suitable access to public roads, and there are no outstanding material levies, charges or fees assessed against the Real Property by any public authority (including development or improvement levies, charges or fees) and other than such as are Permitted Encumbrances; and (5) neither the Company nor any of the Subsidiaries has entered into any agreement to sell, transfer, encumber or otherwise dispose of or impair such party's right, title and interest in and to the Real Property or the air, density and easement rights relating thereto (except for Permitted Encumbrances). 4.25 NO EXPROPRIATION. No property or assets of Holdco, the Company or any of the Subsidiaries have been taken or expropriated by any federal, provincial, state, municipal or other authority within the past three years nor has any notice or proceeding in respect thereof been given or, to the knowledge of the Vendors, commenced and the Vendors have no knowledge of any intent or proposal to give any such notice or commence any such proceeding. 4.26 LEASED PROPERTY. Schedule 4.26 sets forth the municipal address or the location of all the Leased Property and a list of all Leases. Except as disclosed in Schedule 4.26, all buildings, structures, improvements and appurtenances situated on the Leased Property are in reasonable operating condition and in a state of good maintenance and repair having regard to their age, normal wear and tear and the uses to which they are put, are adequate and suitable for the purposes for which they are currently being used and the Company (or the relevant Subsidiary) has adequate rights of ingress and egress for the operation of the Business in the ordinary course. Except as so disclosed in Schedule 4.26, to the knowledge of the Vendors, the Leased Property (including all buildings, improvements and fixtures thereon) is fit for its present use, and there are no material structural repairs or replacements which are necessary for such use and there are no material repairs to, or replacements of, the roof or the mechanical, electrical, heating, ventilating, air-conditioning, plumbing or drainage equipment or systems which are necessary for such use and for which the Company or any Subsidiary is responsible, and the Leased Property is not currently undergoing any material alteration or renovation nor is any such alteration or renovation contemplated. Neither of the Company nor any of the Subsidiaries is a party to any Lease, whether as lessor or lessee, other than the Leases described in Schedule 4.26 relating to the Leased Property. Each of the Leases is in good standing and in full force and effect without amendment thereto, and none of the Company, 36 -31- the Subsidiaries or, to the knowledge of the Vendors, any other party thereto has failed to perform any obligation that constitutes, or with the giving of notice or the lapse of time or both would constitute, a material breach thereof. 4.27 COMMISSIONS. No commission, finder's fee, consulting fees or other similar payment is payable by Holdco, the Company or any Subsidiaries to any broker, agent or other intermediary acting or purporting to act on behalf of them or the Vendors in connection with the transactions contemplated by this Agreement. 4.28 GST REGISTRATION. The Company and those Subsidiaries carrying on business in Canada are registrants for the purposes of the ETA with the registration numbers set out in Schedule 4.28. 4.29 BANK ACCOUNTS. Schedule 4.29 sets forth a true and complete list showing the name of each bank, trust company or similar institution in which Holdco, the Company or any Subsidiary has accounts or safe deposit boxes, the number or designation of each such account and safe deposit box and the names of all persons authorized to draw thereon or to have access thereto. 4.30 CONDITION AND STATUS OF ASSETS. All material tangible personal property of the Company and the Subsidiaries is in good working condition and good repair having regard to its age, normal wear and tear and the uses to which it is put, consistent with past practice. 4.31 JOINT VENTURE INTEREST. Schedule 4.31 set forth the details of all partnerships, joint ventures and co-tenancies in or to which any of Holdco, the Company or any Subsidiary is a partner, joint venturer, member or party. 4.32 HOLDCO. The sole business of Holdco is to hold and deal with its shares in the capital of the Company. Holdco does not now and will not between the date hereof and the Closing Date carry on any active business, employ any individuals, hold any other assets or rights or have any liabilities except as relate to the acquisition, pledge or disposition of such shares and neither Holdco nor any of its predecessors has carried on any active business, employed any individuals, held any other assets or rights or had any other liabilities in the past, except, in each case, as disclosed in this Agreement. 5. Representations and Warranties of the Purchaser -------------------------------------------------- The Purchaser represents and warrants to the Vendors as follows and acknowledges and confirms that the Vendors are relying on such representations and warranties in connection with the transactions contemplated hereby: 37 -32- 5.1 ORGANIZATION. The Purchaser is a business trust duly formed and validly existing under the laws of the State of Ohio and has all necessary power and authority to own or lease its property and to enter into this Agreement and perform its obligations hereunder. 5.2 AUTHORIZATION; NO VIOLATION. (1) All necessary proceedings have been taken by the Purchaser to enable it to enter into this Agreement and to perform its obligations hereunder. (2) The execution and delivery of this Agreement by the Purchaser and the consummation of the transactions contemplated hereby will not, with or without the giving of notice, lapse of time or both, breach or violate any of the provisions of, constitute a default under, conflict with or cause the acceleration of any obligation of the Purchaser under (A) the Declaration of Trust, as amended, of the Purchaser or any exercise of authority by the securityholders thereunder or any resolution of the board of trustees (or any committee thereof) of the Purchaser, (B) any Contract to which the Purchaser is a party or by which it is bound, (C) any judgment, decree, order or award of any court, governmental body or arbitrator having jurisdiction over the Purchaser, (D) any Permit held by the Purchaser or (E) any applicable law, statute, ordinance, regulation or rule. (3) This Agreement has been duly executed and delivered by the Purchaser and is a legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser by the Vendors in accordance with its terms. 5.3 CONSENTS AND APPROVALS. Except for requirements under the Competition Act and the Investment Canada Act, there is no requirement for the Purchaser to make any filing with, give any notice to or obtain any licence, permit, certificate, registration, authorization, consent or approval of, any government or regulatory authority nor is the consent or approval of any other third party required as a condition to the lawful consummation by the Purchaser of the transactions contemplated by this Agreement. 5.4 SOURCES OF FUNDS. The Purchaser has cash balances, short-term deposits and/or amounts presently available for drawdown under existing credit facilities which in the aggregate exceed the amount of the Purchase Price and, accordingly, does not require additional financing in order to complete the transactions contemplated hereby. 38 -33- 6. Survival of Representations and Warranties --------------------------------------------- 6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE VENDORS. The representations and warranties of the Vendors contained in this Agreement and in any certificate delivered pursuant hereto shall survive the closing of the transactions contemplated for a period of thirteen months following the Closing Date and, notwithstanding such closing or any investigation made by or on behalf of the Purchaser, shall continue in full force and effect for the benefit of the Purchaser during such period, except that: (1) the representations and warranties set out in Sections 3.1(a) and (b) and Sections 4.3 and 4.5 (and the corresponding representations and warranties set out in the certificates to be delivered pursuant to Section 8.1) shall survive the closing of the transactions contemplated hereby and continue in full force and effect until the lapse of applicable limitation periods; (2) the representations and warranties set out in Section 4.19 (and the corresponding representations and warranties set out in the certificate to be delivered pursuant to Section 8.1) shall survive the closing of the transactions contemplated hereby and continue in full force and effect for a period of four years following the Closing Date; (3) the representations and warranties set out in Section 4.16 in respect of a particular taxation year, period or event (and the corresponding representations and warranties set out in the certificates to be delivered pursuant to Section 8.1) shall survive the closing of the transactions contemplated hereby and continue in full force and effect until 90 days after the expiration of the period, if any, during which an assessment, reassessment or other form of recognized document assessing liability for Tax under applicable Tax legislation in respect of such taxation year, period or event could be issued under such Tax legislation, taking into account any waivers or similar documents extending such period given by the Company or any of the Subsidiaries prior to (but not after) the Time of Closing; and (4) a claim for breach of any of the representations and warranties made by the Vendors in this Agreement or in any certificate delivered pursuant hereto involving fraud or fraudulent misrepresentation on the part of the Vendors may be made against the Vendors at any time following the Closing Date, subject only to applicable limitation periods imposed by law. 6.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The representations and warranties of the Purchaser contained in this Agreement and in any certificate delivered pursuant hereto shall survive the closing of the transactions contemplated hereby for a period of one year and, notwithstanding such closing or any investigation made by or on behalf of the Vendors, shall continue in full force and effect for the benefit of the Vendors during such period. 39 -34- 7. Covenants --------- 40 -35- 7.1 ACCESS. The Vendors shall forthwith make available to the Purchaser and its authorized representatives and, if requested by the Purchaser, acting reasonably, provide a copy to the Purchaser of all documents, books and records relating to Holdco, the Company and the Subsidiaries, including title documents, written environmental compliance reviews and site assessments that are in the possession or under the control of the Vendors, Holdco, the Company or any Subsidiary, Contracts, financial statements, minute books, share certificate books, share registers, plans, orders, books of account, accounting records and constating documents relating to Holdco, the Company and the Subsidiaries. The Vendors shall cause the Company and the Subsidiaries to afford the Purchaser and its authorized representatives access on reasonable notice to the Business and the property, assets, undertaking, records and documents of the Company and the Subsidiaries for the purpose of reviewing the same. The foregoing access shall be at any times selected by the Purchaser until March 3, 1997 and thereafter shall be restricted to during normal business hours. The Vendors shall also cause the Company and the Subsidiaries to use their reasonable best efforts to arrange meetings prior to March 3, 1997 with current and past major customers of the Company and the Subsidiaries; provided, however, that Investco shall be notified at least two Business Days prior to any meeting between representatives of the Purchaser and such customers (whether or not arranged by the Vendors or the Company) and a representative of Investco shall be entitled to attend any such meeting. The Vendors shall cause the Company and the Subsidiaries, as appropriate, forthwith following a request therefor from the Purchaser, to deliver to all applicable governmental authorities having jurisdiction over the Real Property and the Leased Property a request substantially in the form prepared or described by the Purchaser that such authorities release to the Company or any such Subsidiary any information held by such authorities in respect to such property, upon receipt of which by the Company or any such Subsidiary, the Vendors shall cause the recipient to make the same available to the Purchaser. In addition, the Purchaser shall be entitled to conduct such environmental inspections and investigations, including intrusive testing, as the Purchaser, acting reasonably, shall deem appropriate, subject to the execution and delivery by the Purchaser of an indemnity in respect of the same in favour of the Vendors, Holdco, the Company and the Subsidiaries, in form and substance acceptable to the Vendors, acting reasonably, which shall provide that the Purchaser will be responsible for any Losses caused by or reasonably attributable to the activities of the Purchaser and its representatives during such investigations. The Vendors shall cause the Company and the Subsidiaries to cooperate in assisting investigations by the Purchaser as provided in the foregoing. Notwithstanding any other provision of this Agreement, until 9:00 a.m. (Toronto time) on March 3, 1997 the Vendors shall be entitled to mask or delete from any Contract, Permit or other document required to be provided or made available to the Purchaser pursuant to the terms of this Agreement any information ("Identifying Information") which may identify the municipal address or location of any real property which is the subject of any Operating Agreement; provided, however, that if this Agreement has not been terminated by the Purchaser pursuant to Section 10.4 on or before March 3, 1997, the Vendors shall cause the Company to provide to the Purchaser the Identifying Information as soon as is reasonably practicable thereafter. 41 -36- 7.2 CURATIVE EFFORTS. The Vendors or any of their Affiliates (other than Holdco, the Company or any Subsidiary if to do so would render any representation or warranty made herein to be or become untrue other than with the Purchaser's consent, not to be unreasonably withheld) shall be entitled to do any act or thing, including by making any payment or satisfying any obligation that is otherwise owing by Holdco, the Company or any Subsidiary or by acquiring common shares of Holdco (so long as the same are Purchased Shares to be purchased and sold hereunder without any increase in the aggregate Purchase Price, ignoring for this purpose the effect of Article 11) as may be necessary to cure or remedy prior to the Time of Closing, any inaccuracy in any representation or warranty or any breach of covenant made or contained herein provided that no such curative or remedial act or thing shall have a Material Adverse Effect. 7.3 DELIVERY OF BOOKS AND RECORDS. The Vendors shall deliver or cause to be delivered to the Purchaser, at the Time of Closing, all of the books and records of and relating to Holdco, the Company, the Subsidiaries and the Business. The Purchaser agrees that it will preserve the books and records so delivered to it for a period of six years from the Closing Date, or for such longer period as is required by any applicable law, and will permit the Vendors or their authorized representatives reasonable access thereto in connection with the affairs of such Vendor relating to Tax or other appropriate matters. The Vendors and the Purchaser agree to furnish or cause to be furnished to the other after the Closing, upon request, as promptly as practicable, such information (including access to books and records) and assistance relating to Holdco, the Company or any Subsidiary as is reasonably necessary for the filing of any Tax return, the preparation for any Tax audit, the prosecution or defence of any claim, suit or proceeding relating to any proposed Tax adjustment for which the Vendors or the Purchaser retains liability and for the performance by the Vendors and the Purchaser of their respective obligations under this Agreement. The Vendors and the Purchaser shall keep all such information and documents received by them confidential unless otherwise required by law. 7.4 CONDUCT PRIOR TO CLOSING. Without in any way limiting any other obligations of the Vendors hereunder, during the period from the date hereof until the earlier of the termination of the parties' obligations under this Agreement (other than those set forth in Sections 12.2, 12.3, 12.4 and 12.5) and the Time of Closing: (1) the Vendors shall cause Holdco, the Company and the Subsidiaries to: (1) conduct the Business and the operations and affairs of Holdco, the Company and the Subsidiaries only in the ordinary and normal course of business, consistent with past practice; (2) not enter into any transaction or take any action which, if effected before the date of this Agreement, would constitute a breach of any representation, warranty, covenant or other obligation of the Vendors contained herein, without the prior written consent of the Purchaser; 42 -37- (3) not enter into any material supply arrangements or enter into any Contract which is material to the Company and the Subsidiaries taken as a whole without the prior written consent of the Purchaser; (4) not acquire or dispose of any material property other than inventories and equipment purchased or disposed of in the ordinary and normal course of the conduct of the Business, consistent with past practice; (5) not terminate, amend, supplement or otherwise alter the terms of any material Lease or make any material improvement or other material changes to any Leased Property or Real Property except as may be approved by the Purchaser in writing; (6) use its best efforts to maintain in full force and effect (and, if applicable, to renew on substantially the same terms) all material policies of insurance now in effect; (7) not purchase or acquire any real property or sell or dispose of any of the Real Property; (8) pay and discharge the liabilities and obligations of the Company and the Subsidiaries in the ordinary and normal course in accordance and consistent with the past practice of the Company and the Subsidiaries, except those contested in good faith; and (9) not grant any general increase in the compensation of the employees of Holdco, the Company or any of the Subsidiaries (including any increase pursuant to any Employee Plan) or any material increase in the compensation or bonus payable to any officer, employee, consultant or agent of Holdco, the Company or any of the Subsidiaries, other than increases in the ordinary and normal course of the Business consistent with past practice; and (2) the Vendors shall use, and shall cause the Company and the Subsidiaries to use, their respective best efforts to: (1) obtain, at or prior to the Time of Closing, from all appropriate federal, provincial, state, municipal or other governmental or regulatory bodies, the licences, permits, consents, approvals, certificates, registrations and authorizations described in Schedule 4.12(a); (2) give or obtain the notices, consents and approvals described in Schedule 4.12(b); 43 -38- (3) preserve intact the Business and the property, assets, operations and affairs of the Company and the Subsidiaries and carry on the Business and the affairs of the Company and the Subsidiaries as currently conducted; (4) take all necessary action, steps and proceedings to approve or authorize, validly and effectively, the completion of the transactions contemplated hereby; and (5) satisfy the conditions set out in Sections 8 and 9. 7.5 COVENANTS OF THE PURCHASER PRIOR TO CLOSING. Without in any way limiting any other obligations of the Purchaser hereunder, during the period from the date hereof until the earlier of the termination of the parties obligations under this Agreement (other than those set forth in Sections 12.2, 12.3, 12.4 and 12.5) and the Time of Closing, the Purchaser shall use its best efforts to: (1) take all necessary action, steps and proceedings to approve or authorize the completion of the transactions contemplated hereby; and (2) satisfy the conditions set out in Sections 8 and 9. 7.6 REGULATORY FILINGS. Each of the parties hereto shall, and shall cause each of their respective subsidiaries and affiliates, if any, and as applicable, to, use its best efforts to effect as soon as practicable all necessary applications, registrations and filings under the Competition Act and the Investment Canada Act in connection with the completion of the transactions contemplated herein or any agreement, instrument or other document contemplated hereby and to obtain any and all consents and approvals required thereunder. 7.7 TITLE REPORTS AND SURVEYS. The Vendors shall, at their own expense, deliver to the Purchaser within five days after the date of this Agreement the Company's most current certified building location surveys, title certificates and copies of matters of record reflected in the title certificates or title opinions with respect to each parcel of Real Property (except that such surveys, certificates and opinions need not be provided for any two parcels of Real Property having, in each case, an agreed (as between the Vendors and the Purchaser, each acting reasonably) market value of less than $250,000). Subject to the exceptions as to delivery set out above, the Vendors shall deliver to the Purchaser, at or prior to the Time of Closing, updated certified building location surveys, title certificates and copies of matters of record reflected in the title certificates or title opinions with respect to each parcel of Real Property, in each case dated no more than 30 days prior to the Closing Date. 7.8 SOLICITATION OF OFFERS. The Vendors may solicit and entertain offers from persons other than the Purchaser to acquire the Purchased Shares and may engage in communications in that regard provided that: 44 -39- (1) nothing in this Section 7.8 shall derogate from any obligation of the Vendors to comply with any other covenant set forth in this Agreement or from any liability the Vendors may have under Section 11.13; (2) in exercising its rights under this Section 7.8, the Vendors shall not disclose the name, identity or nature of the Purchaser to any prospective purchaser of or offeror for the Purchased Shares, or provide such information regarding the Purchaser as would constitute disclosure of the Purchaser's identity; (3) officers and employees of the Company and the Subsidiaries (excepting those who are also officers or employees of Onex Corporation) shall not participate in any meetings or conversations with any such prospective purchaser or offeror or their representatives (provided that if any such officer or employee receives an unsolicited communication from any prospective purchaser or offeror, such officer or employee shall be permitted to redirect the call to Investco or its representatives); (4) no such prospective purchaser or offeror or its representatives shall be permitted by the Vendors or the Company to be present during the term of this Agreement at the head office of the Company, other than in the ordinary course of the Business, consistent with past practice, and not for any purpose related to a possible purchase of Purchased Shares; (5) the Vendors' representatives engaged in any such solicitation or entertainment of offers may be present at the Company's head office only in a manner that does not, in the reasonable judgement of the Purchaser, materially impede the due diligence investigations of the Purchaser and its authorized representatives, provided that Investco and its representatives may be present at all meetings between the Purchaser and its authorized representatives and the management or other representatives of Holdco, the Company and the Subsidiaries and, in any event, may be present at the Company's head office without restriction after the earlier of (i) March 3, 1997, and (ii) the termination of the parties' obligations under this Agreement (other than those set forth in Sections 12.2, 12.3, 12.4 and 12.5); (6) on March 3, 1997, if the Purchaser has not exercised any right by that time to terminate the parties obligations under this Agreement (other than those set forth in Sections 12.2, 12.3, 12.4 and 12.5), Investco shall advise the Purchaser of those prospective purchasers or offerors with which it has communicated with respect to a possible sale of the Purchased Shares; and (7) until the termination of the parties' obligations under this Agreement (other than those set forth in Sections 12.2, 12.3, 12.4 and 12.5), the Vendors shall not provide 45 -40- to any person other than the Purchaser and other than in the ordinary course of the Business in accordance with past practice information concerning Holdco, the Company or the Subsidiaries that is confidential or proprietary and the disclosure of which would be materially adverse to Holdco, the Company and the Subsidiaries or to the Purchaser (assuming for this purpose that the Purchaser would thereafter acquire the Purchased Shares), including details of the Leases, Operating Agreements or other Material Contracts to which Holdco, the Company or any Subsidiary is a party. For greater certainty, the Purchaser acknowledges that the Vendors may provide to prospective purchasers or offerors a confidential offering memorandum substantially in the form previously provided to it. 7.9 PURCHASERS KNOWLEDGE. To the Purchaser's knowledge, there are no facts, circumstances, events or conditions that it reasonably believes would render any of the representations or warranties of the Vendors contained in this Agreement untrue in any material respect and the Purchaser hereby agrees that if at time prior to the Time of Closing it obtains knowledge of any such fact, circumstance, event or condition, it shall soon as practicable thereafter advise the Vendors of the particulars thereof, provided that: (1) the knowledge of the Purchaser shall be comprised solely of those matters actually known to the Chief Investment Officer or the Senior Vice President, General Counsel and Secretary of the Purchaser and the Purchaser hereby represents and warrants that each such individual has made appropriate enquiries of such officers of the Purchaser and First Union Management, Inc. who would reasonably be expected to have responsibility for or knowledge of such matters; and (2) the provision of any notice or advice by the Purchaser to the Vendor pursuant to this Section 7.9 shall not constitute a waiver of the Purchaser's rights and remedies hereunder with respect to the information set out in such notice or advice. 7.10 TAIL DIRECTORS' AND OFFICERS' INSURANCE. The Purchaser shall cause Holdco and the Company to maintain for a period of not less than six years following the Closing Date liability insurance for the benefit of the current officers and directors of Holdco and the Company. Such insurance policy shall at all times provide coverage in the aggregate amount of not less than $15,000,000. 8. CONDITIONS OF CLOSING IN FAVOUR OF THE PURCHASER --------------------------------------------------- The completion of the transactions contemplated by this Agreement is subject to the following conditions for the exclusive benefit of the Purchaser, to be fulfilled or performed at or prior to the Time of Closing: 46 -41- 8.1 REPRESENTATIONS AND WARRANTIES. Except for the representation and warranty contained in Section 3.2(a), the representations and warranties of the Vendors contained in this Agreement shall be true and correct in all material respects at the Time of Closing with the same force and effect as if such representations and warranties were made at and as of such time and a certificate dated the Closing Date of each of the Vendors to that effect shall have been delivered to the Purchaser, such certificates to be in form and substance satisfactory to the Purchaser, acting reasonably. 8.2 COVENANTS. All of the terms, covenants and conditions of this Agreement to be complied with or performed by the Vendors, Holdco, the Company or the Subsidiaries at or before the Time of Closing shall have been complied with or performed in all material respects and certificates dated the Closing Date of Investco to that effect shall have been delivered to the Purchaser, such certificates to be in form and substance satisfactory to the Purchaser, acting reasonably. 8.3 REGULATORY CONSENTS. There shall have been obtained, from all appropriate federal, provincial, state, municipal or other governmental or administrative bodies, such licences, permits, consents, approvals, certificates, registrations and authorizations as are required to be obtained to permit the completion of the transactions contemplated hereby, including those described in Schedule 4.12(a), all of which shall be in form and substance satisfactory to the Purchaser, acting reasonably, and any applicable waiting period under the Competition Act shall have expired, provided that the Purchaser shall not be entitled to rely on this condition with respect to any such matter that was not obtained as a result of any breach by the Purchaser of its obligations under Section 7.5. 8.4 OTHER CONSENTS. The Vendors shall have given or obtained the notices, consents and approvals described in Schedule 4.12(b), in each case in form and substance satisfactory to the Purchaser, acting reasonably. 8.5 MATERIAL ADVERSE CHANGE. There shall not have occurred since December 31, 1996 any material adverse change in any of the Business, operations or financial condition of Holdco, the Company and the Subsidiaries, taken as a whole. 8.6 NO ACTION OR PROCEEDING. At the Time of Closing, no legal or regulatory action or proceeding shall be pending or threatened in writing by any person to enjoin, restrict or prohibit the consummation of any of the transactions contemplated hereby. 8.7 SHAREHOLDERS' AGREEMENT, ETC. At the Time of Closing, all shareholders' agreements, voting trusts or similar agreements described in Schedule 3.1(b) shall have been terminated. 47 -42- 8.8 OPTIONS. At the Time of Closing, all options or similar rights described in Schedule 3.1(b) or Schedule 4.5 shall have expired or terminated or been exercised (in which latter case, all shares issued upon the exercise thereof shall be included as Purchased Shares hereunder). 8.9 LEGAL MATTERS. All actions, proceedings, instruments and documents required to implement this Agreement shall have been approved as to form and legality by counsel for the Purchaser, acting reasonably. 8.10 LEGAL OPINION. The Vendors shall have delivered to the Purchaser a favourable opinion of counsel to the Vendors, in form satisfactory to the Purchaser, acting reasonably. 8.11 RESIGNATIONS. The directors of Holdco, the Company and the Subsidiaries (other than Paul Clough) shall have tendered written resignations. 8.12 SECTION 116 CERTIFICATES. Each Vendor that is a non-resident of Canada within the meaning of the Tax Act shall have delivered a certificate obtained under section 116 of the Tax Act with a "certificate limit" not less than that Vendor's Pro Rata Share of the Purchase Price or a direction to the Purchaser to withhold from the Purchase Price otherwise payable to such Vendor any amount required to be withheld under the Tax Act. 8.13 NON-PERFORMANCE. If any of the conditions contained in Sections 8.1 through 8.12 is not performed or fulfilled at or prior to the Time of Closing to the satisfaction of the Purchaser, acting reasonably, the Purchaser may by notice to the Vendors terminate this Agreement and the obligations of the parties under this Agreement (other than the obligations contained in Sections 12.2, 12.3, 12.4 and 12.5), provided that the Purchaser may also bring an action pursuant to Section 11 against the Vendors for damages suffered by the Purchaser where the non-performance or non-fulfilment of the relevant condition is as a result of a breach of covenant within the control of the Vendors, Holdco, the Company or a Subsidiary and the Vendors, Holdco, the Company or such Subsidiary fails to use reasonable commercial efforts to comply with such covenant or cure such breach or is as a result of a breach of representation or warranty by the Vendors and provided further that the Vendors may bring an action pursuant to Section 11 against the Purchaser for damages suffered by the Vendors where the non-performance or non-fulfilment of the relevant condition is as a result of a breach of covenant within the control of the Purchaser and the Purchaser fails to use reasonable commercial efforts to comply with such covenant or cure such breach. Any such condition may be waived in whole or in part by the Purchaser without prejudice to any claims it may have for breach of covenant, representation or warranty. 9. CONDITIONS OF CLOSING IN FAVOUR OF THE VENDORS ------------------------------------------------- 48 -43- The completion of the transactions contemplated by this Agreement is subject to the following terms and conditions for the exclusive benefit of the Vendors, to be fulfilled or performed at or prior to the Time of Closing: 9.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Purchaser contained in this Agreement shall be true and correct in all material respects at the Time of Closing with the same force and effect as if such representations and warranties were made at and as of such time and a certificate dated the Closing Date of a duly authorized officer of the Purchaser to that effect shall have been delivered to the Vendors, such certificate to be in form and substance satisfactory to the Vendors, acting reasonably. 9.2 COVENANTS. All of the terms, covenants and conditions of this Agreement to be complied with or performed by the Purchaser at or before the Time of Closing shall have been complied with or performed in all material respects and a certificate dated the Closing Date of a duly authorized officer of the Purchaser to that effect shall have been delivered to the Vendors, such certificate to be in form and substance satisfactory to the Vendors, acting reasonably. 9.3 REGULATORY CONSENTS. There shall have been obtained, from all appropriate federal, provincial, state, municipal or other governmental or administrative bodies, such licences, permits, consents, approvals, certificates, registrations and authorizations as are required by law to be obtained to permit the completion of the transactions contemplated hereby, and any applicable waiting period under the Competition Act shall have expired, provided that the Vendors shall not be entitled to rely on this condition with respect to any such matter that was not obtained as a result of any breach by the Vendors of their obligations under Section 7.4(b)(iv) or (v). 9.4 NO ACTION OR PROCEEDING. No legal or regulatory action or proceeding shall be pending or threatened by any person to enjoin, restrict or prohibit the completion of the transactions contemplated hereby. 9.5 LEGAL MATTERS. All actions, proceedings, instruments and documents required to implement this Agreement shall have been approved as to form and legality by counsel to the Vendors, acting reasonably. 9.6 LEGAL OPINION. The Purchaser shall have delivered to the Vendors a favourable opinion of counsel to the Purchaser, in form satisfactory to the Vendors, acting reasonably. 9.7 NON-PERFORMANCE. If any of the conditions contained in Sections 9.1 through 9.6 is not performed or fulfilled at or prior to the Time of Closing to the satisfaction of the Vendors, acting reasonably, the Vendors may terminate this Agreement and the obligations of the parties under this Agreement (other than the obligations contained in Sections 12.2, 12.3, 12.4 and 12.5) by giving written notice to the Purchaser, provided that the Vendors may also bring an action pursuant to Section 11 against the Purchaser for damages suffered by the Vendors where the non-performance 49 -44- or non-fulfilment of the relevant condition is as a result of a breach of a covenant within the control of the Purchaser and the Purchaser fails to use reasonable commercial efforts to comply with such covenant or cure such breach or is a result of a breach of representation or warranty by the Purchaser and provided further that the Purchaser may bring an action pursuant to Section 11 against the Vendors for damages suffered by the Purchaser where the non-performance or non-fulfilment of the relevant condition is as a result of a breach of covenant within the control of the Vendors and the Vendors fail to use reasonable commercial efforts to comply with such covenant or cure such breach. Any such condition may be waived in whole or in part by the Vendors without prejudice to any claims the Vendors may have for breach of covenant, representation or warranty. 10. CLOSING ARRANGEMENTS ------------------------ 10.1 PLACE OF CLOSING. The closing shall take place at the Time of Closing at the offices of Davies, Ward & Beck, 1 First Canadian Place, Toronto, Ontario M5X 1B1 or at such other place as the Vendors and the Purchaser may mutually determine. 10.2 IMPLEMENTATION. At the Time of Closing, upon fulfilment of all the conditions set out in Sections 8 and 9 which have not been waived in writing by the Vendors or the Purchaser, as the case may be, the parties shall execute all documents and do all other acts and things necessary or advisable to implement and give effect fully to each of the transactions contemplated hereby and, without limitation: (1) the Vendors shall deliver or cause to be delivered to the Purchaser certificates representing the Purchased Shares, duly endorsed for transfer to the Purchaser, together with all other agreements, instruments, certificates, share certificates, directions, opinions and other documents contemplated to be delivered to the Purchaser by the Vendors hereunder; and (2) the Purchaser shall deliver or cause to be delivered to the Vendors the certified cheques or bank drafts contemplated by Section 2.3 together with all other agreements, instruments, certificates, share certificates, receipts, opinions and other documents contemplated to be delivered to the Vendors by or on behalf of the Purchaser. 10.3 FURTHER ASSURANCES. Each party to this Agreement agrees that, from time to time subsequent to the Closing Date, such party will, at the request and expense of any other party, execute and deliver all such documents, including, without limitation, all such additional conveyances, transfers, consents and other assurances and do all such other acts and things as any other party, acting reasonably, may from time to time request be executed or done in order to better evidence or perfect or effectuate any provision of this Agreement or of any agreement or other document executed pursuant to this Agreement or any of the respective obligations intended to be created hereby or thereby. 50 -45- 1.4 EARLY TERMINATION. The Purchaser may, by written notice delivered to the Vendors at or prior to 9:00 a.m. (Toronto time) on March 3, 1997, terminate the obligations of both parties under this Agreement (other than those set forth in Sections 12.2, 12.3, 12.4 and 12.5) by reason of: (1) the Purchaser's non-satisfaction, in its sole and absolute discretion, with the result of its due diligence investigations conducted pursuant to Section 7.1 (including the Purchaser's investigation of any of the contracts, disclosures or other matters referred to in any of the Schedules to this Agreement); (2) the failure to execute and deliver the non-competition agreements and confidentiality agreements described in Section 10.5. The termination of such obligations pursuant to this Section 10.4 shall relieve both parties of all liabilities relating hereto, other than those set forth in Sections 12.2, 12.3, 12.4 and 12.5 and in the confidentiality agreements referred to in Section 1.5 and other than those provisions of the Escrow Agreement relating to the disposition of the funds then held by the Escrow Agent. 10.5 NON-COMPETITION AGREEMENT. Onex Corporation ("Onex") and the Purchaser shall use their best efforts to execute and deliver by February 24, 1997 (but to have effect only if and when the Closing occurs): (1) a form of a non-competition agreement in form and substance mutually satisfactory to Onex and the Purchaser which shall provide that Onex will not, directly or indirectly, engage or participate in North America for a period of five years after the date hereof in any business substantially the same as or similar to the Business (except any such engagement or participation in a similar business which is incidental to the operations of Onex or any of its Affiliates where such business constitutes less than 5% of the assets or revenues of Onex or such Affiliate); and (2) a confidentiality agreement in form and substance mutually satisfactory to Onex and the Purchaser wherein Onex will agree that: (1) it will not, directly or indirectly, use other than as may be reasonably necessary in connection with its rights, remedies, obligations and liabilities under this Agreement or to make such disclosure as may be required by law any confidential information, trade secrets or proprietary data of Holdco, the Company or the Subsidiaries (including lists of customers of the Business and its Intellectual Property); and 51 -46- (2) it will not disclose, divulge or communicate, orally, in writing or otherwise, any such confidential information, trade secrets or proprietary data to any other person other than as may be reasonably necessary in connection with its rights, remedies, obligations and liabilities under this Agreement or to make such disclosure as may be required by law. Each Vendor who is not an employee of the Company or any of its Subsidiaries and the Purchaser shall use their best efforts to enter into separate non-competition agreements and confidentiality agreements substantially on the terms and by the date described above. For greater certainty, the failure of any party to enter into at or prior to the Time of Closing a non-competition agreement and confidentiality agreement as provided in this Section 10.5 shall not constitute a breach by any party hereto of any term or provision of this Agreement nor shall such failure be considered to constitute non-performance or non-fulfilment of any condition to the closing of the transactions contemplated hereby, whether set out in Section 8, Section 9 or otherwise, and the sole remedy of any party with respect to any such failure shall be the entitlement of the Purchaser to exercise its rights under Section 10.4 within the time period provided for such exercise. 10.6 ONEX ASSOCIATES. Investco covenants and agrees to (a) purchase, at or before the Time of Closing, all of the Purchased Shares now held, or which may hereafter be held, by any Onex Associate and (b) to obtain from each of the Onex Associates, and to deliver to the Purchaser, on or before February 21, 1997, an acknowledgement in the form of Schedule 10.6. 10.7 CIBC WARRANT. Investco covenants to obtain from Canadian Imperial Bank of Commerce ("CIBC") and to deliver to the Purchaser, on or before February 21, 1997, an agreement substantially in the form of the agreement set out as Schedule 10.7, pursuant to which CIBC will (a) consent to the redemption, on or before the Closing Date, of the common stock warrant granted by Holdco to CIBC dated the 13th day of November, 1996 and the termination of the Shareholders' Agreement among Impark Holdings Inc., CIBC, Holdco and Onex dated the 13th day of November, 1996 and (b) confirm that it does not now hold any shares in the capital of Holdco and that it will not exercise any right to acquire any shares in the capital of Holdco between the date of such agreement and the Closing Date. 11. INDEMNIFICATION ------------------- 11.1 INDEMNIFICATION BY THE VENDORS. The Vendors hereby agree to indemnify and save harmless the Purchaser from all Losses suffered or incurred by the Purchaser (or, if the Closing has occurred, the Purchaser, Holdco, the Company or any Subsidiary) as a result of or arising directly or indirectly out of or in connection with: (1) any breach by the Vendors of or any inaccuracy of any of the representations and warranties of the Vendors set out in this Agreement (other than in Section 4.16, 52 -47- which are covered by Section 11.1(c)) or any of the corresponding representations and warranties set out in any certificate to be delivered by the Vendors pursuant to this Agreement or in any agreement, instrument or other document delivered pursuant to this Agreement (provided that the indemnity provided for in this Section 11.1(a) shall not apply in the case of a breach or inaccuracy of any representation or warranty unless the Indemnified Party shall have provided notice to the Indemnifying Party in accordance with Section 11.3 on or prior to the expiration of such representation and warranty as provided in Section 6.1); (2) any breach or non-performance by the Vendors of any covenant to be performed by the Vendors under this Agreement or under any agreement, instrument, certificate or other document delivered pursuant hereto; (3) Taxes of Holdco, the Company or any of the Subsidiaries (i) in respect of any period ending before 12:00 a.m. on the Closing Date in the case of Taxes imposed under the Tax Act, the Code or any equivalent provincial, state or municipal laws and (ii) in respect of a time prior to the Time of Closing in the case of other Taxes, including, without limitation, any assessment or reassessment in respect of any of the matters disclosed in Schedule 4.16 to the extent such Taxes exceed the amount reserved for current taxes in respect thereof in the Audited Financial Statements or in the Forecast Working Capital Statement; PROVIDED that any Tax refund received by Holdco, the Company or any of the Subsidiaries (or any successor thereto on or after the Closing Date) in respect of any such period or time shall, to the extent not recorded as an asset or a reduction in liabilities in the Audited Financial Statements or in the Forecast Working Capital Statement, be set off against any Losses referred to in this Section 11.1(c) or, if received when no amount is payable by the Vendors under Section 11.1 or after an indemnity payment has been made in respect of any relevant Loss, shall forthwith be paid to the Vendors, provided that the liability of any Vendor to indemnify the Purchaser in respect of any such Loss shall be limited to such Vendor's Pro Rata Share of such Loss. 11.2 INDEMNIFICATION BY THE PURCHASER. The Purchaser agrees to indemnify and save harmless the Vendors from all Losses suffered or incurred by the Vendors as a result of or arising directly or indirectly out of or in connection with: (1) any breach by the Purchaser of or any inaccuracy of any representation or warranty of the Purchaser contained in this Agreement or in any agreement, instrument, certificate or other document delivered pursuant to this Agreement (provided that the Purchaser shall not be required to indemnify or save harmless the Vendors in respect of any breach or inaccuracy of any representation or warranty unless the Vendors shall have provided notice to the Purchaser in accordance with 53 -48- Section 11.3 on or prior to the expiration of such representation and warranty as provided in Section 6.2); (2) any breach or non-performance by the Purchaser of any covenant to be performed by it under this Agreement or under any agreement, instrument, certificate or other document delivered pursuant hereto; and (3) any Tax imposed or sought to be imposed on income of Holdco, the Company, or any Subsidiary earned after the Closing Date except to the extent such Tax is exigible as a result of any breach by the Vendors of or any inaccuracy of any of the representations and warranties of the Vendors set out in Section 4.16 or any of the corresponding representations and warranties set out in any certificate to be delivered by the Vendors pursuant to this Agreement. 11.3 NOTICE OF CLAIM. (1) In the event that any person (the "Indemnified Party") shall become aware of any claim, proceeding or other matter involving any Loss (a "Claim") in respect of which another person (the "Indemnifying Party") is required to indemnify the Indemnified Party pursuant to this Agreement, the Indemnified Party shall promptly give written notice thereof to the Indemnifying Party. Such notice shall specify whether the Claim arises as a result of a claim by a person (a "Third Party") against the Indemnified Party (a "Third Party Claim") or whether the Claim does not involve a Third Party (a "Direct Claim"), and shall also specify with reasonable particularity (to the extent that the information is available) the factual basis for the Claim and the amount of the Claim, if known. (2) If after the Time of Closing the Purchaser, Holdco, the Company or any Subsidiary or any agent or representative of any of them (the "Recipient") receives any written request for information, notice of intention to assess, assessment, reassessment, confirmation of assessment or reassessment, determination of loss or any similar communication (a "Communication") from any governmental authority in connection with any matter relating to any Tax in respect of which a Claim pursuant to Section 11.1 may result, the Recipient shall forthwith and in any event not more than 10 Business Days after receipt thereof by the Recipient deliver to the Vendors a copy of such Communication and shall take all action necessary to preserve any rights to object to, dispute or contest any matter to which such Communication relates. If the Purchaser, Holdco, the Company or any Subsidiary, as the case may be, shall fail to comply with the foregoing, the liability of the Vendors in connection with the Tax to which such Communication relates shall be extinguished to the extent any Vendor suffers a Loss as result of or reasonably attributable to such failure to comply. (3) If, through the fault of the Indemnified Party, the Indemnifying Party does not receive notice of any Claim in time to contest effectively the determination of any liability 54 -49- susceptible of being contested, the Indemnifying Party shall be entitled to set off against the amount claimed by the Indemnified Party the amount of any Losses incurred by the Indemnifying Party resulting from the Indemnified Party's failure to give such notice on a timely basis. (4) The Purchaser, Holdco, the Company and each Subsidiary agree that, 15 days prior to filing any Tax return for any taxable period ending on or before the Closing Date, the Vendors or Investco shall have the right to review and to approve the preparation of such Tax return, which approval may not be unreasonably withheld provided that in any such Tax return all discretionary deductions or other amounts in computing income or taxable income shall be claimed to the greatest extent possible and no election shall be made not to have subsection 256(9) of the Tax Act or any equivalent provincial provision apply. 11.4 DIRECT CLAIMS. With respect to any Direct Claim, following receipt of notice from the Indemnified Party of the Claim, the Indemnifying Party shall have 90 days to make such investigation of the Claim as it considers necessary or desirable. For the purpose of such investigation, the Indemnified Party shall make available to the Indemnifying Party the information relied upon by the Indemnified Party to substantiate the Claim, together with all such other information as the Indemnifying Party may reasonably request. If both parties agree at or prior to the expiration of such 90-day period (or any mutually agreed upon extension thereof) to the validity and amount of such Claim, the Indemnifying Party shall immediately pay to the Indemnified Party the amount of the Loss suffered or incurred by the Indemnified Party with respect to the Claim, failing which the matter shall be referred to binding arbitration in such manner as the parties may agree or shall be determined by a court of competent jurisdiction. 11.5 THIRD PARTY CLAIMS. With respect to any Third Party Claim, the Indemnifying Party shall have the right, at its expense, to participate in or assume control of the negotiation, settlement or defence of the Claim and, in such event, the Indemnifying Party shall reimburse the Indemnified Party for all the Indemnified Party's reasonable out-of-pocket expenses as a result of such participation or assumption. If the Indemnifying Party elects to assume such control, the Indemnified Party shall have the right to participate in the negotiation, settlement or defence of such Third Party Claim and to retain counsel to act on its behalf, provided that the fees and disbursements of such counsel shall be paid by the Indemnified Party unless the Indemnifying Party consents to the retention of such counsel or unless the named parties to any action or proceeding include both the Indemnifying Party and the Indemnified Party and a representation of both the Indemnifying Party and the Indemnified Party by the same counsel would be inappropriate due to actual or potential differing interests between them (such as the availability of different defences). If the Indemnifying Party, having elected to assume such control, thereafter fails to defend the Third Party Claim within a reasonable time, the Indemnified Party shall be entitled to assume such control, and the Indemnifying Party shall be bound by the results obtained by the Indemnified Party with respect to such Third Party Claim. If any Third Party Claim is of a nature such that the Indemnified Party is required by applicable law to make a payment to a Third Party before the completion of settlement negotiations or related legal proceedings, the Indemnified Party may make such payment and the 55 - 50 - Indemnifying Party shall, forthwith after demand by the Indemnified Party, reimburse the Indemnified Party for such payment. If the amount of any Loss suffered or incurred by the Indemnified Party in respect of a Third Party Claim in respect of which such payment was made, as finally determined, is less than the amount which was paid by the Indemnifying Party to the Indemnified Party, the Indemnified Party shall, forthwith after receipt of the difference from the Third Party, pay the amount of such difference to the Indemnifying Party. If the amount of any Loss suffered or incurred by the Indemnified Party in respect of a Third Party Claim in respect of which such payment was made, as finally determined, is greater than the amount which was paid by the Indemnifying Party to the Indemnified Party, the Indemnifying Party shall, forthwith following such final determination, pay the amount of such difference to the Indemnified Party. 11.6 SETTLEMENT OF THIRD PARTY CLAIMS. If the Indemnifying Party fails to assume control of the defence of any Third Party Claim within 30 days after its receipt of notice thereof pursuant to Section 11.5, the Indemnified Party shall have the exclusive right to contest, settle or pay the amount claimed. Whether or not the Indemnifying Party assumes control of the negotiation, settlement or defence of any Third Party Claim, the Indemnifying Party shall not settle any Third Party Claim without the written consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed. 11.7 CO-OPERATION. The Indemnified Party and the Indemnifying Party shall co-operate fully with each other with respect to Third Party Claims, and shall keep each other fully advised with respect thereto (including supplying copies of all relevant documentation promptly as it becomes available). 11.8 LIMITATIONS. The Vendors shall not be liable for any Losses referred to in Section 11.1 ("Warranty Claims") until the aggregate of all Warranty Claims exceeds $1,050,000, after which amount the Purchaser shall be entitled to indemnification by each Vendor, and each Vendor shall be liable, for its Pro Rata Share of the full amount of all Warranty Claims. Notwithstanding any other provision hereof, the maximum liability of any Vendor under Section 11.1 shall be an amount equal to the such Vendor's Pro Rata Share of $10,500,000, except with respect to the breach of any of the representations and warranties referred to in section 6.1(a), in which case the maximum liability of any Vendor shall be an amount equal to such Vendor's Pro Rata Share of the Purchase Price. 11.9 INDEMNITY PAYMENT ADJUSTMENTS. For greater certainty, the amount of any payment required to be made by an Indemnifying Party to an Indemnified Party pursuant to this Section 11 shall be (i) reduced by the amount of any insurance proceeds actually received by the Indemnified Party in respect of the Loss or Losses to which the payment relates, (ii) increased to take account of any net Tax cost incurred by the Indemnified Party arising from the receipt of the payment and the incurrence or payment of the Loss or Losses (including any net Tax cost resulting from such increase), (iii) reduced to take account of any net Tax benefit realized by the Indemnified Party arising from the receipt of the payment and the incurrence or payment of the Loss or Losses, and (iv) 56 - 51 - deemed to constitute an adjustment to the Purchase Price. For greater certainty, the adjustments provided for in this Section 11.9 shall not be made to the extent they have been taken into account in calculating the amount of the relevant Loss. 1.10 TAX COMPUTATION. For purposes of computing indemnification for Taxes, in the case of any Taxes that are imposed on a periodic basis and are payable for a tax period that includes (but does not end on) the Closing Date, the portion of such Tax period ending on the day prior to the Closing Date shall (x) in the case of any Taxes other than gross receipts, sales or use Taxes and Taxes based upon or related to income, be deemed to be the amount of such Tax for the entire Tax period multiplied by a fraction the numerator of which is the number of days in the Tax period ending on the day prior to the Closing Date and the denominator of which is the number of days in the entire Tax period, and (y) in the case of any Tax based upon or related to income and any gross receipts, sales or use Tax, be deemed equal to the amount which would be payable if the relevant Tax period ended on the day prior to the Closing Date. The portion of any credits relating to a Tax period that begins before and ends after the Closing Date shall be determined as though the relevant Tax period ended on the day prior to the Closing Date. All determinations necessary to give effect to the foregoing allocations shall be made in a manner consistent with prior practice of Vendor, Holdco, the Company and the Subsidiaries. 11.11 EXCLUSIVITY. The provisions of this Section 11 shall apply to any Claim for breach of any covenant, representation, warranty or other provision of this Agreement or any agreement, certificate or other document delivered pursuant hereto to the exclusion of other relief or remedies therefor (other than a claim for specific performance or injunctive relief), with the intent that all such Claims shall be subject to the limitations and other provisions contained in this Section 11. 11.12 MITIGATION. Nothing in this Section 11 shall derogate from any party's obligation at law to mitigate any damage suffered or incurred by that party, or any rule regarding the calculation of damages that takes into account the ability of any party to mitigate the same. 11.13 LIQUIDATED DAMAGES. In the event that the Vendors: (1) wilfully fail to use their best efforts to satisfy the closing conditions in favour of the Purchaser set forth in Section 8 that are within the Vendors' ability to satisfy; (2) wilfully make a material misrepresentation in Sections 3 or 4 hereof or in any certificate delivered pursuant to Section 8 relating thereto; or (3) commit fraud with respect to any material representation and warranty made in Sections 3 or 4 hereof or in any certificate delivered pursuant to Section 8 relating thereto, 57 - 52 - and if the Vendors fail to cure such wilful failure, material misrepresentation or fraud prior to the Time of Closing with the effect that the Purchaser exercises its right not to close the acquisition of the Purchased Shares, then (the Vendors acknowledge) the Purchaser will suffer damages that are and will be difficult to ascertain with certainty. In such circumstances, the Purchaser may, by written notice delivered to the Vendors at or prior to the Time of Closing, elect to exercise any rights it may have under Section 8 as a consequence thereof not to complete the purchase and sale transaction contemplated hereby. If the Purchaser properly makes such election, each Vendor shall pay to the Purchaser such Vendor's Pro Rata Share of $5,000,000 by way of liquidated damages for such wilful failure, material misrepresentation or fraud, which amount constitutes the parties= good faith pre-estimate of the actual damages that the Purchaser will suffer in such circumstances and is not to be construed as a penalty, provided that Investco shall have no liability under this Section 11.13 arising out of any voluntary resignation by any or all of the individuals named in Schedule 4.22(b) and Mr. Chip Vosmik from their employment and/or offices with Holdco, the Company and/or the Subsidiaries. The payment by each Vendor of its Pro Rata Share of such amount shall extinguish all other liability of such Vendor in connection therewith (including any other liability under this Section 11, but excluding any obligation to obtain the appropriate disposition of funds held by the Escrow Agent pursuant to the Escrow Agreement), and shall constitute full and final satisfaction of the Purchaser=s claims relating thereto against such Vendor, and against receipt of such amount the Purchaser shall deliver to such Vendor a full and final written release to that effect. Investco acknowledges and agrees that any failure by it to purchase at or before the Time of Closing the Purchased Shares now or hereafter held by any Onex Associate and to tender the same as and when required hereby shall constitute an event described in Section 11.13(a). Nothing in this Section 11.13 shall derogate from any right that the Purchaser may have under this Agreement, at law or in equity to seek specific performance by the Vendors of their obligations hereunder. 12. MISCELLANEOUS 12.1 AUTHORITY OF INVESTCO. Each of the Vendors hereby irrevocably appoints Investco as such Vendor's agent and attorney for the purpose of executing and delivering any amendment, waiver, notice, direction or other document or taking any other action required or permitted to be taken by or on behalf of the Vendors pursuant to this Agreement or in connection with the transactions contemplated hereby. Any such amendment, waiver, notice, direction or other document or any such other action shall be deemed to have been effectively given or taken on behalf of the Vendors and shall be binding upon each of the Vendors as if each of them had executed and delivered such document or taken such other action, as the case may be. 12.2 MANAGEMENT. The Purchaser intends that the Company continue the employment of Paul T. Clough and Chip S. Vosmik (collectively, the "Managers") and the current senior management team of the Company after the Time of Closing. The Vendors agree to cooperate in good faith prior to the Time of Closing with the Purchaser to retain the Managers and such senior management team in place after the Time of Closing. 58 -53- 12.3 NOTICES. (1) Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be delivered in person, transmitted by telecopy or similar means of recorded electronic communication or sent by registered mail, charges prepaid, addressed as follows: (1) If to Investco: Impark Investments Inc. c/o Onex Corporation 161 Bay Street 49th Floor, P.O. Box 700 Toronto, Ontario M5J 2S1 Attention: Mark L. Hilson or Anthony Munk Fax: (416) 362-5765 (2) If to the Management Imperial Parking Limited Vendors: Suite 300 601 West Cordova Street Vancouver, B.C. V6B 1G1 Attention: Paul T. Clough Fax: (604) 331-7172 (3) If to the Purchaser: First Union Real Estate Equity and Mortgage Investments 55 Public Square Suite 1910 Cleveland, Ohio 44113-1937 Attention: Senior Vice President, General Counsel and Secretary Fax: (216) 781-7364
59 -54- with copies to: Fasken Campbell Godfrey Box 20, Suite 3700 Toronto Dominion Bank Tower Toronto-Dominion Centre Toronto, Ontario M5K 1N6 Attention: Walter J. Palmer Fax: (416) 364-7813 Mayer, Brown & Platt 190 South LaSalle Street Chicago, Illinois 60603-3441 Attention: J. Trent Anderson Fax: (312) 706-8101 (2) Any such notice or other communication shall be deemed to have been given and received on the day on which it was delivered personally or by reputable overnight courier or transmitted by facsimile (or, if such day is not a Business Day, on the next following Business Day) or, if mailed, on the third Business Day following the date of mailing; provided, however, that if at the time of mailing or within three Business Days thereafter there is or occurs a labour dispute or other event which might reasonably be expected to disrupt the delivery of documents by mail, any notice or other communication hereunder shall be delivered or transmitted by means of recorded electronic communication as aforesaid. (3) Any party may at any time change its address for service from time to time by giving notice to the other parties in accordance with this Section 12.3. 12.4 TRANSACTION COSTS. Each of the Purchaser and the Vendors shall bear their own expenses and fees incurred with respect to this Agreement and the transactions contemplated hereby. 12.5 CONSULTATION. The parties shall consult with each other before issuing any press release or making any other public announcement with respect to this Agreement or the transactions contemplated hereby and, except as required by any applicable law or regulatory requirement or by any stock exchange on which the shares of the Purchaser or Investco or any of its Affiliates are then listed and posted for trading, neither the Vendors nor the Purchaser shall issue any such press release or make any such public announcement without the prior written consent of the other, which consent shall not be unreasonably withheld or delayed. 60 12.6 DISCLOSURE. Prior to any public announcement of the transaction contemplated hereby pursuant to Section 12.5, none of the parties shall disclose this Agreement or any aspect of such transaction except to its board of directors, its senior management, its legal, accounting, financial or other professional advisors, any financial institution contacted by it with respect to any financing required in connection with such transaction and counsel to such institution, or as may be required by any applicable law or any regulatory authority or stock exchange having jurisdiction. 12.7 ASSIGNMENT AND ENFORCEABILITY. (1) This Agreement shall be binding upon and enforceable by the parties and their respective successors and permitted assigns. No party may assign any of its rights or benefits under this Agreement, or delegate any of its duties or obligations under this Agreement, to any person without the prior written consent of the other parties hereto. (2) Notwithstanding Section 12.7(a), Investco may assign all of its rights, benefits, liabilities and obligations under this Agreement to any Affiliate to which the Purchased Shares owned by it are transferred or assigned prior to the Time of Closing and such Affiliate may effect such further transfers and assignments as it may in its sole discretion determine; provided, however, that any such assignment or transfer shall not relieve Investco from its liabilities and obligations pursuant to this Agreement. In the event of any such transfer or assignment, the Affiliate to which such transfer or assignment is made shall be for all purposes considered to be a Vendor hereunder and shall be entitled to enforce against the Purchaser all of the rights and benefits of Investco hereunder. (3) Notwithstanding Section 12.7(a), the Purchaser may assign all of its rights, benefits, liabilities and obligations under this Agreement to any corporation which is a subsidiary of or controlled by the Purchaser or to First Union Management, Inc. or any Affiliate of First Union Management, Inc.; provided, however, that any such assignment or transfer shall not relieve the Purchaser from its liabilities and obligations pursuant to this Agreement. In the event of any such transfer or assignment, the person to which such assignment is made shall be for all purposes considered to be the Purchaser hereunder and shall be entitled to enforce against the Vendors all of the rights and benefits of the Purchaser hereunder. 12.8 ONEX CORPORATION. Onex Corporation hereby covenants and agrees that if Investco or any of its permitted assigns hereunder fails to pay any amount as and when owing by it under Section 11.1, then Onex Corporation shall forthwith pay or cause to be paid such amount, failing which, Onex Corporation shall be liable therefor as a primary obligor, and not merely as surety. 2.9 MANAGEMENT VENDORS. The Vendors represent and warrant and covenant to the Purchaser that at the Time of Closing the Purchased Shares shall be held beneficially and of record 61 -56- by Investco and directors or employees of Holdco, the Company or the Subsidiaries, but only if each such director or employee has executed and delivered by February 21, 1997 an instrument (an "Instrument of Adhesion") substantially in the form annexed hereto as Schedule 12.9, and in any case only if the number of Purchased Shares held in the aggregate by such directors and employees does not exceed 3,358,000 and further provided that there shall be two such employees whose holdings of Purchased Shares, in aggregate, equal the combined holdings of all other such directors and employees. 12.10 CONSTRUCTION. The parties hereto acknowledge that their respective legal counsel have reviewed and participated in settling the terms of this Agreement and that any rule of construction to the effect that any ambiguity is to be resolved against the drafting party shall not be applicable in the interpretation of this Agreement. 12.11 COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall constitute an original and all of which taken together shall constitute one and the same instrument. Delivery of this Agreement may be effected by facsimile transmission. 62 12.12 RESTRICTION ON LIABILITY. Notwithstanding anything herein to the contrary contained, this Agreement is made and executed on behalf of the Purchaser, a business trust organized under the laws of the State of Ohio, by its officers on behalf of the trustees thereof, and none of the trustees or any additional or successor trustee hereafter appointed, or any beneficiary, officer, employee or agent of the Purchaser shall have any liability in his personal or individual capacity but instead, all parties shall look solely to the property and assets of the Purchaser for satisfaction of claims of any nature arising under or in connection with this Agreement. IN WITNESS WHEREOF this Agreement has been executed by the parties as of the date first above written. IMPARK INVESTMENTS INC. by /s/ Authorized Signer ------------------------------ C.S. ------------------------------ FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS by /s/ Authorized Signer ------------------------------ ------------------------------ - ---------------------------- 63 The undersigned has executed this Agreement as of the date first above written to take notice of the provisions hereof, to bind itself to Sections 10.5 and 12.8 and to take any benefit associated with its obligations in Sections 10.5 and 12.8, and not for any other reason. ONEX CORPORATION by /s/ Authorized Signer ----------------------------- ------------------------------ 64 SHARE PURCHASE AMENDING AGREEMENT REFERENCE is made to the share purchase agreement made the 18th day of February, 1997 (the "Share Purchase Agreement") between Impark Investments Inc. ("Investco") and First Union Real Estate Equity and Mortgage Investments (the "Purchaser"), to which the following persons (the "Management Vendors") became parties in accordance therewith pursuant to instruments of adhesion dated February 21, 1997: Paul T.C. Clough, Charles S. Vosmik, J. Bruce Newsome (and Laurentian Bank of Canada in trust for account no. V002679, a registered retirement savings plan trust of which J. Bruce Newsome is the sole beneficiary), Douglas I. Poirier (and RBC Dominion Securities Inc. in trust for account no. 496-81890-11, a registered retirement savings plan trust of which Douglas I. Poirier is the sole beneficiary), J. Robin Bateman (and Gundyco in trust for account no. 590-90333-17, a registered retirement savings plan trust of which J. Robin Batemen is the sole beneficiary), James MacKay, Michael T. Menzies, Robert L. Noiles (and Gundyco in trust for account no. 590-77616-12, a registered retirement savings plan trust of which Robert L. Noiles is the sole beneficiary), Harry J. Renaud (and Midland Walwyn Capital Inc. in trust for account no. 8RABNQS, a registered retirement savings plan trust of which Harry J. Renaud is the sole beneficiary), Stuart M. MacKenzie (and Gundyco in trust for account no. 590-90254-12, a registered retirement savings plan trust of which Stuart M. MacKenzie is the sole beneficiary), Daniel Sawchuk, Vernon Schwartz and Jonas Prince. WHEREAS the Purchaser terminated the obligations of the parties to the Share Purchase Agreement (other than those set forth in Sections 12.2, 12.3, 12.4 and 12.5) by written notice (the "Notice") delivered to Investco on February 24, 1997; NOW THEREFORE in consideration of the premises and the respective covenants set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, the parties hereby agree as follows: 1. Capitalized terms that are used herein without other definition and that are defined in the Share Purchase Agreement shall have the respective meanings herein that are ascribed thereto in the Share Purchase Agreement, unless the context otherwise requires. References herein to Sections mean Sections of the Share Purchase Agreement. 2. The Notice is hereby revoked with effect as if it had never been given and as if the rights and obligations of the parties to the Share Purchase Agreement had not been affected by the execution and delivery of the Notice, and the Share Purchase Agreement is hereby deemed to have been in full force and effect from and after its execution and delivery by Investco and the Purchaser on February 18, 1997. 3. The Share Purchase Agreement is hereby amended as follows: (a) Section 1.1(y) is deleted in its entirety and the following is substituted therefor: 65 - 2 - "(y) "ESCROW AGREEMENT" means the agreement dated as of February 26, 1997 between Investco, the Purchaser and the Escrow Agent;" (b) Section 7.1 is amended by deleting the date "March 3, 1997" each time it appears in the final sentence of such section and substituting therefor the date "March 7, 1997". (c) Each of Section 4.22, 7.8(e) and 7.8(f) is amended by deleting the date "March 3, 1997" where it appears therein and substituting therefor the date "March 7, 1997". (d) Section 10.4 is amended by deleting the time "9:00 a.m." where it appears therein and substituting therefor the time "5:00 p.m." and by deleting the date "March 3, 1997" where it appears therein and substituting therefor the date "March 7, 1997". (e) Section 12.4 is amended by adding the following sentence to the end of such section: "Notwithstanding the preceding sentence, in the event that the Purchaser terminates the obligations of the parties under this Agreement (other than those set forth in Sections 12.2, 12.3, 12.4 and 12.5) by exercising its rights under Section 10.4, then the Purchaser shall pay to Investco, forthwith after such termination, the amount of U.S. $10,000 in partial reimbursement of Investco's legal fees and expenses incurred in connection with the negotiation and settlement of this Agreement." (f) Schedule 1 is amended by adding the phrase "(and registered retirement savings plan trusts of which they are the sole beneficiaries)" after the word "individuals" in the first line thereof and by deleting therefrom the name "Stuart M. Murdoch" and substituting therefor "Stuart M. MacKenzie". 4. The Purchaser acknowledges and agrees that Onex has executed and delivered a non-competition and confidentiality agreement as described in Section 10.5 in accordance with such section and that the Purchaser may not rely on any alleged failure by Onex to do the same in giving any notice referred to in Section 10.4. 5. Notwithstanding Section 7.6, Investco and the Purchaser agree to file by fax (with originals to follow by courier or delivery as soon as practicable thereafter) with the Director of Investigation and Research appointed under the Competition Act (Canada) (the "Competition Act"), by not later than 5:30 p.m. (Toronto time) on March 7, 1997, the information set out in section 121 of the Competition Act, certified in accordance with section 118 of the Competition Act, and such other documents as may be required to constitute a complete short form notification under the Competition Act relating to the transactions contemplated by the Share Purchase Agreement. 66 - 3 - 6. Investco and the Purchaser agree that neither of them shall, without the prior written consent of the other, make any public disclosure of the existence of or the terms and conditions of the Share Purchase Agreement prior to March 15, 1997 unless compelled to do so by formal order of a court or regulatory authority having jurisdiction in the premises or required to do so by law or by the rules of any stock exchange on which securities of Onex or the Purchaser are listed (and neither of them shall make such disclosure on or after that date until the Closing Date unless the party making disclosure determines in good faith and after consultation with its legal counsel that such disclosure has been so compelled or is so required), it being agreed that disclosure to the legal, accounting, financial, other professional advisors and the employees of either party who have a need to know about the transaction does not and will not constitute public disclosure. Investco and the Purchaser shall provide prior notice to each other and shall use their best efforts to consult with each other before making any public disclosure of the existence of or the terms and conditions of the Share Purchase Agreement, with a view to making such disclosure in time, manner and content mutually satisfactory to them. No Management Vendor shall make any public disclosure of the existence of or the terms and conditions of the Share Purchase Agreement unless and until public disclosure of the same has been made by Investco or the Purchaser. 7. The Share Purchase Agreement remains in full force and effect, unamended except as specifically provided for in paragraphs 2, 3 and 5 above. 8. This agreement may be executed in any number of counterparts, each of which shall constitute an original and all of which taken together shall constitute one and the same instrument, and this agreement shall be effective as of the latest date on which any counterpart is shown to have been executed. Delivery hereof and of any counterpart to any party may be effected by facsimile transmission made to that party. IN WITNESS WHEREOF this amending agreement has been executed by the parties as of the 26th day of February, 1997. IMPARK INVESTMENTS INC. FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS by /s/ Authorized Signer by /s/ Authorized Signer ---------------------------- ----------------------------------- /s/ Paul L. C. Clough /s/ Charles S. Vosmik - ------------------------------ ----------------------------------- Paul T. C. Clough Charles S. Vosmik 67 - 4 - /S/ J. Bruce Newsome /S/ Douglas Poirier - ------------------------------ ------------------------------ J. Bruce Newsome Douglas I. Poirier (for himself and as sole beneficiary (for himself and as sole beneficiary of RRSP trust account no. V002679 of RRSP trust account no. 496-81890-11 with Laurentian Bank of Canada) with RBC Dominion Securities Inc.) /S/ J. Robin Batement /S/ Robert Noiles - ------------------------------ ------------------------------ J. Robin Bateman Robert L. Noiles (for himself and as sole beneficiary (for himself and as sole beneficiary of RRSP trust account no. 590-90333-17 of RRSP trust account no. 590-77616-12 with Gundyco) with Gundyco) /S/ James MacKay /S/ Michael T. Menzies - ------------------------------ ------------------------------ James MacKay Michael T. Menzies /S/ Harry J. Renaud /S/ Stuart MacKenzie - ------------------------------ ------------------------------ Harry J. Renaud Stuart M. MacKenzie (for himself and as sole beneficiary (for himself and as sole beneficiary of RRSP trust account no. 8RABNQS of RRSP trust account no. 590-90254-12 with Midland Walwyn Capital Inc.) with Gundyco) /S/ Daniel Sawchuk /S/ Venon Schwartz - ------------------------------ ------------------------------ Daniel Sawchuk Vernon Schwartz /S/ Jonas Price - ------------------------------ Jonas Prince - ------------------------------ The undersigned acknowledges and consents to the foregoing as of the 26th day of February, 1997 ONEX CORPORATION by /S/ Authorized Signature ---------------------------
68 SHARE PURCHASE SECOND AMENDING AGREEMENT REFERENCE is made to the share purchase agreement made the 18th day of February, 1997 (the "Share Purchase Agreement") between Impark Investments Inc. ("Investco") and First Union Real Estate Equity and Mortgage Investments (the "Purchaser"), to which the following persons (the "Management Vendors") became parties in accordance therewith pursuant to instruments of adhesion dated February 21, 1997: Paul T.C. Clough, Charles S. Vosmik, J. Bruce Newsome (and Laurentian Bank of Canada in trust for account no. V002679, a registered retirement savings plan trust of which J. Bruce Newsome is the sole beneficiary), Douglas I. Poirier (and RBC Dominion Securities Inc. in trust for account no. 496-81890-11, a registered retirement savings plan trust of which Douglas I. Poirier is the sole beneficiary), J. Robin Bateman (and Gundyco in trust for account no. 590-90333-17, a registered retirement savings plan trust of which J. Robin Batemen is the sole beneficiary), James MacKay, Michael T. Menzies, Robert L. Noiles (and Gundyco in trust for account no. 590-77616-12, a registered retirement savings plan trust of which Robert L. Noiles is the sole beneficiary), Harry J. Renaud (and Midland Walwyn Capital Inc. in trust for account no. 8RABNQS, a registered retirement savings plan trust of which Harry J. Renaud is the sole beneficiary), Stuart M. MacKenzie (and Gundyco in trust for account no. 590-90254-12, a registered retirement savings plan trust of which Stuart M. MacKenzie is the sole beneficiary), Daniel Sawchuk, Vernon Schwartz and Jonas Prince. WHEREAS the Share Purchase Agreement was amended by a share purchase amending agreement made as of the 26th day of February, 1997 (the Share Purchase Agreement as so amended being referred to herein as the "Amended Share Purchase Agreement"); NOW THEREFORE in consideration of the premises and the respective covenants set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, the parties hereby agree as follows: 1. Capitalized terms that are used herein without other definition and that are defined in the Amended Share Purchase Agreement shall have the respective meanings herein that are ascribed thereto in the Amended Share Purchase Agreement, unless the context otherwise requires. References herein to Sections mean Sections of the Amended Share Purchase Agreement. 2. The Amended Share Purchase Agreement is hereby amended as follows: (a) Section 1.1 is amended by: (i) deleting the word "and" at the end of Section 1.1(jjj); (ii) deleting the period at the end of Section 1.1(kkk) and substituting therefor ";and"; and (iii) adding to the end thereof a new Section 1.1(lll) as follows: 69 - 2 - "(lll) "SECOND AMENDING AGREEMENT" means the agreement dated as of March 3, 1997 between Investco, the Purchaser and the Management Vendors. (b) Section 10.4 is amended by: (i) deleting the period at the end of Section 10.4(b) and substituting therefor ";and"; and (ii) inserting immediately following Section 10.4(b) thereof a new Section 10.4(c) as follows: "(c) the failure by 3:00 p.m. (Toronto time) on March 7, 1997: (i) to obtain the consent, on terms and conditions acceptable to the Purchaser, of Canadian Imperial Bank of Commerce and Hong Kong Bank of Canada referred to in paragraph 3 of the Second Amending Agreement; and (ii) to execute and deliver, and to obtain the execution and delivery by Investco (in its own capacity and as agent and attorney of the Management Vendors under Section 12.1) of, an amendment to this Agreement as contemplated by paragraph 4 of the Second Amending Agreement." 3. The Purchaser and the Vendors acknowledge that the Purchaser wishes to have the Company and its Affiliates implement a reorganization (the "Reorganization") of the Company and certain of its Affiliates and that such Reorganization cannot be implemented without the consent of Canadian Imperial Bank of Commerce and Hong Kong Bank of Canada pursuant to the credit agreement dated as of November 13, 1996 as described in Schedule 4.2 to the Amended Share Purchase Agreement. Investco and the Purchaser agree to use their best efforts (as such term is construed under Section 1.11) to obtain the consent of such banks to the Reorganization. 4. Investco and the Purchaser agree to use their best efforts (as such term is construed under Section 1.11) to execute and deliver an agreement to further amend the Amended Share Purchase Agreement to provide for: (i) the Reorganization; (ii) the subscription by Investco or an Affiliate of it (and/or the Vendors) for preferred shares of the Company or an Affiliate of it; and (iii) an exchange agreement to be entered into between the Purchaser and Investco or an Affiliate of it (and/or the Vendors) relating to such preferred shares. 5. The Amended Share Purchase Agreement remains in full force and effect, unamended except as specifically provided for in paragraph 2 above. 70 - 3 - 6. This agreement may be executed in any number of counterparts, each of which shall constitute an original and all of which taken together shall constitute one and the same instrument, and this agreement shall be effective as of the latest date on which any counterpart is shown to have been executed. Delivery hereof and of any counterpart to any party may be effected by facsimile transmission made to that party. IN WITNESS WHEREOF this amending agreement has been executed by the parties as of the 2nd day of March, 1997. IMPARK INVESTMENTS INC. FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS by /s/ Authorized Signer by ---------------------------- ----------------------------- IMPARK INVESTMENTS INC., /s/ Paul T.C. Clough as agent and attorney for each of the ------------------------------- Management Vendors pursuant to Paul T.C. Clough Section 12.1 of the Amended Share /s/ Charles S. Vosmik Purchase Agreement ------------------------------- Charles S. Vosmik by /s/ Authorized Signer ---------------------------------------- - ------------------------------------------ The undersigned acknowledges and consents to the foregoing as of the 2nd day of March, 1997. ONEX CORPORATION by /s/ Authorized Signer -------------------------------------------- 71 ESCROW AMENDING AGREEMENT REFERENCE is made to the escrow agreement made as of the 26th day of February, 1997 (the "Escrow Agreement") between Impark Investments Inc. ("Investco"), First Union Real Estate Equity and Mortgage Investments (the "Purchaser") and Kelly Affleck Greene (the "Escrow Agent") IN CONSIDERATION of the premises and the respective covenants set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, the parties hereby agree as follows: 1. The Escrow Agreement is hereby amended as follows: (a) deleting the date "March 7, 1997" from Section 3.2(a) each time it appears therein and substituting therefor in each case the date "March 7, 1997"; (b) deleting the ";and" from the end of Section 3.2(a) and substituting a period therefor; (c) deleting therefrom Section 3.2(b); and (d) deleting the term "Final Termination Time" from Section 3.3 and substituting therefor the term "Early Termination Time". 2. The Escrow Agreement remains in full force and effect, unamended except as specifically provided for in paragraph 1 above. 3. This agreement may be executed in any number of counterparts, each of which shall constitute an original and all of which taken together shall constitute one and the same instrument, and this agreement shall be effective as of the latest date on which any counterpart is shown to have been executed. Delivery hereof and of any counterpart to any party may be effected by facsimile transmission made to that party. IN WITNESS WHEREOF this amending agreement has been executed by the parties as of the 2nd day of March, 1997. IMPARK INVESTMENTS INC. FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS by /s/ Authorized Signer by /s/ Authorized Signer ---------------------------- --------------------------- KELLY AFFLECK GREENE by /s/ Authorized Signer --------------------------- Name: 72 SHARE PURCHASE THIRD AMENDING AGREEMENT REFERENCE is made to the share purchase agreement made the 18th day of February, 1997 (the "Share Purchase Agreement") between Impark Investments Inc. ("Investco") and First Union Real Estate Equity and Mortgage Investments (the "Purchaser"), to which the following persons (the "Management Vendors") became parties in accordance therewith pursuant to instruments of adhesion dated February 21, 1997: Paul T.C. Clough, Charles S. Vosmik, J. Bruce Newsome (and Laurentian Bank of Canada in trust for account no. V002679, a registered retirement savings plan trust of which J. Bruce Newsome is the sole beneficiary), Douglas I. Poirier (and RBC Dominion Securities Inc. in trust for account no. 496-81890-11, a registered retirement savings plan trust of which Douglas I. Poirier is the sole beneficiary), J. Robin Bateman (and Gundyco in trust for account no. 590-90333-17, a registered retirement savings plan trust of which J. Robin Batemen is the sole beneficiary), James MacKay, Michael T. Menzies, Robert L. Noiles (and Gundyco in trust for account no. 590-77616-12, a registered retirement savings plan trust of which Robert L. Noiles is the sole beneficiary), Harry J. Renaud (and Midland Walwyn Capital Inc. in trust for account no. 8RABNQS, a registered retirement savings plan trust of which Harry J. Renaud is the sole beneficiary), Stuart M. MacKenzie (and Gundyco in trust for account no. 590-90254-12, a registered retirement savings plan trust of which Stuart M. MacKenzie is the sole beneficiary), Daniel Sawchuk, Vernon Schwartz and Jonas Prince. WHEREAS the Share Purchase Agreement was amended by a share purchase amending agreement made as of the 26th day of February, 1997 (the "First Amending Agreement") and a share purchase amending agreement made as of the 2nd day of March, 1997 (the "Second Amending Agreement") (the Share Purchase Agreement as so amended being referred to herein as the "Amended Share Purchase Agreement"); NOW THEREFORE in consideration of the premises and the respective covenants set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, the parties hereby agree as follows: 1. Capitalized terms that are used herein without other definition and that are defined in the Amended Share Purchase Agreement shall have the respective meanings herein that are ascribed thereto in the Amended Share Purchase Agreement, unless the context otherwise requires. References herein to Sections mean Sections of the Amended Share Purchase Agreement. 2. The Amended Share Purchase Agreement is hereby amended as follows: (a) Section 1.1(lll) is amended by deleting the date "March 3, 1997" therein and substituting therefore the date "March 2, 1997"; (b) Section 10.4 is amended by: 73 - 2 - (i) deleting the time "9:00 a.m." where it appears therein and substituting therefore the time "12:00 p.m."; (ii) deleting the time "3:00 p.m." where it appears therein and substituting therefore the time "12:00 p.m."; and (iii) deleting the date "March 7, 1997" where it appears therein and substituting therefor the date "March 11, 1997". 3. Section 5 of the First Amending Agreement is hereby deleted. 4. The Amended Share Purchase Agreement remains in full force and effect, unamended except as specifically provided for in paragraph 2 above. The First Amending Agreement remains in full force and effect, unamended except as specifically provided for in the Second Amending Agreement and in paragraphs 2 and 3 above. 5. This agreement may be executed in any number of counterparts, each of which shall constitute an original and all of which taken together shall constitute one and the same instrument, and this agreement shall be effective as of the latest date on which any counterpart is shown to have been executed. Delivery hereof and of any counterpart to any party may be effected by facsimile transmission made to that party. IN WITNESS WHEREOF this amending agreement has been executed by the parties as of the 7th day of March, 1997. IMPARK INVESTMENTS INC. FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS by /s/ Authorized Signer by /s/ Authorized Signer ---------------------------- ----------------------------- IMPARK INVESTMENTS INC., as agent and attorney for each of the Management Vendors pursuant to Section 12.1 of the Amended Share Purchase Agreement by /s/ Authorized Signer ---------------------------- - -------------------------------- 74 -3- The undersigned acknowledges and consents to the foregoing as of the 7th day of March, 1997. ONEX CORPORATION by /s/ Authorized Signer __________________________ 75 ESCROW AMENDING AGREEMENT REFERENCE is made to the escrow agreement made as of the 26th day of February, 1997 between Impark Investments Inc. ("Investco"), First Union Real Estate Equity and Mortgage Investments (the "Purchaser") and Kelly Affleck Greene (the "Escrow Agent"), as amended by an agreement made by such parties as of March 2, 1997 (as so amended, the "Escrow Agreement"). IN CONSIDERATION of the premises and the respective covenants set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, the parties hereby agree as follows: 1. The Escrow Agreement is hereby amended as follows: (a) deleting the date "March 7, 1997" from Section 3.2(a) each time it appears therein and substituting therefore in each case the date "March 11, 1997"; and (b) deleting the time "5:00 p.m." in the first line of Section 3.2(a) and substituting therefor the time "12:00 p.m. (Toronto time)". 2. The Escrow Agreement remains in full force and effect, unamended except as specifically provided for in paragraph 1 above. 3. This agreement may be executed in any number of counterparts, each of which shall constitute an original and all of which taken together shall constitute one and the same instrument, and this agreement shall be effective as of the latest date on which any counterpart is shown to have been executed. Delivery hereof and of any counterpart to any party may be effected by facsimile transmission made to that party. IN WITNESS WHEREOF this amending agreement has been executed by the parties as of the 7th day of March, 1997. IMPARK INVESTMENTS INC. FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS by /s/ Authorized Signer by /s/ Authorized Signer ---------------------------- --------------------------- KELLY AFFLECK GREENE by /s/ Authorized Signer --------------------------- Name: 76 SHARE PURCHASE FOURTH AMENDING AGREEMENT REFERENCE is made to the share purchase agreement made the 18th day of February, 1997 between Impark Investments Inc. ("Investco") and First Union Real Estate Equity and Mortgage Investments (the "Purchaser"), to which the following persons (the "Management Vendors") became parties in accordance therewith pursuant to instruments of adhesion dated February 21, 1997: Paul T.C. Clough, Charles S. Vosmik, J. Bruce Newsome (and Laurentian Bank of Canada in trust for account no. V002679, a registered retirement savings plan trust of which J. Bruce Newsome is the sole beneficiary), Douglas I. Poirier (and RBC Dominion Securities Inc. in trust for account no. 496-81890-11, a registered retirement savings plan trust of which Douglas I. Poirier is the sole beneficiary), J. Robin Bateman (and Gundyco in trust for account no. 590-90333-17, a registered retirement savings plan trust of which J. Robin Batemen is the sole beneficiary), James MacKay, Michael T. Menzies, Robert L. Noiles (and Gundyco in trust for account no. 590-77616-12, a registered retirement savings plan trust of which Robert L. Noiles is the sole beneficiary), Harry J. Renaud (and Midland Walwyn Capital Inc. in trust for account no. 8RABNQS, a registered retirement savings plan trust of which Harry J. Renaud is the sole beneficiary), Stuart M. MacKenzie (and Gundyco in trust for account no. 590-90254-12, a registered retirement savings plan trust of which Stuart M. MacKenzie is the sole beneficiary), Daniel Sawchuk, Vernon Schwartz and Jonas Prince, as amended by an amending agreement (the "First Amending Agreement") made as of February 26, 1997 by the foregoing parties and by further amending agreements made as of March 2, 1997 and as of March 7, 1997 between the Purchaser and Investco (both in its own capacity and as agent and attorney for the Management Vendors (such agreement, as so amended, being hereinafter referred to as the "Share Purchase Agreement"). WHEREAS the parties to the Share Purchase Agreement wish to amend such agreement on the terms set out herein; NOW THEREFORE in consideration of the premises and the respective covenants set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, the parties hereby agree as follows: 1. DEFINED TERMS AND REFERENCES. Capitalized terms that are used herein without other definition and that are defined in the Share Purchase Agreement shall have the respective meanings herein that are ascribed thereto in the Share Purchase Agreement, unless the context otherwise requires. References herein to Sections mean Sections of the Share Purchase Agreement. 2. AMENDMENTS TO SECTION 1.1. Section 1.1 of the Share Purchase Agreement is hereby amended as follows: (a) by adding immediately after paragraph (f) the following: "(f.1) 'Canadian Dollar Equivalent' means, with respect to any amount of United States dollars, the amount of Canadian dollars that would be received upon the purchase by the holder of such United States dollars of Canadian dollars at an 77 - 2 - exchange rate equal to the noon (12:00 p.m.) United States/Canadian dollar exchange rate quoted by the Bank of Canada on the Business Day prior to the Closing Date; (f.2) 'Canco 1' has the meaning ascribed thereto in Section 2.7 and includes the successors of such corporation;"; (b) by adding immediately after paragraph (g) the following: "(g.1) 'Class A Common Shares' means Class A Non-Voting Common Shares in the capital of Canco 1 or any successor; (g.2) 'Class A Preferred Shares' means Class A Preferred Shares in the capital of Canco 1 or any successor; "; (c) by deleting paragraph (i) and substituting therefor the following: "(i) 'Closing Date' means the date on which all the conditions set out in Sections 8 and 9 are satisfied or waived in writing by the Vendors or the Purchaser, as the case may be, but in any event not later than April 11, 1997, except that if the Purchaser determines in good faith and so notifies Investco in writing prior to 11:00 a.m. (Toronto time) on April 11, 1997 that it does not have reasonable assurance that a wire transfer of funds can be commenced on April 11, 1997 from an account in the United States and completed to an account in Canada of a different entity before 11:00 a.m. (Toronto time) on April 11, 1997, then the latest date by which the conditions set out in Sections 8 and 9 are to be satisfied shall be April 15, 1997;" (d) by amending paragraph (j) by adding the following immediately after the word "less" in the fifth line thereof: "(i) $250,000 and (ii)"; (e) by adding immediately after paragraph (l) the following: "(l.1) 'Common Share Allocation Amount' means the Canadian Dollar Equivalent of U.S. $11.6 million;"; (f) by adding immediately after paragraph (tt) the following: "(tt.1) 'Onex Vendor' means an Onex Associate that has executed and delivered a notice substantially in the form of Schedule 10.6(b) in accordance with Section 10.6 during the time limit specified for such notice by such section; 78 - 3 - (tt.2) 'Opco Subsidiaries' means, collectively, City Collection Company Ltd., Impark Management Ltd., Inner-Tec Security Consultants Ltd., Compupark Systems Corporation and Park-Ur-Self (Canada) Ltd.;"; (g) by deleting paragraph (zz) and substituting the following therefor: "(zz) 'Pro Rata Share' means, at any time in respect of any Vendor, the percentage obtained by multiplying by 100 the quotient obtained by dividing the number of common shares of Holdco held by such Vendor by the total number of common shares of Holdco issued and outstanding at such time; provided that for the purpose of determining, at any time, the Pro Rata Share of Investco, Investco shall be deemed to hold all common shares of Holdco other than those held by the Management Vendors and the Onex Vendors and further provided that, for all purposes of Article 11, (i) the Pro Rata Share of Investco shall be determined on the basis that Investco is deemed to hold all common shares of Holdco other than those held by the Management Vendors and (ii) at and after the Time of Closing, the Pro Rata Share of any Vendor shall be that Vendor's Pro Rata Share as at the Time of Closing, determined as aforesaid;" and (h) by inserting the following immediately following the term "Management Vendors" where it appears in paragraph (jjj): ", the Onex Vendors (if any)". 3. AMENDMENTS TO SECTION 2.3. Section 2.3 of the Share Purchase Agreement is hereby amended by deleting that portion of Section 2.3 that follows Section 2.3(a) and substituting the following therefor: "(b) the issuance and delivery to each Vendor by Canco 1 of Class A Common Shares on the basis that each Vendor shall be entitled to one Class A Common Share for each $1.00 of such Vendor's Pro Rata Share of the Common Share Allocation Amount; and (c) the delivery to or to the order of each Vendor by the Purchaser of a certified cheque or bank draft, in either case drawn on a Canadian chartered bank in immediately available funds, payable to the order of such Vendor (or, in the case of Investco, by the wire transfer of immediately available funds to such account as may be specified by Investco) in the amount of such Vendor's Pro Rata Share of the excess of the Purchase Price over the aggregate of (i) the Escrow Amount and (ii) the Common Share Allocation Amount (subject, in the case of Vendors that are non-residents of Canada within the meaning of the Tax Act and who have not delivered to the 79 -4- Purchaser a certificate meeting the requirements of Section 8.12, to any withholdings required to be made under the Tax Act), against delivery to the Purchaser of a certificate or certificates representing the Purchased Shares, duly endorsed for transfer to the Purchaser or as it may direct. (d) Notwithstanding the foregoing provisions of this Section 2.3, the Purchaser may, by notice in writing delivered to each Management Vendor not less than ten Business Days prior to the Closing Date, offer to satisfy all or any specified portion of the amount otherwise payable to such Management Vendor pursuant to Section 2.3(c) (the "Cash Portion") by the delivery to such Management Vendor of Class A Common Shares, Class B Voting Common Shares or Class A Preferred Shares (each of which shall satisfy $1.00 of the Cash Portion) on the basis described in such notice. Each Management Vendor electing to accept such offer shall do so by notice in writing delivered to the Purchaser and to Investco not less than three Business Days prior to the Closing Date; such notice shall specify that amount of the Cash Portion which such Management Vendor has agreed shall be satisfied by the issuance of Class A Common Shares, Class B Voting Common Shares or Class A Preferred Shares. Furthermore, the Purchaser shall have the right, by notice in writing delivered to any one or more of the Management Vendors not less than three Business Days prior to the Closing Date, to satisfy the obligation to deliver Class A Common Shares to any such Management Vendor pursuant to Section 2.3(b) by the delivery at the Time of Closing of cash in lieu thereof. (e) Notwithstanding the foregoing provisions of Section 2.3 or any other provision of this Agreement, the Purchaser shall have the right, by notice in writing delivered to Investco and the Management Vendors not less than three Business Days prior to the Closing Date, to reduce the portion of the Purchase Price to be paid pursuant to Section 2.3(b) to such extent as may be determined by Purchaser in its sole and absolute discretion and to pay cash at the Time of Closing in lieu thereof. The Purchaser agrees to exercise reasonable efforts to identify structuring opportunities that may enable it to exercise its discretion pursuant to the foregoing provisions of this Section 2.3(e) and, in the event of the identification of opportunities that it determines to be practical and appropriate under the circumstances, to exercise its discretion to so cause such a reduction." 4. FURTHER AMENDMENTS TO SECTION 2. Section 2 of the Share Purchase Agreement is hereby further amended by adding the following Sections immediately following Section 2.5: "2.6 ACTIONS IN CONTEMPLATION OF CLOSING. Each party agrees to execute all such documents and do all such other acts and things (to the extent lawful and within its power), all in full cooperation with the other parties, as may be necessary to effect and implement: 80 -5- (a) prior to the Time of Closing the steps and transactions set out in Sections 2.7 and 2.8 below in a manner that will permit the consummation in accordance herewith of the purchase and sale of the Purchased Shares provided for in Section 2.1. Each party shall consider in good faith any changes or modifications to the steps and transactions set out in Sections 2.7 and 2.8 and Sections 2.11 and 2.12 that are proposed by any other party. 2.7 CAPITALIZATION OF CANCO 1. The Purchaser shall cause to be capitalized a company ("Canco 1") existing under the Canada Business Corporations Act, of which all the voting shares are held, directly or indirectly, by First Union Management, Inc. ("FUMI"), such that Canco 1 (if it is to be the assignee of the Purchaser in accordance with Section 12.7(c)) has cash at the Time of Closing in an amount not less than the Canadian Dollar Equivalent of U.S. $39.6 million together with such other cash amount as may be necessary for Canco 1 in that circumstance to make the payments described in Section 2.3(c). The authorized share capital of Canco 1 shall include Class A Common Shares, Class B Voting Common Shares and Class A Preferred Shares with the respective attributes set forth with respect thereto in Schedule 2.7 2.8 CONTINUANCE UNDER CBCA. The Vendors shall use their best efforts to cause the Company, Robbins Parking Service Ltd. and Impark Properties Ltd. to be continued as soon as practicable under the laws of Canada pursuant the export and import continuance provisions of the Company Act (British Columbia) and the Canada Business Corporations Act, respectively. 2.9 PUT AND CALL AGREEMENT. First Union Real Estate Equity and Mortgage Investments ("FUR") and Investco shall enter into at the Time of Closing, and perform the respective obligations then to be performed by them under, a put-call agreement, a security trust indenture and a depositary agreement relating to Investco's Class A Common Shares substantially on the terms and conditions described in Schedule 2.9. 2.10 AMALGAMATIONS INVOLVING CANCO 1. The Purchaser shall ensure that, so long as Investco (or a permitted assign other than FUR or FUMI) is a holder of Class A Common Shares, any amalgamation involving Canco 1 and any other corporation, including any amalgamation of Canco 1 and Imperial Parking Limited, shall be accomplished as a short form vertical amalgamation under the Canada Business Corporations Act, with Canco 1 as the holding corporation in each case. For greater certainty, the Purchaser shall ensure that all rights and obligations of Canco 1 shall be rights and obligations of the corporation continuing following any such amalgamation without the requirement of any assignment or assumption agreement or other formality. 2.11 554506 ALBERTA LTD. The Purchaser may at any time prior to the Closing Date request by written notice to Investco that the Vendors use their reasonable best efforts to cause the Company to purchase, on terms and conditions acceptable to Investco and the Purchaser, acting reasonably, on or before the Closing Date all the outstanding shares of 81 -6- 554506 Alberta Ltd. not currently owned, directly or indirectly, by the Company. Any such purchase shall be completed by the Company by drawing down under its credit facilities with Canadian Imperial Bank of Commerce an amount sufficient to pay the full amount of the purchase price for such shares; provided, however, that any indebtedness incurred by the Company in connection with such acquisition shall not be taken into account in any calculation of the Closing Debt. 2.12 NO BREACH FOR IMPLEMENTING PRE-CLOSING STEPS. The parties hereby agree that to the extent that any inaccuracy in any representation and warranty made by any party in the Share Purchase Agreement results solely from any action taken by that party in good faith compliance with its obligations which are required to be fulfilled at or prior to the Time of Closing under Sections 2.8 and 2.11, the intention to take which action such party has disclosed to the Purchaser (if such party is a Vendor) or to Investco (if such party is the Purchaser) prior to taking the same, the same shall be deemed not to cause, result in or give rise to any breach of warranty or misrepresentation (or any non-satisfaction of a condition to closing related thereto) by such party under the Share Purchase Agreement or in any other agreement, instrument or other document delivered in connection with the transactions contemplated hereby. The taking of any action by any party in good faith compliance with any of its obligations which are required to be fulfilled at or prior to the Time of Closing under Sections 2.8 and 2.11, the intention to take which action such party has disclosed to the Purchaser (if such party is a Vendor) or to Investco (if such party is the Purchaser) prior to taking the same, shall be deemed not to cause, result in or give rise to any breach by such party of any covenant or agreement (or any non-satisfaction of a condition to closing related thereto) contained in the Share Purchase Agreement, including the covenants and agreements of the Vendors contained in Section 7.4, or in any other agreement, instrument or other document delivered in connection with the transactions contemplated hereby. 2.13 CONSENT TO POST-CLOSING TRANSACTIONS. The Vendors hereby consent to, and agree that they will suffer no adverse consequences as a result of, any of the following transactions to be completed at or following the Time of Closing: (a) the direct or indirect sale by the Company of the Opco Subsidiaries; (b) any amalgamation made in accordance with Section 2.10; and (c) the sale of the Real Property (or the real property owned by 554506 Alberta Ltd.) by any owner thereof from time to time. 2.14 TAX ELECTION. If any Vendor who is not exempt from tax under Part I of the Tax Act has received Class A Common Shares pursuant to Section 2.3(b) and so elects by giving written notice to Canco 1 on the Closing Date, the Purchaser shall cause Canco 1 to elect jointly with such Vendor under subsection 85(1) of the Tax Act (or any successor provision thereto of similar effect) and under the equivalent provision of any provincial tax 82 -7- legislation, in prescribed form, and shall therein agree that the elected amount in respect of such Vendor's Purchased Shares shall be an amount not less than (a) that Vendor's Pro Rata Share of the Purchase Price, less (b) that Vendor's Pro Rata share of the Common Share Allocation Amount, subject to the limitations prescribed by the relevant legislation. The Vendor and Canco 1 shall file such election as required by the relevant legislation and the administrative practices of Revenue Canada so that it shall have full force and effect for purposes of the relevant legislation. 5. AMENDMENT TO SECTION 3. Section 3 of the Share Purchase Agreement is hereby amended by adding the following new Section 3.3 immediately following Section 3.2: "3.3 REPRESENTATIONS RE EXTRAORDINARY BONUSES. Each of the Management Vendors represents and warrants to the Purchaser that he has not received any extraordinary bonus or other compensation from Onex or any of its Affiliates or Associates during the 18 months preceding the date hereof except as disclosed in writing to the Purchaser and is not entitled to receive any such extraordinary bonus or other compensation under any commitment or agreement from Onex or any of its Affiliates or Associates. The Purchaser agrees that the information referred to above in this Section 3.3, including the information contained in such written disclosure, shall be subject to the February 7, 1997 confidentiality agreement referred to in Section 1.5." 6. AMENDMENTS TO SECTION 8. Section 8 of the Share Purchase Agreement is hereby amended by adding the following Section immediately following Section 8. 12, renumbering the present Section 8.13 to Section 8.14 and replacing the reference to "8.12" in the first line of the present Section 8.13 with a reference to "8.13": "8.13 DEPOSITARY EXECUTION OF DEPOSITARY AGREEMENT. A depositary satisfactory to the Purchaser and Investco, each acting reasonably, shall have executed and delivered a depositary agreement containing substantially the terms set out with respect to such agreement in Schedule 2.9." 7. AMENDMENTS TO SECTION 9. Section 9 of the Share Purchase Agreement is hereby amended by adding the following Section immediately following Section 9. 6 and renumbering the present Section 9.7 to Section 9.8 and replacing the reference to "9.6" in the first line of the present Section 9.7 with a reference to "9.7": "9.7 TRUSTEE EXECUTION OF SECURITY TRUST INDENTURE. A trustee satisfactory to the Purchaser and Investco, each acting reasonably, shall have executed and delivered a security trust indenture containing substantially the terms set out with respect to such indenture in Schedule 2.9." 8. AMENDMENTS TO SECTION 10. Section 10 of the Share Purchase Agreement is hereby amended as follows: 83 -8- (a) by deleting Section 10.4 and substituting the following therefor: "10.4 The Purchaser may, by written notice delivered to the Vendors at or prior to 8:00 p.m. (Toronto time) on March 19, 1997, terminate the obligations of all parties under this Agreement (other than those set forth in Sections 12.2, 12.3, 12.4 and 12.5) by reason of the failure of the Purchaser and the Management Vendors to agree in principle on a reasonable basis to the terms of the Management Vendors' investment in the Company (or its Affiliates or successors, including Canco 1) to be made at or after the Time of Closing. The termination of such obligations pursuant to this Section 10.4 shall relieve all parties of all liabilities relating hereto, other than those set forth in Sections 12.2, 12.3, 12.4 and 12.5 and in the confidentiality agreements referred to in Section 1.5 and other than those provisions of the Escrow Agreement relating to the disposition of the funds then held by the Escrow Agent"; and (b) by adding the following sentences to the end of Section 10.6: "Alternatively, Investco and any one or more Onex Associates may elect, by notice in writing given in substantially the form of Schedule 10.6(b) given to the Purchaser not less than three Business Days prior to the Closing Date, that such Onex Associate or Onex Associates will sell the Purchased Shares held by it or them to the Purchaser in accordance with this Agreement. In such case, each Onex Associate shall be considered an Onex Vendor for all purposes of this Agreement. No such notice shall affect Investco's 'Pro Rata Share' for the purposes of Article 11. Sections 3.1(a), 3.2(b) and 12.9 shall be deemed to be amended in accordance with the foregoing. The binding of any Onex Associate as an Onex Vendor by the giving of a notice as aforesaid shall constitute compliance by Investco with its obligations relating to such Onex Associate under the penultimate sentence of Section 11.13." 9. SCHEDULES. Schedules 2.7, 2.9 and 10.6(b) attached hereto are deemed to be incorporated in and to form part of the Share Purchase Agreement and the list of Schedules set out in Section 1.15 is hereby deemed to be amended accordingly. 10. AMENDMENTS TO FIRST AMENDING AGREEMENT. The date "March 15, 1997" is deleted where it appears in Section 6 of the First Amending Agreement, and the date "March 19, 1997" is substituted therefor. 11. CONFIRMATION OF SHARE PURCHASE AGREEMENT. The Share Purchase Agreement remains in full force and effect, unamended except as specifically provided in paragraphs 2 to 9, inclusive, above. For greater certainty, each party hereto hereby acknowledges and agrees that, notwithstanding any contrary act or omission or any execution and delivery of any document at any time prior to the execution and delivery of this amending agreement, all of the obligations of the parties set out in the Share Purchase Agreement are and remain in full force and effect as aforesaid and shall for all purposes be deemed to have 84 -9- continuously been in such force and effect from February 18, 1997 to and including the date hereof, as amended on the respective date of each amending agreement referred to above. 12. COUNTERPARTS. This agreement may be executed in any number of counterparts, each of which shall constitute an original and all of which taken together shall constitute one and the same instrument, and this agreement shall be effective as of the latest date on which any counterpart is shown to have been executed. Delivery hereof and of any counterpart to any party may be effected by facsimile transmission made to that party. Failure of any Management Vendor to execute this Agreement shall not relieve any party who has executed this Agreement from its obligations hereunder. IN WITNESS WHEREOF this amending agreement has been executed by the parties as of the 17th day of March, 1997. IMPARK INVESTMENTS INC. FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS by by --------------------------- --------------------------- /s/ Paul T. C. Clough /s/ Charles S. Vosmik - ------------------------------ ------------------------------ Paul T. C. Clough Charles S. Vosmik /s/ J. Bruce Newsome /s/ Douglas I. Poirier - ------------------------------ ------------------------------ J. Bruce Newsome Douglas I. Poirier (for himself and as sole beneficiary (for himself and as sole beneficiary of RRSP trust account no. V002679 of RRSP trust account no. 496-81890-11 with Laurentian Bank of Canada) with RBC Dominion Securities Inc.) /s/ J. Robin Bateman /s/ Robert L. Noiles - ------------------------------ ------------------------------ J. Robin Bateman Robert L. Noiles (for himself and as sole beneficiary (for himself and as sole beneficiary of RRSP trust account no. 590-90333-17 of RRSP trust account no. 590-77616-12 with Gundyco) with Gundyco) /s/ James MacKay /s/ Michael T. Menzies - ------------------------------ ------------------------------ James MacKay Michael T. Menzies 85 -10- /s/ Harry J. Renaud /s/ Stuart M. MacKenzie - ------------------------------ ------------------------------ Harry J. Renaud Stuart M. MacKenzie (for himself and as sole beneficiary (for himself and as sole beneficiary of RRSP trust account no. 8RABNQS of RRSP trust account no. 590-90254-12 with Midland Walwyn Capital Inc.) with Gundyco) /s/ Daniel Sawchuk /s/ Vernon Schwartz - ------------------------------ ------------------------------ Daniel Sawchuk Vernon Schwartz /s/ Jonas Prince - ------------------------------ Jonas Prince ----------------------------- The undersigned acknowledges and consents to the foregoing as of the 17th day of March, 1997 ONEX CORPORATION By /s/ Authorized Signor ----------------------------- 86 SCHEDULE 2.7 (1) TERM SHEET CANCO 1 CLASS A NON-VOTING COMMON SHARES ------------------------------------------------------------------------------ ISSUER: Canco 1 (the "Company"). ISSUE: Class A Non-Voting Common Shares (the "Shares") AUTHORIZED NUMBER: The Company will be authorized to issue up to 15,000,000 Shares. DIVIDENDS: Each Share will entitle the holder thereof to dividends if, as and when declared by the Company, subject to the rights of holders of classes of shares ranking equally with or ahead of the Shares. PRIORITY: The Shares will rank equally with the Class B Voting Common Shares of the Company and behind any other class of shares in the capital of the Company from time to time, if the provisions of such other class so provide, with respect to the payment of dividends and the repayment of capital or other distributions to be made on the liquidation, dissolution or winding-up of the Company. RIGHTS ON LIQUIDATION: Subject to the rights of holders of shares having a preference over the Shares, in the event of the liquidation, dissolution or winding-up of the Company or any other distribution of the assets of the Company to its shareholders for the purpose of winding up its affairs, the holders of the Shares and of the Class B Voting Common Shares then outstanding shall be entitled to receive the remaining net assets of the Company, pro rata to the number of Shares and Class B Voting Common Shares then held. CURRENCY: All amounts payable by way of dividends or distributions upon the liquidation, dissolution or winding-up of the Company shall be paid in the lawful money of Canada. NOTICE RIGHTS: Except as provided by law or as described in this paragraph, holders of the Shares shall not be entitled as such to receive notice of any meeting of holders of any other class of shares of the Company. The Company shall provide 60 days' prior notice to its shareholders 87 -2- before it may (a) issue in any period of twelve consecutive months ending on or prior to March 31, 2002 more than 1,000,000 Class B Voting Common Shares or more than 1,000,000 Class A Common Shares, excluding shares issued for per share consideration equal to or exceeding $1.00 per share, or (b) subdivide on or prior to March 31, 2002 any outstanding Class B Voting Common Shares. The Company shall provide 180 days' notice to its shareholders prior to taking any corporate action that would diminish or remove the limitation on liability of shareholders provided for under subsection 45(1) of the Canada Business Corporations Act. VOTING RIGHTS: Except as provided by law, holders of the Shares shall not be entitled as such to vote. The approval of the holders of the Shares with respect to any matter that requires their approval may be given by special resolution either in writing by the holders of two-thirds of the Shares then outstanding or passed by two-thirds of the votes cast on such matter at a special meeting called and held for the purpose of considering the same at which one or more holders of not less than 25% of the Shares then outstanding are present in person or represented by proxy. Each Share shall entitle the holder thereof to one vote on those matters on which such holders are entitled as such to vote. SCHEDULE 2.7 (2) TERM SHEET CANCO 1 CLASS B VOTING COMMON SHARES ------------------------------------------------------------------------------ ISSUER: Canco 1 (the "Company"). ISSUE: Class B Voting Common Shares (the "Shares"). AUTHORIZED NUMBER: The Company will be authorized to issue an unlimited number of Shares. 88 -3- DIVIDENDS: Each Share will entitle the holder thereof to dividends if, as and when declared by the Company, subject to the rights of holders of classes of shares ranking equally with or ahead of the Shares. PRIORITY: The Shares will rank equally with the Class A Non-Voting Common Shares of the Company and behind any other class of shares in the capital of the Company from time to time, if the provisions of such other class so provide, with respect to the payment of dividends and the repayment of capital or other distributions to be made on the liquidation, dissolution or winding-up of the Company. RIGHTS Subject to the rights of holders of shares having ON LIQUIDATION: a preference over the Shares, in the event of the liquidation, dissolution or winding-up of the Company or any other distribution of the assets of the Company to its shareholders for the purpose of winding up its affairs, the holders of the Shares and of the Class A Non-Voting Common Shares then outstanding shall be entitled to receive the remaining net assets of the Company, pro rata to the number of Shares and Class A Non-Voting Common Shares then held. NOTICE RIGHTS: The Company shall provide 60 days' prior notice to its shareholders before it may (a) issue in any period of twelve consecutive months ending on or prior to March 31, 2002 more than 1,000,000 Class B Voting Common Shares, excluding shares issued for per share consideration equal to or exceeding $1.00 per share, or (b) subdivide on or prior to March 31, 2002 any outstanding Class B Voting Common Shares. The Company shall provide 180 days equal to or prior notice to its shareholders of any meeting of shareholders called to consider any proposed corporate action that would diminish or remove the limitation on liability of shareholders provided for under subsection 45(1) of the Canada Business Corporations Act. CURRENCY: All amounts payable by way of dividends or distributions upon the liquidation, dissolution or winding-up of the Company shall be paid in the lawful money of Canada. VOTING RIGHTS: Holders of the Shares shall be entitled as such to receive notice of and to vote at any meeting of shareholders of the Company, subject to the rights of holders of any other class of shares of the Company (whether at law or as set out in the share provisions relating to such class of shares) to vote 89 -4- as a class on certain matters. Each Share shall entitle the holder thereof to one vote on those matters on which such holders are entitled as such to vote. SCHEDULE 2.7 (3) TERM SHEET CANCO 1 CLASS A PREFERRED SHARES ------------------------------------------------------------------------------ ISSUER: Canco 1 ("the Company"). ISSUE: Class A $1.00 Redeemable Preferred Shares (the "Shares"). AUTHORIZED NUMBER: The Company will be authorized to issue up to 2,000,000 Shares. REDEMPTION: Redeemable at any time after March 31, 2002 at the option of the Company on one day's notice to the holders at $1.00 per Share plus declared but unpaid dividends. DIVIDENDS: Each Share will entitle the holder thereof to cumulative dividends, subject to the rights of holders of classes of shares ranking equally with or ahead of the Shares. PRIORITY: The Shares will rank in priority to every other class of shares in the capital of the Company from time to time with respect to the payment of dividends and the repayment of capital (including by way of redemption or purchase for cancellation) or other distributions to be made on the liquidation, dissolution or winding-up of the Company, to the extent of the $1.00 preference amount per Share plus declared but unpaid dividends. RIGHTS ON In the event of the liquidation, dissolution or LIQUIDATION: winding-up of the Company or any other distribution of the assets of the Company to its shareholders for the purpose of winding up its affairs, the holders of the Shares then outstanding shall be entitled to receive $1.00 per Share plus declared but unpaid dividends from the remaining net assets of the Company in preference to holders of shares of every other class. 90 -5- CURRENCY: All amounts payable by way of dividends, redemption price or distributions upon the liquidation, dissolution or winding-up of the Company shall be paid in the lawful money of Canada. VOTING RIGHTS: Except as provided by law, holders of the Shares shall not be entitled as such to receive notice of or to vote at any meeting of the holders of shares of the Company. 91 SCHEDULE 2.9 (1) TERM SHEET PUT-CALL AGREEMENT ------------------------------------------------------------------------------ PARTIES: First Union Real Estate Equity and Mortgage Investments, a business trust existing under the laws of the State of Ohio ("FUR"). Impark Investments Inc. ("Investco") and the Onex Associates holding Shares at or immediately prior to the Time of Closing SUBJECT SHARES: Class A Non-Voting Common Shares in the capital of Canco 1 acquired by Investco and the Onex Associates from Canco 1 at the Time of Closing pursuant to the Share Purchase Agreement (the "Shares"). CURRENCY: Unless otherwise specified, all dollar amounts set out herein are expressed in United States dollars. CONSIDERATION: Investco and the Onex Associates shall pay their respective pro rata shares (based on the proportion that the number of Shares held by each such party bears to the total number of Shares held by Investco and the Onex Associates) of Cdn. $250,000 to FUR and grant to FUR the call rights described below in consideration for the grant by FUR of the put rights described below. DEPOSIT OF ELIGIBLE Prior to the closing of the transactions SECURITIES: contemplated by the Holdings Share Purchase Agreement, FUR will execute and deliver the Security Trust Indenture and will deliver to and deposit with the Trustee Eligible Securities having an aggregate face value (or in the case of Eligible Securities denominated in U.S. dollars, the Canadian Dollar Equivalent thereof) at least equal to the aggregate issue price of the Shares to be issued to Investco and the Onex Associates at the closing. Such Eligible Securities will secure the obligations of FUR under the Put-Call Agreement and under the Security Trust Indenture. PARTIAL PUT If, at the end of any calendar quarter ending RIGHT: on or after September 30, 1998, the Total Asset Value of FUR equals or exceeds $750 million for the first time after the date of the Put-Call Agreement but does not exceed 92 -2- $1 billion, then Investco and the Onex Associates will be entitled to put to FUR one-half (but not less or more than one-half) of the Shares held by them as at the end of such calendar quarter, at the put price prevailing as at the date of closing such put transaction, as indicated in Appendix A hereto. TRIGGER EVENT Investco and the Onex Associates will have the PUT RIGHT: right following the occurrence of the Trigger Event (as defined below) to sell all but not less than all of the outstanding Shares held by them to FUR at the put price prevailing as at the date of closing such put transaction, as indicated in Appendix A hereto. TRIGGER EVENT: The first to occur of the following events and circumstances shall be the "Trigger Event": 1. The Total Asset Value of FUR equalling or exceeding $1.0 billion at the end of any calendar quarter ending on or after September 30, 1998. 2. The effective date (as determined by the enacting or issuing governmental body) on which (i) section 856(c)(5)(B) of the U.S. Internal Revenue Code of 1986, as amended, insofar as such section requires that a real estate investment trust's total assets "be limited in respect of any one issuer to an amount not greater in value than 5% of the value of the total assets of the [REIT]", is repealed by the U.S. Congress, provided that no successor statute or U.S. Federal administrative rule is enacted or issued before or contemporaneously with such repeal, or (ii) the reference in the above-quoted language to "5%" is amended by act of the U.S. Congress or U.S. Federal administrative rule to provide for a percentage equal to or exceeding "10%". 3. First Union Management Inc. ("FUMI") and its affiliates ceasing to own 90% of the outstanding voting and equity shares of Canco 1 or its successors (excluding the Shares and shares issued to the Management Vendors or under management incentive and compensation arrangements), or FUR selling subordinated debt securities issued by Canco 1 or its successors (unless at the time of the sale the Total Asset Value of FUR is less than $600 million). 4. The giving prior to March 31, 2002 of notice by Canco 1 or its 93 -3- successor as issuer of the Shares, where such notice is required to be given under the articles of Canco 1, that it (a) intends to issue more than 1,000,000 Class B Voting Common Shares in any period of 12 consecutive months at a per share consideration equal to or exceeding $1 per share, (b) intends to subdivide any outstanding Class B Voting Common Shares or (c) intends to take any corporate action that would diminish or remove the limitation on liability of shareholders provided for under subsection 45(1) of the Canada Business Corporations Act. 5. Any event or series of events by which (i) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d)(2) of the United States Securities Exchange Act of 1934 (the "Exchange Act")) becomes, whether by means of any issuance or direct or indirect transfer of securities, merger, consolidation, liquidation, dissolution or otherwise, the "beneficial owner" (as such term is used in Rule 13d-3 under the Exchange Act, except that a person shall be deemed to be a "beneficial owner" of all securities that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly through one or more intermediaries, of more than 35% of the total voting rights attaching to the then-outstanding voting securities of FUR or FUMI, or (ii) during any period of two consecutive years, individuals who at the beginning of such period constituted FUR's board of trustees or FUMI's board of directors (together with any new trustees or new directors whose election by the FUR's board of trustees or FUMI's board of directors (as the case may be) or whose nomination for election by FUR's or FUMI's stockholders, as applicable, was approved by a vote of 66 2/3% of FUR's trustees or FUMI's directors (as applicable) then still in office who were either trustees or directors (as applicable) at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of FUR's trustees or FUMI's directors (as applicable) then still in office. 6. Any default under the Put-Call Agreement or the Security Trust Indenture (subject to a five business day cure period following notice with respect to defaults other than those relating to obligations to make payments, deposit Eligible Securities or perfect the Trustee's security interest in the Eligible Securities), 94 -4- or any event of default or other circumstance under any agreement to which FUR is a party that automatically or otherwise results in an acceleration of the time for payment of any monetary obligation of FUR in an amount exceeding $5.0 million, unless the same has been remedied or waived within five business days after arising. 7. The occurrence of the day that falls 30 months after the Issue Date. IMMEDIATE PUT: All the outstanding Shares held by Investco and the Onex Associates may be put to FUR immediately, without further notice, act or formality, upon Investco providing notice to FUR to that effect following the earliest to occur of: - any voluntary or involuntary act of bankruptcy or insolvency of FUR or Canco 1 or their successors after, with respect to involuntary acts of bankruptcy, such cure periods as are permitted under the principal credit facility of FUR; - any voluntary or involuntary step in the dissolution, liquidation or winding-up of FUR or Canco 1 or their successors after, with respect to involuntary acts of bankruptcy, such cure periods as are permitted under the principal credit facility of FUR; or - the commencement on behalf of FUR in any court of competent jurisdiction of any action to challenge, or the inclusion in pleadings filed on behalf of FUR with any court of competent jurisdiction of a request for relief that challenges, the validity of the Put-Call Agreement or the Security Trust Indenture. The transfer of title to the Shares in this situation will be deemed to occur immediately upon delivery of such notice, with the put price being held by FUR in trust for Investco and the Onex Associates beginning upon such delivery, to be released upon surrender of the Share certificates. Provided that such exercise notice is duly delivered, the immediate put will so occur notwithstanding whether any other notice of exercise of a put or call right, or notice of an election to delay the closing of a put transaction, has previously been given. The provisions of this section override the other provisions of this term sheet relating to exercise periods and closing periods. The put price shall be that prevailing on the date of delivery of such notice, as indicated in Appendix A hereto. 95 -5- FUR CALL RIGHTS: FUR will have the right during a 30-day period following the first anniversary of the occurrence of the Trigger Event to acquire all of the outstanding Shares from Investco and the Onex Associates at the call price prevailing as at the date of closing such call transaction, as indicated in Appendix A hereto. FUR will have an additional call right during a 30-day period following the second anniversary of the occurrence of the Trigger Event to acquire all of the outstanding Shares from Investco and the Onex Associates at the call price prevailing as at the date of closing such call transaction, as indicated in Appendix A hereto. FUR EXTENSION RIGHT: If: - the Trigger Event occurs on the day that falls 30 months after the Issue Date (without the occurrence at such time of any condition described in paragraphs 3 to 6 of the definition of "Trigger Event"), and Investco's and the Onex Associates' put rights are exercised by them; - during the period between the exercise date and the closing, FUR elects by notice in writing given to the Trustee and Investco to delay the closing until the day that falls 36 months after the Issue Date; and - such notice is accompanied by a payment to Investco and the Onex Associates equal to 3% of the initial issue price of the Shares then held by such parties; then the closing of the put transaction will occur on the day that falls 36 months after the Issue Date and at the put price prevailing as at the date of closing such put transaction, as indicated in Appendix A hereto; PROVIDED THAT should any of the events or circumstances described in paragraphs 3 to 6 of the definition of "Trigger Event" occur or arise after such election is made, then the closing of the put transaction will be governed by the provisions under "Exercise of Put/Call Rights and Closing Periods". The occurrence of such events or circumstances shall be for such purpose the date of exercise of the put option. 96 -6- EXERCISE OF Investco will be able to exercise, on behalf of PUT/CALL RIGHTS itself and behalf of each of the Onex Associates, AND CLOSING any put right hereunder by notice in writing PERIODS: given to FUR at any time following the satisfaction of any condition to the exercise of such right until the 30th day following the giving of notice by FUR of such event. As an exception to that, Investco may not exercise any put right during the final 15 days of any calendar quarter. For greater certainty, each Onex Associate shall be bound by the exercise of any put right by Investco and shall not be entitled to exercise any put right independently of Investco. The closing of any put transaction will occur 30 days after the exercise of the put right, except that if a put right is exercised between 30 and 16 days (inclusive) prior to the end of a calendar quarter, then the closing of the corresponding put transaction will occur 5 days prior to the last day of such calendar quarter. In each case, closing will be effected by the tendering of the put price against delivery of the relevant Share certificates. FUR's call rights can be exercised on 30 days' notice and the closing of the purchase and sale transaction will occur 30 days after the giving of such notice, with closing being effected by the tendering of the call price against delivery of the Share certificates. ADJUSTMENTS TO With respect to any put or call right that PUT/CALL PRICE: results in the determination of the put or call price on or as of a date falling between two dates set out in Appendix A, the price per share will be calculated by dividing (a) the amount by which the put or call price on the later of such dates exceeds the price on the former date by (b) the number of days between such dates and (c) multiplying the result by the number of days from but not including the former date to and including the date of closing. TITLE TO SHARES: At the time of the closing of any put or call, Investco and the Onex Associates shall represent and warrant to FUR that they have good and marketable title to the Shares being transferred, free and clear of any lien, charge, pledge, encumbrance, security interest, call, option or adverse claim, except pursuant to the provisions of the Put-Call Agreement and the Depositary Agreement. 97 -7- ADDITIONAL FUR shall be required every six months to ELIGIBLE purchase additional Eligible Securities having an SECURITIES: aggregate cost, excluding commissions, fees and expenses of acquisition, at least equal to the aggregate amount of increase over such six months in the aggregate put price of the Shares held by Investco and the Onex Associates. In the event of the exercise of a partial put right, the Eligible Securities may be reduced so that those remaining have an aggregate cost, as calculated above, at least equal to the aggregate put price of the remaining Shares held by Investco and the Onex Associates. FUR shall also be required every six months to purchase additional Eligible Securities as necessary to offset any diminution in the Canadian dollar equivalent value of the Eligible Securities then held by the Trustee below the then prevailing put and call price to the extent caused by the effect on U.S. dollar denominated Eligible Securities of any reduction in the value of the U.S. dollar against the Canadian dollar. These additional Eligible Securities shall be delivered to and deposited with the Trustee to be held as security for the obligations of FUR under the Put-Call Agreement and under the Security Trust Indenture. FUR may hedge the foreign exchange risk in some other manner with the prior written consent of Investco, not to be unreasonably withheld. TRANSFER OF Prior to the expiry of FUR's call rights SHARES: hereunder, Investco may transfer Shares only to its affiliates, to employees, officers and directors of Onex Corporation, to corporations pursuant to which such individuals participate in Onex's management investment plan, to FUR and to FUMI and the Onex Associates may transfer Shares only to, in the case of an Onex Associate that is a corporation, an affiliate or shareholder of such corporation or to any corporation that is an affiliate of Onex Corporation or, in the case of any other Onex Associate, to a corporation controlled, directly or indirectly, by such Onex Associate or Associates of such Onex Associate or to any corporation that is an affiliate of Onex Corporation, to FUR and to FUMI provided that in each case the transferee agrees in the prescribed form to be bound by the provisions of the Put-Call Agreement and the Depositary Agreement and to retain the status which permitted it to be a transferee. FUR will use its best efforts to secure any Canco 1 corporate or shareholder approval of any transfer of Shares permitted by the Put-Call Agreement or resulting from the exercise of any put or call right. If at any time Canco 1 has ceased to be a "private company" within the meaning of the Securities Act (Ontario), FUR will pay any fee charged by any securities regulatory authority in connection with a put or call transaction hereunder. The Shares will be held in accordance with a depositary agreement both pending and following any 98 -8- permitted transfer. Nothing herein shall prevent Investco from acquiring any Class A Common Shares held by Management Vendors provided that such Class A Common Shares shall not constitute Shares for the purposes of the Put-Call Agreement. RECOURSE: Notwithstanding any failure of FUR to fulfill its obligations under the Put-Call Agreement or the Security Trust Indenture, Investco and the Onex Associates shall have recourse in executing any judgment against FUR to all the property and assets of FUR other than: (a) property directly or indirectly acquired by Canco 1 on the Closing Date in connection with the acquisition of the Purchased Shares (including the Real Property); (b) property, the fair market value of which is wholly or partly attributable to the property referred to in (a); (c) property, the fair market value of which is determinable primarily by reference to the fair market value of, or any proceeds of disposition of, the property referred to in (a); (d) an interest in, or indebtedness of, any corporation, partnership, trust or other person that directly capitalizes Canco 1 in whole or in part; and (e) substitutions for any property, interest or indebtedness referred to in (a), (b), (c) or (d) above; provided that in no event shall recourse not be available to those assets subject to the Security Trust Indenture. AMENDMENTS: Any amendments to the Put-Call Agreement may be made by agreement in writing between FUR and Investco and the provisions of such agreement may be waived by such of those two parties as is the beneficiary thereof. Any such amendment to the Put-Call Agreement shall be binding upon the Onex Associates without any further act or formality on their part. FUR RIGHTS FUR and its affiliates will agree not to exercise RELATING any class voting rights associated with Shares TO SHARES: held by them prior to March 31, 2002. 99 -9- PROTECTIVE The Put-Call Agreement will contain PROVISIONS: provisions providing that the put and call rights thereunder relate to all securities into which the Shares may be converted, exchanged, consolidated or subdivided upon any reorganization of the capital of Canco 1 or its successors, or any arrangement or amalgamation or other like transaction relating to such persons, with corresponding changes to the put and call prices. NOTICES: FUR will be required to provide timely notice to Investco of the occurrence of any event or circumstance giving rise to the ability to exercise any put rights hereunder. FUR shall provide to Investco on request any additional information reasonably necessary to permit Investco to determine whether such an event or circumstance may occur or whether it has occurred at any time. FUR shall provide to Investco on a quarterly basis a certificate of the nature described in the definition of "Total Asset Value" below. ASSIGNMENT: The benefit of this agreement can be assigned only to the persons and in the manner that Shares can be transferred hereunder. References to Investco, the Onex Associates and Canco 1 include their successors and, in the case of Investco and the Onex Associates, their permitted assigns. GOVERNING LAW: Province of Ontario. DEFINITIONS: "CANADIAN DOLLAR EQUIVALENT" has the meaning given to it in the Holdings Share Purchase Agreement. "ELIGIBLE SECURITIES" means United States Government or Government of Canada debt securities denominated in U.S. or Canadian dollars and having a term to maturity at the time of purchase by FUR or by the Trustee of not more than one year. "TOTAL ASSET VALUE" means at any time the "value of the total assets" of FUR determined at such time within the meaning of section 856(c)(5) of the United States Internal Revenue Code, expressed in United States dollars, as certified with supporting calculations and information by two senior officers of FUR in accordance with the Put-Call Agreement. "HOLDINGS SHARE PURCHASE AGREEMENT" means the share purchase agreement made as of February 18, 1997, as amended to and including March 11, 1997, relating to the purchase and sale of the outstanding 100 -10- shares of Imperial Holdings No. 2 Inc. "ISSUE DATE" means the date on which the Shares are first issued. "TRUSTEE" means Trust Company, a trust company existing under the laws of Canada or of a province of Canada, as trustee for Investco and the Onex Associates. APPENDIX A TO SCHEDULE 2.9 (1)
DATE OF CLOSING OF PUT/CALL TRANSACTION PURCHASE PRICE(1) - ------------------------------------------------------------------------------------ September 30, 1997 Issue Price(2) x 1.04 - ------------------------------------------------------------------------------------ March 31, 1998 September 30, 1997 Price x 1.045 - ------------------------------------------------------------------------------------ September 30, 1998 March 31, 1998 Price x 1.05 - ------------------------------------------------------------------------------------ March 31, 1999 September 30, 1998 Price x 1.055 - ------------------------------------------------------------------------------------ September 30, 1999 March 31, 1999 Price x 1.06 - ------------------------------------------------------------------------------------ March 31, 2000 September 30, 1999 Price x 1.065 - ------------------------------------------------------------------------------------ September 30, 2000 March 31, 2000 Price x 1.07 - ------------------------------------------------------------------------------------ March 31, 2001 September 30, 2000 Price x 1.075 - ------------------------------------------------------------------------------------ September 30, 2001 March 31, 2001 Price x 1.08 - ------------------------------------------------------------------------------------ March 31, 2002 September 30, 2001 Price x 1.085 - ------------------------------------------------------------------------------------
- -------- (1) The per Share price is this amount divided by the number of Shares originally issued in accordance with the Share Purchase Agreement. (2) Issue Price equates to the Common Share Allocation Amount in the Share Purchase Agreement (in Canadian dollars). 101 SCHEDULE 2.9 (2) TERM SHEET SECURITY TRUST INDENTURE - -------------------------------------------------------------------------------- PARTIES: First Union Real Estate Equity and Mortgage Investments, a business trust existing under the laws of the State of Ohio ("FUR"). Trust Company (the "Trustee"), a trust company existing under the laws of Canada or of a province of Canada, as trustee for Investco and the permitted transferees of its Class A Non-Voting Common Shares in the capital of Canco 1 (the "Shares"). "Investco" herein means Investco or any permitted transferee of its Shares. Impark Investments Inc. ("Investco") and its permitted assigns under the Share Purchase Agreement and permitted transferees of the Shares. DEPOSIT OF Eligible Securities will be deposited with the ELIGIBLE Trustee on the Issue Date and from time to time SECURITIES: thereafter to secure the obligations of FUR under the Put-Call Agreement and under the Security Trust Indenture. The Trustee will reinvest Eligible Securities that mature, and any distributions on or proceeds of Eligible Securities, into new Eligible Securities until distribution or realization in accordance with the indenture. RIGHTS AND Upon the occurrence of any event of default under REMEDIES: the Put-Call Agreement or under the Security Trust Indenture (subject to a five business day cure period with respect to defaults other than those relating to obligations to make payments, deposit Eligible Securities or perfect the Trustee's security interest in the Eligible Securities), the Trustee will be entitled to realize on the trust assets and to exercise its remedies at law and in equity. Other than with respect to the failure of FUR to pay any amount owing upon an immediate put of the Shares (in which case the Trustee shall be required to exercise its remedies), the Trustee will take enforcement action only upon the direction of Investco. In other respects, the Security Trust Indenture will include customary enforcement rights and remedies. ALLOCATION All income earned on the Eligible Securities OF INCOME: held at any time shall be solely for the account of FUR. All such amounts shall automatically be deposited with and held by the Trustee as additional collateral under the Security Trust Indenture, and the Trustee shall invest or reinvest 102 - 2 - the same in Eligible Securities TRUSTEE Investco may direct the Trustee to do any act or DIRECTIONS: thing in accordance with the Security Trust Indenture, except that prior to any default, FUR may direct the Trustee as to the manner in which the Trustee may comply with its obligations to reinvest in accordance with the Security Trust Indenture any distributions or proceeds received on or from Eligible Securities. TRUSTEE FEES: The fees and expenses of the Trustee shall be paid by FUR. TRUSTEE The Trustee shall retain all evidences of PROVISIONS: ownership of the Eligible Securities until they are sold, returned to FUR or otherwise dealt with in accordance with the Security Trust Indenture. The Trustee shall not be required to do any act or thing except as specifically provided for in the Security Trust Indenture or pursuant to a direction properly given in accordance with the Security Trust Indenture. The Trustee shall be entitled to retain legal advice with respect to any ambiguity in its obligations under the Security Trust Indenture. INDEMNITY: FUR shall indemnify the Trustee against any loss or claim relating to any act or omission under the Security Trust Indenture, excluding gross negligence and wilful misconduct. RESIGNATION AND The Trustee may resign on six months' notice, REPLACEMENT: such resignation to be effective upon the appointment of a replacement trustee, and any party may apply on notice to the other parties to the Ontario Court (General Division) for an order appointing a replacement trustee if the parties have failed to do so within such six-month period. Investco may, by direction, replace the Trustee with another trust company (incorporated under the laws of Canada or of a province of Canada) that is acceptable to FUR, acting reasonably. AMENDMENTS: The Security Trust Indenture may be amended from time to time by agreement in writing between FUR and Investco, except that any amendment affecting the scope of responsibility or the indemnity of the Trustee shall require the consent of the Trustee. NOTICES: The Trustee will be entitled to receive the same notices that Investco is entitled to receive under the Put-Call Agreement. TERMINATION AND The obligations of FUR under the Security Trust DISCHARGE: Indenture shall terminate 103 - 3 - when FUR's obligations to Investco under the Put-Call Agreement and the Security Trust Indenture have been performed in full and the Put-Call Agreement has terminated in accordance with its terms. At such time, the Trustee shall release all remaining trust assets (net of the Trustee's fees and expenses) to FUR and discharge any security interests against them. GOVERNING LAW: Province of Ontario. DEFINITIONS: "ELIGIBLE SECURITIES" means United States Government or Government of Canada debt securities denominated in U.S. or Canadian dollars and having a term to maturity at the time of purchase by FUR or by the Trustee of not more than one year. 104 SCHEDULE 2.9 (3) TERM SHEET DEPOSITARY AGREEMENT - ------------------------------------------------------------------------------ PARTIES: First Union Real Estate Equity and Mortgage Investments, a business trust existing under the laws of the State of Ohio ("FUR"). Investco (which shall include the permitted transferees of it Class A Non-Voting Common Shares (the "Shares") in the capital of Canco 1). (the "Depositary"). DEPOSIT OF SHARES: Upon the issuance of the Shares, the certificates representing the same shall be deposited with and held by the Depositary to be dealt with in accordance with this agreement. All non-cash distributions resulting from a share split or extraordinary distribution on the Shares that reduces the capital of Canco 1, which distributions represent ownership or equity interests in Canco 1, shall be held by the Depositary in the same manner as the Shares are held. 105 - 2 - DEALING WITH SHARES: The Depositary shall deal with the Shares as follows: 1. At all times and in all circumstances, the Depositary shall deal with the Shares as directed in writing by FUR and Investco acting jointly. 2. In the event the Depositary believes, after obtaining legal advice, that its obligations with respect to the Shares is subject to ambiguity, the Depositary may apply for and comply with the directions of a court of competent jurisdiction. 3. At any time, the Depositary shall permit the certificates representing the Shares to be registered in the name of any corporation that an officer of Investco swears in an affidavit is an affiliate of Investco and a permitted transferee of such Shares pursuant to the provisions of the put-call agreement (provided that the Depositary shall not release the Shares to such corporation). 4. At any time when the Depositary is directed by Investco to deliver the Shares to FUR in connection with the exercise of Investco's put right, the Depositary shall do so. 5. At any time when the Depositary is directed by FUR to deliver the Shares to FUR in connection with the exercise of FUR's call right, the Depositary shall do so upon receipt of funds in the amount determined by reference to the put/call payment table (which will be in the form annexed to the put-call agreement). 6. On October 31, 2001, the Depositary shall deliver to Investco any Shares then held by the Depositary. DIVIDENDS: All dividends and distributions, other than those that are to be held by the Depositary as provided above, shall be paid by the Depositary to Investco. NATURE OF DEPOSITARY Investco will retain ownership of the Shares INTEREST: until it disposes of them in accordance with its obligations, and all income earned on the Shares at any time shall be solely for the account of Investco. DEPOSITARY FEES: The fees and expenses of the Depositary shall be paid by FUR. DEPOSITARY The Depositary shall retain all evidences of PROVISIONS: ownership of the Shares until 106 - 3 - they are dealt with in accordance with this agreement. The Depositary shall not be required to do any act or thing except as specifically provided for in this agreement or pursuant to a direction properly given in accordance with this agreement. The Depositary shall be entitled to retain legal advice with respect to any ambiguity in its obligations under this agreement. INDEMNITY: FUR shall indemnify the Depositary against any loss or claim relating to any act or omission under this agreement, excluding gross negligence and wilful misconduct. RESIGNATION AND The Depositary may resign on six months' notice, REPLACEMENT: such resignation to be effective upon the appointment of a replacement depositary, and any party may apply to the Ontario Court (General Division) for an order appointing a replacement depositary if the parties have failed to do so within such six-month period. FUR may, by direction, replace the Depositary with another depositary that is acceptable to Investco, acting reasonably. AMENDMENTS: This agreement may be amended from time to time by agreement in writing between FUR and Investco, except that any amendment affecting the scope of responsibility or the indemnity of the Depositary shall require the consent of the Depositary. TERMINATION AND The obligations of the Depositary shall terminate DISCHARGE: when all of the Shares have been dealt with in accordance with the agreement. GOVERNING LAW: Province of Ontario. 107 SCHEDULE 10.6(b) ---------------- ONEX VENDOR NOTICE ------------------ TO: FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS REFERENCE is made to the share purchase agreement made the 18th day of February, 1997 between Impark Investments Inc. ("Investco") and First Union Real Estate Equity and Mortgage Investments (the "Purchaser"), to which the following persons (the "Management Vendors") became parties in accordance therewith pursuant to instruments of adhesion dated February 21, 1997: Paul T.C. Clough, Charles S. Vosmik, J. Bruce Newsome (and Laurentian Bank of Canada in trust for account no. V002679, a registered retirement savings plan trust of which J. Bruce Newsome is the sole beneficiary), Douglas I. Poirier (and RBC Dominion Securities Inc. in trust for account no. 496-81890-11, a registered retirement savings plan trust of which Douglas I. Poirier is the sole beneficiary), J. Robin Bateman (and Gundyco in trust for account no. 590-90333-17, a registered retirement savings plan trust of which J. Robin Batemen is the sole beneficiary), James MacKay, Michael T. Menzies, Robert L. Noiles (and Gundyco in trust for account no. 590-77616-12, a registered retirement savings plan trust of which Robert L. Noiles is the sole beneficiary), Harry J. Renaud (and Midland Walwyn Capital Inc. in trust for account no. 8RABNQS, a registered retirement savings plan trust of which Harry J. Renaud is the sole beneficiary), Stuart M. MacKenzie (and Gundyco in trust for account no. 590-90254-12, a registered retirement savings plan trust of which Stuart M. MacKenzie is the sole beneficiary), Daniel Sawchuk, Vernon Schwartz and Jonas Prince, as amended by an amending agreement (the "First Amending Agreement") made as of February 26, 1997 by the foregoing parties and by further amending agreements made as of March 2, 1997 and as of March 7, 1997 between the Purchaser and Investco (both in its own capacity and as agent and attorney for the Management Vendors and as of March 17, 1997 between the parties thereto (such agreement, as so amended, being hereinafter referred to as the "Share Purchase Agreement"). Capitalized terms used without other definition herein and that are defined in the Share Purchase Agreement have the respective meanings herein as are ascribed to them in the Share Purchase Agreement. WHEREAS is an Onex Associate and is the registered and beneficial holder of common shares in the capital of Holdco and whereas is the optionee under an option granted by Impark Holdings Inc. on November 11, 1996 in respect of common shares in the capital of Holdco (for purposes of this instrument, each of and is an "Onex Vendor" and the common shares held by either Onex Vendor or that either Onex Vendor has the right to acquire under option are herein referred to as the "Sale Shares"); NOW THEREFORE for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, the parties agree as follows: 108 - 2 - 1. Notwithstanding section 4 of the acknowledgement executed and delivered by the Onex Vendors in accordance with Section 10.6 of the Share Purchase Agreement, the Onex Vendors shall sell all of the Sale Shares to the Purchaser at the Time of Closing in accordance with the Share Purchase Agreement and on the terms and subject to the conditions therein set forth. Except as provided for herein, such acknowledgement remains in full force and effect. 2. The Onex Vendors are [ ] are not [ ] NON-RESIDENTS of Canada within the meaning of the Income Tax Act (Canada). If the Onex Vendors are non-residents of Canada as so defined, the Onex Vendors will apply for certificates under section 116 of the Income Tax Act (Canada) as contemplated by Section 8.12 of the Share Purchase Agreement. 3. Investco shall not be required to purchase the Sale Shares or to sell them to the Purchaser under the Share Purchase Agreement. 4. The Purchaser shall be required to purchase the Sale Shares in accordance with the Share Purchase Agreement and on the terms and subject to the conditions therein set forth. DATED as of this _____ day of ________________, 1997. SIGNED, SEALED AND DELIVERED ) in the presence of ) ) ) ) --------------------------------- ) [NAME OF INDIVIDUAL ONEX VENDOR] ) IMPARK INVESTMENTS INC. [NAME OF CORPORATE ONEX VENDOR] by by ---------------------------- ----------------------------- 109 - 3 - Acknowledged and agreed to as of the date set forth above. FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS by ---------------------------- 110 SHARE PURCHASE FIFTH AMENDING AGREEMENT REFERENCE is made to the share purchase agreement made the 18th day of February, 1997 between Impark Investments Inc. ("Investco") and First Union Real Estate Equity and Mortgage Investments ("FUR"), to which the following persons (the "Management Vendors") became parties in accordance therewith pursuant to instruments of adhesion dated February 21, 1997: Paul T.C. Clough, Charles S. Vosmik, J. Bruce Newsome (and Laurentian Bank of Canada in trust for account no. V002679, a registered retirement savings plan trust of which J. Bruce Newsome is the sole beneficiary), Douglas I. Poirier (and RBC Dominion Securities Inc. in trust for account no. 496-81890-11, a registered retirement savings plan trust of which Douglas I. Poirier is the sole beneficiary), J. Robin Bateman (and Gundyco in trust for account no. 590-90333-17, a registered retirement savings plan trust of which J. Robin Batemen is the sole beneficiary), James MacKay, Michael T. Menzies, Robert L. Noiles (and Gundyco in trust for account no. 590-77616-12, a registered retirement savings plan trust of which Robert L. Noiles is the sole beneficiary), Harry J. Renaud (and Midland Walwyn Capital Inc. in trust for account no. 8RABNQS, a registered retirement savings plan trust of which Harry J. Renaud is the sole beneficiary), Stuart M. MacKenzie (and Gundyco in trust for account no. 590-90254-12, a registered retirement savings plan trust of which Stuart M. MacKenzie is the sole beneficiary), Daniel Sawchuk, Vernon Schwartz and Jonas Prince, as amended by an amending agreement (the "First Amending Agreement") made as of February 26, 1997 by the foregoing parties and by further amending agreements made as of March 2, 1997 and as of March 7, 1997 between the Purchaser and Investco (both in its own capacity and as agent and attorney for the Management Vendors and by a further amending agreement made as of March 17, 1997 made between the parties to the First Amending Agreement (such agreement, as so amended, being hereinafter referred to as the "Share Purchase Agreement"). WHEREAS FUR has assigned its rights and benefits under the Share Purchase Agreement to First Union Management, Inc. (the "Purchaser"); AND WHEREAS the parties to the Share Purchase Agreement wish to amend such agreement on the terms set out herein; NOW THEREFORE in consideration of the premises and the respective covenants set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, the parties hereby agree as follows: 1. DEFINED TERMS AND REFERENCES. Capitalized terms that are used herein without other definition and that are defined in the Share Purchase Agreement shall have the respective meanings herein that are ascribed thereto in the Share Purchase Agreement, unless the context otherwise requires. References herein to Sections mean Sections of the Share Purchase Agreement. 2. CLOSING DATE. Notwithstanding Section 1.1(i), the undersigned agree that the Closing Date shall be April 17, 1997. 3. CLOSING DEBT. Notwithstanding Section 1.1(j), the undersigned agree that the Closing Debt shall be $36,366,847. 111 - 2 - 4. COMMON SHARE ALLOCATION AMOUNT. Notwithstanding Section 1.1(l.1), the undersigned agree that the Common Share Allocation Amount shall be $16,222,600. 5. ALLOCATION OF PORTION OF PURCHASE PRICE. Notwithstanding Section 2.3, the aggregate Purchase Price payable under Section 2.2 on the Closing Date to Investco and the Onex Vendors shall be allocated as provided for in Schedule 1 hereto. 6. CONFIRMATION OF SHARE PURCHASE AGREEMENT. The Share Purchase Agreement remains in full force and effect, unamended except as specifically provided in paragraphs 2 to 5, inclusive, above. 7. COUNTERPARTS. This agreement may be executed in any number of counterparts, each of which shall constitute an original and all of which taken together shall constitute one and the same instrument, and this agreement shall be effective as of the latest date on which any counterpart is shown to have been executed. Delivery hereof and of any counterpart to any party may be effected by facsimile transmission made to that party. IN WITNESS WHEREOF this amending agreement has been executed by the parties as of the 15th day of April, 1997. IMPARK INVESTMENTS INC. FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS by /s/ Authorized Signer by /s/ Authorized Signer --------------------------- --------------------------- FIRST UNION MANAGEMENT, INC. by /s/ Authorized Signer --------------------------- ----------------------------- The undersigned acknowledges and consents to the foregoing as of the 17th day of April, 1997 ONEX CORPORATION by /s/ Authorized Signer -------------------------- 112 - 3 - SCHEDULE 1 TO THE SHARE PURCHASE FIFTH AMENDING AGREEMENT
- ------------------------------ ---------------------------- --------------------------- ---------------------------- Vendor Section 2.3(a) Allocation Section 2.3(b) Allocation Section 2.3(c) Allocation of Escrow Amount of Class A Common Shares of Remaining Cash - ------------------------------ ---------------------------- --------------------------- ---------------------------- Investco $1,813,169.55 14,006,307 $43,437,178.69 - ------------------------------ ---------------------------- --------------------------- ---------------------------- 1170821 Ontario Inc. nil 52,243 53,046.81 - ------------------------------ ---------------------------- --------------------------- ---------------------------- 1170809 Ontario Inc. nil 43,993 44,669.68 - ------------------------------ ---------------------------- --------------------------- ---------------------------- 1170810 Ontario Inc. nil 49,491 50,253.52 - ------------------------------ ---------------------------- --------------------------- ---------------------------- 1170812 Ontario Inc. nil 49,491 50,253.52 - ------------------------------ ---------------------------- --------------------------- ---------------------------- 1170697 Ontario Inc. nil 8,250 8,377.12 - ------------------------------ ---------------------------- --------------------------- ---------------------------- 1170819 Ontario Inc. nil 8,250 8,377.12 - ------------------------------ ---------------------------- --------------------------- ---------------------------- 1170698 Ontario Inc. nil 13,735 13,968.22 - ------------------------------ ---------------------------- --------------------------- ---------------------------- Anthony R. Melman nil 78,255 368,555.88 - ------------------------------ ---------------------------- --------------------------- ---------------------------- Ewout R. Heersink nil 65,899 310,362.57 - ------------------------------ ---------------------------- --------------------------- ---------------------------- Anthony Munk nil 74,138 349,157.01 - ------------------------------ ---------------------------- --------------------------- ---------------------------- Mark L. Hilson nil 74,138 349,157.01 - ------------------------------ ---------------------------- --------------------------- ---------------------------- Thomas P. Dea nil 12,356 58,193.32 - ------------------------------ ---------------------------- --------------------------- ---------------------------- Andrew J. Sheiner nil 12,356 58,193.32 - ------------------------------ ---------------------------- --------------------------- ---------------------------- Donald W. Lewtas nil 20,606 96,975.96 - ------------------------------ ---------------------------- --------------------------- ---------------------------- Eric J. Rosen nil 123,629 399,410.53 - ------------------------------ ---------------------------- --------------------------- ---------------------------- TOTAL $1,813,169.55(1) 14,693,137(2) $45,656,130.28(3) - ------------------------------ ---------------------------- --------------------------- ----------------------------
Notes: - -------- [FN] 1. Proportionate share of Investco and Onex Vendors of $2,001,909 Escrow Amount. Investco and the Onex Vendors hold an aggregate of 31,390,000 Purchased Shares, out of a total of 34,657,500, or 90.572026256%. 2. The Common Share Allocation Amount is U.S. $11,600,000 x 1.3985, or Cdn. $16,222,600. Each Class A Common Share that is issued satisfies $1.00 of that amount. At 90.572026256%, Investco and the Onex Vendors in aggregate are entitled to 14,693,137 Class A Common Shares. 3. The total cash payable is $105,000,000, less Closing Debt ($38,444,347 + $1,000,000 + $1,077,500) = $68,633,153, less the Common Share Allocation Amount of $16,222,600 = $52,410,553, less the Escrow Amount of $2,001,909 = $50,408,644. At 90.572026256%, the aggregate share of these Vendors is $45,656,130.28. EX-10.D 6 EXHIBIT 10.D 1 Exhibit 10d PUT-CALL AGREEMENT THIS AGREEMENT made the 17th day of April, 1997, B E T W E E N: IMPARK INVESTMENTS INC., a corporation existing under the laws of the Province of Ontario, (hereinafter referred to as "Investco"), OF THE FIRST PART, - and - THE SHAREHOLDERS OF 3357392 CANADA INC. LISTED ON SCHEDULE A HERETO, (hereinafter referred to as the "Onex Associates") OF THE SECOND PART, - and - FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS, a business trust existing under the laws of the State of Ohio, (hereinafter referred to as "FUR"), OF THE THIRD PART. WHEREAS pursuant to the Share Purchase Agreement (as hereinafter defined), Investco and the Onex Associates have sold to 3357392 Canada Inc. (subject to further definition below, the "Corporation") all the shares of Imperial Holdings No. 2 Inc. beneficially owned by them; AND WHEREAS the Corporation has issued to Investco and the Onex Associates Class A Non-Voting Common Shares of the Corporation in partial payment of the purchase price for such shares of Imperial Holdings No. 2 Inc.; AND WHEREAS the Share Purchase Agreement contemplates that FUR, Investco and the Onex Associates shall enter into an agreement providing for certain put rights in favour of 2 -2- Investco and the Onex Associates and certain call rights in favour of FUR relating to the Class A Non-Voting Common Shares of the Corporation beneficially owned by Investco and the Onex Associates; NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the respective covenants, agreements, representations, warranties and indemnities of the parties hereinafter contained and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by each party), the parties hereby agree as follows: 1. INTERPRETATION 1.1 DEFINED TERMS. For the purposes of this Agreement, unless the context otherwise requires, the following terms shall have the meanings set out below and grammatical variations of such terms shall have corresponding meanings: (1) "AFFILIATE" has the meaning given to such term in the CBCA; (2) "AGGREGATE PURCHASE PRICE" has the meaning given to such term in Section 4.3(a)(i); (3) "ASSOCIATE" has the meaning given to such term in the CBCA; (4) "BUSINESS DAY" means any day, other than Saturday or Sunday, on which banks are generally open for business in Toronto, Ontario; (5) "CALL NOTICE" has the meaning given to such term in Section 3.4; (6) "CALL RIGHT" has the meaning given to such term in Section 3.4; (7) "CANADIAN DOLLAR EQUIVALENT" has the meaning given to such term in the Share Purchase Agreement; (8) "CBCA" means the Canada Business Corporations Act, as in effect on the date hereof; (9) "CLASS A NON-VOTING COMMON SHARES" means the Class A Non-Voting Common Shares in the capital of the Corporation and includes any shares or other securities 3 -3- into which such shares may be converted, exchanged, reclassified, redesignated, subdivided, consolidated or otherwise changed from time to time and any securities of any successor or continuing corporation to the Corporation into which any of the foregoing securities may be changed as a result of any amalgamation, merger, consolidation, statutory arrangement or other form of reorganization, statutory or otherwise; (10) "CLOSING DATE" means: (1) with respect to the closing of any purchase and sale of Shares hereunder upon the exercise of any Put Right (other than the Immediate Put Right) or the Call Right, the day which is the 30th day following the receipt (or deemed receipt) by FUR or Investco, as the case may be, of the applicable Put Notice or Call Notice; provided, however, that if a Delayed Closing Notice has been effectively delivered by FUR to Investco pursuant to Section 4.6 (subject to the proviso contained therein), the Closing Date shall be April 15, 2000; and provided further that if any such Put Right is exercised between 30 and 16 days (inclusive) prior to the end of any calendar quarter, the applicable Closing Date shall be the day that is five days prior to the last day of such calendar quarter; and (2) with respect the closing of any purchase and sale of Shares hereunder upon the exercise of the Immediate Put Right, the day specified as the closing date in the Immediate Put Notice; (11) "CORPORATION" means 3357392 Canada Inc. and its successors; (12) "DELAYED CLOSING NOTICE" has the meaning given to such term in Section 4.6; (13) "DEPOSIT AGREEMENT" means the agreement made as of the date hereof between FUR, Investco, the Onex Associates and Montreal Trust Company, as depositary, pursuant to which, among other things, certificates representing the Shares have been deposited with such depositary; 4 -4- (14) "DEPOSITARY" means Montreal Trust Company in its capacity as depositary under the Deposit Agreement; (15) "ELIGIBLE SECURITIES" means bonds, debentures or other evidences of indebtedness of or fully guaranteed as to the payment of principal and interest by the full faith and credit of the Government of the United States of America or the Government of Canada, provided the same are denominated in United States dollars or Canadian dollars and have a term to maturity at the time of deposit by FUR with the Trustee or at the time of purchase by the Trustee, as the case may be, of not more than one year; (16) "EQUITY SHARES" means the Class A Non-Voting Common Shares, the Class B Voting Common Shares and any other shares in the capital of the Corporation which carry a residual right to participate in the earnings of the Corporation and in the property and assets of the Corporation in the event of liquidation, winding-up or dissolution; (17) "EVENT OF DEFAULT" means any of: (1) a default or breach by FUR of any of its covenants and obligations under this Agreement, the Security Trust Indenture or the Deposit Agreement arising upon or otherwise relating to the failure by FUR to (A) make any payment required to be made by it pursuant to any provision of this Agreement, the Security Trust Indenture or the Deposit Agreement, (B) deposit with the Trustee any Eligible Securities required to be so deposited pursuant to this Agreement or the Security Trust Indenture or (C) file any financing statement, financing change statement or any other document or to do any other act or thing necessary or advisable, in the reasonable opinion of counsel to Investco, to perfect or to maintain the perfection of the Pledge or to ensure that for so long as the Security Trust Indenture remains in effect the Pledge constitutes a first priority Security Interest in the Collateral (the terms "Pledge", "Security Interest" and "Collateral" having the respective meanings given to them in the Security Trust Indenture); (2) a default or breach by FUR of any of its covenants and obligations under this Agreement or the Security 5 -5- Trust Indenture other than a default or breach described in paragraph (q)(i) above; or (3) an inaccuracy or breach in any representation and warranty made by FUR herein or in the Security Trust Indenture; (18) "FUMI" means First Union Management, Inc. and its successors; (19) "IMMEDIATE PUT EVENT" means the occurrence of any of the following: (1) either of the Corporation or FUR (1) taking any action for the termination, winding-up, liquidation or dissolution of the Corporation or FUR, or ceasing to carry on business, or ceasing to pay its current obligations in the ordinary course of business as they generally become due, (2) making a general assignment for the benefit of creditors or becoming insolvent or unable to meet its obligations as they generally become due, (3) filing a petition in voluntary liquidation or bankruptcy, (4) filing a petition or answer or consent seeking the reorganization of the Corporation or FUR, as the case may be, or the readjustment of any of the indebtedness of the Corporation or FUR, as the case may be, (5) commencing any case or proceeding in respect of the Corporation or FUR under applicable insolvency or bankruptcy laws now or hereafter existing (including the Companies' Creditors Arrangement Act), (6) consenting to the appointment of any receiver, receiver-manager, administrator, custodian, liquidator or trustee of all or any part of its assets or property (provided that the mere grant by the Corporation or FUR of security interests over all or part of their respective assets or property to a trustee, other than to a trustee-in-bankruptcy, in accordance with the provisions of normal course security arrangements shall not of itself constitute an Immediate Put Event), (7) taking any corporate or other organizational action for the purpose of effecting any of the foregoing, including by (A) convening any meeting of the Corporation or FUR for the purpose of considering any resolution for (or to petition for) its winding-up, liquidation or dissolution or (B) the passing by shareholders of the Corporation of a resolution for its winding-up or by the security holders of FUR of a resolution for its winding-up, liquidation or dissolution, or (8) being adjudicated as bankrupt or insolvent; 6 -6- (2) if any petition for any proceedings in bankruptcy or liquidation or for the winding-up, reorganization or readjustment of indebtedness of the Corporation or FUR shall be filed, or any case or proceeding shall be commenced, under any applicable bankruptcy or insolvency laws now or hereafter existing (including the Companies' Creditors Arrangement Act), against the Corporation or FUR, or any receiver, receiver-manager, administrator, custodian, liquidator or trustee shall be appointed for the Corporation or FUR or for all or any part of the Corporation's or FUR's assets or property, or any order for relief or for the winding-up, dissolution or liquidation shall be entered in a proceeding with respect to the Corporation or FUR under the provisions of the United States Bankruptcy Code, the CBCA, the Bankruptcy and Insolvency Act (Canada), the Companies' Creditors Arrangement Act (Canada) or any other applicable or similar bankruptcy or insolvency laws, in each case, as amended, and such proceeding or appointment shall not be dismissed or discharged, as the case may be, within 45 days after the filing thereof or such appointment; (3) the commencement by or on behalf of FUR in any court of competent jurisdiction of any action or proceeding to challenge, or the inclusion in pleadings filed by or on behalf of FUR with any court of competent jurisdiction of a request for relief that challenges, the validity of this Agreement or the Security Trust Indenture; (20) "IMMEDIATE PUT NOTICE" has the meaning given to such term in Section 3.3; (21) "IMMEDIATE PUT RIGHT" has the meaning given to such term in Section 3.3; (22) "INVESTCO" means, notwithstanding any prior definition in this Agreement, Impark Investments Inc. or, if Impark Investments Inc. should transfer all of its remaining Shares at any time to any Permitted Transferee in accordance with Section 6.2, it shall thereafter mean such Permitted Transferee, and it shall include any successor of Impark Investments Inc. or such Permitted Transferee; (23) "MANAGEMENT VENDORS" has the meaning given to such term in the Share Purchase Agreement; 7 -7- (24) "ONEX" means Onex Corporation and its successors; (25) "ONEX ASSOCIATES" means , notwithstanding any prior definition in this Agreement, the shareholders of 3357392 Canada Inc. listed on Schedule A hereto or, if any such shareholder should transfer all of its remaining Shares at any time to any Permitted Transferee in accordance with Section 6.2, such Permitted Transferee shall thereafter be substituted for such shareholder as the Onex Associate, and the term "Onex Associate" shall include any successor of any such shareholder or such Permitted Transferee; (26) "PARTIAL PUT RIGHT" has the meaning given to such term in Section 3.1; (27) "PERMITTED TRANSFEREE" means: (1) with respect to Investco, any Affiliate of Investco, any employee, officer or director of Onex or any corporation pursuant to which any such individual participates in the management investment plan of Onex; and (2) with respect to the Onex Associates, in the case of any Onex Associate that is a corporation, any Affiliate or shareholder of such corporation or any corporation that is an Affiliate of Onex or, in the case of any other Onex Associate, to a corporation controlled, directly or indirectly, by such Onex Associate or Associates of such Onex Associate or any corporation that is an Affiliate of Onex; (28) "PERSON" means an individual, a firm, a corporation, a syndicate, a partnership, an association, a joint venture, a trust, a government or governmental agency and every other legal or business entity whatsoever; (29) "PURCHASE PRICE" means, with respect to any purchase and sale of Shares upon the exercise of any Put Right or the Call Right hereunder, the price per Share as set out in Schedule B applicable on the Closing Date for such purchase and sale; provided, however, that in the case of the exercise of the Immediate Put Right it shall mean the price per Share as so set out applicable on the date of 8 -8- the delivery of the Immediate Put Notice, and further provided that (i) if the relevant Closing Date occurs prior to September 30, 1997, the Purchase Price shall be that set forth for September 30, 1997, (ii) if the relevant Closing Date falls between any two dates set out in Schedule B, the Purchase Price shall be calculated by dividing (A) the amount by which the Purchase Price specified for the date set out in Schedule B that next follows such Closing Date exceeds the Purchase Price specified for the immediately preceding date set out in Schedule B by (B) the number of days between such dates, and (C) multiplying the quotient thus obtained by the number of days from but not including such earlier date to and including the Closing Date, and (D) adding such product to the Purchase Price specified for the earlier of such dates, and (iii) if the relevant date occurs after March 31, 2002, the Purchase Price shall be that set forth for March 31, 2002; (30) "PUT NOTICE" means any notice given by Investco to FUR pursuant to Section 3.1, 3.2 or 3.3; (31) "PUT RIGHTS" means, collectively, the Partial Put Right, the Trigger Event Put Right and the Immediate Put Right; (32) "QUARTERLY REPORT" has the meaning given to such term in Section 9.1; (33) "SECURITY TRUST INDENTURE" means the agreement dated as of the date hereof among FUR, Investco, the Onex Associates and Montreal Trust Company of Canada; (34) "SHARE PURCHASE AGREEMENT" means the share purchase agreement made as of February 18, 1997, as amended to and including April 15, 1997, between FUR, Investco and the Management Vendors relating to the purchase and sale of the outstanding shares of Imperial Holdings No. 2 Inc.; (35) "SHARES" means the Class A Non-Voting Common Shares held as of the date hereof by Investco and the Onex Associates, as set out in Schedule A; (36) "TAX ACT" means the Income Tax Act (Canada), as amended from time to time; 9 -9- (37) "TOTAL ASSET VALUE" means at any time the "value of the total assets" of FUR determined at such time within the meaning of section 856(c)(5) of the United States Internal Revenue Code, expressed in United States dollars, as certified in the most recently delivered Quarterly Report; (38) "TRANSFER" means, in respect of any Share, any sale, exchange, transfer, assignment, gift, pledge, encumbrance, hypothecation, alienation or other transaction, whether voluntary, involuntary or by operation of law, by which the legal or beneficial ownership of, or any security interest or other interest in, such Share passes from one person to another person, whether or not for value; (39) "TRIGGER EVENT" means the first to occur of any of the following: (1) the Total Asset Value of FUR equalling or exceeding $1.0 billion at the end of any calendar quarter ending on or after September 30, 1998; (2) the effective date (as determined by the enacting or issuing governmental body) on which (i) section 856(c)(5)(B) of the U.S. Internal Revenue Code of 1986, as amended, insofar as such section requires that a real estate investment trust's total assets "be limited in respect of any one issuer to an amount not greater in value than 5% of the value of the total assets of the [REIT]", is repealed by the U.S. Congress, provided that no successor statute or U.S. Federal administrative rule is enacted or issued before or contemporaneously with such repeal, or (ii) the reference in the above-quoted language to "5%" is amended by act of the U.S. Congress or U.S. Federal administrative rule to provide for a percentage equal to or exceeding "10%"; (3) FUMI and its Affiliates ceasing to own shares of the Corporation carrying at least 90% of the votes attaching to all the outstanding voting shares of the Corporation and 90% of the outstanding Equity Shares (in each case excluding the Shares and any shares issued to the Management Vendors or under management incentive and compensation arrangements), or FUR selling subordinated debt securities issued by the Corporation (unless at the 10 -10- time of the sale the Total Asset Value of FUR is less than $600 million); (4) the giving prior to March 31, 2002 of notice by the Corporation, where such notice is required to be given under the articles of the Corporation, that it (a) intends to issue more than 1,000,000 Class B Voting Common Shares in any period of 12 consecutive months at a per share consideration of less than $1.00, (b) intends to subdivide the outstanding Class B Voting Common Shares or (c) intends to take any corporate action that would diminish or remove the limitation on liability of shareholders provided for under subsection 45(1) of the CBCA; (5) any event or series of events by which (i) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d)(2) of the United States Securities Exchange Act of 1934 (the "Exchange Act")) becomes, whether by means of any issuance or direct or indirect transfer of securities, merger, consolidation, liquidation, dissolution or otherwise, the "beneficial owner" (as such term is used in Rule 13d-3 under the Exchange Act, except that a person shall be deemed to be a "beneficial owner" of all securities that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly through one or more intermediaries, of more than 35% of the total voting rights attaching to the then-outstanding voting securities of FUR or FUMI, or (ii) during any period of two consecutive years, individuals who at the beginning of such period constituted FUR's board of trustees or FUMI's board of directors (together with any new trustees or new directors whose election by the FUR's board of trustees or FUMI's board of directors (as the case may be) or whose nomination for election by FUR's or FUMI's stockholders, as applicable, was approved by a vote of 66 2/3% of FUR's trustees or FUMI's directors (as applicable) then still in office who were either trustees or directors (as applicable) at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason (other than death or disability) to constitute a majority of FUR's trustees or FUMI's directors (as applicable) then still in office; 11 -11- (6) any Event of Default, except that (A) if such Event of Default is one described in Section 1.1(q)(ii), it shall not be deemed to give rise to a Trigger Event if it is cured within 15 business days after written notice of the same has been given to FUR, and (B) if such Event of Default is one described in Section 1.1(q)(iii), it shall not be deemed to give rise to a Trigger Event if it is cured within five business days after written notice of the same has been given to FUR; (7) any event of default or other circumstance under any agreement to which FUR is a party (other than this Agreement or the Security Trust Indenture) that automatically or otherwise results in an acceleration of the time for payment of any monetary obligation of FUR in an amount exceeding $5.0 million, unless the same has been remedied or waived within five business days after arising; and (8) the occurrence of the day that falls 30 months after the date of this Agreement; (40) "TRIGGER EVENT PUT NOTICE" has the meaning given to such term in Section 3.2; (41) "TRIGGER EVENT PUT RIGHT" has the meaning given to such term in Section 3.2; and (42) "TRUSTEE" means Montreal Trust Company of Canada, acting in its capacity as collateral agent under the Security Trust Indenture. 1.2 HEADINGS. The division of this Agreement into sections, paragraphs and clauses and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. The terms "this Agreement", "hereof", "herein", "hereunder" and similar expressions refer to this Agreement and not to any particular section or other portion hereof and include any agreement or instrument supplemental or ancillary hereto. 1.3 CURRENCY. Unless otherwise indicated, all dollars amounts referred to in this Agreement are expressed in United States funds. 12 -12- 1.4 GOVERNING LAW. This Agreement shall be construed and interpreted in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. Each of the parties hereby irrevocably attorns to the non-exclusive jurisdiction of the courts of the Province of Ontario. 1.5 SEVERABILITY. If any provision contained herein is determined to be void or unenforceable in whole or in part, it shall not be deemed to affect or impair the validity of any other provision herein and each such provision is deemed to be separate and distinct. 1.6 ENTIRE AGREEMENT. This Agreement, the Security Trust Indenture and the Deposit Agreement constitute the entire agreement between the parties with respect to the subject matter hereof. 1.7 BUSINESS DAYS. Any action or payment required or permitted to be taken or made hereunder on a day that is not a business day may be taken or made on the next succeeding business day. 1.8 NUMBER AND GENDER. 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. 2. PUT OPTION PRICE 2.1 PUT OPTION PRICE. In consideration of the grant by FUR to Investco and the Onex Associates of the Put Rights and the other covenants and agreements of FUR contained in this Agreement, Investco and the Onex Associates hereby agree, in their respective pro rata shares (based on the proportion that the number of Shares held by each such party bears to the total number of Shares held by Investco and the Onex Associates), to pay to FUR Cdn. $250,000 (the "Put Option Price") and to grant to FUR the Call Right. 2.2 SATISFACTION OF PUT OPTION PRICE. Investco and each of the Onex Associates hereby agree to deliver to FUR, upon the execution and delivery of this Agreement by FUR, in full payment and satisfaction of the Put Option Price, one or more certified cheques or bank drafts in immediately available funds in the aggregate amount of the Put Option Price, made payable to or to the order of FUR. 3. PUT AND CALL RIGHTS 13 -13- 3.1 PARTIAL PUT RIGHT. If, at the end of any calendar quarter ending on or after September 30, 1998, the Total Asset Value of FUR (as shown in any Quarterly Report) equals or exceeds $750 million for the first time after the date of this Agreement, but does not exceed $1 billion, Investco shall have the right (the "Partial Put Right"), exercisable by notice in writing delivered to FUR, the Trustee and the Depositary at any time following the quarter-end at which the Total Asset Value of FUR first equals or exceeds $750 million (without then exceeding $1 billion) until the 30th day following the delivery to Investco of the Quarterly Report relating to such quarter, to require FUR to purchase one-half (1/2), but not less than one-half (1/2), of the Shares owned by Investco and the Onex Associates as at the end of such calendar quarter at the applicable Purchase Price. 3.2 TRIGGER EVENT PUT RIGHT. Upon the occurrence of the Trigger Event, Investco shall have the right (the "Trigger Event Put Right"), exercisable by notice (the "Trigger Event Put Notice") in writing delivered to FUR, the Trustee and the Depositary at any time following the occurrence of the Trigger Event until the 30th day following the giving of notice by FUR to Investco of the Trigger Event, to require FUR to purchase all but not less than all of the Shares owned by Investco and the Onex Associates on the applicable Closing Date, which purchase is to be made at the applicable Purchase Price. 3.3 IMMEDIATE PUT RIGHT. Upon the occurrence of any Immediate Put Event, Investco shall have the right (the "Immediate Put Right"), exercisable by notice (the "Immediate Put Notice") in writing delivered to FUR at any time following the occurrence of the Immediate Put Event until the fifth day following the giving of notice by FUR to Investco of such Immediate Put Event, to require FUR to purchase all but not less than all of the Shares owned by Investco and the Onex Associates on the applicable Closing Date, which purchase is to be made at the applicable Purchase Price. A copy of the Immediate Put Notice shall be provided to the Trustee and the Depositary as soon as reasonably practicable after being given to FUR. The Immediate Put Notice shall set out the Closing Date for the purchase and sale of such Shares, which date (i) shall not be more than 10 days, and (ii) if the Immediate Put Notice relates to one or more Immediate Put Events described in Sections 1.1(s)(i) or (ii) that relate to the Corporation but none of which relates to FUR, shall not be less than two days, following the date of delivery to FUR of the Immediate Put Notice. The due delivery of an Immediate Put Notice shall override any other Put Notice or any Call Notice theretofore or thereafter given, and the closing of the purchase and sale transaction effected 14 -14- by the giving of the Immediate Put Notice shall occur in accordance with such Immediate Put Notice notwithstanding the giving of any Delayed Closing Notice or any other provision hereof to the contrary. 3.4 CALL RIGHTS OF FUR. At any time during either (i) the period commencing on the date of the first anniversary of the occurrence of the Trigger Event and ending on the 30th day following such date or (ii) the period commencing on the date of the second anniversary of the occurrence of the Trigger Event and ending on the 30th day following such date, FUR shall have the right (the "Call Right"), exercisable by notice (a "Call Notice") in writing delivered to Investco at any time during either such period, to require Investco and the Onex Associates to sell all but not less than all of the Shares owned by Investco and the Onex Associates on the applicable Closing Date, which purchase is to be made at the applicable Purchase Price. 3.5 LIMITATIONS ON EXERCISE PERIOD. Notwithstanding the periods for exercise of the Partial Put Right and the Trigger Event Put Right set out in Sections 3.1 and 3.2, the written notice by which either such Put Right is exercised may not be given during the final 15 days of any calendar quarter. 3.6 PURCHASE AND SALE UPON EXERCISE. Upon the exercise of any Put Right or the Call Right, Investco and the Onex Associates shall sell, and FUR shall purchase, such number of Shares as are required to be so purchased and sold pursuant to the terms of this Section 3. Any such purchase and sale of Shares shall be completed on such other terms and conditions as are set out in Section 4. 4. CLOSING ARRANGEMENTS 4.1 DEFINITIONS. In this Section 4, the term "Purchased Shares" means the Shares to be purchased from Investco and the Onex Associates by FUR pursuant to Section 3.1, 3.2, 3.3 or 3.4, and the term "Vendor" means the applicable vendor (being Investco or the relevant Onex Associate) of any such Shares. 4.2 PLACE AND TIME OF CLOSING. (1) Unless otherwise provided in this Agreement, the closing of the purchase and sale of the Purchased Shares shall take place at the offices of Fasken Campbell Godfrey at 10:00 a.m. (Toronto time) on the applicable Closing Date, or at such other place and time as FUR and Investco may mutually determine, the 15 -15- actual time of closing on such Closing Date being hereinafter referred to as the "Time of Closing". (2) Notwithstanding the actual Closing Date with respect to any purchase and sale of Shares upon the exercise of the Immediate Put Right, and notwithstanding anything else contained in this Agreement, such purchase and sale shall be deemed to have taken place immediately upon the delivery of the Immediate Put Notice and the effective date of such transfer of the Shares shall for all purposes be deemed to be the date of such delivery. 4.3 CLOSING DELIVERIES. (1) At the Time of Closing: (1) FUR shall pay the aggregate Purchase Price (the "Aggregate Purchase Price") for the Purchased Shares by delivery to Investco on behalf of the Vendors of a certified cheque or bank draft in immediately available Canadian funds in the amount of the Aggregate Purchase Price; and (2) each Vendor shall deliver to FUR: (1) an acknowledgement in writing of the receipt by Investco of any payment made pursuant to Section 4.3(a)(i) and that such delivery to Investco constitutes good delivery to such Vendor of the Purchase Price for the Purchased Shares being sold by such Vendor; (2) a representation and warranty in writing from such Vendor that the Vendor is then the registered and beneficial owner of the Purchased Shares to be sold by it at the Time of Closing, free and clear of any lien, charge, pledge, encumbrance, security interest, call, option or adverse claim, except to the extent the same exists pursuant to the provisions of this Agreement or the Deposit Agreement; and (3) a representation and warranty in writing from such Vendor that it is not a non-resident of Canada within the meaning of the Tax Act or, in lieu thereof, (I) a certificate obtained under section 116 of the Tax Act with a "certificate limit" not less than the Purchase Price of the Purchased Shares being sold by such Vendor or (II) a direction in writing by such Vendor to FUR to withhold from such Purchase Price any amount required to be withheld under the Tax Act and any applicable provincial 16 -16- tax statute in respect of the sale of the Purchased Shares by such Vendor; (3) at the time that each Vendor is required to deliver to FUR an acknowledgement in writing as described in Section 4.3(a)(ii)(A), Investco shall deliver to the Depositary (with an original executed copy being delivered to FUR) either: (1) confirmation in writing that Investco has received the Aggregate Purchase Price for the Purchased Shares; or (2) an irrevocable direction to the Depositary to the effect that the Depositary shall thereafter hold the Purchased Shares solely for and on behalf of FUR; and (4) at the time that each Vendor is required to deliver to FUR an acknowledgement in writing as described in Section 4.3(a)(ii)(A), if at that time the conditions to the automatic termination of this Agreement as set out in Section 10.8(b) have been satisfied, Investco shall deliver to the Trustee (with an original executed copy being delivered to FUR) written notice to the effect that this Agreement has been terminated in accordance with its terms. (2) From and after the date of the delivery of such Immediate Put Notice, and even though the certificates representing the Purchased Shares may not have been delivered to FUR, the purchase and sale of the Purchased Shares shall be deemed to have been completed and all right, title, benefit and interest in and to the Purchased Shares shall be conclusively deemed to have been transferred and assigned to and become vested in FUR, in each case as at the date of the Immediate Put Event, and all right, title, benefit and interest of each Vendor or of any pledgee, transferee or other person claiming any interest therein or thereto through any Vendor shall cease, except that the Vendors shall retain a security interest in the Purchased Shares until the receipt by Investco of the full amount of the Aggregate Purchase Price. 4.4 TENDER PROCESS. (1) If any Vendor is not present or otherwise represented by counsel or a representative of Investco at the Time of Closing or is present or so represented but fails for any reason to deliver to FUR any document referred to in Section 4.3(a)(ii), FUR may deposit the portion of the Aggregate Purchase Price 17 -17- allocable to the Purchased Shares to be sold by such Vendor into a special account at the main branch in Toronto, Ontario of any Canadian chartered bank in the joint names of FUR and the Vendor. Forthwith after the making of such deposit, FUR shall give such Vendor written notice thereof, which notice shall specify the date of deposit, the name and address of the bank branch at which the deposit was made and the account number. Such deposit shall constitute valid payment and satisfaction of the portion of the Aggregate Purchase Price allocable to the Purchased Shares to be sold by such Vendor. If a Vendor described in the foregoing provisions of this Section 4.4(a) is a non-resident of Canada within the meaning of the Tax Act, such Vendor shall indemnify FUR for all loss, liability or expense resulting from any failure of such Vendor to deliver the documents referred to in Section 4.3(a)(ii)(C) on a timely basis. Upon presentation by the relevant Vendor to FUR of the documents referred to in Section 4.3(a)(ii), the Vendor shall, subject to the provisions of Section 4.4(b), be entitled to be paid the monies so deposited with such bank, together with all interest accrued thereon. (2) If Investco fails for any reason to deliver to the Depositary either document referred to in Section 4.3(a)(iii), FUR may deposit the Aggregate Purchase Price into a special account at the main branch in Toronto, Ontario of any Canadian chartered bank in the joint names of FUR and Investco. Forthwith after the making of such deposit, FUR shall give Investco written notice thereof, which notice shall specify the date of deposit, the name and address of the bank branch at which the deposit was made and the account number. Such deposit shall constitute valid payment and satisfaction of the portion of the Aggregate Purchase Price allocable to the Purchased Shares to be sold by each Vendor. Upon delivery by Investco to the Depositary of either document referred to in Section 4.3(a)(iii), Investco and the Vendors shall, subject to the provisions of Section 4.4(a), be entitled to be paid the monies so deposited with such bank, together with all interest accrued thereon. 4.5 TRANSFER OF TITLE. (1) If the deliveries provided for in Section 4.3(a) are completed at the Time of Closing in respect of any Purchased Shares, the purchase and sale of such Purchased Shares shall be deemed to have been completed and all right, title, benefit and interest in and to such Purchased Shares shall conclusively be deemed to have been transferred and assigned to and become vested in FUR, in each case as at the Time of Closing, and all right, title, benefit and interest of the Vendor or of any pledgee, 18 -18- transferee or other person claiming any interest therein or thereto through the Vendor shall cease. (2) If, pursuant to Section 4.4, the Aggregate Purchase Price or some portion of it is deposited with a Canadian chartered bank in the joint names of FUR and either Investco or the relevant Vendor, from and after the date of such deposit, and even though the certificates representing the Purchased Shares may not have been delivered to FUR, the purchase and sale of the Purchased Shares in respect of which certain deliveries required by Section 4.3(a)(ii) and/or (iii) have not been made shall be deemed to have been completed and all right, title, benefit and interest in and to such Purchased Shares shall be conclusively deemed to have been transferred and assigned to and become vested in FUR, in each case as at the Time of Closing, and all right, title, benefit and interest of the Vendor or of any pledgee, transferee or other person claiming any interest therein or thereto through the Vendor shall cease; provided, however, that the relevant Vendor or Vendors shall be entitled to receive the Purchase Price so deposited, together with all interest accrued interest thereon, upon delivery to FUR and, if applicable, the Depositary, of the documents required to be delivered by the relevant Vendor or Vendors pursuant to Section 4.3(a)(ii) or by Investco pursuant to Section 4.3(a)(iii). 4.6 FUR EXTENSION RIGHT. (1) Notwithstanding the foregoing provisions of this Section 4 (other than Section 4.3(b)), should the Trigger Event occur on the day that falls 30 months after the date of this Agreement (without the occurrence at such time of any event or circumstance described in Section 1.1(mm)(iii), (iv), (v), (vi) or (vii)), FUR shall have the right to elect, by notice (a "Delayed Closing Notice") in writing given to the Trustee and Investco at any time during the period commencing on the date of the receipt by FUR of a Trigger Event Put Notice and ending on the applicable Closing Date, to delay the closing until April 15, 2000; provided, however, that should any event or circumstance described in Section 1.1(mm) (iii), (iv), (v), (vi) or (vii) occur or arise after such election is made, then the completion of such purchase and sale shall be governed by Section 3 and the foregoing provisions of Section 4, and the date of the giving of the applicable Put Notice shall for the purposes thereof be deemed to be the date of the occurrence of such event or circumstance. 19 -19- (2) No Delayed Closing Notice delivered in accordance with Section 4.6(a) shall be effective unless accompanied by certified cheques or bank drafts in immediately available funds payable to Investco and each of the Onex Associates in an amount equal to Cdn. $0.03 for each Share then registered on the books of the Corporation in the name of each such party. 5. REPRESENTATIONS AND WARRANTIES. 5.1 REPRESENTATIONS AND WARRANTIES RELATING TO INVESTCO AND THE ONEX ASSOCIATES. Investco and each of the Onex Associates represents and warrants to FUR in respect of itself as follows and acknowledges that FUR is relying on such representations and warranties in connection with the matters contemplated hereby: (1) unless it is a natural person, it is a corporation validly existing under the laws of the Province of Ontario and has all necessary corporate power and authority to enter into this Agreement and the Deposit Agreement and to perform its obligations hereunder and thereunder; (2) unless it is a natural person, all necessary corporate action has been taken to authorize it to enter into this Agreement and the Deposit Agreement and to perform its obligations hereunder and thereunder; (3) the execution and delivery of this Agreement and the Deposit Agreement by it and the consummation of the transactions contemplated hereby and thereby will not, with or without the giving of notice, lapse of time or both, breach or violate any of the provisions of, constitute a default under, or conflict with or cause the acceleration of any obligation of such person under (A) any agreement to which it is a party or by which it is bound, (B) any judgment, decree, order or award of any court, governmental body or arbitrator having jurisdiction over such person, (C) any applicable law, statute, ordinance, regulation or rule, or (D), unless it is a natural person, its articles or by-laws or any resolution of its directors or shareholders; (4) each of this Agreement and the Deposit Agreement has been duly executed and delivered by it and is a legal, valid and binding obligation, enforceable against it by FUR in accordance with its terms; 20 -20- (5) except as indicated in Schedule A, it is not a non-resident of Canada within the meaning of the Tax Act; (6) there is no requirement for it to make any filing with, give any notice to or obtain any licence, permit, certificate, registration, authorization, consent or approval of, any government or regulatory authority nor is the consent or approval of any other third party required as a condition to the lawful consummation by it of the transactions contemplated by this Agreement or the Deposit Agreement; (7) it is the registered and beneficial owner of that number of Shares as is set out opposite its name in Schedule A and it has good and marketable title thereto, free and clear of all liens, charges, pledges, encumbrances, security interests, calls, options or adverse claims except to the extent the same exists pursuant to the provisions of this Agreement or the Deposit Agreement; and (8) no person (other than FUR) has any agreement, contract, lease, licence, option or instrument or any right or privilege (whether by law, pre-emptive or contractual) capable of becoming such an agreement, contract, lease, licence, option or instrument for the purchase or the acquisition of any of the Shares held by it. 5.2 REPRESENTATIONS AND WARRANTIES BY FUR. FUR represents and warrants to Investco and the Onex Associates as follows and acknowledges and confirms that they are relying on such representations and warranties in connection with the transactions contemplated hereby: (1) FUR is a business trust duly formed and validly existing under the laws of the State of Ohio and has all necessary power and authority to own or lease its property, to enter into this Agreement, the Security Trust Indenture and the Deposit Agreement and to perform its obligations hereunder and thereunder; 21 -21- (2) all necessary proceedings have been taken (including, as necessary, the obtaining of any security holder approvals) by FUR to enable it to enter into this Agreement, the Security Trust Indenture and the Deposit Agreement and to perform its obligations hereunder and thereunder; (3) the execution and delivery of this Agreement, the Security Trust Indenture and the Deposit Agreement by FUR and the consummation of the transactions contemplated hereby and thereby will not, with or without the giving of notice, lapse of time or both, breach or violate any of the provisions of, constitute a default under, conflict with or cause the acceleration of any obligation of FUR under (A) the Declaration of Trust, as amended, of FUR or any exercise of authority by the security holders thereunder or any resolution of the board of trustees (or any committee thereof) of FUR, (B) any agreement to which FUR is a party or by which it is bound, (C) any judgment, decree, order or award of any court, governmental body or arbitrator having jurisdiction over FUR, or (D) any applicable law, statute, ordinance, regulation or rule; (4) each of this Agreement, the Security Trust Indenture and the Deposit Agreement has been duly executed and delivered by FUR and is a legal, valid and binding obligation of FUR, enforceable against FUR by Investco and the Onex Associates in accordance with its terms; (5) there is no requirement for FUR to make any filing with, give any notice to or obtain any licence, permit, certificate, registration, authorization, consent or approval of, any government or regulatory authority nor is the consent or approval of any other third party required as a condition to the lawful consummation by FUR of the transactions contemplated by this Agreement, the Security Trust Indenture or the Deposit Agreement; (6) all necessary corporate action has been taken by the Corporation and its shareholders to authorize or consent to any Transfer of the Shares to FUR pursuant to an exercise of the Put Rights and the Call Rights as contemplated hereby; and (7) it has delivered to and deposited with the Trustee in accordance with the terms of the Security Trust 22 -22- Indenture Eligible Securities having an aggregate face value (calculated by reference to the Canadian Dollar Equivalent of the face value of any Eligible Securities denominated in United States dollars) at least equal to Cdn. $14,693,137. 6. TRANSFER RESTRICTIONS. 6.1 GENERAL PROHIBITION. Except as specifically permitted by this Agreement, neither Investco nor any Onex Associate shall Transfer any Shares now or hereafter held or owned beneficially by it unless the restrictions set out in this Section 6 have been waived in writing by FUR and any conditions specified in any such waiver have been satisfied. Any purported Transfer in violation of this Agreement shall be invalid and shall not be registered on the books of the Corporation or otherwise recognized for any purpose. 6.2 PERMITTED TRANSFERS. Investco or any Onex Associate may Transfer any Shares beneficially owned by such person to any Permitted Transferee; provided, however, that the transferor and any such Permitted Transferee shall execute and deliver to FUR an agreement in the form attached hereto as Schedule C. 6.3 PLEDGES. Investco or any Onex Associate may pledge or otherwise grant a security interest in any Shares now or hereafter held by it to secure any bona fide indebtedness of the pledgor to a Canadian chartered bank, a United States commercial bank or any trust company incorporated or existing under the laws of Canada or the United States or any political subdivision thereof, provided that (i) the relevant Shares remain deposited with the Depositary and subject to the provisions of the Deposit Agreement and (ii) the relevant pledgee executes and delivers to FUR a counterpart to this Agreement pursuant to which the relevant pledgee agrees (A) to be bound by the terms and conditions hereof in respect of such pledged Shares and (B) to release all rights and interests in the pledged Shares to FUR upon payment of the Purchase Price therefor in accordance with the provisions of this Agreement. 6.4 TRANSFER ON DEATH. The provisions of Section 6.1 shall not apply to the Transfer of any Shares from a deceased Onex Associate to his estate or to any Associate of such deceased Onex Associate, provided that (i) the estate or such Associate shall be bound by the provisions of this Agreement and (ii) the legal representative(s) of the deceased Onex Associate (on behalf of his estate) or such Associate, as the case may be, executes and 23 -23- delivers a counterpart in substance having the same effect as Schedule C pursuant to which such person(s) agrees to be bound by the terms and conditions hereof in respect of such Shares. 6.5 OTHER PERMITTED TRANSFERS. The restrictions on Transfer contained in this Section 6 shall not apply to any Transfer of Shares by Investco or any Onex Associate to FUR or to FUMI nor shall any such restriction operate to prevent the acquisition by Investco of any Class A Non-Voting Common Shares of the Corporation held by the Management Vendors (provided that such Class A Non-Voting Common Shares shall not constitute Shares for the purposes of this Agreement). In addition, nothing herein shall prevent the acquisition by Investco and/or any or all Onex Associates of the Class A Non-Voting Common Shares held as at the date hereof by Charles Vosmik, and upon any such acquisition, such shares shall automatically become Shares for all purposes hereof. 7. PROTECTIVE PROVISIONS. (1) If and whenever at any time after the date hereof, the Corporation shall (i) subdivide or redivide the outstanding Class A Non-Voting Common Shares into a greater number of Class A Non-Voting Common Shares or (ii) consolidate, combine or reduce the outstanding Class A Non-Voting Common Shares into a lesser number of Class A Non-Voting Common Shares, then, in each such event, the Purchase Price will, on the effective date of or the record date for such event, be adjusted by multiplying the Purchase Price in effect immediately prior to such date by a fraction, of which the numerator shall be total number of Class A Non-Voting Common Shares outstanding on such date before giving effect to such event, and of which the denominator shall be the total number of Class A Non-Voting Common Shares on such date after giving effect to such event. Such adjustment will be made successively whenever any such event shall occur. (2) For greater certainty, but without limitation, if at any time after the date hereof there shall occur any of the following: (1) any reclassification or redesignation of the Class A Non-Voting Common Shares or any conversion, exchange or other change of Class A Non-Voting Common Shares into other shares or securities or any other capital reorganization; or 24 -24- (2) any consolidation, amalgamation, merger, plan of arrangement or other form of reorganization involving the Corporation (other than a consolidation, amalgamation, plan of arrangement or other form of reorganization which does not result in any reclassification or redesignation of Class A Non-Voting Common Shares or conversion, exchange or other change of Class A Non-Voting Common Shares into other shares or securities), any of such events being called a "Capital Reorganization", the Aggregate Purchase Price that FUR shall be required to pay to Investco and the Onex Associates who thereafter sell any Shares hereunder to FUR shall be the Aggregate Purchase Price for the Shares (or the predecessor securities of the Shares) which would otherwise have been paid by FUR to Investco or the relevant Onex Associate if such Capital Reorganization had not occurred. (3) Upon the occurrence of any such Capital Reorganization, the parties hereto shall enter into an agreement supplemental hereto which shall provide for the amendment of this Agreement on such terms and conditions as may be necessary to protect the rights of FUR, Investco and the Onex Associates hereunder. 8. RECOURSE. In addition to the rights of Investco and the Onex Associates pursuant to the Security Trust Indenture, upon the occurrence of any Event of Default, Investco and the Onex Associates shall have recourse in executing any judgment against FUR to all the property and assets of FUR other than the following: (1) property directly or indirectly acquired by the Corporation on the date hereof in connection with the closing of the transactions contemplated by the Share Purchase Agreement, including without limitation the Real Property (as defined in the Share Purchase Agreement); (2) property, the fair market value of which is wholly or partly attributable to the property referred to in (a); (3) property, the fair market value of which is determinable primarily by reference to the fair market value of, or any proceeds of disposition of, the property referred to in (a); 25 -25- (4) an interest in, or indebtedness of, any corporation, partnership, trust or other person that directly capitalizes the Corporation in whole or in part; and (5) substitutions for any property, interest or indebtedness referred to in paragraphs (a), (b), (c) or (d) above or this paragraph (e); provided that in no event shall recourse not be available to those assets subject to the Security Trust Indenture. 9. ADDITIONAL COVENANTS. --------------------- 9.1 QUARTERLY REPORTS. FUR shall deliver to Investco as soon as practicable following the end of each calendar quarter (but in any event not more than 45 days thereafter), a report (a "Quarterly Report") certified by any two senior officers of FUR setting out the Total Asset Value for FUR and accompanied by all supporting calculations and further information as may be reasonably necessary to permit Investco to verify the Total Asset Value as set out therein. 9.2 REQUIRED NOTIFICATIONS AND COOPERATION. (1) FUR shall deliver to Investco written notice of the occurrence of the Trigger Event or Immediate Put Event as soon as reasonably practicable thereafter. Such notice shall contain a brief description of the event or circumstance giving rise to such Trigger Event or Immediate Put Event and shall set out the date of such occurrence. Upon any written request by Investco, FUR shall provide to Investco any additional information as may be reasonably necessary to permit Investco to verify the occurrence of such event. (2) Investco shall have the right at any time and from time to time to require by notice in writing delivered to FUR that FUR provide or cause to be provided to it such information relating to FUR, FUMI or the Corporation as may be reasonably necessary to permit Investco to assess the likelihood of the prospective occurrence of an Immediate Put Event or a Trigger Event or to verify that such an event has occurred. 9.3 EXERCISE OF CLASS VOTING RIGHTS. FUR hereby covenants and agrees that it shall not, and that it shall not permit any of its Affiliates to, exercise any class voting rights attaching to or associated with any Shares held by them until the 26 -26- earlier of March 31, 2002 and the date on which Investco and the Onex Associates cease to hold any Shares. 9.4 REGULATORY FEES. At any time the Corporation ceases to be a "private company" (as defined in the Securities Act (Ontario)), FUR shall pay any and all fees charged by any securities regulatory authority in connection with any purchase by FUR of Shares hereunder. 9.5 DEPOSIT OF ADDITIONAL ELIGIBLE SECURITIES. (1) On October 7, 1997, FUR shall deliver to and deposit with the Trustee, to be held by the Trustee in accordance with the Security Trust Indenture, Eligible Securities having an aggregate cost (not including commissions, fees and expenses of acquisition) at least equal to the increase between (i) Cdn. $14,693,137 and (ii) the Aggregate Purchase Price as at September 30, 1997 for all of the Shares then held by Investco and the Onex Associates. On the 15th day of the month following the end of every sixth calendar month following September 30, 1997, FUR shall deliver to and deposit with the Trustee, to be held by the Trustee in accordance with the Security Trust Indenture, Eligible Securities having an aggregate cost (not including commissions, fees and expenses of acquisition) at least equal to the increase between the Aggregate Purchase Price of all of the Shares held by Investco and the Onex Associates as at the end of the preceding six-month period (or since September 30, 1997 with respect to the first such period) and as at the end of such six-month period. (2) In the event that as at September 30, 1997 the sum in Canadian dollars (using the Canadian Dollar Equivalent at that date of any Eligible Securities denominated and any costs incurred in United States dollars) (the "Six Month End Value") of (i) the aggregate value of all Eligible Securities then held by the Trustee under the Security Trust Indenture, and (ii) the aggregate cost of the additional Eligible Securities to be deposited by FUR on or before October 15, 1997 pursuant to Section 9.5(a), is less than the Aggregate Purchase Price as at September 30, 1997 of all of the Shares then held by Investco and the Onex Associates as a result of the diminution of the Canadian Dollar Equivalent (calculated as at September 30, 1997) value of any Eligible Securities then held by the Trustee that are denominated in United States dollars, then FUR shall, on or before October 15, 1997, deliver to and deposit with the Trustee, to be held by the Trustee in accordance with the Security Trust Indenture, Eligible Securities having an aggregate cost (not including commissions, fees and expenses of acquisition) 27 -27- at least equal to the difference between the Six Month End Value as at September 30, 1997 and the Aggregate Purchase Price as at that date. A similar calculation shall be performed as at the end of every sixth calender month following September 30, 1997 and if the Six Month End Value as at any such date is less than the Aggregate Purchase Price as at such date of all of the Shares then held by Investco and the Onex Associates as a result of the diminution of the Canadian Dollar Equivalent (calculated as at such date) value of any Eligible Securities then held by the Trustee that are denominated in United States dollars, then FUR shall, on or before the 15th day of the month following such date, deliver to and deposit with the Trustee, to be held by the Trustee in accordance with the Security Trust Indenture, Eligible Securities having an aggregate cost (not including commissions, fees and expenses of acquisition) at least equal to the difference between the Six Month End Value as at such date and the Aggregate Purchase Price as at such date. If FUR shall hedge the foreign exchange risk relating to the deposit with the Trustee of Eligible Securities denominated other than in Canadian dollars in a manner other than as set forth in this Section 9.5(b) but with similar effect, then it may request Investco's consent to the waiver of the provisions of this Section 9.5(b), which consent is not to be unreasonably withheld. 9.6 CONFIDENTIALITY. Investco and the Onex Associates shall treat all information received in their capacity as shareholders of the Corporation or pursuant to the provisions of this Agreement (including without limitation any financial statements of the Corporation and any information provided by FUR pursuant to Sections 9.1 and 9.2) as confidential and shall not use or disclose to any person (other than its directors, officers, agents, employees or representatives and those of Onex (collectively, the "Representatives") who have a need to know it), or permit any of its Representatives to use or disclose to any person, directly or indirectly, any such information at any time hereafter, provided however that nothing in this Section 9.6 shall preclude Investco, Onex or any Onex Associate or Representative from using or disclosing any such information (i) if such information is available to the public or in the public domain at the time of such disclosure or use, without breach of this Agreement, (ii) if disclosure is required to be made by any law, regulation, governmental body or authority or stock exchange or dealer quotation system on which securities of Investco or any of its Affiliates or any Onex Associate are listed or quoted or by court order, or (iii) if disclosure is made to a court which is determining the rights of the parties under this Agreement or if use or disclosure otherwise may be reasonably necessary in connection with the rights, remedies, obligations and liabilities of Investco or the Onex Associates under this Agreement or any other agreement contemplated hereby or in connection with any budgeting or treasury planning function of Investco, Onex or their Affiliates or any valuation of the Shares for the corporate purposes of Investco, Onex or their Affiliates. Investco and each Onex Associate 28 -28- acknowledges and agrees that the obligations under this Section 9.6 are to remain in effect in perpetuity. 10. MISCELLANEOUS 10.1 AUTHORITY OF INVESTCO. Each of the Onex Associates hereby irrevocably appoints Investco as such person's agent and attorney for the purpose of executing and delivering any amendment, waiver, notice, direction, receipt or other document or taking any other action required or permitted to be taken by or on behalf of the Onex Associates pursuant to this Agreement or in connection with the transactions contemplated hereby, including, without limitation, for the purpose of giving any Put Notice and the exercise of any of the rights granted to the Onex Associates pursuant to Sections 3.1, 3.2 and 3.3. Any such amendment, waiver, notice, direction, receipt or other document or any such other action shall be deemed to have been effectively given or taken on behalf of the Onex Associates and shall be binding upon each of the Onex Associates as if each of them had executed and delivered such document or taken such other action, as the case may be. Without limiting the generality of the foregoing, each Onex Associate appoints Investco or its agent to receive such Onex Associate's pro rata share of the Aggregate Purchase Price pursuant to Section 4.3(a)(i) and to deliver the confirmation or direction to the Depositary contemplated by Section 4.3(a)(iii). 10.2 CORPORATE CONSENTS TO TRANSFERS. No party shall exercise any rights as a shareholder of the Corporation to revoke, override, restrict, limit or qualify any corporate or shareholder authorization or consent that has been given on or prior to the date hereof in respect of any Transfer of Shares contemplated hereby, and each party shall exercise its best efforts to ensure that no such revocation, override, restriction, limitation or qualification is effected. In addition, FUR shall exercise its best efforts to secure any corporate or shareholder authorization or consent necessary in connection with any Transfer of Shares made in accordance with the provisions hereof. 10.3 IMPLEMENTATION. Each of the parties hereto agrees to execute and deliver all such instruments and other documents, to exercise all voting rights attaching to the outstanding shares of the Corporation and to do all such other acts and things as may be necessary or advisable from time to time to give effect fully to the provisions and intent of this Agreement. 10.4 NOTICES. 29 -29- (1) Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be delivered in person or transmitted by telecopy or similar means of recorded electronic communication, addressed as follows: (1) If to Investco or to the Onex Associates: c/o Onex Corporation 161 Bay Street 49th Floor, P.O. Box 700 Toronto, Ontario M5J 2S1 Attention: Mark L. Hilson or Anthony Munk Fax: (416) 362-5765 (2) If to FUR: First Union Real Estate Equity and Mortgage Investments 55 Public Square Suite 1910 Cleveland, Ohio 44113-1937 Attention: Senior Vice President, General Counsel and Secretary Fax: (216) 781-7364 with copies to: Fasken Campbell Godfrey Box 20, Suite 3700 Toronto Dominion Bank Tower Toronto-Dominion Centre Toronto, Ontario M5K 1N6 Attention: Walter J. Palmer Fax: (416) 364-7813
30 -30- Mayer, Brown & Platt 190 South LaSalle Street Chicago, Illinois 60603-3441 Attention: J. Trent Anderson Fax: (312) 706-8101
(2) any such notice or other communication so delivered or transmitted shall be deemed to have been given and received on the day on which it was delivered personally or by reputable overnight courier or transmitted by facsimile (or, if such day is not a business day, on the next following business day); and (3) any party may at any time change its address for service from time to time by giving notice to the other parties in accordance with this Section 10.4, provided that in no event shall the address for service to any Onex Associate be different that the address for service to Investco. 10.5 ASSIGNMENT AND ENFORCEABILITY. This Agreement shall be binding upon and enforceable by the parties and their respective successors and permitted assigns. No party may assign any of its rights or benefits under this Agreement, or delegate any of its duties or obligations under this Agreement, to any person except as expressly permitted hereby. Investco and the Onex Associates may assign all or any part of their rights under this Agreement to any Permitted Transferee to which any of their respective Shares are Transferred in accordance with Section 6, provided that such Permitted Transferee complies with the requirements of Section 6. 10.6 TIME OF THE ESSENCE. Time shall be of the essence of this Agreement. 10.7 AMENDMENTS AND WAIVER. This Agreement may be amended by instrument in writing executed by FUR and Investco and not in any other manner. The waiver of any covenant or agreement made in favour of any party may be effected only by instrument in writing executed by such party (or by Investco if such party is an Onex Associate), and no failure to exercise any right or remedy or any delay in doing so, and no partial exercise of any such right or remedy shall be construed as a waiver thereof, and no waiver in any one instance shall be construed as a waiver in any subsequent or 31 -31- other instance unless the instrument in writing effecting the same expressly so provides. 10.8 TERMINATION. This Agreement shall terminate only (a) by agreement in writing made by Investco and FUR or (b) automatically at such time (but without prejudice to the rights of the parties relating to any defaults hereunder existing at such time) as all of the Shares at any time held by Investco or the Onex Associates shall have been purchased by FUR pursuant to one or more exercises of the Put Rights and/or the Call Rights and the Aggregate Purchase Price in respect of all such Shares shall have been paid and satisfied in full as provided for herein, including, without limitation, in Section 4.4 hereof. 10.9 COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall constitute an original and all of which taken together shall constitute one and the same instrument. Delivery of this Agreement may be effected by facsimile transmission. 10.10 RESTRICTION ON LIABILITY. Notwithstanding anything herein to the contrary contained, this Agreement is made and executed on behalf of FUR, a business trust organized under the laws of the State of Ohio, by its officers on behalf of the trustees thereof, and none of the trustees or any additional or successor trustee hereafter appointed, or any beneficiary, officer, employee or agent of FUR shall have any liability in his personal or individual capacity but instead, all parties shall, subject to the provisions of Section 8, look solely to the property and assets of FUR for satisfaction of claims of any nature arising under or in connection with this Agreement. IN WITNESS WHEREOF this Agreement has been executed by the parties. 32 -32- IMPARK INVESTMENTS INC. FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS by /s/ Authorized Signer ______________________________ by /s/ Authorized Signer ______________________________ _________________________________ 1170821 ONTARIO INC. 1170809 ONTARIO INC. by /s/ Authorized Signer by /s/ Authorized Signer ______________________________ ______________________________ 1170810 ONTARIO INC. 1170812 ONTARIO INC. by /s/ Authorized Signer by /s/ Authorized Signer ______________________________ ______________________________ 1170697 ONTARIO INC. 1170819 ONTARIO INC. by /s/ Authorized Signer by /s/ Authorized Signer ______________________________ ______________________________ 1170698 ONTARIO INC. by /s/ Authorized Signer ______________________________
33 -33- SIGNED, SEALED AND DELIVERED ) the presence of ) ) /s/ Authorized Signer ) ___________________________________ ) Anthony R. Melman ) ) /s/ Ewout R. Heersink ) ___________________________________ ) Ewout R. Heersink ) ) /s/ Anthony Munk ) ___________________________________ ) Anthony Munk ) ) /s/ Mark L. Hilson ) ___________________________________ ) Mark L. Hilson ) ) /s/ Thomas P. Dea ) ___________________________________ ) Thomas P. Dea ) ) /s/ Andrew J. Sheiner ) ___________________________________ ) Andrew J. Sheiner ) ) /s/ Donald W. Lewtas ) ___________________________________ ) Donald W. Lewtas ) ) /s/ Eric J. Rosen ) ___________________________________ ) Eric J. Rosen )
34 SCHEDULE A
ONEX ASSOCIATES THAT ARE SHAREHOLDERS OF 3357392 CANADA INC. CLASS A NON-VOTING COMMON SHARES HELD - ----------------------------------- ------------------------------------- 1170821 Ontario Inc. 52,243 1170809 Ontario Inc. 43,993 1170810 Ontario Inc. 49,491 1170812 Ontario Inc. 49,491 1170697 Ontario Inc. 8,250 1170819 Ontario Inc. 8,250 1170698 Ontario Inc. 13,735 Anthony R. Melman 78,255 Ewout R. Heersink 65,899 Anthony Munk 74,138 Mark L. Hilson 74,138 Thomas P. Dea 12,356 Andrew J. Sheiner 12,356 Donald W. Lewtas 20,606 Eric J. Rosen 123,629 CLASS A NON-VOTING COMMON SHARES HELD BY INVESTCO: 14,006,307
35 SCHEDULE B
DATE OF CLOSING OF PUT/CALL TRANSACTION PURCHASE PRICE - ---------------------------------------------------------------------------------------------------------------- September 30, 1997 Cdn. $1.00 x 1.04 - ---------------------------------------------------------------------------------------------------------------- March 31, 1998 September 30, 1997 Price x 1.045 - ---------------------------------------------------------------------------------------------------------------- September 30, 1998 March 31, 1998 Price x 1.05 - ---------------------------------------------------------------------------------------------------------------- March 31, 1999 September 30, 1998 Price x 1.055 - ---------------------------------------------------------------------------------------------------------------- September 30, 1999 March 31, 1999 Price x 1.06 - ---------------------------------------------------------------------------------------------------------------- March 31, 2000 September 30, 1999 Price x 1.065 - ---------------------------------------------------------------------------------------------------------------- September 30, 2000 March 31, 2000 Price x 1.07 - ---------------------------------------------------------------------------------------------------------------- March 31, 2001 September 30, 2000 Price x 1.075 - ---------------------------------------------------------------------------------------------------------------- September 30, 2001 March 31, 2001 Price x 1.08 - ---------------------------------------------------------------------------------------------------------------- March 31, 2002 September 30, 2001 Price x 1.085 - ----------------------------------------------------------------------------------------------------------------
36 SCHEDULE C NOTICE OF TRANSFER AND INSTRUMENT OF ADHESION --------------------------------------------- TO: FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS ("FUR") AND TO: THE OTHER PARTIES TO THE PUT-CALL AGREEMENT (as defined below) REFERENCE is made to the put-call agreement made the 15th day of April, 1997 between Impark Investments Inc., FUR and certain other parties (the "Put-Call Agreement"). Capitalized terms used herein without being otherwise defined, and that are defined in the Put-Call Agreement, shall have the respective meanings herein as are ascribed thereto in the Put-Call Agreement. WHEREAS the undersigned _______________________________ (the "Transferor") is a party to the Put-Call Agreement; AND WHEREAS the Transferor intends to transfer to the undersigned _______________________________ (the "Transferee") ________ Class A Non-Voting Common Shares (the "Transferred Shares") in the capital of the Corporation; NOW THEREFORE, in consideration of the premises, the undersigned hereby agree as follows: 1. The Transferor and the Transferee jointly and severally represent and warrant that the Transferee is a Permitted Transferee of the Transferor. 2. The Transferee agrees in favour of FUR and all other present and future holders of Shares to be bound by the provisions of the Put-Call Agreement and the Deposit Agreement, including, without limitation, all amendments, supplements and additions thereto, deletions therefrom and restatements thereof, as if the Transferee were an original party thereto, and to deposit or leave deposited with the Depositary the certificate or certificates representing the Transferred Shares in accordance with the Deposit Agreement. 3. The Transferee represents and warrants that it is [ ] is not [ ] a NON-RESIDENT of Canada within the meaning of the Income Tax Act (Canada). If the Transferee is a non-resident of Canada as so defined, the Transferee will comply with Section 4.3(a)(ii)(C) of the Put-Call Agreement in connection with any sale to FUR of the Transferred Shares pursuant to the exercise of the Put Rights or the Call Rights. 4. The Transferee agrees that it will exercise its reasonable best efforts to maintain at all times while it remains a holder of Shares the status that has qualified it as a Permitted Transferee 37 -2- of the Transferor, and if during such time any event shall occur that would result in the Transferee no longer having such status, the Transferee shall as soon as reasonably practicable thereafter give written notice of such event to FUR and, if so requested in writing by FUR, shall forthwith transfer the Transferred Shares to Investco or another Onex Associate. 5. The Transferor acknowledges and agrees that, notwithstanding the transfer of the Transferred Shares to the Transferee, the Transferor shall not be released from any of its liabilities and obligations pursuant to the Put-Call Agreement. DATED as of the _____________ day of ____________________, 199_. SIGNED, SEALED AND DELIVERED ) in the presence of ) ) ___________________________________ ) Name of Transferor: ) ) ___________________________________ ) Name of Transferee: EX-10.E 7 EXHIBIT 10.E 1 Exhibit 10e 3357392 CANADA INC. Cdn. $55,000,000 Senior Subordinated Partial PIK Notes due April 17, 2009 ------------------------- NOTE PURCHASE AGREEMENT ------------------------- Dated April 17, 1997 2 TABLE OF CONTENTS
PAGE 1. AUTHORIZATION OF NOTES 1 2. SALE AND PURCHASE OF NOTES 1 3. CLOSING 1 4. CONDITIONS TO CLOSING 2 4.1. Representations and Warranties 2 4.2. Performance; No Default 2 4.3. Compliance Certificates 2 4.4. Notes 3 4.5. Opinion of Counsel 3 4.6. Purchase Permitted By Applicable Law, etc. 3 4.7. Changes in Corporate Structure 4 4.8. Proceedings and Documents 4 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 4 5.1. Organization; Power and Authority 4 5.2. Authorization, etc. 4 5.3. Disclosure 5 5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates 5 5.5. Property 6 5.6. Compliance with Laws, Other Instruments, etc. 7 5.7. Governmental Authorizations, etc. 7 5.8. Litigation; Observance of Agreements, Statutes and Orders 8 5.9. Taxes 8 5.10. Title to Property; Leases. 8 5.11. Licenses, Permits, etc. 9 5.12. Pension Plans 9 5.13. Private Offering by the Company 9 5.14. Use of Proceeds; Margin Regulations 9 5.15. Existing Indebtedness, Future Liens 10 5.16. Foreign Assets Control Regulations, etc. 10 5.17. Status under Certain Statutes 10 5.18. Environmental Matters 11 5.19. Material Agreements 11
3 5.20. Books and Records 11 6. REPRESENTATIONS OF THE PURCHASER 12 6.1. Purchase for Investment 12 6.2. Source of Funds 12 7. INFORMATION AS TO COMPANY 12 7.1. Financial and Business Information 12 7.2. Officer's Certificate 17 7.3. Inspection 17 8. PAYMENT OF THE NOTES 18 8.1. Required Repayments 18 8.2. Optional Prepayments with Make-Whole Amount 18 8.3. Allocation of Partial Prepayments 19 8.4. Maturity; Surrender, etc. 19 8.5. Purchase of Notes 19 8.6. Make-Whole Amount 19 9. AFFIRMATIVE COVENANTS 21 9.1. Compliance with Law 21 9.2. Insurance 21 9.3. Maintenance of Properties 22 9.4. Payment of Taxes and Claims 22 9.5. Corporate Existence, etc. 22 9.6. Maintenance of Net Worth. 23 9.7. Maintenance of Consolidated Indebtedness to Net Worth Ratio. 23 9.8. Maintenance of Interest Coverage Ratio. 23 9.9. Maintenance of Leverage Ratio. 23 9.10. Maintenance of Parking Contracts. 23 9.11. Further Assurances 23 10. NEGATIVE COVENANTS 24 10.1. Transactions with Affiliates 24 10.2. Merger, Consolidation, etc. 24 10.3. Indebtedness 25 10.4. Liens 25 10.5. Disposal of Assets Generally 25 10.6. Change in Business 25 10.7. Distributions 25
4 10.8. Investments 26 10.9. Lease-Backs 26 10.10. Subsidiaries 26 10.11. Maintenance and Ownership of Subsidiaries 26 10.12. Compromise of Accounts. 27 11. EVENTS OF DEFAULT 27 12. REMEDIES ON DEFAULT, ETC. 30 12.1. Acceleration 30 12.2. Other Remedies 31 12.3. Rescission 31 12.4. No Waivers or Election of Remedies, Expenses, etc. 32 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES. 32 13.1. Registration of Notes. 32 13.2. Transfer and Exchange of Notes. 32 13.3. Replacement of Notes. 33 14. SUBORDINATION 33 14.1. Notes Subordinated to Permitted Senior Indebtedness 33 14.2. Payment Over of Proceeds Upon Bankruptcy 34 14.3. Suspension of Payments When Permitted Senior Indebtedness in Default 35 14.4. Payment Permitted If No Default 36 14.5. Subrogation to Rights of Holders of Permitted Senior Indebtedness 36 14.6. Provisions Solely to Define Relative Rights 37 14.7. Payments Held in Trust 38 14.8. No Waiver of Subordination Provisions 38 14.9. Reliance on Judicial Order or Certificate of Liquidating Agent 38 15. PAYMENTS ON NOTES 39 15.1. Place of Payment. 39 15.2. Home Office Payment. 39 16. EXPENSES, ETC. 40 16.1. Transaction Expense. 40 16.2. Survival 40 17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
5 AGREEMENT 40 18. AMENDMENT AND WAIVER. 41 18.1. Requirements. 41 18.2. Solicitation of Holders of Notes 41 18.3. Binding Effect, etc. 42 18.4. Notes held by Company, etc. 42 19. NOTICES 42 20. REPRODUCTION OF DOCUMENTS 43 21. SUBSTITUTION OF PURCHASER 43 22. MISCELLANEOUS 44 22.1. Successors and Assigns 44 22.2. Payments Due on Non-Business Days. 44 22.3. Severability 44 22.4. Construction 44 22.5. Counterparts 44 22.6. Governing Law 45 SCHEDULES/EXHIBITS Schedule A Information Relating to Purchasers Schedule B Defined Terms Schedule 5.4 Subsidiaries Schedule 5.5 Property Schedule 5.8 Litigation Schedule 5.14 Use of Proceeds Schedule 5.15 Existing Indebtedness Schedule 5.19 Material Agreements Exhibit 1 Form of Note Exhibit 4.5 Form of Subsidiary Guaranty Exhibit 11(e)-1 Form of Security Agreement Exhibit 11(e)-2 Form of Opinion of Counsel to the Company
6 3357392 CANADA INC. 601 West Cordova Street, Suite 300 Vancouver, B.C. V6B 1G1 Canada Senior Subordinated Partial PIK Notes due April 17, 2009 April 17, 1997 TO EACH OF THE PURCHASERS LISTED IN THE ATTACHED SCHEDULE A: Ladies and Gentlemen: 3357392 Canada Inc., a corporation duly organized and validly existing under the laws of the Province of Ontario (the "COMPANY"), agrees with you as follows: 1. AUTHORIZATION OF NOTES. The Company will authorize the issue and sale of Cdn. $55,000,000 aggregate original principal amount of its Senior Subordinated Partial PIK Notes due April 17, 2009 (the "NOTES", such term to include any such notes issued in substitution therefor pursuant to SECTION 13 of this Agreement (as hereinafter defined) and Additional Notes issued in payment of interest thereon). The Notes shall be substantially in the form set out in EXHIBIT 1, with such changes therefrom, if any, as may be approved by you and the Company. Certain capitalized terms used in this Agreement are defined in SCHEDULE B; references to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement. 2. SALE AND PURCHASE OF NOTES. Subject to the terms and conditions of this Agreement, the Company will issue and sell to you and you will purchase from the Company, at the Closing provided for in SECTION 3, Notes in the principal amount specified opposite your name in SCHEDULE A at the purchase price of 100% of the principal amount thereof. 7 - 2 - 3. CLOSING. The sale and purchase of the Notes to be purchased by you shall occur at the offices of Fasken Campbell Godfrey, 42nd Floor, Toronto-Dominion Bank Tower, Tower, Toronto, Ontario, Canada M5K 1N6, at 8:00 a.m., Toronto time, at a closing (the "CLOSING") on April 17, 1997 or on such other Business Day thereafter on or prior to May 30, 1997 as may be agreed upon by the Company and you. At the Closing the Company will deliver to you the Notes to be purchased by you in the form of a single Note (or such greater number of Notes in denominations of at least Cdn. $1,000,000 as you may request) dated the date of the Closing and registered in your name (or in the name of your nominee), against delivery by you to the Company or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds for the account of the Company to account number 45-81113 at Canadian Imperial Bank of Commerce. If at the Closing the Company shall fail to tender such Notes to you as provided above in this SECTION 3, or any of the conditions specified in SECTION 4 shall not have been fulfilled to your satisfaction, you shall, at your election, be relieved of all further obligations under this Agreement, without thereby waiving any rights you may have by reason of such failure or such nonfulfillment. 4. CONDITIONS TO CLOSING. Your obligation to purchase and pay for the Notes to be sold to you at the Closing is subject to the fulfillment to your satisfaction, prior to or at the Closing, of the following conditions: 4.1. REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Company in this Agreement shall be correct when made and at the time of the Closing. 4.2. PERFORMANCE; NO DEFAULT. The Company shall have performed and compiled with all agreements and conditions contained in this Agreement required to be performed or compiled with by it prior to or at the Closing and after giving effect to the issue and sale of the Notes (and the application of the proceeds thereof as contemplated by SCHEDULE 5.14) no Default or Event of Default shall have occurred and be continuing. 8 - 3 - 4.3. COMPLIANCE CERTIFICATES. (a) OFFICER'S CERTIFICATE. The Company shall have delivered to you an Officer's Certificate, dated the date of the Closing, certifying that the conditions specified in SECTIONS 4.1 and 4.2 have been fulfilled. (b) SECRETARY'S CERTIFICATES. The Company and each Guarantor shall have delivered to you a certificate certifying as to (i) the charter and by-laws of the Company and each Guarantor, (ii) the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of the Notes and the Note Documents, and (iii) the incumbency of the officers authorized to sign the Notes and the Note Documents. (c) GOOD STANDING CERTIFICATE. Each of the Company and the Guarantors shall have delivered a certificate of status, compliance, good standing or like certificate issued by the appropriate government officials of its jurisdiction of incorporation. 4.4. NOTES. The Company shall have delivered to you the Notes duly executed. 4.5. SUBSIDIARY GUARANTY. You shall have received the duly executed Subsidiary Guaranty substantially in the form of EXHIBIT 4.5. 4.6. PURCHASE PERMITTED BY APPLICABLE LAW, ETC. On the date of the Closing your purchase of Notes shall (i) be permitted by the laws and regulations of each jurisdiction to which you are subject, without recourse to provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (ii) not violate any applicable law or regulation (including, without limitation, Regulation G, T or X of the Board of Governors of the Federal Reserve System) and (iii) not subject you to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof. If requested by you, you shall have received an Officer's Certificate certifying as to such matters of fact as you may reasonably specify to enable you to determine whether such purchase is so permitted. 9 - 4 - 4.7. CHANGES IN CORPORATE STRUCTURE. The Company shall not have changed its jurisdiction of incorporation or been a party to any merger or consolidation and shall not have succeeded to all or any substantial part of the liabilities of any other entity, at any time following the date of the most recent financial statements provided to you. 4.8. PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be satisfactory to you and your special counsel, and you and your special counsel shall have received all such counterpart originals or certified or other copies of such documents as you or they may reasonably request. 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to you that: 5.1. ORGANIZATION; POWER AND AUTHORITY. The Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, and is duly qualified as a foreign corporation and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company has the corporate power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver this Agreement and the Notes and to perform the provisions hereof and thereof. 5.2. AUTHORIZATION, ETC. (a) This Agreement and the Notes have been duly authorized by all necessary corporate action on the part of the Company, and this Agreement constitutes, and upon execution and delivery thereof each Note will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with their respective terms, except as such 10 - 5 - enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). (b) The Subsidiary Guaranty and the Security Agreement have been duly authorized by all necessary corporate action on the part of each Guarantor, and upon execution and delivery thereof the Subsidiary Guaranty and the Security Agreement will constitute, legal, valid and binding obligations of each Guarantor enforceable against each Guarantor in accordance with their respective terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 5.3. DISCLOSURE. You have had the opportunity to conduct a review of the Company's records and meet with representatives of the Company. The Company has responded in all material respects to all requests for information and has accurately answered all questions concerning the assets, properties, liabilities, financial condition, business or prospects of the Company and its Subsidiaries. All forecasts and projections supplied on behalf of the Company were prepared in good faith, adequately disclosed all assumptions relevant thereto and are reasonable estimates (at the date hereof) of the prospects for the business of the Company and its Subsidiaries. This Agreement, the documents, certificates or other writings delivered to you by or on behalf of the Company in connection with the transactions contemplated hereby and the financial statements delivered to you, taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made. Since the date of the last financial statements delivered to you, there has been no change in the financial condition, operations, business, properties or prospects of the Company or any Subsidiary except changes that individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect. There is no fact known to the Company that could reasonably be expected to have a Material Adverse Effect that has not been set forth herein or in the other documents, certificates and other writings delivered to you by or on behalf of the Company specifically for use in connection with the transactions contemplated hereby. 11 - 6 - 5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES. (a) SCHEDULE 5.4 contains (except as noted therein) complete and correct list of the Company's Subsidiaries as of the acquisition referenced on SCHEDULE 5.14, showing, as to each Subsidiary, the correct name thereof, the jurisdiction of its organization, and the percentage of shares of each class of its capital stock or similar equity interests outstanding owned by the Company and each other Subsidiary. (b) All of the outstanding shares of capital stock or similar equity interests of each Subsidiary shown in SCHEDULE 5.4 as being owned by the Company and its Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Company or another Subsidiary free and clear of any Lien (except as otherwise disclosed in SCHEDULE 5.4). (c) Each Subsidiary identified in SCHEDULE 5.4 is a corporation or other legal entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each such Subsidiary has the corporate or other power and authority to own or hold under lease the properties it purports to own or hold under lease and to transact the business it transacts and proposes to transact and each Subsidiary which is a party to the Subsidiary Guaranty and the Security Agreement has the power and authority to execute and deliver the Subsidiary Guaranty and the Security Agreement and to perform the provisions thereof. (d) No Subsidiary is a party to, or otherwise subject to any legal restriction or any agreement (other than this Agreement, the agreements listed on SCHEDULE 5.4 and customary limitations imposed by corporate law statutes) restricting the ability of such Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Company or any of its Subsidiaries that owns outstanding shares of capital stock or similar equity interests of such Subsidiary. 5.5. PROPERTY. 12 - 7 - There are no outstanding work orders requiring, in aggregate, expenditures exceeding Cdn. $50,000 relating to the properties of the Company or any Subsidiary from or required by any police or fire department, sanitation, health, environmental or factory authorities or from any other federal, provincial or municipal authority, nor are any matters relating to the properties of the Company or any Subsidiary under discussion with any such departments or authorities relating to work orders which could reasonably be expected to result in expenditures exceeding Cdn. $50,000. As at the date hereof, no part of the properties of the Company or any Subsidiary or the buildings and fixtures located thereon has been taken or expropriated by any federal, provincial, municipal or other competent authority nor has any written notice or proceeding in respect thereof been delivered to the Company or any of its Subsidiaries nor is the Company aware of any intent or proposal to give any such notice or commence any proceedings. Except for Permitted Liens or as specified in SCHEDULE 5.5, to the knowledge of the Company, the buildings and fixtures are located entirely within the properties of the Company or any Subsidiary in conformity with applicable set-back and coverage requirements and no dwellings of abutting owners encroach upon the properties. 13 - 8 - 5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC. (a) The execution, delivery and performance by the Company of this Agreement and the Note will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of the Company or any Subsidiary under, any indenture, mortgage, deed or trust, loan purchase or credit agreement, lease, corporate charter or by-laws, or any other agreement or instrument to which the Company or any Subsidiary is bound or by which the Company or any Subsidiary or any of their respective properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to the Company or any Subsidiary or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company or any Subsidiary. (b) The execution, delivery and performance by the Guarantors of the Subsidiary Guaranty and the Security Agreement will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of any of the Guarantors under, any indenture, mortgage, deed or trust, loan purchase or credit agreement, lease, corporate charter or by-laws, or any other agreement or instrument to which any of the Guarantors is bound or by which any of the Guarantors or any of their respective properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to any of the Guarantors or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to any of the Guarantors. 5.7. GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by the Company or any Guarantor of any Note Document. 5.8. LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS. (a) Except as disclosed in SCHEDULE 5.8, there are no actions, suits or proceedings pending or, to the knowledge of the Company, threatened against or affecting the Company or any Subsidiary or any property of the 14 - 9 - Company or any Subsidiary in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. (b) Neither the Company nor any Subsidiary is in default under any term of any agreement or instrument to which it is a party or by which it is bound, or any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or is in violation of any applicable law, ordinance, rule or regulation (including without limitation Environmental Laws) of any Governmental Authority, which default or violation, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. 5.9. TAXES. The Company and its Subsidiaries have filed all tax returns that are required to have been filed in any jurisdiction, and have paid all taxes shown to be due and payable on such returns and all other taxes and assessments levied upon them or their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for any taxes and assessments (i) the amount of which is not individually or in the aggregate Material or (ii) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which the Company or a Subsidiary, as the case may be, has established adequate reserves in accordance with GAAP. The Company knows of no basis for any other tax or assessment that could reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of Federal, state, province, foreign or other taxes for all fiscal periods are adequate. 5.10. TITLE TO PROPERTY; LEASES. The Company and its Subsidiaries have good and sufficient title to their respective properties that individually or in the aggregate are Material, in each case free and clear of Liens prohibited by this Agreement. All leases that individually or in the aggregate are Material, are valid and subsisting and are in full force and effect in all material respects and all material amounts owing thereunder have been paid by the Company or its Subsidiary. 5.11. LICENSES, PERMITS, ETC. (a) The Company and its Subsidiaries own or possess all 15 - 10 - licenses, permits, franchises, authorizations, patents, copyrights, service marks, trademarks and trade names, or rights thereto, that individually or in the aggregate are Material, without known conflict with the rights of others; (b) to the best knowledge of the Company, no product of the Company infringes in any material respect any license, permit, franchise, authorization, patent, copyright, service mark, trademark, trade name or other right owned by any other Person; and (c) to the best knowledge of the Company, there is no Material violation by any Person of any right of the Company or any of its Subsidiaries with respect to any patent, copyright, service mark, trademark, trade name or other right owned or used by the Company or any of its Subsidiaries. 5.12. PENSION PLANS. Neither the Company nor any of its Subsidiaries has ever maintained or contributed to any pension plans or beneficial plans including, without limitation, (i) a multi-employer plan as defined under Section 3(37) of ERISA; (ii) a defined benefit plan as defined under Section 3(35) of ERISA; or (iii) a plan to which Section 302 of ERISA or Section 417 of the Internal Revenue Code of the United States of America applies. 5.13. PRIVATE OFFERING BY THE COMPANY. Neither the Company nor anyone acting on its behalf has offered the Notes or any similar securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any person other than you and not more than two other Institutional Investors, each of which has been offered the Notes at a private sale for investment. Neither the Company nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Notes to the registration requirements under applicable securities laws. 5.14. USE OF PROCEEDS; MARGIN REGULATIONS. The Company will apply the proceeds of the sale of the Notes solely as set forth in SCHEDULE 5.14 and for no other purpose. No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation G of the Board of Governors of the Federal Reserve System (12 CFR 16 - 11 - 207), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve the Company in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin stock does not constitute more than 5% of the value of the consolidated assets of the Company and its Subsidiaries and the Company does not have any present intention that margin stock will constitute more than 5% of the value of such assets. As used in this Section, the terms "MARGIN STOCK" and "PURPOSE OF BUYING OR CARRYING" shall have the meanings assigned to them in said Regulation G. 17 - 12 - 5.15. EXISTING INDEBTEDNESS, FUTURE LIENS. (a) Except as described therein, SCHEDULE 5.15 sets forth a complete and correct list of all outstanding Indebtedness of the Company and its Subsidiaries as of the date hereof. Neither the Company nor any Subsidiary is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Indebtedness of the Company or such Subsidiary and no event or condition exists with respect to any Indebtedness of the Company or any Subsidiary that would permit (or that with notice or other lapse of time, or both, would permit) one or more Persons to cause such Indebtedness to become due and payable before its stated maturity or before its regularly scheduled dates of payment. (b) Except as disclosed in SCHEDULE 5.15, neither the Company nor any Subsidiary has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien other than Permitted Liens. 5.16. FOREIGN ASSETS CONTROL REGULATIONS, ETC. Neither the sale of the Notes by the Company hereunder nor its use of the proceeds thereof will violate the Trading with the Enemy Act, as amended, or any of the foreign asset control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto. 5.17. STATUS UNDER CERTAIN STATUTES. Neither the Company nor any Subsidiary is subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935, as amended, the Interstate Commerce Act, as amended, or the Federal Power Act, as amended. 5.18. ENVIRONMENTAL MATTERS. Neither the Company nor any Subsidiary has knowledge of any claim or has received any notice of any claim, and no proceeding has been instituted raising any claim against the Company or any of its Subsidiaries or any of their respective real properties now or formerly owned, leased or operated by any of them or other assets, alleging any damage to the environment or 18 - 13 - violation of the Environmental Laws, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect. Except as otherwise disclosed to you in writing, (a) neither the Company nor any Subsidiary has knowledge of any facts which would give rise to any claim, public or private, of violation of Environmental Laws or damage to the environment emanating from, occurring on or in any way related to real properties now or formerly owned, leased or operated by any of them or to other assets or their use, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect; (b) neither the Company nor any of its Subsidiaries has stored any Hazardous Materials on real properties now or formerly owned, leased or operated by any of them and has not disposed of any Hazardous Materials in a manner contrary to any Environmental Laws in each case in any manner that could reasonably be expected to result in a Material Adverse Effect; and (c) all buildings on all real properties now owned, leased or operated by the Company or any of its Subsidiaries are in compliance with applicable Environmental Laws, except where failure to comply could not reasonably be expected to result in a Material Adverse Effect. 5.19. MATERIAL AGREEMENTS. Neither the Company nor any of its Subsidiaries is a party or otherwise subject to or bound or affected by any agreement or instrument which is material to the business, operations, results of operations, assets, liabilities or financial condition of the Company or any of its Subsidiaries taken as a whole ("MATERIAL AGREEMENT") except as set out in SCHEDULE 5.19. Except as set forth in SCHEDULE 5.19, all such Material Agreements are in full force and effect, unamended, and none of the Company or any such Subsidiary, or to the best of the Company's knowledge, any other party to any Material Agreement is in material default with respect thereto. 5.20. BOOKS AND RECORDS. All books and records of the Company and its Subsidiaries have been fully, properly and accurately kept and completed in accordance with GAAP and there are no material inaccuracies or discrepancies of any kind contained or reflected therein. The Company's and its Subsidiaries' records, systems, controls, data or information are not recorded, stored, maintained, operated or 19 - 14 - otherwise wholly or partly dependent upon or held by any means (including any electronic, mechanical or photographic process, whether computerized or not) which (including all means of access thereto and therefrom) are not under the direct control of the Company in all material respects. 20 - 15 - 6. REPRESENTATIONS OF THE PURCHASER. 6.1. PURCHASE FOR INVESTMENT. You represent that you are purchasing the Notes for your own account and not with a view to the distribution thereof. You understand that the Notes have not been registered under any securities acts and resale may be restricted by applicable securities laws. 6.2. SOURCE OF FUNDS. You represent that the source of funds to be used by you to pay the purchase price of the Notes to be purchased by you hereunder does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA. As used in this SECTION 6.2, the terms "EMPLOYEE BENEFIT PLAN", shall have the respective meanings assigned to such terms in Section 3 of ERISA. 7. INFORMATION AS TO COMPANY. 7.1. FINANCIAL AND BUSINESS INFORMATION. The Company shall deliver to each holder of Notes that is an Institutional Investor: (a) QUARTERLY STATEMENTS -- within 60 days after the end of each quarterly fiscal period in each fiscal year of the Company (other than the last quarterly fiscal period of each such fiscal year), duplicate copies of, (i) a consolidated balance sheet of the Company and its Consolidated Subsidiaries as at the end of such quarter, and (ii) consolidated statements of income, changes in shareholders' equity and cash flows of the Company and its Consolidated Subsidiaries, for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter, setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, and certified by a Senior Financial Officer as fairly presenting, in all material 21 - 16 - respects, the financial position of the companies being reported on and their results of operations and cash flows, subject to changes resulting from year-end adjustments; (b) ANNUAL STATEMENTS -- within 120 days after the end of each fiscal year of the Company, duplicate copies of, (i) a consolidated balance sheet of the Company and its Consolidated Subsidiaries, as at the end of such year, and (ii) consolidated statements of income, changes in shareholder' equity and cash flows of the Company and its Consolidated Subsidiaries, for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP, and accompanied (A) by an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall state that such financial statements present fairly, in all material respects, the financial position of the companies being reported upon and their results of operations and cash flows and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances, and (B) a certificate of such accountants stating that they have reviewed this Agreement and stating further whether, in making their audit, they have become aware of any condition or event that then constitutes a Default or an Event of Default, and, if they are aware that any such condition or event then exists, specifying the nature and period of the existence thereof (it being understood that such accountants shall not be liable, directly or indirectly, for any failure to obtain knowledge of any Default or Event of Default unless such accountants should have obtained knowledge thereof in making an audit in accordance with generally accepted auditing standards or did not make such an audit); (c) FINANCIAL PROJECTIONS -- promptly upon their becoming available and in any event 30 days prior to the end of each fiscal year of the 22 - 17 - Company, consolidated financial projections, including the balance sheet, income statement and cash flow statements for each of the next 12 months of the next fiscal year together with the detailed budget for such fiscal year providing supplementary detailed schedules as necessary and required by the Required Holders; (d) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- promptly, and in any event within five days after a Responsible Officer becoming aware of the existence of any Default or Event of Default or that any Person has given any notice or taken any action with respect to a claimed default hereunder or that any Person has given any notice or taken any action with respect to a claimed default of the type referred to in SECTION 11(H), a written notice specifying the nature and period of existence thereof and what action the Company is taking or proposes to take with respect thereto; (e) ERISA MATTERS -- promptly, and in any event within ten days after a Responsible Officer becoming aware of any of the following, a written notice setting forth the nature thereof and the action, if any, that the Company or an ERISA Affiliate proposes to take with respect thereto: (i) with respect to any Plan, any reportable event, as defined in section 4043(b) of ERISA and the regulations thereunder, for which notice thereof has not been waived pursuant to such regulations as in effect on the date hereof; or (ii) the taking by the PBGC of steps to institute, or the threatening by the PBGC of the institution of, proceedings under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan; or (iii) any event, transaction or condition that could result in the incurrence of any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if such liability or Lien, taken together with any other such liabilities or Liens then existing, could reasonably be expected to have a Material Adverse Effect; 23 - 18 - (f) ENVIRONMENTAL REPORTING -- promptly, and in any event within 10 days of each occurrence, (i) a written notice of any proceeding or order before any Governmental Authority requiring the Company or its Subsidiaries to comply with or take action under any Environmental Laws where such compliance or action requires expenditures in the amount of Cdn. $500,000 or more, the violation thereof involves the possibility of the imposition of a fine or fines aggregating Cdn. $500,000 or more, the violation thereof involves the possibility of the imposition of a fine or fines aggregating Cdn. $500,000 or more or the closing of any property owned or leased by the Company or any Subsidiary for a period in excess of 48 hours where such closure would have a Material Adverse Effect; and (ii) a written notice of any Material occurrence relating to environmental matters that does not require notification under (i) above, together with each delivery of financial statements pursuant to SECTION 7.1(a) and (b). Such Material occurrences shall include occurrences where any of the Company or its Subsidiaries (iii) receives a written notice or claim to the effect that the Company or any of its Subsidiaries is liable to any Person as a result of the release or threatened release of any Hazardous Material into the environment in, on, under or adjacent to any real estate owned or leased by the Company or any Subsidiary; (iv) receives any written notice that the Company or any of its Subsidiaries is subject to investigation by any Governmental Authority evaluating whether any remedial action is needed to respond to the release or threatened release of any Hazardous Material into the environment in, on, under or adjacent to any real estate owned or leased by the Company or any Subsidiary; (v) receives any written notice that all or any portion of the properties owned or leased by the Company or any Subsidiary is subject to an order or a security interest under or pursuant to any Environmental Law; (vi) receives any written notice of a condition with respect to which might reasonably result in a notice of violation by Company or any Subsidiary of any Environmental Law; (vii) receives any written notice of the commencement of any judicial or administrative proceeding alleging a violation by the Company or any Subsidiary of any Environmental Law with respect to any property owned or leased by the Company or any Subsidiary; or (viii) undertakes any activities as a result of new or proposed changes to any existing Environmental Law that could have a Material Adverse Effect on the condition of Company or any of its Subsidiaries. (g) ADDITIONAL REPORTING REQUIREMENTS -- promptly provide notice in writing of (i) any default, or event, condition or occurrence which with notice or lapse of time, or both, would constitute a default under any agreement in respect of Indebtedness to which the Company or any of its Subsidiaries is a party and under which the Company or any such Subsidiary owes (contingently or otherwise) at least Cdn. $500,000 (or the equivalent amount in any other 24 - 19 - currency); (ii) from time to time upon request of the Required Holders, evidence of the maintenance of all insurance required to be maintained by SECTION 9.2, including such originals or copies as the Required Holders may request of policies, certificates of insurance, riders and endorsements relating to such insurance and proof of premium payments; and (iii) promptly upon the issuance thereof, copies of all notices, reports, press releases, circulars, offering documents and other documents filed with, or delivered to, the British Columbia Securities Commission or to a similar Governmental Authority in any other jurisdiction with respect to the Company or any Subsidiary. (h) NOTICES FROM GOVERNMENTAL AUTHORITY -- promptly, and in any event within 30 days of receipt thereof, copies of any notice to the Company or any Subsidiary from any Federal or state Governmental Authority relating to any order, ruling, statute or other law or regulation that could reasonably be expected to have a Material Adverse Effect; and (i) REQUESTED INFORMATION -- with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Company or any of its Subsidiaries or relating to the ability of the Company to perform its obligations hereunder and under the Notes as from time to time may be reasonably requested by any such holder of Notes. 25 - 20 - 7.2. OFFICER'S CERTIFICATE. Each set of financial statements delivered to a holder of Notes pursuant to SECTION 7.1(a) or SECTION 7.1(b) hereof shall be accompanied by a certificate of a Senior Financial Officer setting forth: (a) COVENANT COMPLIANCE -- the information (including detailed calculations) required in order to establish whether the Company was in compliance with the requirements of SECTION 9.6 through SECTION 9.10 hereof, inclusive, during the quarterly or annual period covered by the statements then being furnished (including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Sections, and the calculation of the amount, ratio or percentage then in existence); and (b) EVENT OF DEFAULT -- a statement that such officer has reviewed the relevant terms hereof and has made, or caused to be made, under his or her supervision, a review of the transactions and conditions of the Company and its Subsidiaries from the beginning of the quarterly or annual period covered by the statements then being furnished to the date of the certificate and that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists (including, without limitation, any such event or condition resulting from the failure of the Company or any Subsidiary to comply with any Environmental Law), specifying the nature and period of existence thereof and what action the Company shall have taken or proposes to take with respect thereto. 7.3. INSPECTION. The Company shall permit the representatives of each holder of Notes that is an Institutional Investor: (a) NO DEFAULT -- if no Default or Event of Default then exists, at the expense of such holder and upon reasonable prior notice to the Company, to visit the principal executive office of the Company, to discuss the affairs, finances and accounts of the Company and its Subsidiaries with the Company's officers, and with the consent of the Company, which consent will not be unreasonably withheld) its independent public accountants, and (with the consent of the Company, which consent will not be unreasonably withheld) to visit the other offices and properties of the Company and each Subsidiary, all at 26 - 21 - such reasonable times and as often as may be reasonably requested in writing; and (b) DEFAULT -- if a Default or Event of Default then exits, at the expense of the Company to visit and inspect any of the offices or properties of the Company or any Subsidiary, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and independent public accountants (and by this provision the Company authorizes said accountants to discuss the affairs, finances and accounts of the Company and its Subsidiaries), all at such times and as often as may be requested. 8. PAYMENT OF THE NOTES. 8.1. REQUIRED REPAYMENTS. On April 17, 2007 the Company will repay the principal amount of the Notes outstanding at par plus the accrued interest thereon. 8.2. OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT. The Company may, at its opinion, upon notice as provided below, prepay at any time all, or from time to time any part of, the Notes, in a minimum principal amount of $500,000 or a higher integral multiple of $100,000 at 100% of the principal amount so prepaid, plus the Make-Whole Amount determined for the prepayment date with respect to such principal amount and accrued interest on the amount being prepaid. The Company will give each holder of Notes written notice of each optional prepayment under this SECTION 8.2 not less than 30 days and not more than 60 days prior to the date fixed for such prepayment. Each such notice shall specify such date, the aggregate principal amount of the Notes to be prepaid on such date, the principal amount of each Note held by such holder to be prepaid (determined in accordance with SECTION 8.3), and the interest to be paid on the prepayment date with respect to such principal amount being repaid, and shall be accompanied by a certificate of a Senior Financial Officer as to the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. Two Business Days prior to such prepayment, the Company shall deliver to each holder of Notes a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified prepayment date. 27 - 22 - 8.3. ALLOCATION OF PARTIAL PREPAYMENTS. In the case of each partial prepayment of the Notes, the principal amount of the Notes to be prepaid shall be allocated among all of the Notes at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment. 28 - 23 - 8.4. MATURITY; SURRENDER, ETC. In the case of each prepayment of Notes pursuant to this SECTION 8, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment, together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount, if any. From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note. 8.5. PURCHASE OF NOTES. The Company will not and will not permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except upon the payment or prepayment of the Notes in accordance with the terms of this Agreement and the Notes. The Company will promptly cancel all Notes acquired by it or any Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant to any provision of this Agreement and no Notes may be issued in substitution or exchange for any such Notes. 8.6. MAKE-WHOLE AMOUNT. The term "MAKE-WHOLE AMOUNT" means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal, PROVIDED that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings: "CALLED PRINCIPAL" means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to SECTION 8.2 or has become or is declared to be immediately due and payable pursuant to SECTION 12.1, as the context requires. "DISCOUNTED VALUE" means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled 29 - 24 - due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal. "REINVESTMENT YIELD" means, with respect to the Called Principal of any Note, the yield to maturity implied by (i) the yields reported, as of 10:00 A.M. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as "Page 678" on the Telerate Access Service (or such other display as may replace Page 678 on Telerate Access Service) for actively traded U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or (ii) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable, the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. Such implied yield will be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between (1) the actively traded U.S. Treasury security with the duration closest to and greater than the Remaining Average Life and (2) the actively traded U.S. Treasury security with the duration closest to and less than the Remaining Average Life. "REMAINING AVERAGE LIFE" means, with respect to any Called Principal, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years (calculated to the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment. "REMAINING SCHEDULED PAYMENTS" means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, PROVIDED that if such Settlement Date is not a date on which interest payments 30 - 25 - are due to be made under the terms of the Notes, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to SECTION 8.2 or 12.1. "SETTLEMENT DATE" means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to SECTION 8.2 or has become or is declared to be immediately due and payable pursuant to SECTION 12.1, as the context requires. 31 - 26 - 9. AFFIRMATIVE COVENANTS. The Company covenants that so long as any of the Notes are outstanding: 9.1. COMPLIANCE WITH LAW. The Company will and will cause each of its Subsidiaries to comply with all laws, ordinances or governmental rules or regulations to which each of them is subject, including, without limitation, Environmental Laws, and will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of their respective businesses, in each case to the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other governmental authorizations could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 9.2. INSURANCE. The Company will and will cause each of its Subsidiaries to maintain, with financially sound and reputable insurers, insurance with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co-insurance and self-insurance, if adequate reserves are maintained with respect thereto) as is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated. 9.3. MAINTENANCE OF PROPERTIES. The Company will and will cause each of its Subsidiaries to maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times, PROVIDED that this Section shall not prevent the Company or any Subsidiary from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and the Company has concluded that such discontinuance could not, individually or in the aggregate, reasonably be 32 - 27 - expected to have a Material Adverse Effect. 9.4. PAYMENT OF TAXES AND CLAIMS. The Company will and will cause each of its Subsidiaries to file all tax returns required to be filed in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such returns and all other taxes, assessments, governmental charges, or levies imposed on them or any of their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent and all claims for which sums have become due and payable that have or might become a Lien on properties or assets of the Company or any Subsidiary, PROVIDED that neither the Company nor any Subsidiary need pay any such tax or assessment or claims if (i) the amount, applicability or validity thereof is contested by the Company or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the Company or a Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of the Company or such Subsidiary or (ii) the nonpayment of all such taxes and assessments in the aggregate could not reasonably be expected to have a Material Adverse Effect. 9.5. CORPORATE EXISTENCE, ETC. The Company will at all times preserve and keep in full force and effect its corporate existence. Subject to SECTION 10.2, the Company will at all times preserve and keep in full force and effect the corporate existence of each of its Subsidiaries (unless merged into the Company or a Subsidiary) and all rights and franchises of the Company and its Subsidiaries unless, in the good faith judgment of the Company, the termination of or failure to preserve and keep in full force and effect such corporate existence, right or franchise could not, individually or in the aggregate, have a Material Adverse Effect. 9.6. MAINTENANCE OF NET WORTH. Maintain, on the last day of each fiscal year, calculated as at such day, Consolidated Net Worth of the Company and its Consolidated Subsidiaries of at least an amount equal to Cdn. $39,000,000 determined in accordance with GAAP. 9.7. MAINTENANCE OF CONSOLIDATED INDEBTEDNESS TO NET WORTH RATIO. 33 - 28 - Maintain, as at the last day of each fiscal quarter, a ratio, calculated as at such day, of Consolidated Indebtedness to Consolidated Net Worth of the Company and its Consolidated Subsidiaries of not more than 0.80:1 for each fiscal quarter. 9.8. MAINTENANCE OF INTEREST COVERAGE RATIO. Maintain, as at the end of each fiscal quarter, a minimum Interest Coverage Ratio of 2.70:1. 9.9. MAINTENANCE OF LEVERAGE RATIO. Maintain, as at the end of each fiscal quarter, a Leverage Ratio of not more than 5.50:1. 9.10. MAINTENANCE OF PARKING CONTRACTS. Ensure the existence on a consolidated basis on the last day of each fiscal quarter of an aggregate of at least 1,200 Consolidated Parking Contracts. 9.11. FURTHER ASSURANCES. At its cost and expense, upon request of the Required Holders, duly execute and deliver or cause to be duly executed and delivered to the Purchasers such further instruments and do and cause to be done such further acts as may be necessary or proper in the reasonable opinion of the Required Holders to carry out more effectually the provisions and purposes of the Note Documents. 10. NEGATIVE COVENANTS. The Company covenants that, without the consent of the Required Holders, so long as any of the Notes are outstanding: 10.1. TRANSACTIONS WITH AFFILIATES. The Company will not and will not permit any Subsidiary to enter into directly or indirectly any transaction or Material group of related transactions (including without limitation the purchase, lease, sale or exchange 34 - 29 - of properties of any kind or the rendering of any service) with any Affiliate (other than the Company or another Subsidiary), except in the ordinary course and pursuant to the reasonable requirements of the Company's or such Subsidiary's business and upon fair and reasonable terms no less favorable to the Company or such Subsidiary than would be obtainable in a comparable arm's-length transaction with a Person not an Affiliate. 10.2. MERGER, CONSOLIDATION, ETC. The Company shall not consolidate with or merge with any other corporation or convey, transfer or lease substantially all of its assets in a single transaction or series of transactions to any Person unless: (a) the successor formed by such consolidation or the survivor of such merger or the Person that acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety, as the case may be, shall be a solvent corporation organized and existing under the laws of Canada, the United States or any Province or State thereof (including the District of Columbia), and, if the Company is not such corporation, (i) such corporation shall have executed and delivered to each holder of any Notes its assumption of the due and punctual performance and observance of each covenant and condition of this Agreement and the Notes and (ii) shall have caused to be delivered to each holder of any Notes an opinion of nationally recognized independent counsel, or other independent counsel reasonably satisfactory to the Required Holders, to the effect that all agreements or instruments effecting such assumption are enforceable in accordance with their terms and comply with the terms hereof; (b) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing. No such conveyance, transfer or lease of substantially all of the assets of the Company shall have the effect of releasing the Company or any successor corporation that shall theretofore have become such in the manner prescribed in this SECTION 10.2 from its liability under this Agreement or the Notes. 10.3. INDEBTEDNESS. Create, incur, assume or suffer to exist or permit any of its Subsidiaries to create, incur, assume or suffer to exist any Indebtedness other than (i) Indebtedness to the Purchasers hereunder; (ii) the Permitted Senior Indebtedness; (iii) Indebtedness incurred in respect of a Purchase Money 35 - 30 - Mortgage up to an aggregate outstanding amount, at any time, of Cdn. $1,000,000 (or the equivalent amount in any other currency); (iv) Indebtedness incurred with respect to performance bonds posted in the ordinary course of business and (v) Indebtedness listed on SCHEDULE 5.15. 10.4. LIENS. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Liens on any of their respective assets, other than Permitted Liens. 10.5. DISPOSAL OF ASSETS GENERALLY. Sell, exchange, lease, release or abandon or otherwise dispose of, or permit any of its Subsidiaries to sell, exchange, lease, release or abandon or otherwise dispose of any assets to any Person other than (i) any bona fide sales, exchanges, leases, abandonments or other dispositions in the ordinary course of business, for the purpose of carrying on the business of the Company; (ii) property or assets which have no material economic value in the business of the Company or are obsolete; and (iii) assets having a fair market value of not greater than Cdn. $100,000 in the aggregate in any fiscal year. 36 - 31 - 10.6. CHANGE IN BUSINESS. Not, and not permit any of its Subsidiaries to engage in any line of business other than the businesses engaged in by the Company and its Subsidiaries as of the date hereof and business reasonably related thereto. 10.7. DISTRIBUTIONS. Declare, make or pay, or permit any of its Subsidiaries to declare, make or pay, any Distributions, except (i) directors' fee in an aggregate amount not to exceed $30,000, (ii) performance bonuses paid by the Company or any of its Subsidiaries in the ordinary course of business as part of remuneration for services rendered at fair market value; (iii) Distributions by a Guarantor to the Company or by the Company to a Guarantor; (iv) payments made under management or employment agreements entered into by the Company or any of its Subsidiaries with senior employees in the ordinary course of business; (v) loans made to employees; (vi) non-cash dividend payments to Onex Corporation on the preferred shares of the Company held by Onex Corporation made by way of the issuance of additional preferred shares bearing the same characteristics as such preferred shares held by Onex Corporation and (vii) payments on the Permitted Senior Indebtedness. 10.8. INVESTMENTS. Make any loans, incur any obligations (contingent or otherwise), or make any investments in any Person or permit any of its Subsidiaries to do the same, except for (i) foreign currency hedges, interest rate swaps or similar interest rate and currency hedging obligations or agreements; (ii) indebtedness and obligations incurred in the ordinary course of business and Indebtedness permitted under SECTION 10.3; (iii) Permitted Marketable Securities; (iv) loans permitted under SECTION 10.1; or (v) inter-company loans to or investments in Subsidiaries. 10.9. LEASE-BACKS. Enter into or permit any of its Subsidiaries to enter into any arrangements, directly or indirectly, with any Person, whereby the Company or such Subsidiary, as the case may be, shall sell or transfer any property, whether now owned or hereafter acquired, used or useful in the business, in connection with the rental or lease of the property so sold or transferred or of other property for substantially the same purpose or purposes as the property so sold or transferred. 37 - 32 - 10.10. SUBSIDIARIES. (i) Incorporate or acquire, after the date hereof, any Subsidiaries or commence to carry on business, otherwise than through the Company and its Subsidiaries existing as of the date hereof, except for the incorporation or acquisition of Subsidiaries in North America or such other jurisdictions as the Required Holders may agree to, acting reasonably, where in each case, such Subsidiary has executed and delivered a guarantee of all of the obligations of the Company under this Agreement and/or the other Note Documents and accompanied by opinions satisfactory to the Required Holders, in each case, acting reasonably, prior to or contemporaneously with such Subsidiary having net asset values or revenues, in either case, greater than Cdn. $50,000; or (ii) permit any Subsidiary to exist after the date hereof having net asset values or revenues, in either case, greater than Cdn. $50,000 unless such Subsidiary is a Guarantor. 10.11. MAINTENANCE AND OWNERSHIP OF SUBSIDIARIES. Except as permitted under SECTION 10.5, sell or otherwise dispose of any shares of any of its Subsidiaries or permit any of such Subsidiaries to issue, sell or otherwise dispose of the shares of any other Subsidiary, except to the Company or a Guarantor. 10.12. COMPROMISE OF ACCOUNTS. Compromise of Accounts. Compromise or adjust or permit any of its Subsidiaries to compromise or adjust any material accounts receivable of the Company or such Subsidiary (or extend the time for payment thereof) or grant any discounts, allowances or credits thereon, in each case other than in the ordinary course of business. 11. EVENTS OF DEFAULT. An "EVENT OF DEFAULT" shall exist if any of the following conditions or events shall occur and be continuing: (a) the Company defaults in the payment of any principal or Make-Whole Amount, if any, on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or 38 - 33 - (b) the Company defaults in the payment of any interest on any Note for more than five Business Days after the same becomes due and payable; or (c) the Company defaults in the performance of or compliance with any term contained in SECTION 5.14, SECTIONS 9.6 through 9.10, 10.2, 10.5, 10.7 or 10.10; or (d) the Company defaults in the performance of or compliance with any term contained herein (other than those referred to in paragraphs (a), (b) and (c) of this SECTION 11) and such default is not remedied within 30 days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default and (ii) the Company receiving written notice of such default from any holder of a Note (any such written notice to be identified as a "NOTICE OF DEFAULT" and to refer specifically to this paragraph (d) of SECTION 11); or (e) the Company fails to deliver the duly executed Security Agreement substantially in the form of EXHIBIT 11(e)-1 within 5 Business Days of the Closing, together with (i) evidence, reasonably satisfactory to you, that all instruments and documents (including financing statements), necessary or desirable to perfect and protect your Lien on the collateral granted under the Security Agreement have been signed and delivered in appropriate form for filing or recording, and (ii) an opinion of counsel substantially in the form of EXHIBIT 11(e)-2; or (f) any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in this Agreement or in any writing furnished in connection with the transactions contemplated hereby proves to have been false or incorrect in any material respect on the date as of which made; or (g) (i) the Company or any Subsidiary is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest on any Indebtedness that is outstanding in an aggregate principal amount of at least Cdn. $1,000,000 beyond any period of grace provided with respect thereto, or (ii) the Company or any Subsidiary is in default in the performance of or compliance with any term of any evidence of any Indebtedness in an aggregate outstanding principal amount of at least Cdn. $1,000,000 or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition such Indebtedness has become, or has been declared (or one or more Persons 39 - 34 - are entitled to declare such Indebtedness to be), due and payable before its stated maturity or before its regularly scheduled dates of payment, or (iii) as a consequence of the occurrence or continuation of any event or condition (other than the passage of time or the right of the holder of Indebtedness to convert such Indebtedness into equity interests), (x) the Company or any Subsidiary has become obligated to purchase or repay Indebtedness before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal amount of at least Cdn. $1,000,000, or (y) one or more Persons have the right to require the Company or any Subsidiary so to purchase or repay such Indebtedness; or (h) the Company or any Subsidiary (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; or (i) a court or governmental authority of competent jurisdiction enters an order appointing, without consent by the Company or any of its Subsidiaries, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of the Company or any of its Subsidiaries, or any such petition shall be filed against the Company or any of its Subsidiaries and such petition shall not be dismissed within 60 days; or (j) a final judgment or judgments for the payment of money aggregating in excess of Cdn. $5,000,000 are rendered against one or more of the Company and its Subsidiaries and which judgments are not, within 60 days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 60 days after the expiration of such stay; or (k) any Guarantor fails in any material respect to perform or 40 - 35 - observe any term, covenant or agreement in the Subsidiary Guaranty; or the Subsidiary Guaranty is for any reason partially (including with respect to future advances) or wholly revoked or invalidated, or otherwise ceases to be in full force and effect; or any Guarantor, or any other Person by, through or on behalf of any Guarantor, contests in any manner the validity or enforceability of the Subsidiary Guaranty or denies that such Guarantor has any further liability or obligation thereunder; or (l) the Security Agreement shall cease to be in full force and effect; or the Company, any Guarantor or any Person by, through or on behalf of the Company or any Guarantor shall contest the validity or enforceability of the Security Agreement; or (m) if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under section 412 of the Code, (ii) a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC or the PBGC shall have instituted proceedings under ERISA section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified the Company or any ERISA Affiliate that a Plan may become a subject of any such proceedings, (iii) the aggregate "amount of unfunded benefit liabilities" (within the meaning of section 4001(a)(18) of ERISA) under all Plans, determined in accordance with Title IV of ERISA, shall exceed Cdn. $500,000, (iv) the Company or any ERISA Affiliate shall have incurred or is reasonably expected to incur any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, (v) the Company or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or any Subsidiary establishes or amends any employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of the Company or any Subsidiary thereunder; and any such event or events described in clauses (i) through (vi) above, either individually or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect. As used in SECTION 11(m), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE WELFARE BENEFIT PLAN" shall have the respective meanings assigned to such terms in Section 3 of ERISA. 12. REMEDIES ON DEFAULT, ETC. 41 - 36 - 12.1. ACCELERATION. (a) If an Event of Default with respect to the Company described in paragraph (h) or (i) of SECTION 11 (other than an Event of Default described in clause (i) of paragraph (h) or described in clause (vi) of paragraph (h) by virtue of the fact that such clause encompasses clause (i) of paragraph (h)) has occurred, all the Notes then outstanding shall automatically become immediately due and payable. (b) If any other Event of Default has occurred and is continuing, any holder or holders of more than 25% in principal amount of the Notes at the time outstanding may at any time at its or their option, by notice or notices to the Company, declare all the Notes then outstanding to be immediately due and payable. (c) If any Event of Default described in paragraph (a) or (b) of SECTION 11 has occurred and is continuing, any holder or holders of Notes at the time outstanding affected by such Event of Default may at any time, at its or their option, by notice or notices to the Company, declare all the Notes held by it or them to be immediately due and payable. Upon any Notes becoming due and payable under this SECTION 12.1, whether automatically or by declaration, such Notes will forthwith mature and the entire unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest thereon and (y) the Make-Whole Amount determined in respect of such principal amount (to the full extent permitted by applicable law), shall all be immediately due and payable, in each and every case without presentment, demand, protest or further notice, all of which are hereby waived. The Company acknowledges, and the parties hereto agree, that each holder of a Note has the right to maintain its investment in the Notes free from repayment by the Company (except as herein specifically provided for) and that the provision for payment of a Make-Whole Amount by the Company in the event that the Notes are prepaid or are accelerated as a result of an Event of Default, is intended to provide compensation for the deprivation of such right under such circumstances. 12.2. OTHER REMEDIES. If any Default or Event of Default has occurred and is continuing, and irrespective of whether any Notes have become or have been declared immediately due and payable under SECTION 12.1, the holder of any Note at the 42 - 37 - time outstanding may proceed to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or in any Note, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise. 12.3. RESCISSION. At any time after any Notes have been declared due and payable pursuant to clause (b) or (c) of SECTION 12.1, the holders of not less than 76% in principal amount of the Notes then outstanding, by written notice to the Company, may rescind and annul any such declaration and its consequences if (a) the Company has paid all overdue interest on the Notes, all principal of and Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid other than by reason of such declaration, and all interest on such overdue principal and Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest in respect of the Notes, at the Default Rate, (b) all Events of Default and Defaults, other than non-payment of amounts that have become due solely by reason of such declaration, have been cured or have been waived pursuant to SECTION 17, and (c) no judgment or decree has been entered for the payment of any monies due pursuant hereto or to the Notes. No rescission and annulment under this SECTION 12.3 will extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon. 12.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC. No course of dealing and no delay on the part of any holder of any Note in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder's rights, powers or remedies. No right, power or remedy conferred by this Agreement or by any Note upon any holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise. Without limiting the obligations of the Company under SECTION 15, the Company will pay to the holder of each Note on demand such further amount as shall be sufficient to cover all costs and expenses of such holder incurred in any enforcement or collection under this SECTION 12, including, without limitation, reasonable attorneys' fees, expenses and disbursements. 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES. 13.1. REGISTRATION OF NOTES. 43 - 38 - The Company shall keep at its principal executive office a register for the registration and registration of transfers of Notes. The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register. Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Company shall not be affected by any notice or knowledge to the contrary. The Company shall give to any holder of a Note that is an Institutional Investor promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes. 13.2. TRANSFER AND EXCHANGE OF NOTES. Upon surrender of any Note at the principal executive office of the Company for registration of transfer or exchange (and in the case of a surrender for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of such Note or his attorney duly authorized in writing and accompanied by the address for notices of each transferee of such Note or part thereof), the Company shall execute and deliver, at the Company's expense (except as provided below), one or more new Notes (as requested by the holder thereof) in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of Exhibit 1. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Company may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes. Notes shall not be transferred in denominations of less than Cdn. $500,000, PROVIDED that if necessary to enable the registration of transfer by a holder of its entire holding of Notes, one Note may be in a denomination of less than Cdn. $500,000. Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be deemed to have made the representation set forth in SECTION 6.2. 44 - 39 - 13.3. REPLACEMENT OF NOTES. Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional Investor of such ownership and such loss, theft, destruction or mutilation), and (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (PROVIDED that if the holder of such Note is, or is a nominee for, an original purchaser or another holder of a Note with a minimum net worth of at least Cdn. $10,000,000, such Person's own unsecured agreement of indemnity shall be deemed to be satisfactory), or (b) in the case of mutilation, upon surrender and cancellation thereof, the Company at its own expense shall execute and deliver, in lieu thereof, a new Note, dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon. 14. SUBORDINATION. 14.1. NOTES SUBORDINATED TO PERMITTED SENIOR INDEBTEDNESS. The Company covenants and agrees and you likewise covenant and agree for the benefit of the holders of the Permitted Senior Indebtedness, that, to the extent and in the manner hereinafter set forth in this SECTION 14, the Obligations under the Notes are hereby expressly made subordinate and subject in right of payment as provided in this SECTION 14 to the prior payment in full of all Permitted Senior Indebtedness. This SECTION 14 shall constitute a continuing offer to all persons who, in reliance upon such provisions, become holders of, or continue to hold, Permitted Senior Indebtedness, and such provisions are made for the benefit of the holders of Permitted Senior Indebtedness and such holders are made obligees hereunder and they or each of them may enforce such provisions. 14.2. PAYMENT OVER OF PROCEEDS UPON BANKRUPTCY. 45 - 40 - (a) In the event of (i) any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding in connection therewith, relative to the Company or its assets, (ii) any liquidation, dissolution or other winding up of the Company, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy, or (iii) any assignment for the benefit of creditors or any other marshalling of assets or liabilities of the Company (the events described in the foregoing clauses (i), (ii) and (iii) are referred to collectively as "INSOLVENCY OR LIQUIDATION PROCEEDINGS"), then and in any such event the holders of Permitted Senior Indebtedness shall be entitled to receive payment in full in cash of all amounts due on or in respect of all Permitted Senior Indebtedness (or payment thereof provided for to the satisfaction of the holders of Permitted Senior Indebtedness), before the holder is entitled to receive any payment or distribution of any kind or character (excluding Permitted Junior Payments) on account of principal of, or premium (if any) or interest on, the Notes, and to that end the holders of Permitted Senior Indebtedness shall be entitled to receive, for application to the payment of such Permitted Senior Indebtedness, any payment or distribution of assets of the Company of any kind or character (excluding Permitted Junior Payments) that may be payable or deliverable in respect of the Notes in connection with any such Insolvency or Liquidation Proceeding. (b) Any payment or distribution of assets of the Company of any kind or character from any source, whether in cash, property or securities (excluding Permitted Junior Securities), including by way of set-off or enforcement of any guarantee or otherwise, which the holders would be entitled to receive but for the provisions of this Article shall be paid by the liquidating trustee or agent or other person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of Permitted Senior Indebtedness or the representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Permitted Senior Indebtedness may have been issued, rateably according to the aggregate amounts remaining unpaid on account of the Permitted Senior Indebtedness held or represented by each, to the extent necessary to make payment in full in cash of all Permitted Senior Indebtedness after giving effect to any concurrent payment or distribution, or provision therefor to the satisfaction of the holders of the Permitted Senior Indebtedness. (c) In the event that, notwithstanding the foregoing provisions of SECTION 14.2(b), any holder of the Notes shall have received, after the commencement of any Insolvency or Liquidation Proceeding, any payment or 46 - 41 - distribution of assets of the Company of any kind or character in respect of the Obligations under the Notes whether in cash, property or securities including by way of set off or enforcement of any guarantee or otherwise before all Permitted Senior Indebtedness is paid in full or payment thereof provided for to the satisfaction of the holders of Permitted Senior Indebtedness, then such payment or distribution (excluding Permitted Junior Payments) shall be paid over or delivered forthwith therefor to the holders of the Permitted Senior Indebtedness or the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other Person making payment or distribution of assets of the Company for application to the payment of all Permitted Senior Indebtedness remaining unpaid, to the extent necessary to pay all Permitted Senior Indebtedness in full, after giving effect to any concurrent payment or distribution to or for the holders of Permitted Senior Indebtedness. 14.3. SUSPENSION OF PAYMENTS WHEN PERMITTED SENIOR INDEBTEDNESS IN DEFAULT. (a) Unless SECTION 14.2 shall be applicable, upon (i) the occurrence of a default in the payment when due (whether at maturity or upon acceleration, mandatory prepayment or otherwise) of any principal of or interest or premium (if any) or interest on any unreimbursed amounts under drawn letters of credit on any Permitted Senior Indebtedness that is continuing after the expiration of any grace period applicable thereto (a "PAYMENT DEFAULT"), and (ii) either the Company or such holder of Permitted Senior Indebtedness sending to the holders of the Notes written notice of such Payment Default, then no payment or distribution of any assets of the Company or any Subsidiary of any kind or character (excluding Permitted Junior Payments) shall be made by the Company including by way of set off or enforcement of guaranty or otherwise on account of principal of, or premium (if any) or interest on, the Notes or on account of the purchase or redemption or other acquisition of the Notes unless and until either (x) such Payment Default shall have been cured or waived, or shall have ceased to exist, (y) such defaulted Permitted Senior Indebtedness shall have been discharged or (z) the benefits of this provision shall have been waived by the holders of such defaulted Permitted Senior Indebtedness, after which the Company shall resume making any and all required payments in respect of the Notes, including any payments in arrears. (b) Unless SECTION 14.2 shall be applicable, upon (i) the occurrence of any default or event of default under any Permitted Senior Indebtedness if the effect of such default or event of default is to permit such Permitted Senior Indebtedness to become due and payable prior to its stated 47 - 42 - maturity (a "COVENANT DEFAULT"), and (ii) the holder of such Permitted Senior Indebtedness or the Company sending to the holders of the Notes written notice of such Covenant Default, then no payment or distribution of any assets of the Company of any kind or character (excluding Permitted Junior Payments) shall be made by the Company including by way of set-off or enforcement of guaranty or otherwise on account of principal of, or premium (if any) or interest on, the Notes or on account of the purchase or redemption or other acquisition of the Notes for a period (a "PAYMENT BLOCKAGE PERIOD") commencing on the date of receipt of such written notice by the holders of the Notes and continuing until (subject to any blockage of payments that may then be in effect under SECTION 14.3(A)) the first to occur of (x) more than 179 days shall have elapsed since receipt of such written notice by the holders of the Notes (provided that the obligations under the applicable Permitted Senior Indebtedness shall not theretofore have been accelerated), (y) such Covenant Default shall have been cured or waived or shall have ceased to exist or the Permitted Senior Indebtedness shall have been discharged, or (z) such Payment Blockage Period shall have been terminated by written notice to the Company and the holders of the Notes given by the holder of such Permitted Senior Indebtedness. After the first to occur of the events described in the foregoing clauses (x), (y) and (z), the Company shall resume making any and all required payments in respect of the Notes, including any payments in arrears. In no event will a Payment Blockage Period extend beyond 179 days from the date of the receipt by the holders of the Notes of the notice initiating such Payment Blockage Period (such 179-day period referred to as the "INITIAL PERIOD"). Any number of notices of events of default may be given during the Initial Period; PROVIDED that during any period of 365 consecutive days there must be a period of 186 consecutive days in which no Payment Blockage Period is in effect. No Covenant Default with respect to the Permitted Senior Indebtedness that existed or was continuing on the date of the commencement of any Payment Blockage Period will be, or can be, made the basis for the commencement of a second Payment Blockage Period, whether or not within a period of 365 consecutive days, unless such Covenant Default has been cured or waived for a period of not less than 90 consecutive days. (c) In the event that, notwithstanding the foregoing, the Company shall make any payment to any holder of any Note prohibited by the foregoing provisions of this SECTION 14.3, then and in such event such payments shall be paid over and delivered forthwith to the holders of the Permitted Senior Indebtedness or their representative. 14.4. PAYMENT PERMITTED IF NO DEFAULT. 48 - 43 - Nothing contained in this SECTION 14 or elsewhere in this Agreement or in the Notes shall prevent the Company, at any time except in the circumstances described in SECTION 14.2 or under the conditions described in SECTION 14.3, from making payments at any time of principal of, or premium (if any) or interest on, the Notes to the extent permitted by the terms of Permitted Senior Indebtedness as in effect from time to time. 14.5. SUBROGATION TO RIGHTS OF HOLDERS OF PERMITTED SENIOR INDEBTEDNESS. Subject to the payment in full of all Permitted Senior Indebtedness, the holders of the Notes shall be subrogated (equally and ratably with the holders of all Indebtedness of the Company that by its express terms is subordinated to Permitted Senior Indebtedness to the same extent as the Notes are so subordinated and is entitled to like rights of subrogation) to the rights of the holders of Permitted Senior Indebtedness to receive payments and distributions of cash, property and securities applicable to the Permitted Senior Indebtedness to the extent that payment of Permitted Senior Indebtedness has been made from amounts otherwise payable to the holders of the Notes until the Notes and all other amounts payable under this Agreement shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Permitted Senior Indebtedness of any cash, property or securities to which the holders of the Notes would be entitled except for the provisions of this SECTION 14, and no payments over pursuant to the provisions of this SECTION 14 to the holders of Permitted Senior Indebtedness by the holders of the Notes, shall, as among the Company, its creditors other than holders of the Permitted Senior Indebtedness and the holders of the Notes, be deemed to be a payment or distribution by the Company to or on account of the Permitted Senior Indebtedness. In the event that any Permitted Senior Indebtedness becomes due and payable, whether by acceleration, maturity or otherwise, no distribution shall thereafter be made on account of the Notes until all Permitted Senior Indebtedness shall be paid in full. 14.6. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS. The provisions of this SECTION 14 are and are intended solely for the purpose of defining the relative rights of the holders of the Notes, on the one hand, and the holders of Permitted Senior Indebtedness, on the other hand. Nothing contained in this SECTION 14 or elsewhere in this Agreement or in the Notes is intended to or shall (a) impair, as among the Company and its creditors other than holders of Permitted Senior Indebtedness and the holders of the 49 - 44 - Notes, the obligation of the Company, which is absolute and unconditional, to pay to the holders of the Notes the principal of, and premium (if any) and interest on, the Notes and all other amounts payable under this Agreement as and when the same shall become due and payable, all in accordance with the terms hereof and of the Notes; (b) affect the relative rights against the Company of the holders of the Notes and creditors of the Company other than the holders of Permitted Senior Indebtedness, it being expressly understood that the Notes, the indebtedness represented thereby and the payment of the principal of, and premium (if any) and interest on, the Notes and of all other amounts payable under this Agreement in all respects shall rank equally with, or prior to, all existing and future unsecured Indebtedness of the Company that is not Permitted Senior Indebtedness; (c) prevent the holders of the Notes from exercising all remedies otherwise permitted by applicable law upon default under this Agreement, subject to the rights, if any, under this SECTION 14 of the holders of Permitted Senior Indebtedness (i) in any Insolvency or Liquidation Proceeding to receive, pursuant to and in accordance with SECTION 14.2, cash, property and securities otherwise payable or deliverable to the holders or the Notes, or (ii) under the conditions specified in SECTION 14.3 to prevent any payment prohibited by such SECTION 14.3; or (d) limit the rights of the holders of the Notes to take any action to accelerate the maturity of the Notes pursuant to SECTION 11 or to pursue any rights or remedies hereunder or under applicable law. 14.7. PAYMENTS HELD IN TRUST. Should any distribution or the proceeds thereof in respect of principal of, or premium (if any) or interest on, the Notes be collected or received by the holders of Notes at a time when the holders of Notes are not permitted to receive any such distribution or proceeds thereof, including if the same is collected or received when there is or would be after giving effect to such payment an Event of Default under any Permitted Senior Indebtedness, then the holders of Notes will forthwith deliver, or cause to be delivered, the same to the holders of Permitted Senior Indebtedness in precisely the form held by the holders of Notes (except for any necessary endorsement) and until so delivered, the same shall be held in trust by the holders of Notes as property of the holders of Permitted Senior Indebtedness and shall not be commingled with other property of the holders of Notes. 14.8. NO WAIVER OF SUBORDINATION PROVISIONS. (a) No right of any present or future holder of any Permitted Senior Indebtedness to enforce subordination as herein provided shall at any 50 - 45 - time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Agreement, regardless of any knowledge thereof that any such holder may have or be otherwise charged with. (b) Without in any way limiting the generality of SECTION 14.8(A), the holders of Permitted Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the holders of the Notes, without incurring responsibility to the holders of the Notes and without impairing or releasing the subordination provided in this SECTION 14 or the obligations hereunder of the holders of the Notes to the holders of Permitted Senior Indebtedness, do any one or more of the following: (1) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, any Permitted Senior Indebtedness or any instrument evidencing the same or any agreement under which Permitted Senior Indebtedness is outstanding (including any increase in the aggregate principal amount of any indebtedness thereunder); (2) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing any Permitted Senior Indebtedness; (3) release any Person liable in any manner for the collection of any Permitted Senior Indebtedness; and (4) exercise or refrain from exercising any rights against the Company and any other Person. 14.9. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT. Upon any payment or distribution of assets of the Company referred to in this SECTION 14, the holders of the Notes shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which such insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution, winding up or similar case or proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the holders of the Notes for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Permitted Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this SECTION 14 provided that such court, trustee, assignee or other person has been apprised of, or the order or certificate makes reference to the provisions of this Article. 51 - 46 - 14.10 FURTHER ASSURANCES Upon receipt of written notice by a holder of Permitted Senior Indebtedness, the Company shall, from time to time, for and on behalf of all present and future holders of the Notes, execute and deliver deeds of subordination in favour of the person or persons forwarding such notice to the Company providing that such person or persons are entitled to all the rights and benefits of this Article as a holder of Permitted Senior Indebtedness. An executed counterpart of each such deed shall be delivered by the Company. Nothing contained in this provision shall impair the rights of any holders of Permitted Senior Indebtedness in whose favour such a deed of subordination has not been so executed and delivered. 15. PAYMENTS ON NOTES. 15.1. PLACE OF PAYMENT. Subject to SECTION 15.2, payments of principal, Make-Whole Amount, if any, and interest becoming due and payable on the Notes shall be made in Toronto, Ontario at the principal office of the Company in such jurisdiction. The Company may at any time, by notice to each holder of a Note, change the place of payment of the Notes so long as such place of payment shall be either the principal office of the Company in such jurisdiction or the principal office of a bank or trust company in such jurisdiction. 15.2. HOME OFFICE PAYMENT. So long as you or your nominee shall be the holder of any Note, and notwithstanding anything contained in SECTION 14.1 or in such Note to the contrary, the Company will pay all sums becoming due on such Note for principal, Make-Whole Amount, if any, and interest by the method and at the address specified for such purpose below your name in SCHEDULE A, or by such other method or at such other address as you shall have from time to time specified to the Company in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written request of the Company made concurrently with or reasonably promptly after payment or prepayment in full of any Note, you shall surrender such Note for cancellation, reasonably promptly after any such request, to the Company at its principal executive office or at the place of payment most recently designated by the Company pursuant to SECTION 14.1. Prior to any sale or other disposition of any Note held by you or your nominee you will, at your election, 52 - 47 - either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Company in exchange for a new Note or Notes pursuant to SECTION 13.2. The Company will afford the benefits of this SECTION 15.2 to any Institutional Investor that is the direct or indirect transferee of any Note purchased by you under this Agreement and that has made the same agreement relating to such Note as you have made in this SECTION 15.2. 16. EXPENSES, ETC. 16.1. TRANSACTION EXPENSE. Whether or not the transactions contemplated hereby are consummated, the Company will pay all costs and expenses (including reasonable attorneys' fees of a special counsel and, if reasonably required, local or other counsel) incurred by you or holder of a Note in connection with such transactions and in connection with any amendments, waivers or consents under or in respect of this Agreement or the Notes (whether or not such amendment, waiver or consent becomes effective), including, without limitation: (a) the costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under this Agreement or the Notes or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement or the Notes, or by reason of being a holder of any Note, and (b) the costs and expenses, including financial advisors' fees, incurred in connection with the insolvency or bankruptcy of the Company or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes. The Company will pay, and will save you and each other holder of a Note harmless from, all claims in respect of any fees, costs or expenses, if any, of brokers and finders (other than those retained by you). 16.2. SURVIVAL. The obligations of the Company under this SECTION 16 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Agreement or the Notes, and the termination of this Agreement. 17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. 53 - 48 - All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the Notes, the purchase or transfer by you of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of you or any other holder of a Note. All statements contained in any certificate or other instrument delivered by or on behalf of the Company pursuant to this Agreement shall be deemed representations and warranties of the Company under this Agreement. Subject to the preceding sentence, this Agreement and the Notes embody the entire agreement and understanding between you and the Company and supersede all prior agreements and understandings relating to the subject matter hereof. 18. AMENDMENT AND WAIVER. 18.1. REQUIREMENTS. This Agreement and the Notes may be amended, and the observance of any term hereof or of the Notes may be waived (either retroactively or prospectively), with (and only with) the written consent of the Company and the Required Holders, except that no amendment or waiver may, without the written consent of the holder of each Note at the time outstanding affected thereby, (i) subject to the provisions of SECTION 12 relating to acceleration or rescission, change the amount or time of any prepayment or payment of principal of, or reduce the rate or change the time of payment or method of computation of interest or of the Make-Whole Amount on, the Notes, (ii) change the percentage of the principal amount of the Notes the holders of which are required to consent to any such amendment or waiver, or (iii) amend any of SECTIONS 8, 11(a), 11(b), 12, 14, or 18.1 hereof. 18.2. SOLICITATION OF HOLDERS OF NOTES. (a) The Company will provide each holder of the Notes (irrespective of the amount of Notes then owned by it) with sufficient information, sufficiently far in advance of the date a decision is required, to enable such holder to make an informed and considered decision with respect to any proposed amendment, waiver or consent in respect of any of the provisions hereof or of the Notes. The Company will deliver executed or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions of this SECTION 18 to each holder of outstanding Notes promptly following the date on which it is executed and delivered by, or receives the consent or approval 54 - 49 - of, the requisite holders of Notes. (b) The Company will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security, to any holder of Notes as consideration for or as an inducement to the entering into by any holder of Notes or any waiver or amendment of any of the terms and provisions hereof unless such remuneration is concurrently paid, or security is concurrently granted, on the same terms, ratably to each holder of Notes then outstanding even if such holder did not consent to such waiver or amendment. 18.3. BINDING EFFECT, ETC. Any amendment or waiver consented to as provided in this SECTION 18 applies equally to all holders of Notes and is binding upon them and upon each future holder of any Note and upon the Company without regard to whether such Note has been marked to indicate such amendment or waiver. No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent thereon. No course of dealing between the Company and the holder of any Note nor any delay in exercising any rights hereunder or under any Note shall operate as a waiver of any rights of any holder of such Note. As used herein, the term "THIS AGREEMENT" and references thereto shall mean this Agreement as it may from time to time be amended or supplemented. 18.4. NOTES HELD BY COMPANY, ETC. Solely for the purpose of determining whether the holders of the requisite percentage of the aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver or consent to be given under this Agreement or the Notes, or have directed the taking of any action provided herein or in the Notes to be taken upon the direction of the holders of a specified percentage of the aggregate principal amount of Notes then outstanding, Notes directly or indirectly owned by the Company or any of its Affiliates shall be deemed not to be outstanding. 19. NOTICES. All notices and communications provided for hereunder shall be in writing and sent (a) by telecopy if the sender on the same day sends a 55 - 50 - confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by a recognized overnight delivery service (with charges prepaid). Any such notice must be sent: (i) if to you or your nominee, to you or it at the address specified for such communications in SCHEDULE A, or at such other address as you or it shall have specified to the Company in writing, (ii) if to any other holder of any Note, to such holder at such address as such other holder shall have specified to the Company in writing, or (iii) if to the Company, to the Company at its address set forth at the beginning hereof to the attention of Paul T. Clough, or at such other address as the Company shall have specified to the holder of each Note in writing. Notices under this SECTION 19 will be deemed given only when actually received. 56 - 51 - 20. REPRODUCTION OF DOCUMENTS. This Agreement and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by you at the Closing (except the Notes themselves), and (c) financial statements, certificates and other information previously or hereafter furnished to you, may be reproduced by you by any photographic, photostatic, microfilm, microcard, miniature photographic or other similar process and you may destroy any original document so reproduced. The Company agrees and stipulates that, to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by you in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. This SECTION 20 shall not prohibit the Company or any other holder of Notes from contesting any such reproduction to the same extent that it could contest the original, or from introducing evidence to demonstrate the inaccuracy of any such reproduction. 21. SUBSTITUTION OF PURCHASER. You shall have the right to substitute any one of your Affiliates as the purchaser of the Notes that you have agreed to purchase hereunder, by written notice to the Company, which notice shall be signed by both you and such Affiliate, shall contain such Affiliate's agreement to be bound by this Agreement and shall contain a confirmation by such Affiliate of the accuracy with respect to it of the representations set forth in SECTION 6. Upon receipt of such notice, wherever the word "you" is used in this Agreement (other than in this SECTION 21), such word shall be deemed to refer to such Affiliate in lieu of you. In the event that such Affiliate is so substituted as a purchaser hereunder and such Affiliate thereafter transfers to you all of the Notes then held by such Affiliate, upon receipt by the Company of notice of such transfer, wherever the word "you" is used in this Agreement (other than in this SECTION 21), such word shall no longer be deemed to refer to such Affiliate, but shall refer to you, and you shall have all the rights of an original holder of the Notes under this Agreement. 22. MISCELLANEOUS. 22.1. SUCCESSORS AND ASSIGNS. 57 - 52 - All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns (including, without limitation, any subsequent holder of a Note) whether so expressed or not. 22.2. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this Agreement or the Notes to the contrary notwithstanding, any payment of principal of or Make-Whole Amount or interest on any Note that is due on a date other than a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day. 22.3. SEVERABILITY. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction. 22.4. CONSTRUCTION. Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person. 22.5. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto. 58 - 53 - 22.6. GOVERNING LAW. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State. * * * * * 59 - 54 - If you are in agreement with the foregoing, please sign the form of agreement on the accompanying counterpart of this Agreement and return it to the Company, whereupon the foregoing shall become a binding agreement between you and the Company. Very truly yours, 3357392 CANADA INC. By: /s/ Authorized Signer Name: Title: The foregoing is hereby agreed to as of the date thereof. 3006302 NOVA SCOTIA COMPANY By: /s/ Authorized Signer Name: Title: 60 - 55 - SCHEDULE A ---------- INFORMATION RELATING TO PURCHASERS Principal Amount of Name and Address of Purchaser Notes to be Purchased - ----------------------------- ---------------------- 3006302 Nova Scotia Company, a Cdn.$55,000,000 Nova Scotia unlimited liability company (1) All payments by wire transfer of Canadian Imperial Bank of Commerce Acct. No. 45-8113 with sufficient information to identify the source and application of such funds. (2) All notices of payments and written confirmations of such wire transfers: 3006302 Nova Scotia Company c/o First Union Real Estate Equity and Mortgage Investments 55 Public Square, Suite 1910 Cleveland, Ohio 44113-1937 Attn: Senior Vice President, General Counsel and Secretary Fax: (216) 781-7364 (3) All other communications: 3006302 Nova Scotia Company c/o First Union Real Estate Equity and Mortgage Investments 55 Public Square, Suite 1910 Cleveland, Ohio 44113-1937 Attn: Senior Vice President, General Counsel and Secretary Fax: (216) 781-7364 61 - 56 - SCHEDULE B ---------- DEFINED TERMS ------------- As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term: "AFFILIATE" means, at any time, and with respect to any Person, (a) any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person and (b) any Person beneficially owning or holding, directly or indirectly, 10% or more of any class of voting or equity interests of the Company or any Subsidiary or any corporation of which the Company and its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 10% or more of any class of voting or equity interests. As used in this definition, "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Unless the context otherwise clearly requires, any reference to an "Affiliate" is a reference to an Affiliate of the Company. "AGREEMENT" means this Note Purchase Agreement between the Company and the purchasers listed on SCHEDULE A, as it may from time to time be amended or supplemented. "ANNUALIZED CAPITAL EXPENDITURES" means for any relevant period commencing with April 1, 1997, an amount equal to the aggregate amount of capital expenditures for such period multiplied by a fraction, the numerator of which is 12 and the denominator of which is the number of calendar months which have elapsed since April 1, 1997. "ANNUALIZED CONSOLIDATED EBITDA" means for any relevant period commencing with April 1, 1997, an amount equal to Consolidated EBITDA for such period multiplied by a fraction, the numerator of which is 12 and the denominator of which is the number of calendar months which have elapsed since April 1, 1997. "ANNUALIZED CONSOLIDATED INTEREST CHARGES" means for any relevant period commencing with April 1, 1997, an amount equal to Consolidated Interest Charges for such period, multiplied by a fraction, the numerator of which is 12 62 - 57 - and the denominator of which is the number of calendar months which have elapsed since April 1, 1997. "BUSINESS DAY" means (a) for the purposes of SECTION 8.6 only, any day other than a Saturday, a Sunday or a day on which commercial banks in New York City are required or authorized to be closed, and (b) for the purposes of any other provision of this Agreement, any day other than a Saturday, a Sunday or a day on which commercial banks in Toronto or New York are required or authorized to be closed. "CAPITAL LEASE" means, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP. "CLOSING" is defined in SECTION 3. "CODE" means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time. "COMPANY" means 3357392 Canada Inc., a corporation duly organized and validly existing under the laws of the Province of Ontario. "CONFIDENTIAL INFORMATION" is defined in SECTION 21. "CONSOLIDATED CASH INTEREST CHARGES" means, for any period for the Company and its Consolidated Subsidiaries, the total of (i) all items properly classified as interest expense (whether expensed or capitalized) in accordance with GAAP; and (ii) the imputed interest component for any element of Consolidated Indebtedness (such as capital leases and deferred revenues) which would not be classified as interest expense pursuant to GAAP, calculated using an interest rate equal to the then prevailing Canadian Prime Rate, in each case for such period, provided that, notwithstanding the foregoing, with respect to the Notes only the current paid interest component, and not accrued interest, will be included in this calculation. "CONSOLIDATED DEPRECIATION AND AMORTIZATION EXPENSE" means, for any period, the depreciation and amortization expense of the Company and its Consolidated Subsidiaries, determined in accordance with GAAP. "CONSOLIDATED EBITDA" means, for any period, the Consolidated Net 63 - 58 - Income of the Company and its Consolidated Subsidiaries (or with respect to the definition of Target EBITDA, the relevant target entity mutatis mutandis) increased by the sum of (i) Consolidated Cash Interest Charges; (ii) Consolidated Income Tax Expense; and (iii) Consolidated Depreciation and Amortization Expense, in each case, for such period and calculated prior to extraordinary items and (iv) such out-of-pocket expenses incurred by such entities on a one time basis and which can reasonably be solely attributed to the acquisition referenced on SCHEDULE 5.14. "CONSOLIDATED INCOME TAX EXPENSE" means, for any period, the aggregate of all taxes (including deferred taxes) based on income of the Company and its Consolidated Subsidiaries for such period determined in accordance with GAAP. "CONSOLIDATED INDEBTEDNESS" means the aggregate of all Indebtedness for borrowed money of the Company and its Consolidated Subsidiaries less (y) the Notes and (z) such cash and Permitted Marketable Securities on the balance sheet of the latest financial statements delivered pursuant to SECTION 7. "CONSOLIDATED NET WORTH" means at any time, with respect to any Person and its Consolidated Subsidiaries, the aggregate of (i) the total shareholders' equity determined as of such time in accordance with GAAP; plus (ii) the Notes; where shareholders equity for greater certainty and without duplication includes any shares in the capital of such Person or its Subsidiaries which are redeemable at the option of the holder in accordance with their terms. "CONSOLIDATED PARKING CONTRACTS" means, at any time, with respect to the Company and its Consolidated Subsidiaries, the aggregate of (i) the total number of existing contracts and leases which are in full force and effect for the management or operation of parking lots of parking garages; and (ii) the number of parking lots of parking garages operated on properties owned by the Company and its Consolidated Subsidiaries. "CONSOLIDATED SUBSIDIARY" means, at any date, in respect of any person, a Subsidiary of such Person which is or should be consolidated with such Person in its consolidated financial statements prepared as of such date. "DEFAULT" means an event or condition the occurrence or existence of which would, with the lapse of time or the giving of notice or both, become an Event of Default. 64 - 59 - "DEFAULT RATE" means that rate of interest that is 2% per annum above the rate of interest stated in clause (a) of the first paragraph of the Notes. "DISTRIBUTIONS" means (i) any dividend or other distribution on issued shares of the Company or any of its Subsidiaries; (ii) the purchase, redemption or retirement of any issued shares of the Company or any of its Subsidiaries redeemed or purchased by the Company or any such Subsidiary, as the case may be, or any payments made under any employee stock option agreement; (iii) any consulting fee, management fee or management bonus paid or payable to any director, officer, shareholder or Affiliate of the Company or any of its Subsidiaries or any Person not dealing at arm's length with the Company or any of its Subsidiaries or their respective directors, officers, shareholders or Affiliates; or (iv) any payment on account of any principal and interest on any loans or advances owing at any time by the Company or any of its Subsidiaries to any of their respective directors, officers, shareholders or Affiliates. "ENVIRONMENTAL LAWS" means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including but not limited to those related to hazardous substances or wastes, air emissions and discharges to waste or public systems. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect. "ERISA AFFILIATE" means any trade or business (whether or not incorporated) that is treated as a single employer together with the Company under section 414 of the Code. "EVENT OF DEFAULT" is defined in SECTION 11. "GAAP" means, at any time, accounting principles generally accepted in Canada as recommended in the Handbook of the Canadian Institute of Chartered Accountants at the relevant time applied on a consistent basis. "GOVERNMENTAL AUTHORITY" means (a) the government of 65 - 60 - (i) the United States of America or Canada or any State or other political subdivision thereof, or (ii) any jurisdiction in which the Company or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of the Company or any Subsidiary, or (b) any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government. "GUARANTORS" mean Advanced Parking Systems Ltd., Imperial Parking (U.S.), Inc., Imperial Parking, Inc., The Park-Ur-Self System, Inc., Robbins Parking Service Ltd., 504463 N.B. Inc. and Imperial Parking (Asia) Limited. "GUARANTY" means, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any indebtedness, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including (without limitation) obligations incurred through an agreement, contingent or otherwise, by such Person: (a) to purchase such indebtedness or obligation or any property constituting security therefor; (b) to advance or supply funds (i) for the purchase or payment of such indebtedness or obligation, or (ii) to maintain any working capital or other balance sheet condition or any income statement condition of any other Person or otherwise to advance or make available funds for the purchase or payment of such indebtedness or obligation; (c) to lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such indebtedness or obligation of the ability of any other Person to make payment of the indebtedness or obligation; or (d) otherwise to assure the owner of such indebtedness or obligation against loss in respect thereof. In any computation of the indebtedness or other liabilities of the obligor under any Guaranty, the indebtedness or other obligations that are the subject of such Guaranty shall be assumed to be direct obligations of such obligor. 66 - 61 - "HAZARDOUS MATERIAL" means any and all pollutants, toxic or hazardous wastes or any other substances that might pose a hazard to health or safety, the removal of which may be required or the generation, manufacture, refining, production, processing, treatment, storage, handling, transportation, transfer, use, disposal, release, discharge, spillage, seepage, or filtration of which is or shall be restricted, prohibited or penalized by any applicable law (including, without limitation, asbestos, urea formaldehyde foam insulation and polycholorinated biphenyls). "HOLDER" means, with respect to any Note, the Person in whose name such Note is registered in the register maintained by the Company pursuant to SECTION 13.1. "INDEBTEDNESS" with respect to any Person means, at any time, without duplication, (a) its liabilities for borrowed money and its redemption obligations in respect of mandatorily redeemable Preferred Stock; (b) its liabilities for the deferred purchase price of property acquired by such Person (excluding accounts payable arising in the ordinary course of business but including all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property); (c) all liabilities appearing on its balance sheet in accordance with GAAP in respect of Capital Leases; (d) all liabilities for borrowed money secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities); (e) all its liabilities in respect of letters of credit or instruments serving a similar function issued or accepted for its account by banks and other financial institutions (whether or not representing obligations for borrowed money); (f) Swaps of such Person; and (g) any Guaranty of such Person with respect to liabilities of a type described in any of clauses (a) through (f) hereof. 67 - 62 - Indebtedness of any Person shall include all obligations of such Person of the character described in clauses (a) through (e) to the extent such Person remains legally liable in respect thereof notwithstanding that any such obligation is deemed to be extinguished under GAAP. "INSTITUTIONAL INVESTOR" means (a) any original purchaser of a Note, (b) any holder of a Note holding more than 25% of the aggregate principal amount of the Notes then outstanding, and (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form. "INTEREST COVERAGE RATIO" means (i) for the periods beginning on April 1, 1997 and ending on the last day of each fiscal quarter up to and including the fiscal quarter ended March 31, 1998, the ratio of Annualized Consolidated EBITDA less Annualized Capital Expenditures to Annualized Consolidated Cash Interest Charges; and (ii) for any fiscal quarter after the fiscal quarter ended March 31, 1998, the ratio of Consolidated EBITDA less capital expenditures to Consolidated Cash Interest Charges for the twelve month period ending on the least day of such fiscal quarter. "LEVERAGE RATIO" means (i) for periods beginning on April 1, 1997 and ending on the last day of each fiscal quarter up to and including the fiscal quarter ended March 31, 1998, the ratio of Consolidated Indebtedness to Annualized Consolidated EBITDA; and (ii) for any fiscal quarter thereafter, the ratio of Consolidated Indebtedness to Consolidated EBITDA for the twelve month period ending on the last day of such fiscal quarter. "LIEN" means, with respect to any Person, any mortgage, lien, pledge, charge, security interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention agreement or Capital Lease, upon or with respect to any property or asset of such Person (including in the case of stock, stockholder agreements, voting trust agreements and all similar arrangements). "MAKE-WHOLE AMOUNT" is defined in SECTION 8.6. "MATERIAL" means material in relation to the business, operations, affairs, financial condition, assets, properties, or prospects of the Company and its 68 - 63 - Subsidiaries taken as a whole. "MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the business, operations, affairs, financial condition, assets or properties of the Company and its Subsidiaries taken as a whole, or (b) the ability of the Company to perform its obligations under this Agreement and the Notes, or (c) the validity or enforceability of this Agreement or the Notes. "MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan" (as such term is defined in section 4001(a)(3) of ERISA). "NOTE DOCUMENTS" mean the Notes, the Agreement, the Subsidiary Guaranty and the Security Agreement. "NOTES" is defined in SECTION 1. "OBLIGATIONS" means any principal (including reimbursement obligations and guarantees), premium, if any, interest (including interest accruing on or after the filing of, or which would have occurred but for the filing of, any petition in bankruptcy or for reorganization relating to the Company whether or not a claim for post-filing interest is allowed in such proceedings) penalties, fees, expenses, indemnifications, reimbursements, claims for recision, damages, gross-up payments and all other amounts and other liabilities payable under the Note Documents or otherwise. "OFFICER'S CERTIFICATE" means a certificate of a Senior Financial Officer or of any other officer of the Company whose responsibilities extend to the subject matter of such certificate. "PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto. "PERMITTED JUNIOR PAYMENTS" mean a payment or distribution in the form of equity securities or subordinated securities of the Company or any successor obligor with respect to the Notes provided for by a plan of reorganization or readjustment that, in the case of any such subordinated securities, are subordinate in right of payment to all Permitted Senior Indebtedness that may at the time be outstanding to substantially the same or a greater extent than, the Obligations are so subordinated as provided herein. "PERMITTED LIENS" means any one or more of the following: 69 - 64 - a. Liens for taxes, rates, assessments or governmental charges or levies not at the time due and delinquent or the validity of which is being contested at the time by the Company in good faith by proper legal proceedings; b. Liens resulting from any judgment rendered or claim filed against the Company which the Company shall be contesting in good faith by proper legal proceedings; c. undetermined or inchoate Liens which have not at such time been filed or registered pursuant to law against the Company or which relate to obligations not due or delinquent; d. Liens affecting real property which are (i) title defects or irregularities of a minor nature; or (ii) restrictions, easements, rights-of-way, servitudes or other similar rights in land (including, without restriction, rights-of-way and servitudes for railways, sewers, drains, gas and oil pipelines, gas and water mains, electric light and power and telephone or telegraph or cable television conduits, poles, wires, cables or other incidental equipment) granted to or reserved by other Persons; in each case where such Liens in the aggregate do not materially impair the usefulness of the property for the purposes for which it is held and mortgages of and other Liens against the said easements, rights-of-way, servitudes or other similar rights in real property; e. Liens or deposits in connection with bids, tenders, contracts or expropriation proceedings of the Company or to secure workers' compensation, unemployment insurance or other similar statutory assessments, or to secure costs of litigation when required by law, and surety or appeal bonds in connections with such litigation; f. mechanic's, warehouseman's, carriers' or other similar common law liens or privileges, where the action to enforce the same has not proceeded to final judgment, is being defended in good faith by the Company and by appropriate proceedings and in respect of which it shall have set aside on its books reserves deemed by it to be adequate therefor; g. any other liens or privileges or other title irregularities, encroachments or encumbrances of a nature similar to the foregoing which are of a minor nature and will not in the aggregate materially and adversely affect the use of the property for the purpose for which it is held by the Company or any of its Subsidiaries; 70 - 65 - h. Liens in favour of the holders of the Permitted Senior Indebtedness; i. Purchase Money Mortgages, securing Indebteness, in an aggregate amount not to exceed Cdn. $1,000,000; and j. other Liens in an aggregate amount not to exceed Cdn. $50,000. "PERMITTED MARKETABLE SECURITIES" means any securities held by the Company or any of its Subsidiaries which are publicly traded on a recognized stock exchange and do not represent greater than 5% of the issued and outstanding securities of the issuing corporation and any fixed income securities for which a public market exists. "PERMITTED SENIOR INDEBTEDNESS" means Indebtedness outstanding from time to time pursuant to the Amended and Restated Credit Agreement dated as of April 17, 1997 among the Company (by amalgamation with Imperial Parking Limited), 504463 N.B. Inc., the financial institutions party thereto and BT Bank of Canada, as agent, including all Accomodations (as defined in the Amended and Restated Credit Agreement) and interest, fees, expenses and other amounts owed pursuant thereto or contemplated thereby, as such amounts are reduced from time to time. "PERSON" means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof. "PLAN" means an "employee benefit plan" (as defined in section 3(3) of ERISA) that is or, within the preceding five years, has been established or maintained, or to which contributions are or, within the preceding five years, have been made or required to be made, by the Company or any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate may have any liability. "PREFERRED STOCK" means any class of capital stock of a corporation that is preferred over any other class of capital stock of such corporation as to the payment of dividends or the payment of any amount upon liquidation or dissolution of such corporation. "PROPERTY" or "PROPERTIES" means, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate. 71 - 66 - "PURCHASE MONEY MORTGAGE" means any Lien charging property acquired by the Company, which is or has been granted or assumed by the Company or which arises by operation of law in favour of the transferor substantially concurrently with and for the purpose of the acquisition of such property, in each case where (i) the principal amount secured by such Lien is not in excess of the cost to the Company of the property acquired; and (ii) such Lien extends only to the property acquired. "REQUIRED HOLDERS" means, at any time, the holders of at least 66-2/3% in principal amount of the Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates). "RESPONSIBLE OFFICER" means any Senior Financial Officer and any other officer of the Company with responsibility for the administration of the relevant portion of this agreement. "SECURITIES ACT" means the Securities Act of 1933, as amended from time to time. "SECURITY AGREEMENT" means the security agreement dated the date of Closing issued by the Guarantors. "SENIOR FINANCIAL OFFICER" means the chief financial officer, principal accounting officer, treasurer or comptroller of the Company. "SUBSIDIARY" means, as to any Person, any corporation, association or other business entity in which such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the absence of contingencies, to elect a majority of the directors (or Persons performing similar functions) of such entity, and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is owned by such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries (unless such partnership can and does ordinarily take major business actions without the prior approval of such Person or one or more of its Subsidiaries). Unless the context otherwise clearly requires, any reference to a "Subsidiary" is a reference to a Subsidiary of the Company. "SUBSIDIARY GUARANTY" means the guaranty dated the date of Closing issued by the Guarantors. 72 - 67 - "SWAPS" means, with respect to any Person, payment obligations with respect to interest rate swaps, currency swaps and similar obligations obligating such Person to make payments, whether periodically or upon the happening of a contingency. For the purposes of this Agreement, the amount of the obligation under any Swap shall be the amount determined in respect thereof as of the end of the then most recently ended fiscal quarter of such Person, based on the assumption that such Swap had terminated at the end of such fiscal quarter, and in making such determination, if any agreement relating to such Swap provides for the netting of amounts payable by and to such Person thereunder or if any such agreement provides for the simultaneous payment of amounts by and to such Person, then in each such case, the amount of such obligation shall be the net amount so determined. "WHOLLY-OWNED SUBSIDIARY" means, at any time, any Subsidiary one hundred percent (100%) of all of the equity interests (except directors' qualifying shares) and voting interests of which are owned by any one or more of the Company and the Company's other Wholly-Owned Subsidiaries at such time. 73 - 68 - SCHEDULE 5.14 ------------- USE OF PROCEEDS --------------- The Company shall use the proceeds of the Notes solely to acquire the shares of Imperial Holdings No. 2 Inc. pursuant to that certain Share Purchase Agreement dated as of February 18, 1997, as amended to and including April 15, 1997. 74 - 69 - NOTE 3357392 CANADA INC. SENIOR SUBORDINATED PARTIAL PIK NOTES DUE APRIL 17, 2009 No.1 Cdn. $55,000,000 April 17, 1997 FOR VALUE RECEIVED, the undersigned, 3357392 CANADA INC. (herein called the "Company"), a corporation duly organized and validly existing under the laws of the Province of Ontario hereby promises to pay to 3006302 NOVA SCOTIA COMPANY, or registered assigns, the principal sum of FIFTY-FIVE MILLION DOLLARS (Cdn.$55,000,000) on April 17, 2009, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of 12% per annum from the date hereof, payable quarterly, on March 31, June 30, September 30 and December 31 of each year, commencing with June 30, 1997, payable in cash at a rate of 4% per annum and the balance of such interest payable in additional Senior Subordinated Partial PIK Notes due April 17, 2009 ("Additional Notes"), substantially in the form hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest and any overdue payment of any Make-Whole Amount (as defined in the Note Purchase Agreements referred to below), payable quarterly as aforesaid (or, at the option of the registered holder hereof, on demand), in cash at a rate per annum from time to time equal to 14%. Payments of principal of, interest (except for interest payable in Additional Notes as herein provided) on and any Make-Whole Amount with respect to this Note are to be made in lawful money of Canada at Toronto, Ontario or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreements referred to below. This Note is one of a series of the Company's Senior Subordinated Partial PIK Notes due April 17, 2009 (herein called the "Notes") issued pursuant to one or more separate Note Purchase Agreements, dated as of April 17, 1997 (as from time to time amended, the "Note Purchase Agreements"), between the Company and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this 75 - 70 - Note will be deemed, by its acceptance hereof, (i) to have agreed to the subordination provisions set forth in SECTION 14 of the Note Purchase Agreements and (ii) to have made the representation set forth in SECTION 2 of the Note Purchase Agreements. This Note is a registered Note and, as provided in the Note Purchase Agreements, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder's attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary. This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise. If an Event of Default, as defined in the Note Purchase Agreements, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreements. This Note shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State. 3357392 CANADA INC. By: /s/ Authorized Signer Title: 76 - 71 - EXHIBIT 11(e)-2 FORM OF OPINION OF SPECIAL COUNSEL TO THE COMPANY Matters To Be Covered In Opinion of Special Counsel To the Company - ----------------------------------------- 1. Each of the Company and its Subsidiaries being duly incorporated, validly existing and in good standing and having requisite corporate power and authority to issue and sell the Notes and to execute and deliver the documents. 2. Each of the Company and its Subsidiaries being duly qualified and in good standing as a foreign corporation in appropriate jurisdictions. 3. Due authorization and execution of the documents and such documents being legal, valid, binding and enforceable. 4. No conflicts with charter documents, laws or other agreements. 5. All consents required to issue and sell the Notes and to execute and deliver the documents having been obtained. 6. No litigation questioning validity of documents. 7. The Notes not requiring registration under the Securities Act of 1933, as amended; no need to qualify an indenture under the Trust Indenture Act of 1939, as amended. 8. No violation of Regulations G, T or X of the Federal Reserve Board. 9. Company not an "investment company", or a company "controlled" by an "investment company", under the Investment Company Act of 1940, as amended. EX-10.F 8 EXHIBIT 10.F 1 Exhibit 10f 504463 N.B. INC. Cdn. $9,166,666 Senior Subordinated Partial PIK Notes due April 17, 2009 ------------------------- NOTE PURCHASE AGREEMENT ------------------------- Dated April 17, 1997 2
TABLE OF CONTENTS Page 1. AUTHORIZATION OF NOTES 1 2. SALE AND PURCHASE OF NOTES 1 3. CLOSING 1 4. CONDITIONS TO CLOSING 2 4.1. Representations and Warranties 2 4.2. Performance; No Default 2 4.3. Compliance Certificates 2 4.4. Notes 3 4.5. Opinion of Counsel 3 4.6. Purchase Permitted By Applicable Law, etc. 3 4.7. Changes in Corporate Structure 4 4.8. Proceedings and Documents 4 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 4 5.1. Organization; Power and Authority 4 5.2. Authorization, etc. 4 5.3. Disclosure 5 5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates 5 5.5. Property 6 5.6. Compliance with Laws, Other Instruments, etc. 7 5.7. Governmental Authorizations, etc. 7 5.8. Litigation; Observance of Agreements, Statutes and Orders 8 5.9. Taxes 8 5.10. Title to Property; Leases. 8 5.11. Licenses, Permits, etc. 9 5.12. Pension Plans 9 5.13. Private Offering by the Company 9 5.14. Use of Proceeds; Margin Regulations 9 5.15. Existing Indebtedness, Future Liens 10 5.16. Foreign Assets Control Regulations, etc. 10 5.17. Status under Certain Statutes 10 5.18. Environmental Matters 11 5.19. Material Agreements 11 5.20. Books and Records 11
3 6. REPRESENTATIONS OF THE PURCHASER 12 6.1. Purchase for Investment 12 6.2. Source of Funds 12 7. INFORMATION AS TO COMPANY 12 7.1. Financial and Business Information 12 7.2. Officer's Certificate 17 7.3. Inspection 17 8. PAYMENT OF THE NOTES 18 8.1. Required Repayments 18 8.2. Optional Prepayments with Make-Whole Amount 18 8.3. Allocation of Partial Prepayments 19 8.4. Maturity; Surrender, etc. 19 8.5. Purchase of Notes 19 8.6. Make-Whole Amount 19 9. AFFIRMATIVE COVENANTS 21 9.1. Compliance with Law 21 9.2. Insurance 21 9.3. Maintenance of Properties 22 9.4. Payment of Taxes and Claims 22 9.5. Corporate Existence, etc. 22 9.6. Maintenance of Net Worth. 23 9.7. Maintenance of Consolidated Indebtedness to Net Worth Ratio. 23 9.8. Maintenance of Interest Coverage Ratio. 23 9.9. Maintenance of Leverage Ratio. 23 9.10. Maintenance of Parking Contracts. 23 9.11. Further Assurances 23 10. NEGATIVE COVENANTS 24 10.1. Transactions with Affiliates 24 10.2. Merger, Consolidation, etc. 24 10.3. Indebtedness 25 10.4. Liens 25 10.5. Disposal of Assets Generally 25 10.6. Change in Business 25 10.7. Distributions 25
4 10.8. Investments 26 10.9. Lease-Backs 26 10.10. Subsidiaries 26 10.11. Maintenance and Ownership of Subsidiaries 26 10.12. Compromise of Accounts. 27 11. EVENTS OF DEFAULT 27 12. REMEDIES ON DEFAULT, ETC. 30 12.1. Acceleration 30 12.2. Other Remedies 31 12.3. Rescission 31 12.4. No Waivers or Election of Remedies, Expenses, etc. 32 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES. 32 13.1. Registration of Notes. 32 13.2. Transfer and Exchange of Notes. 32 13.3. Replacement of Notes. 33 14. SUBORDINATION 33 14.1. Notes Subordinated to Permitted Senior Indebtedness 33 14.2. Payment Over of Proceeds Upon Bankruptcy 34 14.3. Suspension of Payments When Permitted Senior Indebtedness in Default 35 14.4. Payment Permitted If No Default 36 14.5. Subrogation to Rights of Holders of Permitted Senior Indebtedness 36 14.6. Provisions Solely to Define Relative Rights 37 14.7. Payments Held in Trust 38 14.8. No Waiver of Subordination Provisions 38 14.9. Reliance on Judicial Order or Certificate of Liquidating Agent 38 15. PAYMENTS ON NOTES 39 15.1. Place of Payment. 39 15.2. Home Office Payment. 39 16. EXPENSES, ETC. 40 16.1. Transaction Expense. 40 16.2. Survival 40 17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT 40
5 18. AMENDMENT AND WAIVER. 41 18.1. Requirements. 41 18.2. Solicitation of Holders of Notes 41 18.3. Binding Effect, etc. 42 18.4. Notes held by Company, etc. 42 19. NOTICES 42 20. REPRODUCTION OF DOCUMENTS 43 21. SUBSTITUTION OF PURCHASER 43 22. MISCELLANEOUS 44 22.1. Successors and Assigns 44 22.2. Payments Due on Non-Business Days. 44 22.3. Severability 44 22.4. Construction 44 22.5. Counterparts 44 22.6. Governing Law 45 SCHEDULES/EXHIBITS Schedule A Information Relating to Purchasers Schedule B Defined Terms Schedule 5.4 Subsidiaries Schedule 5.5 Property Schedule 5.8 Litigation Schedule 5.14 Use of Proceeds Schedule 5.15 Existing Indebtedness Schedule 5.19 Material Agreements Exhibit 1 Form of Note Exhibit 4.5 Form of Subsidiary Guaranty Exhibit 11(e)-1 Form of Security Agreement Exhibit 11(e)-2 Form of Opinion of Counsel to the Company
6 504463 N.B. INC. 601 West Cordova Street, Suite 300 Vancouver, B.C. V6B 1G1 Canada Senior Subordinated Partial PIK Notes due April 17, 2009 April 17, 1997 TO EACH OF THE PURCHASERS LISTED IN THE ATTACHED Schedule A: Ladies and Gentlemen: 504463 N.B. Inc., a corporation duly organized and validly existing under the laws of the Province of New Brunswick (the "Company"), agrees with you as follows: 1. AUTHORIZATION OF NOTES. The Company will authorize the issue and sale of Cdn. $9,166,666 aggregate original principal amount of its Senior Subordinated Partial PIK Notes due April 17, 2009 (the "Notes", such term to include any such notes issued in substitution therefor pursuant to SECTION 13 of this Agreement (as hereinafter defined) and Additional Notes issued in payment of interest thereon). The Notes shall be substantially in the form set out in EXHIBIT 1, with such changes therefrom, if any, as may be approved by you and the Company. Certain capitalized terms used in this Agreement are defined in SCHEDULE B; references to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement. 2. SALE AND PURCHASE OF NOTES. Subject to the terms and conditions of this Agreement, the Company will issue and sell to you and you will purchase from the Company, at the Closing provided for in SECTION 3, Notes in the principal amount specified opposite your name in SCHEDULE A at the purchase price of 100% of the principal amount thereof. 7 - 2 - 3. CLOSING. The sale and purchase of the Notes to be purchased by you shall occur at the offices of Fasken Campbell Godfrey, 42nd Floor, Toronto-Dominion Bank Tower, Tower, Toronto, Ontario, Canada M5K 1N6, at 8:00 a.m., Toronto time, at a closing (the "Closing") on April 17, 1997 or on such other Business Day thereafter on or prior to May 30, 1997 as may be agreed upon by the Company and you. At the Closing the Company will deliver to you the Notes to be purchased by you in the form of a single Note (or such greater number of Notes in denominations of at least Cdn. $1,000,000 as you may request) dated the date of the Closing and registered in your name (or in the name of your nominee), against delivery by you to the Company or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds for the account of the Company to account number 45-81113 at Canadian Imperial Bank of Commerce. If at the Closing the Company shall fail to tender such Notes to you as provided above in this SECTION 3, or any of the conditions specified in SECTION 4 shall not have been fulfilled to your satisfaction, you shall, at your election, be relieved of all further obligations under this Agreement, without thereby waiving any rights you may have by reason of such failure or such nonfulfillment. 4. CONDITIONS TO CLOSING. Your obligation to purchase and pay for the Notes to be sold to you at the Closing is subject to the fulfillment to your satisfaction, prior to or at the Closing, of the following conditions: 4.1. Representations and Warranties. The representations and warranties of the Company in this Agreement shall be correct when made and at the time of the Closing. 4.2. Performance; No Default. The Company shall have performed and compiled with all agreements and conditions contained in this Agreement required to be performed or compiled with by it prior to or at the Closing and after giving effect to the issue and sale of the Notes (and the application of the proceeds thereof as contemplated by SCHEDULE 5.14) no Default or Event of Default shall have occurred and be continuing. 4.3. Compliance Certificates. 8 - 3 - (a) OFFICER'S CERTIFICATE. The Company shall have delivered to you an Officer's Certificate, dated the date of the Closing, certifying that the conditions specified in Sections 4.1 and 4.2 have been fulfilled. (b) SECRETARY'S CERTIFICATES. The Company and each Guarantor shall have delivered to you a certificate certifying as to (i) the charter and by-laws of the Company and each Guarantor, (ii) the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of the Notes and the Note Documents, and (iii) the incumbency of the officers authorized to sign the Notes and the Note Documents. (c) GOOD STANDING CERTIFICATE. Each of the Company and the Guarantors shall have delivered a certificate of status, compliance, good standing or like certificate issued by the appropriate government officials of its jurisdiction of incorporation. 4.4. Notes. The Company shall have delivered to you the Notes duly executed. 4.5. Subsidiary Guaranty. You shall have received the duly executed Subsidiary Guaranty substantially in the form of EXHIBIT 4.5. 4.6. Purchase Permitted By Applicable Law, etc. On the date of the Closing your purchase of Notes shall (i) be permitted by the laws and regulations of each jurisdiction to which you are subject, without recourse to provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (ii) not violate any applicable law or regulation (including, without limitation, Regulation G, T or X of the Board of Governors of the Federal Reserve System) and (iii) not subject you to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof. If requested by you, you shall have received an Officer's Certificate certifying as to such matters of fact as you may reasonably specify to enable you to determine whether such purchase is so permitted. 4.7. Changes in Corporate Structure. The Company shall not have changed its jurisdiction of incorporation or been a party to any merger or consolidation and shall not have succeeded to all or any substantial part of the liabilities 9 - 4 - of any other entity, at any time following the date of the most recent financial statements provided to you. 4.8. Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be satisfactory to you and your special counsel, and you and your special counsel shall have received all such counterpart originals or certified or other copies of such documents as you or they may reasonably request. 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to you that: 5.1. Organization; Power and Authority. The Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, and is duly qualified as a foreign corporation and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company has the corporate power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver this Agreement and the Notes and to perform the provisions hereof and thereof. 5.2. Authorization, etc. (a) This Agreement and the Notes have been duly authorized by all necessary corporate action on the part of the Company, and this Agreement constitutes, and upon execution and delivery thereof each Note will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). (b) The Subsidiary Guaranty and the Security Agreement have been duly authorized by all necessary corporate action on the part of each Guarantor, and upon execution and delivery thereof the Subsidiary Guaranty and the Security Agreement will constitute, legal, valid and binding obligations of each Guarantor enforceable against each Guarantor in accordance with their respective terms, except as such enforceability may be limited by (i) applicable bankruptcy, 10 - 5 - insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 5.3. Disclosure. You have had the opportunity to conduct a review of the Company's records and meet with representatives of the Company. The Company has responded in all material respects to all requests for information and has accurately answered all questions concerning the assets, properties, liabilities, financial condition, business or prospects of the Company and its Subsidiaries. All forecasts and projections supplied on behalf of the Company were prepared in good faith, adequately disclosed all assumptions relevant thereto and are reasonable estimates (at the date hereof) of the prospects for the business of the Company and its Subsidiaries. This Agreement, the documents, certificates or other writings delivered to you by or on behalf of the Company in connection with the transactions contemplated hereby and the financial statements delivered to you, taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made. Since the date of the last financial statements delivered to you, there has been no change in the financial condition, operations, business, properties or prospects of the Company or any Subsidiary except changes that individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect. There is no fact known to the Company that could reasonably be expected to have a Material Adverse Effect that has not been set forth herein or in the other documents, certificates and other writings delivered to you by or on behalf of the Company specifically for use in connection with the transactions contemplated hereby. 5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates. (a) SCHEDULE 5.4 contains (except as noted therein) complete and correct list of the Company's Subsidiaries as of the acquisition referenced on SCHEDULE 5.14, showing, as to each Subsidiary, the correct name thereof, the jurisdiction of its organization, and the percentage of shares of each class of its capital stock or similar equity interests outstanding owned by the Company and each other Subsidiary. (b) All of the outstanding shares of capital stock or similar equity interests of each Subsidiary shown in SCHEDULE 5.4 as being owned by the Company and its Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Company or another Subsidiary free and clear of any Lien (except as otherwise disclosed in SCHEDULE 5.4). (c) Each Subsidiary identified in SCHEDULE 5.4 is a corporation or other legal entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and is in good standing in each 11 - 6 - jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each such Subsidiary has the corporate or other power and authority to own or hold under lease the properties it purports to own or hold under lease and to transact the business it transacts and proposes to transact and each Subsidiary which is a party to the Subsidiary Guaranty and the Security Agreement has the power and authority to execute and deliver the Subsidiary Guaranty and the Security Agreement and to perform the provisions thereof. (d) No Subsidiary is a party to, or otherwise subject to any legal restriction or any agreement (other than this Agreement, the agreements listed on SCHEDULE 5.4 and customary limitations imposed by corporate law statutes) restricting the ability of such Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Company or any of its Subsidiaries that owns outstanding shares of capital stock or similar equity interests of such Subsidiary. 5.5. Property. There are no outstanding work orders requiring, in aggregate, expenditures exceeding Cdn. $50,000 relating to the properties of the Company or any Subsidiary from or required by any police or fire department, sanitation, health, environmental or factory authorities or from any other federal, provincial or municipal authority, nor are any matters relating to the properties of the Company or any Subsidiary under discussion with any such departments or authorities relating to work orders which could reasonably be expected to result in expenditures exceeding Cdn. $50,000. As at the date hereof, no part of the properties of the Company or any Subsidiary or the buildings and fixtures located thereon has been taken or expropriated by any federal, provincial, municipal or other competent authority nor has any written notice or proceeding in respect thereof been delivered to the Company or any of its Subsidiaries nor is the Company aware of any intent or proposal to give any such notice or commence any proceedings. Except for Permitted Liens or as specified in SCHEDULE 5.5, to the knowledge of the Company, the buildings and fixtures are located entirely within the properties of the Company or any Subsidiary in conformity with applicable set-back and coverage requirements and no dwellings of abutting owners encroach upon the properties. 5.6. Compliance with Laws, Other Instruments, etc. (a) The execution, delivery and performance by the Company of this Agreement and the Note will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of the Company or any Subsidiary under, any indenture, mortgage, deed or trust, loan purchase or credit agreement, lease, corporate charter or by-laws, or any other agreement or instrument to which the Company or any Subsidiary is bound or by which the Company or any Subsidiary or any of their respective properties may be bound or 12 - 7 - affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to the Company or any Subsidiary or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company or any Subsidiary. (b) The execution, delivery and performance by the Guarantors of the Subsidiary Guaranty and the Security Agreement will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of any of the Guarantors under, any indenture, mortgage, deed or trust, loan purchase or credit agreement, lease, corporate charter or by-laws, or any other agreement or instrument to which any of the Guarantors is bound or by which any of the Guarantors or any of their respective properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to any of the Guarantors or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to any of the Guarantors. 5.7. Governmental Authorizations, etc. No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by the Company or any Guarantor of any Note Document. 5.8. Litigation; Observance of Agreements, Statutes and Orders. (a) Except as disclosed in SCHEDULE 5.8, there are no actions, suits or proceedings pending or, to the knowledge of the Company, threatened against or affecting the Company or any Subsidiary or any property of the Company or any Subsidiary in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. (b) Neither the Company nor any Subsidiary is in default under any term of any agreement or instrument to which it is a party or by which it is bound, or any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or is in violation of any applicable law, ordinance, rule or regulation (including without limitation Environmental Laws) of any Governmental Authority, which default or violation, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. 5.9. Taxes. The Company and its Subsidiaries have filed all tax returns that are required to have been filed in any jurisdiction, and have paid all taxes shown to be due and payable on such returns and all 13 - 8 - other taxes and assessments levied upon them or their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for any taxes and assessments (i) the amount of which is not individually or in the aggregate Material or (ii) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which the Company or a Subsidiary, as the case may be, has established adequate reserves in accordance with GAAP. The Company knows of no basis for any other tax or assessment that could reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of Federal, state, province, foreign or other taxes for all fiscal periods are adequate. 5.10. Title to Property; Leases. The Company and its Subsidiaries have good and sufficient title to their respective properties that individually or in the aggregate are Material, in each case free and clear of Liens prohibited by this Agreement. All leases that individually or in the aggregate are Material, are valid and subsisting and are in full force and effect in all material respects and all material amounts owing thereunder have been paid by the Company or its Subsidiary. 5.11. Licenses, Permits, etc. (a) The Company and its Subsidiaries own or possess all licenses, permits, franchises, authorizations, patents, copyrights, service marks, trademarks and trade names, or rights thereto, that individually or in the aggregate are Material, without known conflict with the rights of others; (b) to the best knowledge of the Company, no product of the Company infringes in any material respect any license, permit, franchise, authorization, patent, copyright, service mark, trademark, trade name or other right owned by any other Person; and (c) to the best knowledge of the Company, there is no Material violation by any Person of any right of the Company or any of its Subsidiaries with respect to any patent, copyright, service mark, trademark, trade name or other right owned or used by the Company or any of its Subsidiaries. 5.12. Pension Plans. Neither the Company nor any of its Subsidiaries has ever maintained or contributed to any pension plans or beneficial plans including, without limitation, (i) a multi-employer plan as defined under Section 3(37) of ERISA; (ii) a defined benefit plan as defined under Section 3(35) of ERISA; or (iii) a plan to which Section 302 of ERISA or Section 417 of the Internal Revenue Code of the United States of America applies. 14 - 9 - 5.13. Private Offering by the Company. Neither the Company nor anyone acting on its behalf has offered the Notes or any similar securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any person other than you and not more than two other Institutional Investors, each of which has been offered the Notes at a private sale for investment. Neither the Company nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Notes to the registration requirements under applicable securities laws. 5.14. Use of Proceeds; Margin Regulations. The Company will apply the proceeds of the sale of the Notes solely as set forth in SCHEDULE 5.14 and for no other purpose. No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation G of the Board of Governors of the Federal Reserve System (12 CFR 207), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve the Company in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin stock does not constitute more than 5% of the value of the consolidated assets of the Company and its Subsidiaries and the Company does not have any present intention that margin stock will constitute more than 5% of the value of such assets. As used in this Section, the terms "margin stock" and "purpose of buying or carrying" shall have the meanings assigned to them in said Regulation G. 5.15. Existing Indebtedness, Future Liens. (a) Except as described therein, SCHEDULE 5.15 sets forth a complete and correct list of all outstanding Indebtedness of the Company and its Subsidiaries as of the date hereof. Neither the Company nor any Subsidiary is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Indebtedness of the Company or such Subsidiary and no event or condition exists with respect to any Indebtedness of the Company or any Subsidiary that would permit (or that with notice or other lapse of time, or both, would permit) one or more Persons to cause such Indebtedness to become due and payable before its stated maturity or before its regularly scheduled dates of payment. (b) Except as disclosed in SCHEDULE 5.15, neither the Company nor any Subsidiary has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien other than Permitted Liens. 15 - 10 - 5.16. Foreign Assets Control Regulations, etc. Neither the sale of the Notes by the Company hereunder nor its use of the proceeds thereof will violate the Trading with the Enemy Act, as amended, or any of the foreign asset control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto. 5.17. Status under Certain Statutes. Neither the Company nor any Subsidiary is subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935, as amended, the Interstate Commerce Act, as amended, or the Federal Power Act, as amended. 5.18. Environmental Matters. Neither the Company nor any Subsidiary has knowledge of any claim or has received any notice of any claim, and no proceeding has been instituted raising any claim against the Company or any of its Subsidiaries or any of their respective real properties now or formerly owned, leased or operated by any of them or other assets, alleging any damage to the environment or violation of the Environmental Laws, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect. Except as otherwise disclosed to you in writing, (a) neither the Company nor any Subsidiary has knowledge of any facts which would give rise to any claim, public or private, of violation of Environmental Laws or damage to the environment emanating from, occurring on or in any way related to real properties now or formerly owned, leased or operated by any of them or to other assets or their use, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect; (b) neither the Company nor any of its Subsidiaries has stored any Hazardous Materials on real properties now or formerly owned, leased or operated by any of them and has not disposed of any Hazardous Materials in a manner contrary to any Environmental Laws in each case in any manner that could reasonably be expected to result in a Material Adverse Effect; and (c) all buildings on all real properties now owned, leased or operated by the Company or any of its Subsidiaries are in compliance with applicable Environmental Laws, except where failure to comply could not reasonably be expected to result in a Material Adverse Effect. 5.19. Material Agreements. Neither the Company nor any of its Subsidiaries is a party or otherwise subject to or bound or affected by any agreement or instrument which is material to the business, operations, results of 16 - 11 - operations, assets, liabilities or financial condition of the Company or any of its Subsidiaries taken as a whole ("Material Agreement") except as set out in SCHEDULE 5.19. Except as set forth in SCHEDULE 5.19, all such Material Agreements are in full force and effect, unamended, and none of the Company or any such Subsidiary, or to the best of the Company's knowledge, any other party to any Material Agreement is in material default with respect thereto. 5.20. Books and Records. All books and records of the Company and its Subsidiaries have been fully, properly and accurately kept and completed in accordance with GAAP and there are no material inaccuracies or discrepancies of any kind contained or reflected therein. The Company's and its Subsidiaries' records, systems, controls, data or information are not recorded, stored, maintained, operated or otherwise wholly or partly dependent upon or held by any means (including any electronic, mechanical or photographic process, whether computerized or not) which (including all means of access thereto and therefrom) are not under the direct control of the Company in all material respects. 6. REPRESENTATIONS OF THE PURCHASER. 6.1. Purchase for Investment. You represent that you are purchasing the Notes for your own account and not with a view to the distribution thereof. You understand that the Notes have not been registered under any securities acts and resale may be restricted by applicable securities laws. 6.2. Source of Funds. You represent that the source of funds to be used by you to pay the purchase price of the Notes to be purchased by you hereunder does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA. As used in this Section 6.2, the terms "employee benefit plan", shall have the respective meanings assigned to such terms in Section 3 of ERISA. 7. INFORMATION AS TO COMPANY. 7.1. Financial and Business Information. The Company shall deliver to each holder of Notes that is an Institutional Investor: (a) QUARTERLY STATEMENTS -- within 60 days after the end of each quarterly fiscal period in each fiscal year of the Company (other than the last quarterly fiscal period of each such fiscal year), duplicate copies of, 17 - 12 - (i) a consolidated balance sheet of the Company and its Consolidated Subsidiaries as at the end of such quarter, and (ii) consolidated statements of income, changes in shareholders' equity and cash flows of the Company and its Consolidated Subsidiaries, for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter, setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, and certified by a Senior Financial Officer as fairly presenting, in all material respects, the financial position of the companies being reported on and their results of operations and cash flows, subject to changes resulting from year-end adjustments; (b) ANNUAL STATEMENTS -- within 120 days after the end of each fiscal year of the Company, duplicate copies of, (i) a consolidated balance sheet of the Company and its Consolidated Subsidiaries, as at the end of such year, and (ii) consolidated statements of income, changes in shareholder' equity and cash flows of the Company and its Consolidated Subsidiaries, for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP, and accompanied (A) by an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall state that such financial statements present fairly, in all material respects, the financial position of the companies being reported upon and their results of operations and cash flows and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances, and (B) a certificate of such accountants stating that they have reviewed this Agreement and stating further whether, in making their audit, they have become aware of any condition or event that then constitutes a Default or an Event of Default, and, if they are aware that any such condition or event then exists, specifying the nature and period of the existence thereof (it being understood that such accountants shall not be liable, directly or indirectly, for any failure to obtain knowledge of any Default or Event of Default unless such accountants should have obtained knowledge thereof 18 - 13 - in making an audit in accordance with generally accepted auditing standards or did not make such an audit); (c) FINANCIAL PROJECTIONS -- promptly upon their becoming available and in any event 30 days prior to the end of each fiscal year of the Company, consolidated financial projections, including the balance sheet, income statement and cash flow statements for each of the next 12 months of the next fiscal year together with the detailed budget for such fiscal year providing supplementary detailed schedules as necessary and required by the Required Holders; (d) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- promptly, and in any event within five days after a Responsible Officer becoming aware of the existence of any Default or Event of Default or that any Person has given any notice or taken any action with respect to a claimed default hereunder or that any Person has given any notice or taken any action with respect to a claimed default of the type referred to in SECTION 11(h), a written notice specifying the nature and period of existence thereof and what action the Company is taking or proposes to take with respect thereto; (e) ERISA MATTERS -- promptly, and in any event within ten days after a Responsible Officer becoming aware of any of the following, a written notice setting forth the nature thereof and the action, if any, that the Company or an ERISA Affiliate proposes to take with respect thereto: (i) with respect to any Plan, any reportable event, as defined in section 4043(b) of ERISA and the regulations thereunder, for which notice thereof has not been waived pursuant to such regulations as in effect on the date hereof; or (ii) the taking by the PBGC of steps to institute, or the threatening by the PBGC of the institution of, proceedings under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan; or (iii) any event, transaction or condition that could result in the incurrence of any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if such liability or Lien, taken together with any other such liabilities or Liens then existing, could reasonably be expected to have a Material Adverse Effect; (f) ENVIRONMENTAL REPORTING -- promptly, and in any event within 10 days of each occurrence, (i) a written notice of any proceeding or order before any Governmental Authority requiring the Company or its Subsidiaries to comply with or take action under any Environmental 19 - 14 - Laws where such compliance or action requires expenditures in the amount of Cdn. $500,000 or more, the violation thereof involves the possibility of the imposition of a fine or fines aggregating Cdn. $500,000 or more, the violation thereof involves the possibility of the imposition of a fine or fines aggregating Cdn. $500,000 or more or the closing of any property owned or leased by the Company or any Subsidiary for a period in excess of 48 hours where such closure would have a Material Adverse Effect; and (ii) a written notice of any Material occurrence relating to environmental matters that does not require notification under (i) above, together with each delivery of financial statements pursuant to SECTION 7.1(a) and (b). Such Material occurrences shall include occurrences where any of the Company or its Subsidiaries (iii) receives a written notice or claim to the effect that the Company or any of its Subsidiaries is liable to any Person as a result of the release or threatened release of any Hazardous Material into the environment in, on, under or adjacent to any real estate owned or leased by the Company or any Subsidiary; (iv) receives any written notice that the Company or any of its Subsidiaries is subject to investigation by any Governmental Authority evaluating whether any remedial action is needed to respond to the release or threatened release of any Hazardous Material into the environment in, on, under or adjacent to any real estate owned or leased by the Company or any Subsidiary; (v) receives any written notice that all or any portion of the properties owned or leased by the Company or any Subsidiary is subject to an order or a security interest under or pursuant to any Environmental Law; (vi) receives any written notice of a condition with respect to which might reasonably result in a notice of violation by Company or any Subsidiary of any Environmental Law; (vii) receives any written notice of the commencement of any judicial or administrative proceeding alleging a violation by the Company or any Subsidiary of any Environmental Law with respect to any property owned or leased by the Company or any Subsidiary; or (viii) undertakes any activities as a result of new or proposed changes to any existing Environmental Law that could have a Material Adverse Effect on the condition of Company or any of its Subsidiaries. (g) ADDITIONAL REPORTING REQUIREMENTS -- promptly provide notice in writing of (i) any default, or event, condition or occurrence which with notice or lapse of time, or both, would constitute a default under any agreement in respect of Indebtedness to which the Company or any of its Subsidiaries is a party and under which the Company or any such Subsidiary owes (contingently or otherwise) at least Cdn. $500,000 (or the equivalent amount in any other currency); (ii) from time to time upon request of the Required Holders, evidence of the maintenance of all insurance required to be maintained by SECTION 9.2, including such originals or copies as the Required Holders may request of policies, certificates of insurance, riders and endorsements relating to such insurance and proof of premium payments; and (iii) promptly upon the issuance thereof, copies of all notices, reports, press releases, circulars, offering documents and other documents filed with, or delivered to, the British Columbia Securities Commission or to a similar Governmental Authority in any other jurisdiction with respect to the Company or any Subsidiary. (h) NOTICES FROM GOVERNMENTAL AUTHORITY -- promptly, and in any event within 30 days of receipt thereof, copies of any notice to the Company or any Subsidiary from any Federal or state 20 - 15 - Governmental Authority relating to any order, ruling, statute or other law or regulation that could reasonably be expected to have a Material Adverse Effect; and (i) REQUESTED INFORMATION -- with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Company or any of its Subsidiaries or relating to the ability of the Company to perform its obligations hereunder and under the Notes as from time to time may be reasonably requested by any such holder of Notes. 7.2. Officer's Certificate. Each set of financial statements delivered to a holder of Notes pursuant to SECTION 7.1(a) or SECTION 7.1(b) hereof shall be accompanied by a certificate of a Senior Financial Officer setting forth: (a) COVENANT COMPLIANCE -- the information (including detailed calculations) required in order to establish whether the Company was in compliance with the requirements of SECTION 9.6 through SECTION 9.10 hereof, inclusive, during the quarterly or annual period covered by the statements then being furnished (including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Sections, and the calculation of the amount, ratio or percentage then in existence); and (b) EVENT OF DEFAULT -- a statement that such officer has reviewed the relevant terms hereof and has made, or caused to be made, under his or her supervision, a review of the transactions and conditions of the Company and its Subsidiaries from the beginning of the quarterly or annual period covered by the statements then being furnished to the date of the certificate and that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists (including, without limitation, any such event or condition resulting from the failure of the Company or any Subsidiary to comply with any Environmental Law), specifying the nature and period of existence thereof and what action the Company shall have taken or proposes to take with respect thereto. 7.3. Inspection. The Company shall permit the representatives of each holder of Notes that is an Institutional Investor: (a) NO DEFAULT -- if no Default or Event of Default then exists, at the expense of such holder and upon reasonable prior notice to the Company, to visit the principal executive office of 21 - 16 - the Company, to discuss the affairs, finances and accounts of the Company and its Subsidiaries with the Company's officers, and with the consent of the Company, which consent will not be unreasonably withheld) its independent public accountants, and (with the consent of the Company, which consent will not be unreasonably withheld) to visit the other offices and properties of the Company and each Subsidiary, all at such reasonable times and as often as may be reasonably requested in writing; and (b) DEFAULT -- if a Default or Event of Default then exits, at the expense of the Company to visit and inspect any of the offices or properties of the Company or any Subsidiary, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and independent public accountants (and by this provision the Company authorizes said accountants to discuss the affairs, finances and accounts of the Company and its Subsidiaries), all at such times and as often as may be requested. 8. PAYMENT OF THE NOTES. 8.1. Required Repayments. On April 17, 2007 the Company will repay the principal amount of the Notes outstanding at par plus the accrued interest thereon. 8.2. Optional Prepayments with Make-Whole Amount. The Company may, at its opinion, upon notice as provided below, prepay at any time all, or from time to time any part of, the Notes, in a minimum principal amount of $500,000 or a higher integral multiple of $100,000 at 100% of the principal amount so prepaid, plus the Make-Whole Amount determined for the prepayment date with respect to such principal amount and accrued interest on the amount being prepaid. The Company will give each holder of Notes written notice of each optional prepayment under this SECTION 8.2 not less than 30 days and not more than 60 days prior to the date fixed for such prepayment. Each such notice shall specify such date, the aggregate principal amount of the Notes to be prepaid on such date, the principal amount of each Note held by such holder to be prepaid (determined in accordance with SECTION 8.3), and the interest to be paid on the prepayment date with respect to such principal amount being repaid, and shall be accompanied by a certificate of a Senior Financial Officer as to the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. Two Business Days prior to such prepayment, the Company shall deliver to each holder of Notes a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified prepayment date. 22 - 17 - 8.3. Allocation of Partial Prepayments. In the case of each partial prepayment of the Notes, the principal amount of the Notes to be prepaid shall be allocated among all of the Notes at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment. 8.4. Maturity; Surrender, etc. In the case of each prepayment of Notes pursuant to this SECTION 8, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment, together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount, if any. From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note. 8.5. Purchase of Notes. The Company will not and will not permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except upon the payment or prepayment of the Notes in accordance with the terms of this Agreement and the Notes. The Company will promptly cancel all Notes acquired by it or any Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant to any provision of this Agreement and no Notes may be issued in substitution or exchange for any such Notes. 8.6. Make-Whole Amount. The term "Make-Whole Amount" means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal, PROVIDED that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings: "Called Principal" means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to SECTION 8.2 or has become or is declared to be immediately due and payable pursuant to SECTION 12.1, as the context requires. "Discounted Value" means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal 23 - 18 - from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal. "Reinvestment Yield" means, with respect to the Called Principal of any Note, the yield to maturity implied by (i) the yields reported, as of 10:00 A.M. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as "Page 678" on the Telerate Access Service (or such other display as may replace Page 678 on Telerate Access Service) for actively traded U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or (ii) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable, the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. Such implied yield will be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between (1) the actively traded U.S. Treasury security with the duration closest to and greater than the Remaining Average Life and (2) the actively traded U.S. Treasury security with the duration closest to and less than the Remaining Average Life. "Remaining Average Life" means, with respect to any Called Principal, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years (calculated to the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment. "Remaining Scheduled Payments" means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, PROVIDED that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Notes, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to SECTION 8.2 or 12.1. "Settlement Date" means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to SECTION 8.2 or has become or is declared to be immediately due and payable pursuant to SECTION 12.1, as the context requires. 24 - 19 - 9. AFFIRMATIVE COVENANTS. The Company covenants that so long as any of the Notes are outstanding: 9.1. Compliance with Law. The Company will and will cause each of its Subsidiaries to comply with all laws, ordinances or governmental rules or regulations to which each of them is subject, including, without limitation, Environmental Laws, and will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of their respective businesses, in each case to the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other governmental authorizations could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 9.2. Insurance. The Company will and will cause each of its Subsidiaries to maintain, with financially sound and reputable insurers, insurance with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co-insurance and self-insurance, if adequate reserves are maintained with respect thereto) as is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated. 9.3. Maintenance of Properties. The Company will and will cause each of its Subsidiaries to maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times, PROVIDED that this Section shall not prevent the Company or any Subsidiary from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and the Company has concluded that such discontinuance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 9.4. Payment of Taxes and Claims. The Company will and will cause each of its Subsidiaries to file all tax returns required to be filed in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such 25 - 20 - returns and all other taxes, assessments, governmental charges, or levies imposed on them or any of their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent and all claims for which sums have become due and payable that have or might become a Lien on properties or assets of the Company or any Subsidiary, PROVIDED that neither the Company nor any Subsidiary need pay any such tax or assessment or claims if (i) the amount, applicability or validity thereof is contested by the Company or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the Company or a Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of the Company or such Subsidiary or (ii) the nonpayment of all such taxes and assessments in the aggregate could not reasonably be expected to have a Material Adverse Effect. 9.5. Corporate Existence, etc. The Company will at all times preserve and keep in full force and effect its corporate existence. Subject to SECTION 10.2, the Company will at all times preserve and keep in full force and effect the corporate existence of each of its Subsidiaries (unless merged into the Company or a Subsidiary) and all rights and franchises of the Company and its Subsidiaries unless, in the good faith judgment of the Company, the termination of or failure to preserve and keep in full force and effect such corporate existence, right or franchise could not, individually or in the aggregate, have a Material Adverse Effect. 26 - 21 - 9.6. Maintenance of Net Worth. Maintain, on the last day of each fiscal year, calculated as at such day, Consolidated Net Worth of the Company and its Consolidated Subsidiaries of at least an amount equal to Cdn. $11,000,000 determined in accordance with GAAP. 9.7. Maintenance of Consolidated Indebtedness to Net Worth Ratio. Maintain, as at the last day of each fiscal quarter, a ratio, calculated as at such day, of Consolidated Indebtedness to Consolidated Net Worth of the Company and its Consolidated Subsidiaries of not more than 0.80:1 for each fiscal quarter. 9.8. Maintenance of Interest Coverage Ratio. Maintain, as at the end of each fiscal quarter, a minimum Interest Coverage Ratio of 2.70:1. 9.9. Maintenance of Leverage Ratio. Maintain, as at the end of each fiscal quarter, a Leverage Ratio of not more than 5.50:1. 9.10. Further Assurances. At its cost and expense, upon request of the Required Holders, duly execute and deliver or cause to be duly executed and delivered to the Purchasers such further instruments and do and cause to be done such further acts as may be necessary or proper in the reasonable opinion of the Required Holders to carry out more effectually the provisions and purposes of the Note Documents. 10. NEGATIVE COVENANTS. The Company covenants that, without the consent of the Required Holders, so long as any of the Notes are outstanding: 10.1. Transactions with Affiliates. The Company will not and will not permit any Subsidiary to enter into directly or indirectly any transaction or Material group of related transactions (including without limitation the purchase, lease, sale or exchange of properties of any kind or the rendering of any service) with any Affiliate (other than the Company or another Subsidiary), except in the ordinary course and pursuant to the reasonable requirements of the Company's or such Subsidiary's business and upon fair and reasonable terms no less favorable to the Company or such Subsidiary than would be obtainable in a comparable arm's-length transaction with a Person not an Affiliate. 27 -22- 10.2. Merger, Consolidation, etc. The Company shall not consolidate with or merge with any other corporation or convey, transfer or lease substantially all of its assets in a single transaction or series of transactions to any Person unless: (a) the successor formed by such consolidation or the survivor of such merger or the Person that acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety, as the case may be, shall be a solvent corporation organized and existing under the laws of Canada, the United States or any Province or State thereof (including the District of Columbia), and, if the Company is not such corporation, (i) such corporation shall have executed and delivered to each holder of any Notes its assumption of the due and punctual performance and observance of each covenant and condition of this Agreement and the Notes and (ii) shall have caused to be delivered to each holder of any Notes an opinion of nationally recognized independent counsel, or other independent counsel reasonably satisfactory to the Required Holders, to the effect that all agreements or instruments effecting such assumption are enforceable in accordance with their terms and comply with the terms hereof; (b) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing. No such conveyance, transfer or lease of substantially all of the assets of the Company shall have the effect of releasing the Company or any successor corporation that shall theretofore have become such in the manner prescribed in this SECTION 10.2 from its liability under this Agreement or the Notes. 10.3. Indebtedness. Create, incur, assume or suffer to exist or permit any of its Subsidiaries to create, incur, assume or suffer to exist any Indebtedness other than (i) Indebtedness to the Purchasers hereunder; (ii) the Permitted Senior Indebtedness; (iii) Indebtedness incurred in respect of a Purchase Money Mortgage up to an aggregate outstanding amount, at any time, of Cdn. $1,000,000 (or the equivalent amount in any other currency); (iv) Indebtedness incurred with respect to performance bonds posted in the ordinary course of business and (v) Indebtedness listed on SCHEDULE 5.15. 10.4. Liens. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Liens on any of their respective assets, other than Permitted Liens. 10.5. Disposal of Assets Generally. 28 -23- Sell, exchange, lease, release or abandon or otherwise dispose of, or permit any of its Subsidiaries to sell, exchange, lease, release or abandon or otherwise dispose of any assets to any Person other than (i) any bona fide sales, exchanges, leases, abandonments or other dispositions in the ordinary course of business, for the purpose of carrying on the business of the Company; (ii) property or assets which have no material economic value in the business of the Company or are obsolete; and (iii) assets having a fair market value of not greater than Cdn. $100,000 in the aggregate in any fiscal year. 10.6. Change in Business. Not, and not permit any of its Subsidiaries to engage in any line of business other than the businesses engaged in by the Company and its Subsidiaries as of the date hereof and business reasonably related thereto. 10.7. Distributions. Declare, make or pay, or permit any of its Subsidiaries to declare, make or pay, any Distributions, except (i) directors' fee in an aggregate amount not to exceed $30,000, (ii) performance bonuses paid by the Company or any of its Subsidiaries in the ordinary course of business as part of remuneration for services rendered at fair market value; (iii) Distributions by a Guarantor to the Company or by the Company to a Guarantor; (iv) payments made under management or employment agreements entered into by the Company or any of its Subsidiaries with senior employees in the ordinary course of business; (v) loans made to employees; (vi) non-cash dividend payments to Onex Corporation on the preferred shares of the Company held by Onex Corporation made by way of the issuance of additional preferred shares bearing the same characteristics as such preferred shares held by Onex Corporation and (vii) payments on the Permitted Senior Indebtedness. 10.8. Investments. Make any loans, incur any obligations (contingent or otherwise), or make any investments in any Person or permit any of its Subsidiaries to do the same, except for (i) foreign currency hedges, interest rate swaps or similar interest rate and currency hedging obligations or agreements; (ii) indebtedness and obligations incurred in the ordinary course of business and Indebtedness permitted under SECTION 10.3; (iii) Permitted Marketable Securities; (iv) loans permitted under SECTION 10.1; or (v) inter-company loans to or investments in Subsidiaries. 10.9. Lease-Backs. Enter into or permit any of its Subsidiaries to enter into any arrangements, directly or indirectly, with any Person, whereby the Company or such Subsidiary, as the case may be, shall sell or transfer 29 -24- any property, whether now owned or hereafter acquired, used or useful in the business, in connection with the rental or lease of the property so sold or transferred or of other property for substantially the same purpose or purposes as the property so sold or transferred. 10.10. Subsidiaries. (i) Incorporate or acquire, after the date hereof, any Subsidiaries or commence to carry on business, otherwise than through the Company and its Subsidiaries existing as of the date hereof, except for the incorporation or acquisition of Subsidiaries in North America or such other jurisdictions as the Required Holders may agree to, acting reasonably, where in each case, such Subsidiary has executed and delivered a guarantee of all of the obligations of the Company under this Agreement and/or the other Note Documents and accompanied by opinions satisfactory to the Required Holders, in each case, acting reasonably, prior to or contemporaneously with such Subsidiary having net asset values or revenues, in either case, greater than Cdn. $50,000; or (ii) permit any Subsidiary to exist after the date hereof having net asset values or revenues, in either case, greater than Cdn. $50,000 unless such Subsidiary is a Guarantor. 10.11. Maintenance and Ownership of Subsidiaries. Except as permitted under SECTION 10.5, sell or otherwise dispose of any shares of any of its Subsidiaries or permit any of such Subsidiaries to issue, sell or otherwise dispose of the shares of any other Subsidiary, except to the Company or a Guarantor. 10.12. Compromise of Accounts. Compromise of Accounts. Compromise or adjust or permit any of its Subsidiaries to compromise or adjust any material accounts receivable of the Company or such Subsidiary (or extend the time for payment thereof) or grant any discounts, allowances or credits thereon, in each case other than in the ordinary course of business. 11. EVENTS OF DEFAULT. An "Event of Default" shall exist if any of the following conditions or events shall occur and be continuing: (a) the Company defaults in the payment of any principal or Make-Whole Amount, if any, on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or (b) the Company defaults in the payment of any interest on any Note for more than five Business Days after the same becomes due and payable; or 30 -25- (c) the Company defaults in the performance of or compliance with any term contained in SECTION 5.14, SECTIONS 9.6 through 9.9, 10.2, 10.5, 10.7 or 10.10; or (d) the Company defaults in the performance of or compliance with any term contained herein (other than those referred to in paragraphs (a), (b) and (c) of this SECTION 11) and such default is not remedied within 30 days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default and (ii) the Company receiving written notice of such default from any holder of a Note (any such written notice to be identified as a "notice of default" and to refer specifically to this paragraph (d) of SECTION 11); or (e) the Company fails to deliver the duly executed Security Agreement substantially in the form of EXHIBIT 11(e)-1 within 5 Business Days of the Closing, together with (i) evidence, reasonably satisfactory to you, that all instruments and documents (including financing statements), necessary or desirable to perfect and protect your Lien on the collateral granted under the Security Agreement have been signed and delivered in appropriate form for filing or recording, and (ii) an opinion of counsel substantially in the form of EXHIBIT 11(e)-2; or (f) any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in this Agreement or in any writing furnished in connection with the transactions contemplated hereby proves to have been false or incorrect in any material respect on the date as of which made; or (g) (i) the Company or any Subsidiary is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest on any Indebtedness that is outstanding in an aggregate principal amount of at least Cdn. $1,000,000 beyond any period of grace provided with respect thereto, or (ii) the Company or any Subsidiary is in default in the performance of or compliance with any term of any evidence of any Indebtedness in an aggregate outstanding principal amount of at least Cdn. $1,000,000 or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition such Indebtedness has become, or has been declared (or one or more Persons are entitled to declare such Indebtedness to be), due and payable before its stated maturity or before its regularly scheduled dates of payment, or (iii) as a consequence of the occurrence or continuation of any event or condition (other than the passage of time or the right of the holder of Indebtedness to convert such Indebtedness into equity interests), (x) the Company or any Subsidiary has become obligated to purchase or repay Indebtedness before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal amount of at least Cdn. $1,000,000, or (y) one or more Persons have the right to require the Company or any Subsidiary so to purchase or repay such Indebtedness; or 31 -26- (h) the Company or any Subsidiary (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; or (i) a court or governmental authority of competent jurisdiction enters an order appointing, without consent by the Company or any of its Subsidiaries, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of the Company or any of its Subsidiaries, or any such petition shall be filed against the Company or any of its Subsidiaries and such petition shall not be dismissed within 60 days; or (j) a final judgment or judgments for the payment of money aggregating in excess of Cdn. $5,000,000 are rendered against one or more of the Company and its Subsidiaries and which judgments are not, within 60 days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 60 days after the expiration of such stay; or (k) any Guarantor fails in any material respect to perform or observe any term, covenant or agreement in the Subsidiary Guaranty; or the Subsidiary Guaranty is for any reason partially (including with respect to future advances) or wholly revoked or invalidated, or otherwise ceases to be in full force and effect; or any Guarantor, or any other Person by, through or on behalf of any Guarantor, contests in any manner the validity or enforceability of the Subsidiary Guaranty or denies that such Guarantor has any further liability or obligation thereunder; or (l) the Security Agreement shall cease to be in full force and effect; or the Company, any Guarantor or any Person by, through or on behalf of the Company or any Guarantor shall contest the validity or enforceability of the Security Agreement; or (m) if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under section 412 of the Code, (ii) a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC or the PBGC shall have instituted proceedings under ERISA section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified the Company or any ERISA Affiliate that a 32 -27- Plan may become a subject of any such proceedings, (iii) the aggregate "amount of unfunded benefit liabilities" (within the meaning of section 4001(a)(18) of ERISA) under all Plans, determined in accordance with Title IV of ERISA, shall exceed Cdn. $500,000, (iv) the Company or any ERISA Affiliate shall have incurred or is reasonably expected to incur any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, (v) the Company or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or any Subsidiary establishes or amends any employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of the Company or any Subsidiary thereunder; and any such event or events described in clauses (i) through (vi) above, either individually or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect. As used in SECTION 11(m), the terms "employee benefit plan" and "employee welfare benefit plan" shall have the respective meanings assigned to such terms in Section 3 of ERISA. 12. REMEDIES ON DEFAULT, ETC. 12.1. Acceleration. (a) If an Event of Default with respect to the Company described in paragraph (h) or (i) of SECTION 11 (other than an Event of Default described in clause (i) of paragraph (h) or described in clause (vi) of paragraph (h) by virtue of the fact that such clause encompasses clause (i) of paragraph (h)) has occurred, all the Notes then outstanding shall automatically become immediately due and payable. (b) If any other Event of Default has occurred and is continuing, any holder or holders of more than 25% in principal amount of the Notes at the time outstanding may at any time at its or their option, by notice or notices to the Company, declare all the Notes then outstanding to be immediately due and payable. (c) If any Event of Default described in paragraph (a) or (b) of SECTION 11 has occurred and is continuing, any holder or holders of Notes at the time outstanding affected by such Event of Default may at any time, at its or their option, by notice or notices to the Company, declare all the Notes held by it or them to be immediately due and payable. Upon any Notes becoming due and payable under this SECTION 12.1, whether automatically or by declaration, such Notes will forthwith mature and the entire unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest thereon and (y) the Make-Whole Amount determined in respect of such principal amount (to the full extent permitted by applicable law), shall all be immediately due and payable, in each and every case without presentment, demand, protest or further notice, all of which are hereby waived. The Company acknowledges, and the parties hereto 33 -28- agree, that each holder of a Note has the right to maintain its investment in the Notes free from repayment by the Company (except as herein specifically provided for) and that the provision for payment of a Make-Whole Amount by the Company in the event that the Notes are prepaid or are accelerated as a result of an Event of Default, is intended to provide compensation for the deprivation of such right under such circumstances. 12.2. Other Remedies. If any Default or Event of Default has occurred and is continuing, and irrespective of whether any Notes have become or have been declared immediately due and payable under SECTION 12.1, the holder of any Note at the time outstanding may proceed to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or in any Note, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise. 12.3. Rescission. At any time after any Notes have been declared due and payable pursuant to clause (b) or (c) of SECTION 12.1, the holders of not less than 76% in principal amount of the Notes then outstanding, by written notice to the Company, may rescind and annul any such declaration and its consequences if (a) the Company has paid all overdue interest on the Notes, all principal of and Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid other than by reason of such declaration, and all interest on such overdue principal and Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest in respect of the Notes, at the Default Rate, (b) all Events of Default and Defaults, other than non-payment of amounts that have become due solely by reason of such declaration, have been cured or have been waived pursuant to SECTION 17, and (c) no judgment or decree has been entered for the payment of any monies due pursuant hereto or to the Notes. No rescission and annulment under this SECTION 12.3 will extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon. 12.4. No Waivers or Election of Remedies, Expenses, etc. No course of dealing and no delay on the part of any holder of any Note in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder's rights, powers or remedies. No right, power or remedy conferred by this Agreement or by any Note upon any holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise. Without limiting the obligations of the Company under SECTION 15, the Company will pay to the holder of each Note on demand such further amount as shall be sufficient to cover all costs and expenses of such holder 34 -29- incurred in any enforcement or collection under this SECTION 12, including, without limitation, reasonable attorneys' fees, expenses and disbursements. 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES. 13.1. Registration of Notes. The Company shall keep at its principal executive office a register for the registration and registration of transfers of Notes. The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register. Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Company shall not be affected by any notice or knowledge to the contrary. The Company shall give to any holder of a Note that is an Institutional Investor promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes. 13.2. Transfer and Exchange of Notes. Upon surrender of any Note at the principal executive office of the Company for registration of transfer or exchange (and in the case of a surrender for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of such Note or his attorney duly authorized in writing and accompanied by the address for notices of each transferee of such Note or part thereof), the Company shall execute and deliver, at the Company's expense (except as provided below), one or more new Notes (as requested by the holder thereof) in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of Exhibit 1. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Company may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes. Notes shall not be transferred in denominations of less than Cdn. $500,000, PROVIDED that if necessary to enable the registration of transfer by a holder of its entire holding of Notes, one Note may be in a denomination of less than Cdn. $500,000. Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be deemed to have made the representation set forth in SECTION 6.2. 13.3. Replacement of Notes. Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an 35 -30- Institutional Investor, notice from such Institutional Investor of such ownership and such loss, theft, destruction or mutilation), and (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (PROVIDED that if the holder of such Note is, or is a nominee for, an original purchaser or another holder of a Note with a minimum net worth of at least Cdn. $10,000,000, such Person's own unsecured agreement of indemnity shall be deemed to be satisfactory), or (b) in the case of mutilation, upon surrender and cancellation thereof, the Company at its own expense shall execute and deliver, in lieu thereof, a new Note, dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon. 14. SUBORDINATION. 14.1. Notes Subordinated to Permitted Senior Indebtedness. The Company covenants and agrees and you likewise covenant and agree for the benefit of the holders of the Permitted Senior Indebtedness, that, to the extent and in the manner hereinafter set forth in this SECTION 14, the Obligations under the Notes are hereby expressly made subordinate and subject in right of payment as provided in this SECTION 14 to the prior payment in full of all Permitted Senior Indebtedness. This SECTION 14 shall constitute a continuing offer to all persons who, in reliance upon such provisions, become holders of, or continue to hold, Permitted Senior Indebtedness, and such provisions are made for the benefit of the holders of Permitted Senior Indebtedness and such holders are made obligees hereunder and they or each of them may enforce such provisions. 14.2. Payment Over of Proceeds Upon Bankruptcy. (a) In the event of (i) any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding in connection therewith, relative to the Company or its assets, (ii) any liquidation, dissolution or other winding up of the Company, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy, or (iii) any assignment for the benefit of creditors or any other marshalling of assets or liabilities of the Company (the events described in the foregoing clauses (i), (ii) and (iii) are referred to collectively as "Insolvency or Liquidation Proceedings"), then and in any such event the holders of Permitted Senior Indebtedness shall be entitled to receive payment in full in cash of all amounts due on or in respect of all Permitted Senior Indebtedness (or payment thereof provided for to the 36 -31- satisfaction of the holders of Permitted Senior Indebtedness), before the holder is entitled to receive any payment or distribution of any kind or character (excluding Permitted Junior Payments) on account of principal of, or premium (if any) or interest on, the Notes, and to that end the holders of Permitted Senior Indebtedness shall be entitled to receive, for application to the payment of such Permitted Senior Indebtedness, any payment or distribution of assets of the Company of any kind or character (excluding Permitted Junior Payments) that may be payable or deliverable in respect of the Notes in connection with any such Insolvency or Liquidation Proceeding. (b) Any payment or distribution of assets of the Company of any kind or character from any source, whether in cash, property or securities (excluding Permitted Junior Securities), including by way of set-off or enforcement of any guarantee or otherwise, which the holders would be entitled to receive but for the provisions of this Article shall be paid by the liquidating trustee or agent or other person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of Permitted Senior Indebtedness or the representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Permitted Senior Indebtedness may have been issued, rateably according to the aggregate amounts remaining unpaid on account of the Permitted Senior Indebtedness held or represented by each, to the extent necessary to make payment in full in cash of all Permitted Senior Indebtedness after giving effect to any concurrent payment or distribution, or provision therefor to the satisfaction of the holders of the Permitted Senior Indebtedness. (c) In the event that, notwithstanding the foregoing provisions of SECTION 14.2(b), any holder of the Notes shall have received, after the commencement of any Insolvency or Liquidation Proceeding, any payment or distribution of assets of the Company of any kind or character in respect of the Obligations under the Notes whether in cash, property or securities including by way of set off or enforcement of any guarantee or otherwise before all Permitted Senior Indebtedness is paid in full or payment thereof provided for to the satisfaction of the holders of Permitted Senior Indebtedness, then such payment or distribution (excluding Permitted Junior Payments) shall be paid over or delivered forthwith therefor to the holders of the Permitted Senior Indebtedness or the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other Person making payment or distribution of assets of the Company for application to the payment of all Permitted Senior Indebtedness remaining unpaid, to the extent necessary to pay all Permitted Senior Indebtedness in full, after giving effect to any concurrent payment or distribution to or for the holders of Permitted Senior Indebtedness. 14.3. Suspension of Payments When Permitted Senior Indebtedness in Default. (a) Unless SECTION 14.2 shall be applicable, upon (i) the occurrence of a default in the payment when due (whether at maturity or upon acceleration, mandatory prepayment or otherwise) of any principal of or interest or premium (if any) or interest on any unreimbursed amounts under drawn letters of credit on any Permitted Senior Indebtedness that is continuing after the expiration 37 -32- of any grace period applicable thereto (a "Payment Default"), and (ii) either the Company or such holder of Permitted Senior Indebtedness sending to the holders of the Notes written notice of such Payment Default, then no payment or distribution of any assets of the Company or any Subsidiary of any kind or character (excluding Permitted Junior Payments) shall be made by the Company including by way of set off or enforcement of guaranty or otherwise on account of principal of, or premium (if any) or interest on, the Notes or on account of the purchase or redemption or other acquisition of the Notes unless and until either (x) such Payment Default shall have been cured or waived, or shall have ceased to exist, (y) such defaulted Permitted Senior Indebtedness shall have been discharged or (z) the benefits of this provision shall have been waived by the holders of such defaulted Permitted Senior Indebtedness, after which the Company shall resume making any and all required payments in respect of the Notes, including any payments in arrears. (b) Unless SECTION 14.2 shall be applicable, upon (i) the occurrence of any default or event of default under any Permitted Senior Indebtedness if the effect of such default or event of default is to permit such Permitted Senior Indebtedness to become due and payable prior to its stated maturity (a "Covenant Default"), and (ii) the holder of such Permitted Senior Indebtedness or the Company sending to the holders of the Notes written notice of such Covenant Default, then no payment or distribution of any assets of the Company of any kind or character (excluding Permitted Junior Payments) shall be made by the Company including by way of set-off or enforcement of guaranty or otherwise on account of principal of, or premium (if any) or interest on, the Notes or on account of the purchase or redemption or other acquisition of the Notes for a period (a "Payment Blockage Period") commencing on the date of receipt of such written notice by the holders of the Notes and continuing until (subject to any blockage of payments that may then be in effect under SECTION 14.3(a)) the first to occur of (x) more than 179 days shall have elapsed since receipt of such written notice by the holders of the Notes (provided that the obligations under the applicable Permitted Senior Indebtedness shall not theretofore have been accelerated), (y) such Covenant Default shall have been cured or waived or shall have ceased to exist or the Permitted Senior Indebtedness shall have been discharged, or (z) such Payment Blockage Period shall have been terminated by written notice to the Company and the holders of the Notes given by the holder of such Permitted Senior Indebtedness. After the first to occur of the events described in the foregoing clauses (x), (y) and (z), the Company shall resume making any and all required payments in respect of the Notes, including any payments in arrears. In no event will a Payment Blockage Period extend beyond 179 days from the date of the receipt by the holders of the Notes of the notice initiating such Payment Blockage Period (such 179-day period referred to as the "Initial Period"). Any number of notices of events of default may be given during the Initial Period; PROVIDED that during any period of 365 consecutive days there must be a period of 186 consecutive days in which no Payment Blockage Period is in effect. No Covenant Default with respect to the Permitted Senior Indebtedness that existed or was continuing on the date of the commencement of any Payment Blockage Period will be, or can be, made the basis for the commencement of a second Payment Blockage Period, whether or not within a period of 365 consecutive days, unless such Covenant Default has been cured or waived for a period of not less than 90 consecutive days. 38 -33- (c) In the event that, notwithstanding the foregoing, the Company shall make any payment to any holder of any Note prohibited by the foregoing provisions of this SECTION 14.3, then and in such event such payments shall be paid over and delivered forthwith to the holders of the Permitted Senior Indebtedness or their representative. 14.4. Payment Permitted If No Default. Nothing contained in this SECTION 14 or elsewhere in this Agreement or in the Notes shall prevent the Company, at any time except in the circumstances described in SECTION 14.2 or under the conditions described in SECTION 14.3, from making payments at any time of principal of, or premium (if any) or interest on, the Notes to the extent permitted by the terms of Permitted Senior Indebtedness as in effect from time to time. 14.5. Subrogation to Rights of Holders of Permitted Senior Indebtedness. Subject to the payment in full of all Permitted Senior Indebtedness, the holders of the Notes shall be subrogated (equally and ratably with the holders of all Indebtedness of the Company that by its express terms is subordinated to Permitted Senior Indebtedness to the same extent as the Notes are so subordinated and is entitled to like rights of subrogation) to the rights of the holders of Permitted Senior Indebtedness to receive payments and distributions of cash, property and securities applicable to the Permitted Senior Indebtedness to the extent that payment of Permitted Senior Indebtedness has been made from amounts otherwise payable to the holders of the Notes until the Notes and all other amounts payable under this Agreement shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Permitted Senior Indebtedness of any cash, property or securities to which the holders of the Notes would be entitled except for the provisions of this SECTION 14, and no payments over pursuant to the provisions of this SECTION 14 to the holders of Permitted Senior Indebtedness by the holders of the Notes, shall, as among the Company, its creditors other than holders of the Permitted Senior Indebtedness and the holders of the Notes, be deemed to be a payment or distribution by the Company to or on account of the Permitted Senior Indebtedness. In the event that any Permitted Senior Indebtedness becomes due and payable, whether by acceleration, maturity or otherwise, no distribution shall thereafter be made on account of the Notes until all Permitted Senior Indebtedness shall be paid in full. 14.6. Provisions Solely to Define Relative Rights. The provisions of this SECTION 14 are and are intended solely for the purpose of defining the relative rights of the holders of the Notes, on the one hand, and the holders of Permitted Senior Indebtedness, on the other hand. Nothing contained in this SECTION 14 or elsewhere in this Agreement or in the Notes is intended to or shall (a) impair, as among the Company and its creditors other than holders of Permitted Senior Indebtedness and the holders of the Notes, the 39 -34- obligation of the Company, which is absolute and unconditional, to pay to the holders of the Notes the principal of, and premium (if any) and interest on, the Notes and all other amounts payable under this Agreement as and when the same shall become due and payable, all in accordance with the terms hereof and of the Notes; (b) affect the relative rights against the Company of the holders of the Notes and creditors of the Company other than the holders of Permitted Senior Indebtedness, it being expressly understood that the Notes, the indebtedness represented thereby and the payment of the principal of, and premium (if any) and interest on, the Notes and of all other amounts payable under this Agreement in all respects shall rank equally with, or prior to, all existing and future unsecured Indebtedness of the Company that is not Permitted Senior Indebtedness; (c) prevent the holders of the Notes from exercising all remedies otherwise permitted by applicable law upon default under this Agreement, subject to the rights, if any, under this SECTION 14 of the holders of Permitted Senior Indebtedness (i) in any Insolvency or Liquidation Proceeding to receive, pursuant to and in accordance with SECTION 14.2, cash, property and securities otherwise payable or deliverable to the holders or the Notes, or (ii) under the conditions specified in SECTION 14.3 to prevent any payment prohibited by such SECTION 14.3; or (d) limit the rights of the holders of the Notes to take any action to accelerate the maturity of the Notes pursuant to SECTION 11 or to pursue any rights or remedies hereunder or under applicable law. 14.7. Payments Held in Trust. Should any distribution or the proceeds thereof in respect of principal of, or premium (if any) or interest on, the Notes be collected or received by the holders of Notes at a time when the holders of Notes are not permitted to receive any such distribution or proceeds thereof, including if the same is collected or received when there is or would be after giving effect to such payment an Event of Default under any Permitted Senior Indebtedness, then the holders of Notes will forthwith deliver, or cause to be delivered, the same to the holders of Permitted Senior Indebtedness in precisely the form held by the holders of Notes (except for any necessary endorsement) and until so delivered, the same shall be held in trust by the holders of Notes as property of the holders of Permitted Senior Indebtedness and shall not be commingled with other property of the holders of Notes. 14.8. No Waiver of Subordination Provisions. (a) No right of any present or future holder of any Permitted Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Agreement, regardless of any knowledge thereof that any such holder may have or be otherwise charged with. 40 -35- (b) Without in any way limiting the generality of SECTION 14.8(a), the holders of Permitted Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the holders of the Notes, without incurring responsibility to the holders of the Notes and without impairing or releasing the subordination provided in this SECTION 14 or the obligations hereunder of the holders of the Notes to the holders of Permitted Senior Indebtedness, do any one or more of the following: (1) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, any Permitted Senior Indebtedness or any instrument evidencing the same or any agreement under which Permitted Senior Indebtedness is outstanding (including any increase in the aggregate principal amount of any indebtedness thereunder); (2) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing any Permitted Senior Indebtedness; (3) release any Person liable in any manner for the collection of any Permitted Senior Indebtedness; and (4) exercise or refrain from exercising any rights against the Company and any other Person. 14.9. Reliance on Judicial Order or Certificate of Liquidating Agent. Upon any payment or distribution of assets of the Company referred to in this SECTION 14, the holders of the Notes shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which such insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution, winding up or similar case or proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the holders of the Notes for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Permitted Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this SECTION 14 provided that such court, trustee, assignee or other person has been apprised of, or the order or certificate makes reference to the provisions of this Article. 14.10 Further Assurances Upon receipt of written notice by a holder of Permitted Senior Indebtedness, the Company shall, from time to time, for and on behalf of all present and future holders of the Notes, execute and deliver deeds of subordination in favour of the person or persons forwarding such notice to the Company providing that such person or persons are entitled to all the rights and benefits of this Article as a holder of Permitted Senior Indebtedness. An executed counterpart of each such deed shall be delivered by the Company. Nothing contained in this provision shall impair the rights of any holders of Permitted Senior Indebtedness in whose favour such a deed of subordination has not been so executed and delivered. 15. PAYMENTS ON NOTES. 41 -36- 15.1. Place of Payment. Subject to SECTION 15.2, payments of principal, Make-Whole Amount, if any, and interest becoming due and payable on the Notes shall be made in Vancouver, British Columbia at the principal office of the Company in such jurisdiction. The Company may at any time, by notice to each holder of a Note, change the place of payment of the Notes so long as such place of payment shall be either the principal office of the Company in such jurisdiction or the principal office of a bank or trust company in such jurisdiction. 15.2. Home Office Payment. So long as you or your nominee shall be the holder of any Note, and notwithstanding anything contained in SECTION 14.1 or in such Note to the contrary, the Company will pay all sums becoming due on such Note for principal, Make-Whole Amount, if any, and interest by the method and at the address specified for such purpose below your name in SCHEDULE A, or by such other method or at such other address as you shall have from time to time specified to the Company in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written request of the Company made concurrently with or reasonably promptly after payment or prepayment in full of any Note, you shall surrender such Note for cancellation, reasonably promptly after any such request, to the Company at its principal executive office or at the place of payment most recently designated by the Company pursuant to SECTION 14.1. Prior to any sale or other disposition of any Note held by you or your nominee you will, at your election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Company in exchange for a new Note or Notes pursuant to SECTION 13.2. The Company will afford the benefits of this SECTION 15.2 to any Institutional Investor that is the direct or indirect transferee of any Note purchased by you under this Agreement and that has made the same agreement relating to such Note as you have made in this SECTION 15.2. 16. EXPENSES, ETC. 16.1. Transaction Expense. Whether or not the transactions contemplated hereby are consummated, the Company will pay all costs and expenses (including reasonable attorneys' fees of a special counsel and, if reasonably required, local or other counsel) incurred by you or holder of a Note in connection with such transactions and in connection with any amendments, waivers or consents under or in respect of this Agreement or the Notes (whether or not such amendment, waiver or consent becomes effective), including, without limitation: (a) the costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under this Agreement or the Notes or 42 -37- in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement or the Notes, or by reason of being a holder of any Note, and (b) the costs and expenses, including financial advisors' fees, incurred in connection with the insolvency or bankruptcy of the Company or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes. The Company will pay, and will save you and each other holder of a Note harmless from, all claims in respect of any fees, costs or expenses, if any, of brokers and finders (other than those retained by you). 16.2. Survival. The obligations of the Company under this SECTION 16 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Agreement or the Notes, and the termination of this Agreement. 17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the Notes, the purchase or transfer by you of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of you or any other holder of a Note. All statements contained in any certificate or other instrument delivered by or on behalf of the Company pursuant to this Agreement shall be deemed representations and warranties of the Company under this Agreement. Subject to the preceding sentence, this Agreement and the Notes embody the entire agreement and understanding between you and the Company and supersede all prior agreements and understandings relating to the subject matter hereof. 18. AMENDMENT AND WAIVER. 18.1. Requirements. This Agreement and the Notes may be amended, and the observance of any term hereof or of the Notes may be waived (either retroactively or prospectively), with (and only with) the written consent of the Company and the Required Holders, except that no amendment or waiver may, without the written consent of the holder of each Note at the time outstanding affected thereby, (i) subject to the provisions of SECTION 12 relating to acceleration or rescission, change the amount or time of any prepayment or payment of principal of, or reduce the rate or change the time of payment or method of computation of interest or of the Make-Whole Amount on, the Notes, (ii) change the percentage of the principal amount of the Notes the holders of which are required to consent to any such amendment or waiver, or (iii) amend any of SECTIONS 8, 11(a), 11(b), 12, 14, or 18.1 hereof. 18.2. Solicitation of Holders of Notes. 43 -38- (a) The Company will provide each holder of the Notes (irrespective of the amount of Notes then owned by it) with sufficient information, sufficiently far in advance of the date a decision is required, to enable such holder to make an informed and considered decision with respect to any proposed amendment, waiver or consent in respect of any of the provisions hereof or of the Notes. The Company will deliver executed or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions of this SECTION 18 to each holder of outstanding Notes promptly following the date on which it is executed and delivered by, or receives the consent or approval of, the requisite holders of Notes. (b) The Company will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security, to any holder of Notes as consideration for or as an inducement to the entering into by any holder of Notes or any waiver or amendment of any of the terms and provisions hereof unless such remuneration is concurrently paid, or security is concurrently granted, on the same terms, ratably to each holder of Notes then outstanding even if such holder did not consent to such waiver or amendment. 18.3. Binding Effect, etc. Any amendment or waiver consented to as provided in this SECTION 18 applies equally to all holders of Notes and is binding upon them and upon each future holder of any Note and upon the Company without regard to whether such Note has been marked to indicate such amendment or waiver. No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent thereon. No course of dealing between the Company and the holder of any Note nor any delay in exercising any rights hereunder or under any Note shall operate as a waiver of any rights of any holder of such Note. As used herein, the term "this Agreement" and references thereto shall mean this Agreement as it may from time to time be amended or supplemented. 18.4. Notes held by Company, etc. Solely for the purpose of determining whether the holders of the requisite percentage of the aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver or consent to be given under this Agreement or the Notes, or have directed the taking of any action provided herein or in the Notes to be taken upon the direction of the holders of a specified percentage of the aggregate principal amount of Notes then outstanding, Notes directly or indirectly owned by the Company or any of its Affiliates shall be deemed not to be outstanding. 19. NOTICES. 44 -39- All notices and communications provided for hereunder shall be in writing and sent (a) by telecopy if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by a recognized overnight delivery service (with charges prepaid). Any such notice must be sent: (i) if to you or your nominee, to you or it at the address specified for such communications in SCHEDULE A, or at such other address as you or it shall have specified to the Company in writing, (ii) if to any other holder of any Note, to such holder at such address as such other holder shall have specified to the Company in writing, or (iii) if to the Company, to the Company at its address set forth at the beginning hereof to the attention of Paul T. Clough, or at such other address as the Company shall have specified to the holder of each Note in writing. Notices under this SECTION 19 will be deemed given only when actually received. 20. REPRODUCTION OF DOCUMENTS. This Agreement and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by you at the Closing (except the Notes themselves), and (c) financial statements, certificates and other information previously or hereafter furnished to you, may be reproduced by you by any photographic, photostatic, microfilm, microcard, miniature photographic or other similar process and you may destroy any original document so reproduced. The Company agrees and stipulates that, to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by you in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. This SECTION 20 shall not prohibit the Company or any other holder of Notes from contesting any such reproduction to the same extent that it could contest the original, or from introducing evidence to demonstrate the inaccuracy of any such reproduction. 21. SUBSTITUTION OF PURCHASER. You shall have the right to substitute any one of your Affiliates as the purchaser of the Notes that you have agreed to purchase hereunder, by written notice to the Company, which notice shall be signed by both you and such Affiliate, shall contain such Affiliate's agreement to be bound by this Agreement and shall contain a confirmation by such Affiliate of the accuracy with respect to it of the representations set forth in SECTION 6. Upon receipt of such notice, wherever the word 45 -40- "you" is used in this Agreement (other than in this SECTION 21), such word shall be deemed to refer to such Affiliate in lieu of you. In the event that such Affiliate is so substituted as a purchaser hereunder and such Affiliate thereafter transfers to you all of the Notes then held by such Affiliate, upon receipt by the Company of notice of such transfer, wherever the word "you" is used in this Agreement (other than in this SECTION 21), such word shall no longer be deemed to refer to such Affiliate, but shall refer to you, and you shall have all the rights of an original holder of the Notes under this Agreement. 46 -41- 22. MISCELLANEOUS. 22.1. Successors and Assigns. All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns (including, without limitation, any subsequent holder of a Note) whether so expressed or not. 22.2. Payments Due on Non-Business Days. Anything in this Agreement or the Notes to the contrary notwithstanding, any payment of principal of or Make-Whole Amount or interest on any Note that is due on a date other than a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day. 22.3. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction. 22.4. Construction. Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person. 22.5. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto. 47 -42- 22.6. Governing Law. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State. * * * * * 48 -43- If you are in agreement with the foregoing, please sign the form of agreement on the accompanying counterpart of this Agreement and return it to the Company, whereupon the foregoing shall become a binding agreement between you and the Company. Very truly yours, 504463 N.B. INC. By: /s/ Authorized Signer Name: Title: The foregoing is hereby agreed to as of the date thereof. 3006302 NOVA SCOTIA COMPANY By: /s/ Authorized Signer Name: Title: 49 -44- SCHEDULE A ---------- INFORMATION RELATING TO PURCHASERS
Principal Amount of Name and Address of Purchaser Notes to be Purchased - ----------------------------- --------------------- 3006302 Nova Scotia Company, a Cdn.$9,166,666 Nova Scotia unlimited liability company (1) All payments by wire transfer of immediately available funds to: Canadian Imperial Bank of Commerce Acct. No. 45-81113 with sufficient information to identify the source and application of such funds. (2) All notices of payments and written confirmations of such wire transfers: 3006302 Nova Scotia Company c/o First Union Real Estate Equity and Mortgage Investments 55 Public Square, Suite 1910 Cleveland, Ohio 44113-1937 Attn: Senior Vice President, General Counsel and Secretary Fax: (216) 781-7364 (3) All other communications: 3006302 Nova Scotia Company c/o First Union Real Estate Equity and Mortgage Investments 55 Public Square, Suite 1910 Cleveland, Ohio 44113-1937 Attn: Senior Vice President, General Counsel and Secretary Fax: (216) 781-7364
50 -45- SCHEDULE B ---------- DEFINED TERMS ------------- As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term: "Affiliate" means, at any time, and with respect to any Person, (a) any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person and (b) any Person beneficially owning or holding, directly or indirectly, 10% or more of any class of voting or equity interests of the Company or any Subsidiary or any corporation of which the Company and its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 10% or more of any class of voting or equity interests. As used in this definition, "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Unless the context otherwise clearly requires, any reference to an "Affiliate" is a reference to an Affiliate of the Company. "Agreement" means this Note Purchase Agreement between the Company and the purchasers listed on SCHEDULE A, as it may from time to time be amended or supplemented. "Annualized Capital Expenditures" means for any relevant period commencing with April 1, 1997, an amount equal to the aggregate amount of capital expenditures for such period multiplied by a fraction, the numerator of which is 12 and the denominator of which is the number of calendar months which have elapsed since April 1, 1997. "Annualized Consolidated EBITDA" means for any relevant period commencing with April 1, 1997, an amount equal to Consolidated EBITDA for such period multiplied by a fraction, the numerator of which is 12 and the denominator of which is the number of calendar months which have elapsed since April 1, 1997. "Annualized Consolidated Interest Charges" means for any relevant period commencing with April 1, 1997, an amount equal to Consolidated Interest Charges for such period, multiplied by a fraction, the numerator of which is 12 and the denominator of which is the number of calendar months which have elapsed since April 1, 1997. "Business Day" means (a) for the purposes of SECTION 8.6 only, any day other than a Saturday, a Sunday or a day on which commercial banks in New York City are required or authorized to be closed, and (b) for the purposes of any other provision of this Agreement, any day 51 -46- other than a Saturday, a Sunday or a day on which commercial banks in Toronto or New York are required or authorized to be closed. "Capital Lease" means, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP. "Closing" is defined in SECTION 3. "Code" means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time. "Company" means 504463 N.B. Inc., a corporation duly organized and validly existing under the laws of the Province of New Brunswick. "Confidential Information" is defined in SECTION 21. "Consolidated Cash Interest Charges" means, for any period for the Company and its Consolidated Subsidiaries, the total of (i) all items properly classified as interest expense (whether expensed or capitalized) in accordance with GAAP; and (ii) the imputed interest component for any element of Consolidated Indebtedness (such as capital leases and deferred revenues) which would not be classified as interest expense pursuant to GAAP, calculated using an interest rate equal to the then prevailing Canadian Prime Rate, in each case for such period, provided that, notwithstanding the foregoing, with respect to the Notes only the current paid interest component, and not accrued interest, will be included in this calculation. "Consolidated Depreciation and Amortization Expense" means, for any period, the depreciation and amortization expense of the Company and its Consolidated Subsidiaries, determined in accordance with GAAP. "Consolidated EBITDA" means, for any period, the Consolidated Net Income of the Company and its Consolidated Subsidiaries (or with respect to the definition of Target EBITDA, the relevant target entity mutatis mutandis) increased by the sum of (i) Consolidated Cash Interest Charges; (ii) Consolidated Income Tax Expense; and (iii) Consolidated Depreciation and Amortization Expense, in each case, for such period and calculated prior to extraordinary items; and (iv) such out-of-pocket expenses incurred by such entitites on a one time basis and which can reasonably be solely attributed to the acquisition referenced in SCHEDULE 5.14. "Consolidated Income Tax Expense" means, for any period, the aggregate of all taxes (including deferred taxes) based on income of the Company and its Consolidated Subsidiaries for such period determined in accordance with GAAP. 52 -47- "Consolidated Indebtedness" means the aggregate of all Indebtedness for borrowed money of the Company and its Consolidated Subsidiaries less (y) the Notes and (z) such cash and Permitted Marketable Securities on the balance sheet of the latest financial statements delivered pursuant to SECTION 7. "Consolidated Net Worth" means at any time, with respect to any Person and its Consolidated Subsidiaries, the aggregate of (i) the total shareholders' equity determined as of such time in accordance with GAAP; plus (ii) the Notes; where shareholders equity for greater certainty and without duplication includes any shares in the capital of such Person or its Subsidiaries which are redeemable at the option of the holder in accordance with their terms. "Consolidated Parking Contracts" means, at any time, with respect to the Company and its Consolidated Subsidiaries, the aggregate of (i) the total number of existing contracts and leases which are in full force and effect for the management or operation of parking lots of parking garages; and (ii) the number of parking lots of parking garages operated on properties owned by the Company and its Consolidated Subsidiaries. "Consolidated Subsidiary" means, at any date, in respect of any person, a Subsidiary of such Person which is or should be consolidated with such Person in its consolidated financial statements prepared as of such date. "Default" means an event or condition the occurrence or existence of which would, with the lapse of time or the giving of notice or both, become an Event of Default. "Default Rate" means that rate of interest that is 2% per annum above the rate of interest stated in clause (a) of the first paragraph of the Notes. "Distributions" means (i) any dividend or other distribution on issued shares of the Company or any of its Subsidiaries; (ii) the purchase, redemption or retirement of any issued shares of the Company or any of its Subsidiaries redeemed or purchased by the Company or any such Subsidiary, as the case may be, or any payments made under any employee stock option agreement; (iii) any consulting fee, management fee or management bonus paid or payable to any director, officer, shareholder or Affiliate of the Company or any of its Subsidiaries or any Person not dealing at arm's length with the Company or any of its Subsidiaries or their respective directors, officers, shareholders or Affiliates; or (iv) any payment on account of any principal and interest on any loans or advances owing at any time by the Company or any of its Subsidiaries to any of their respective directors, officers, shareholders or Affiliates. "Environmental Laws" means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, 53 -48- licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including but not limited to those related to hazardous substances or wastes, air emissions and discharges to waste or public systems. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect. "ERISA Affiliate" means any trade or business (whether or not incorporated) that is treated as a single employer together with the Company under section 414 of the Code. "Event of Default" is defined in SECTION 11. "GAAP" means, at any time, accounting principles generally accepted in Canada as recommended in the Handbook of the Canadian Institute of Chartered Accountants at the relevant time applied on a consistent basis. "Governmental Authority" means (a) the government of (i) the United States of America or Canada or any State or other political subdivision thereof, or (ii) any jurisdiction in which the Company or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of the Company or any Subsidiary, or (b) any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government. "Guarantors" mean Inner Tec Security Consultants Ltd., Argus Guard & Patrol Ltd., Inner Tec Security Consultants, Century Security Ltd., City Collection Company Ltd., Compupark Systems Corporation and Impark Management Ltd. "Guaranty" means, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any indebtedness, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including (without limitation) obligations incurred through an agreement, contingent or otherwise, by such Person: (a) to purchase such indebtedness or obligation or any property constituting security therefor; 54 -49- (b) to advance or supply funds (i) for the purchase or payment of such indebtedness or obligation, or (ii) to maintain any working capital or other balance sheet condition or any income statement condition of any other Person or otherwise to advance or make available funds for the purchase or payment of such indebtedness or obligation; (c) to lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such indebtedness or obligation of the ability of any other Person to make payment of the indebtedness or obligation; or (d) otherwise to assure the owner of such indebtedness or obligation against loss in respect thereof. In any computation of the indebtedness or other liabilities of the obligor under any Guaranty, the indebtedness or other obligations that are the subject of such Guaranty shall be assumed to be direct obligations of such obligor. "Hazardous Material" means any and all pollutants, toxic or hazardous wastes or any other substances that might pose a hazard to health or safety, the removal of which may be required or the generation, manufacture, refining, production, processing, treatment, storage, handling, transportation, transfer, use, disposal, release, discharge, spillage, seepage, or filtration of which is or shall be restricted, prohibited or penalized by any applicable law (including, without limitation, asbestos, urea formaldehyde foam insulation and polycholorinated biphenyls). "holder" means, with respect to any Note, the Person in whose name such Note is registered in the register maintained by the Company pursuant to SECTION 13.1. "Indebtedness" with respect to any Person means, at any time, without duplication, (a) its liabilities for borrowed money and its redemption obligations in respect of mandatorily redeemable Preferred Stock; (b) its liabilities for the deferred purchase price of property acquired by such Person (excluding accounts payable arising in the ordinary course of business but including all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property); (c) all liabilities appearing on its balance sheet in accordance with GAAP in respect of Capital Leases; 55 -50- (d) all liabilities for borrowed money secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities); (e) all its liabilities in respect of letters of credit or instruments serving a similar function issued or accepted for its account by banks and other financial institutions (whether or not representing obligations for borrowed money); (f) Swaps of such Person; and (g) any Guaranty of such Person with respect to liabilities of a type described in any of clauses (a) through (f) hereof. Indebtedness of any Person shall include all obligations of such Person of the character described in clauses (a) through (e) to the extent such Person remains legally liable in respect thereof notwithstanding that any such obligation is deemed to be extinguished under GAAP. "Institutional Investor" means (a) any original purchaser of a Note, (b) any holder of a Note holding more than 25% of the aggregate principal amount of the Notes then outstanding, and (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form. "Interest Coverage Ratio" means (i) for the periods beginning on April 1, 1997 and ending on the last day of each fiscal quarter up to and including the fiscal quarter ended March 31, 1998, the ratio of Annualized Consolidated EBITDA less Annualized Capital Expenditures to Annualized Consolidated Cash Interest Charges; and (ii) for any fiscal quarter after the fiscal quarter ended March 31, 1998, the ratio of Consolidated EBITDA less capital expenditures to Consolidated Cash Interest Charges for the twelve month period ending on the least day of such fiscal quarter. "Leverage Ratio" means (i) for periods beginning on April 1, 1997 and ending on the last day of each fiscal quarter up to and including the fiscal quarter ended March 31, 1998, the ratio of Consolidated Indebtedness to Annualized Consolidated EBITDA; and (ii) for any fiscal quarter thereafter, the ratio of Consolidated Indebtedness to Consolidated EBITDA for the twelve month period ending on the last day of such fiscal quarter. "Lien" means, with respect to any Person, any mortgage, lien, pledge, charge, security interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention agreement or Capital Lease, upon or with respect to any property or asset of such Person (including in the case of stock, stockholder agreements, voting trust agreements and all similar arrangements). 56 -51- "Make-Whole Amount" is defined in SECTION 8.6. "Material" means material in relation to the business, operations, affairs, financial condition, assets, properties, or prospects of the Company and its Subsidiaries taken as a whole. "Material Adverse Effect" means a material adverse effect on (a) the business, operations, affairs, financial condition, assets or properties of the Company and its Subsidiaries taken as a whole, or (b) the ability of the Company to perform its obligations under this Agreement and the Notes, or (c) the validity or enforceability of this Agreement or the Notes. "Multiemployer Plan" means any Plan that is a "multiemployer plan" (as such term is defined in section 4001(a)(3) of ERISA). "Note Documents" mean the Notes, the Agreement, the Subsidiary Guaranty and the Security Agreement. "Notes" is defined in SECTION 1. "Obligations" means any principal (including reimbursement obligations and guarantees), premium, if any, interest (including interest accruing on or after the filing of, or which would have occurred but for the filing of, any petition in bankruptcy or for reorganization relating to the Company whether or not a claim for post-filing interest is allowed in such proceedings) penalties, fees, expenses, indemnifications, reimbursements, claims for recision, damages, gross-up payments and all other amounts and other liabilities payable under the Note Documents or otherwise. "Officer's Certificate" means a certificate of a Senior Financial Officer or of any other officer of the Company whose responsibilities extend to the subject matter of such certificate. "PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto. "Permitted Junior Payments" mean a payment or distribution in the form of equity securities or subordinated securities of the Company or any successor obligor with respect to the Notes provided for by a plan of reorganization or readjustment that, in the case of any such subordinated securities, are subordinate in right of payment to all Permitted Senior Indebtedness that may at the time be outstanding to substantially the same or a greater extent than, the Obligations are so subordinated as provided herein. "Permitted Liens" means any one or more of the following: 57 -52- a. Liens for taxes, rates, assessments or governmental charges or levies not at the time due and delinquent or the validity of which is being contested at the time by the Company in good faith by proper legal proceedings; b. Liens resulting from any judgment rendered or claim filed against the Company which the Company shall be contesting in good faith by proper legal proceedings; c. undetermined or inchoate Liens which have not at such time been filed or registered pursuant to law against the Company or which relate to obligations not due or delinquent; d. Liens affecting real property which are (i) title defects or irregularities of a minor nature; or (ii) restrictions, easements, rights-of-way, servitudes or other similar rights in land (including, without restriction, rights-of-way and servitudes for railways, sewers, drains, gas and oil pipelines, gas and water mains, electric light and power and telephone or telegraph or cable television conduits, poles, wires, cables or other incidental equipment) granted to or reserved by other Persons; in each case where such Liens in the aggregate do not materially impair the usefulness of the property for the purposes for which it is held and mortgages of and other Liens against the said easements, rights-of-way, servitudes or other similar rights in real property; e. Liens or deposits in connection with bids, tenders, contracts or expropriation proceedings of the Company or to secure workers' compensation, unemployment insurance or other similar statutory assessments, or to secure costs of litigation when required by law, and surety or appeal bonds in connections with such litigation; f. mechanic's, warehouseman's, carriers' or other similar common law liens or privileges, where the action to enforce the same has not proceeded to final judgment, is being defended in good faith by the Company and by appropriate proceedings and in respect of which it shall have set aside on its books reserves deemed by it to be adequate therefor; g. any other liens or privileges or other title irregularities, encroachments or encumbrances of a nature similar to the foregoing which are of a minor nature and will not in the aggregate materially and adversely affect the use of the property for the purpose for which it is held by the Company or any of its Subsidiaries; h. Liens in favor of the holders of the Permitted Senior Indebtedness; i. Purchase Money Mortgages, securing Indebtedness, in an aggregate amount not to exceed Cdn. $1,000,000; and j. other Liens in an aggregate amount not to exceed Cdn. $50,000. 58 -53- "Permitted Marketable Securities" means any securities held by the Company or any of its Subsidiaries which are publicly traded on a recognized stock exchange and do not represent greater than 5% of the issued and outstanding securities of the issuing corporation and any fixed income securities for which a public market exists. "Permitted Senior Indebtedness" means the obligations pursuant to the Guaranty issued by the Company and the Guarantors under the Amended and Restated Credit Agreement dated as of April 17, 1997 among the Company, Imperial Parking Limited, the financial institutions party thereto and BT Bank of Canada, as agent. "Person" means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof. "Plan" means an "employee benefit plan" (as defined in section 3(3) of ERISA) that is or, within the preceding five years, has been established or maintained, or to which contributions are or, within the preceding five years, have been made or required to be made, by the Company or any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate may have any liability. "Preferred Stock" means any class of capital stock of a corporation that is preferred over any other class of capital stock of such corporation as to the payment of dividends or the payment of any amount upon liquidation or dissolution of such corporation. "property" or "properties" means, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate. "Purchase Money Mortgage" means any Lien charging property acquired by the Company, which is or has been granted or assumed by the Company or which arises by operation of law in favour of the transferor substantially concurrently with and for the purpose of the acquisition of such property, in each case where (i) the principal amount secured by such Lien is not in excess of the cost to the Company of the property acquired; and (ii) such Lien extends only to the property acquired. "Required Holders" means, at any time, the holders of at least 66-2/3% in principal amount of the Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates). "Responsible Officer" means any Senior Financial Officer and any other officer of the Company with responsibility for the administration of the relevant portion of this agreement. 59 -54- "Securities Act" means the Securities Act of 1933, as amended from time to time. "Security Agreement" means the security agreement dated the date of Closing issued by the Guarantors. "Senior Financial Officer" means the chief financial officer, principal accounting officer, treasurer or comptroller of the Company. "Subsidiary" means, as to any Person, any corporation, association or other business entity in which such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the absence of contingencies, to elect a majority of the directors (or Persons performing similar functions) of such entity, and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is owned by such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries (unless such partnership can and does ordinarily take major business actions without the prior approval of such Person or one or more of its Subsidiaries). Unless the context otherwise clearly requires, any reference to a "Subsidiary" is a reference to a Subsidiary of the Company. "Subsidiary Guaranty" means the guaranty dated the date of Closing issued by the Guarantors. "Swaps" means, with respect to any Person, payment obligations with respect to interest rate swaps, currency swaps and similar obligations obligating such Person to make payments, whether periodically or upon the happening of a contingency. For the purposes of this Agreement, the amount of the obligation under any Swap shall be the amount determined in respect thereof as of the end of the then most recently ended fiscal quarter of such Person, based on the assumption that such Swap had terminated at the end of such fiscal quarter, and in making such determination, if any agreement relating to such Swap provides for the netting of amounts payable by and to such Person thereunder or if any such agreement provides for the simultaneous payment of amounts by and to such Person, then in each such case, the amount of such obligation shall be the net amount so determined. "Wholly-Owned Subsidiary" means, at any time, any Subsidiary one hundred percent (100%) of all of the equity interests (except directors' qualifying shares) and voting interests of which are owned by any one or more of the Company and the Company's other Wholly-Owned Subsidiaries at such time. 60 -55- SCHEDULE 5.14 ------------- USE OF PROCEEDS --------------- The Company shall use the proceeds of the Notes solely to acquire the Purchased Shares as defined in and pursuant to that certain Share Purchase Agreement dated as of April 17, 1997 between the Company and Imperial Parking Limited. 61 -56- NOTE 504463 N.B. INC. SENIOR SUBORDINATED PARTIAL PIK NOTES DUE APRIL 17, 2009 No.1 Cdn. $9,166,666 April 17, 1997 FOR VALUE RECEIVED, the undersigned, 504463 N.B. INC. (herein called the "Company"), a corporation duly organized and validly existing under the laws of the Province of New Brunswick hereby promises to pay to 3006302 NOVA SCOTIA COMPANY, or registered assigns, the principal sum of NINE MILLION ONE HUNDRED SIXTY-SIX THOUSAND SIX HUNDRED SIXTY-SIX DOLLARS (Cdn.$9,166,666) on April 17, 2009, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of 12% per annum from the date hereof, payable quarterly, on March 31, June 30, September 30 and December 31 of each year, commencing with June 30, 1997, payable in cash at a rate of 4% per annum and the balance of such interest payable in additional Senior Subordinated Partial PIK Notes due April 17, 2009 ("Additional Notes"), substantially in the form hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest and any overdue payment of any Make-Whole Amount (as defined in the Note Purchase Agreements referred to below), payable quarterly as aforesaid (or, at the option of the registered holder hereof, on demand), in cash at a rate per annum from time to time equal to 14%. Payments of principal of, interest (except for interest payable in Additional Notes as herein provided) on and any Make-Whole Amount with respect to this Note are to be made in lawful money of Canada at Vancouver, British Columbia or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreements referred to below. This Note is one of a series of the Company's Senior Subordinated Partial PIK Notes due April 17, 2009 (herein called the "Notes") issued pursuant to one or more separate Note Purchase Agreements, dated as of April 17, 1997 (as from time to time amended, the "Note Purchase Agreements"), between the Company and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the 62 -57- subordination provisions set forth in SECTION 14 of the Note Purchase Agreements and (ii) to have made the representation set forth in SECTION 6.2 of the Note Purchase Agreements. This Note is a registered Note and, as provided in the Note Purchase Agreements, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder's attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary. This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise. If an Event of Default, as defined in the Note Purchase Agreements, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreements. This Note shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State. 504463 N.B. INC. By: /s/ Authorized Signer Title: 63 -58- EXHIBIT 11(e)-2 FORM OF OPINION OF SPECIAL COUNSEL TO THE COMPANY Matters To Be Covered In Opinion of Special Counsel To the Company 1. Each of the Company and its Subsidiaries being duly incorporated, validly existing and in good standing and having requisite corporate power and authority to issue and sell the Notes and to execute and deliver the documents. 2. Each of the Company and its Subsidiaries being duly qualified and in good standing as a foreign corporation in appropriate jurisdictions. 3. Due authorization and execution of the documents and such documents being legal, valid, binding and enforceable. 4. No conflicts with charter documents, laws or other agreements. 5. All consents required to issue and sell the Notes and to execute and deliver the documents having been obtained. 6. No litigation questioning validity of documents. 7. The Notes not requiring registration under the Securities Act of 1933, as amended; no need to qualify an indenture under the Trust Indenture Act of 1939, as amended. 8. No violation of Regulations G, T or X of the Federal Reserve Board. 9. Company not an "investment company", or a company "controlled" by an "investment company", under the Investment Company Act of 1940, as amended. EX-10.G 9 EXHIBIT 10.G 1 EXHIBIT (10g) SHAREHOLDERS AGREEMENT ---------------------- MEMORANDUM OF AGREEMENT made as of the 17th day of April, 1997. BETWEEN: 3357392 CANADA INC., a corporation incorporated pursuant to the laws of Canada, (hereinafter referred to as "CANCO 1"), OF THE FIRST PART, -and- The individuals and trusts listed on Schedule A hereto, (subject to the further definition below, such individuals and trusts being hereinafter collectively referred to as "IMPARK MANAGEMENT" and individually as a "MEMBER OF IMPARK MANAGEMENT"), OF THE SECOND PART, -and 3355489 CANADA INC., a corporation incorporated pursuant to the laws of Canada, (hereinafter referred to as "FUMI HOLDINGS"), OF THE THIRD PART. WHEREAS the individuals listed in Schedule A are employed in the management of Impark (as hereinafter defined); AND WHEREAS those members of Impark Management listed in Schedule A (the "Holdco Shareholders") are the holders of those shares and options to purchase shares as listed in Schedule A of Imperial Holdings No. 2 Inc. ("Holdco"), which owns all of the shares of Imperial Parking Limited; AND WHEREAS First Union Real Estate Equity and Mortgage Investments ("FUR"), an Ohio business trust, has entered into a share purchase 2 -2- agreement dated February 18, 1997 as amended by amending agreements made as of February 26, 1997, March 2, 1997, March 7, 1997, March 17, 1997 and April 15, 1997 (the "Share Purchase Agreement") with Impark Investments Inc., the Holdco Shareholders and certain other individuals providing for the sale and purchase of all of the shares of Holdco; AND WHEREAS Canco 1 has arranged to obtain an assignment of all of the rights of FUR under the Share Purchase Agreement; AND WHEREAS, at the date hereof, Canco 1 is a wholly-owned subsidiary of FUMI Holdings; AND WHEREAS, as a result of the completion of the Share Purchase Agreement, the Holdco Shareholders will become holders of shares of Canco 1; AND WHEREAS the Holdco Shareholders wish to maximize the interest in Canco 1 which they acquire as a result of the sale and purchase of shares provided for under the Share Purchase Agreement; AND WHEREAS the members of Impark Management who are not Holdco Shareholders wish to become shareholders of Canco 1; AND WHEREAS the parties to this agreement wish to establish their respective rights and obligations in respect of the shares of Canco 1 which the members of Impark Management will acquire; NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and of the respective covenants and agreements herein contained and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by each of the parties), the parties covenant and agree as follows: ARTICLE 1 INTERPRETATION -------------- 1.1 CERTAIN DEFINITIONS. Where used in this agreement, unless there is something in the context or the subject matter inconsistent therewith, the following terms shall have the following meanings: "ADDITIONAL PARKING FACILITIES" means any parking facilities (other than the Cleveland Parking Facilities and the Transferred Parking Facilities) which are acquired by FUR after April 17, 1997 whether by direct purchase or by acquisition of an entity owning such parking facilities; 3 -3- "ADJUSTED OPERATING INCOME" for any period means the Facilities Operating Income for such period minus the Facilities Return to FUR for such period; "AFFILIATE", in relation to an individual, means a corporation that is controlled by such individual and all of the shares of which are owned by such individual and/or such individual's spouse and/or children or a trust of which such individual and/or such individual's spouse and/or children are the sole beneficiaries; "BASE INDEBTEDNESS" means the amount as of the close of business on April 17, 1997 of the combined indebtedness (excluding indebtedness incurred for normal working capital purposes including without limitation operating lines of credit) of Canco 1, the Corporation, 504308 N.B. Inc. and 504463 N.B. Inc., which is expected to be approximately $77,500,000; "BOARD" means the board of directors of Canco 1; "BUSINESS DAY" means any day which is not a Saturday, a Sunday or a statutory holiday in Ontario or British Columbia; "CLEVELAND PARKING FACILITIES" means the Huntington garage, the West Third Street surface parking lot and the 55 Public Square garage, all in the City of Cleveland, Ohio; "CLASS A COMMON SHARES" means the Class A non-voting common shares in the capital of Canco 1, any securities into which such common shares may be converted, exchanged, reclassified, redesignated, subdivided or otherwise changed from time to time and any securities of any successor corporation or a corporation continuing from Canco 1 into which such common shares or such other securities may be changed as a result of any amalgamation, merger, consolidation, plan of arrangement or reorganization, statutory or otherwise; "CLASS B COMMON SHARES" means the Class B voting common shares in the capital of Canco 1, any securities into which such common shares may be converted, exchanged, reclassified, redesignated, subdivided or otherwise changed from time to time and any securities of any successor corporation or a corporation continuing from Canco 1 into which such common shares or such other securities may be changed as a result of any amalgamation, merger, consolidation, plan of arrangement or reorganization, statutory or otherwise; "COMMON SHARES" means Class A Common Shares and Class B Common Shares; 4 -4- "CONSOLIDATED PERFORMANCE" for any period means the total of the Impark EBITDA and the Adjusted Operating Income for such period; "CORPORATION" means Imperial Parking Limited or any successor thereto; "DATE OF CLOSING" and "TIME OF CLOSING" have the respective meanings ascribed thereto in Articles 5 and 6, as the case may be; "DEPOSITARY" has the meaning ascribed thereto in section 9.1; "DESIGNATED REPRESENTATIVE" means the Designated Representative as determined at the relevant time in accordance with section 3.1; "DISABILITY" means the inability of a member of Impark Management to continue to perform his duties for Impark on a full-time basis for a period of more than six (6) months as a result of physical or mental disability, as determined by a qualified medical practitioner; "EFFECTIVE DATE" has the meaning ascribed thereto in sections 6.1, 6.2, 6.3 and 7.2; "FACILITIES OPERATING INCOME" for a period means, without double counting, the actual revenues realized by Impark during such period from the operation of First Union Facilities less all expenses associated with operating the First Union Facilities (other than real estate taxes, utilities, ground rent and insurance covering damage to the physical facility) incurred by Impark during such period in operating the First Union Facilities (but for greater certainty not deducting any amounts payable to FUR pursuant to any lease or management agreement and not deducting any interest expense); "FACILITIES RETURN TO FUR" for any period means an amount of imputed interest calculated at the rate of 11% per annum on the amount of any outstanding FUR Capital Expenditure; "FAIR VALUE PER SHARE" as at any date means: (i) in the case of Preferred Shares, the Redemption Amount of a Preferred Share as at such date determined in accordance with the articles of Canco 1 but without regard to the fact that the Preferred Shares are not redeemable prior to April 1, 2002; and (ii) in the case of Common Shares, the amount determined by dividing the Management Enterprise Equity Value as at the end of the immediately preceding calendar year by 1,322,140; 5 -5- "FIRST UNION FACILITIES" means the Cleveland Parking Facilities, the Transferred Parking Facilities and Additional Parking Facilities which are leased to or managed by Impark; "FUMI" mean First Union Management, Inc., a Delaware corporation; "FUMI HOLDINGS PROPORTION" has the meaning ascribed thereto in section 5.1; "FUR CAPITAL EXPENDITURE" means the following: (i) the amount of the gross acquisition cost to FUR (including purchase price, fees, commissions and out-of-pocket expenses of acquisition) of Additional Parking Facilities, and such FUR Capital Expenditures shall be deemed to be outstanding during any period while such Additional Parking Facilities constitute First Union Facilities; and (ii) the amount expended directly or indirectly by FUR to make capital improvements to any First Union Facilities on Impark's recommendation for the purpose of increasing the Facilities Operating Income, and such FUR Capital Expenditures shall be deemed to be outstanding from the date any such amount is so expended and for so long as such parking facilities constitute First Union Facilities; "IMPARK" means collectively the Corporation and 504463 N.B. Inc. and any direct or indirect subsidiaries of either of them; "IMPARK EBITDA" for any period means the consolidated earnings of Impark before interest expense (or interest income), income taxes, depreciation and amortization, as calculated in accordance with generally accepted accounting principles as used in the December 31, 1996 audited financial statements of the Corporation, consistently applied, adjusted as follows: (a) deducting any revenues or expenses of any type related to First Union Facilities for such period; and (b) deducting an amount on account of imputed interest calculated at the rate of 8% per annum on any indebtedness (excluding indebtedness incurred for normal working capital purposes including without limitation operating lines of credit) of Impark which is outstanding at any time during such period in any amount in excess of the Base Indebtedness; "IMPARK MANAGEMENT" means the individuals listed on Schedule A hereto and any other employee of Impark who hereafter becomes a party to this agreement and any legal personal representative of any such individual who 6 -6- dies or becomes mentally incapacitated (the foregoing being "individual members"), and includes any Affiliate of any individual member of Impark Management which holds Shares or to which Shares are transferred or any successor or assign of such Affiliate and also includes individuals to whom Shares are transferred in accordance with the provisions of sections 4.3 and 4.5; and reference herein to the "members" or a "member" means members or a member of Impark Management; "MANAGEMENT ENTERPRISE EQUITY VALUE" as at the end of any calendar year means the amount obtained by multiplying $5,555,556 by the Proportionate Change as at such year end and deducting $4,233,416 from such product; "PERFORMANCE SHORTFALL" for any period means the amount, if any, by which the Performance Target for such period exceeds the Consolidated Performance for such period, provided that if such Consolidated Performance exceeds such Performance Target the Performance Shortfall shall be zero; "PERFORMANCE TARGET" means $13,146,105 for the 1997 calendar year, $14,340,350 for the 1998 calendar year, $14,895,964 for the 1999 calendar year, and $15,473,803 for the 2000 calendar year, subject in each case to the provisions of section 3.5; "PERSON" includes an individual, a trust, a firm, a corporation, a syndicate, a partnership, an association, a joint venture and every other legal or business entity whatsoever; "PREFERRED SHARES" means the Class A Preferred Shares in the capital of Canco 1, any securities into which such Class A Preferred Shares may be converted, exchanged, reclassified, redesignated, subdivided or otherwise changed from time to time and any securities of any successor corporation or a corporation continuing from Canco 1 into which such Class A Preferred Shares or such other securities may be changed as a result of any amalgamation, merger, consolidation, plan of arrangement or reorganization, statutory or otherwise; "PROPORTIONATE CHANGE" as at the end of a calendar year means (i) one as at the end of 1996, and (ii) other than as at the end of 1996, the Consolidated Performance for such calendar year divided by the Performance Target for 1997; "PURCHASE PRICE" means the purchase price for any Purchased Shares pursuant to any transaction of purchase and sale of Shares provided for in this agreement; "PURCHASED SHARES" means, in the context of any provision hereof pursuant to which a Vendor is selling Shares, such Shares; 7 -7- "PURCHASER" means, in the context of any provision hereof pursuant to which a Vendor is selling Shares, the purchaser of such Shares; "SHARE PURCHASE CLOSING" means the completion of the sale and purchase of shares of Holdco pursuant to the Share Purchase Agreement; "SHARES" means Class A Common Shares, Class B Common Shares and Preferred Shares; "SPOUSE" has the meaning ascribed thereto in Part I of the Family Law Act (Ontario); "THIRD PARTY" means, as applicable to sections 5.1 and 6.4, a person dealing at arm's length (within the meaning of the Income Tax Act (Canada)) with Canco 1, and for greater certainty, in all cases, neither (i) any individual who is a full time member of the management of FUR or FUMI or any of their respective affiliates, or any corporation wholly-owned, directly or indirectly, by any such individual or a trust related to any such individual, nor (ii) any person that is a firm, corporation, syndicate, partnership, association, joint venture or other legal or business entity whatsoever which is controlled by FUR or FUMI, shall be deemed to be a Third Party; "THIRD PARTY OFFER" has the meaning ascribed thereto in section 5.1; and "TRANSFERRED PARKING FACILITIES" means 633 - 10th Avenue S.W., Calgary, Alberta; 1009 A, B and C - 9th Avenue S.W., Calgary, Alberta; 10040 - 103 Street, Edmonton, Alberta; 10244 - 103 Street, Edmonton Alberta; 10239 - 107 Street, Edmonton, Alberta; 1709 Blanshard Street, Victoria, B.C.; 245 Graham Avenue and 257 Smith Street, Winnipeg, Manitoba; 168 Water Avenue, Winnipeg, Manitoba; 336 Young Street, Winnipeg, Manitoba; 296, 298 and 304 Broadway, Winnipeg, Manitoba; 115 Donald Street, Winnipeg, Manitoba; 178 Queen's Quay East, Toronto, Ontario; and 1724 Broad Street, Regina, Saskatchewan; and "VENDOR" means, in the context of any provision hereof pursuant to which Shares are being sold, the shareholder selling such Shares. 1.2 OTHER RULES OF INTERPRETATION. All words used in this agreement shall be read with such changes in gender and number as are required by the context. Words importing the singular number shall include the plural and vice versa and words importing gender shall include all genders. The terms "this agreement", "hereof", "herein", "hereunder" and similar expressions refer to this agreement and not to any particular Article, section or paragraph or other portion hereof and 8 -8- include any agreement, schedule, amendment or other instrument supplementary or ancillary hereto. Time is of the essence hereof. 1.3 CURRENCY. All dollar amounts stated herein are, unless otherwise indicated, in Canadian dollars. 1.4 HEADINGS AND REFERENCES. The division of this agreement into Articles, sections and paragraphs and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this agreement. Reference in this agreement to an Article, section or Schedule is to the applicable Article, section or Schedule of this agreement unless the context otherwise requires. 1.5 REFERENCE TO STATUTES. Reference in this agreement to a statute means such statute as amended, re-enacted or replaced from time to time and includes all regulations promulgated thereunder. ARTICLE 2 SUBSCRIPTION AND SHARE PURCHASE CLOSING --------------------------------------- 2.1 EXERCISE OF OPTION. Each Holdco Shareholder already has exercised or shall, prior to the Share Purchase Closing, exercise all options to purchase shares of Holdco held by such Holdco Shareholder as set out in Schedule A so that, at the time of the Share Purchase Closing, each Holdco Shareholder will be the holder of that number of shares of Holdco indicated on Schedule B. 2.2 ALTERATION OF CONSIDERATION. Notwithstanding the provisions of section 2.3 of the Share Purchase Agreement, the portion of the purchase price for the shares of Holdco to be received on the Share Purchase Closing by each Holdco Shareholder shall be satisfied by the payment and delivery by Canco 1 of cash and Shares as set out in Schedule B. Without limiting the generality of section 4.6, all certificates for Shares issued to Holdco Shareholders on the Share Purchase Closing shall bear the legend provided for in section 4.6. 2.3 TAX ELECTIONS. Notwithstanding the provisions of section 2.14 of the Share Purchase Agreement, if requested by a Holdco Shareholder, Canco 1 will file a joint election pursuant to subsection 85(1) of the Income Tax Act (Canada) (the "Tax Act") in the prescribed form and within the prescribed time so that the proceeds of disposition of the shares of Holdco for the purposes of the Tax Act shall be deemed to be the amount elected in such election, as determined by the Holdco Shareholder, within the limits provided for in the Tax Act. 2.4 SUBSCRIPTION. Each person named in Schedule C hereby subscribes for and agrees to take up the number and class of Shares set out opposite such person's 9 -9- name in such Schedule and to pay therefor the subscription price of $1.00 per Share, such subscription to be made and to become effective immediately following the proposed amalgamation of Canco 1 and the Corporation as referred to in section 3.3. Canco 1 agrees to accept such subscription by each such person. 2.5 REPRESENTATION REGARDING RRSP'S. Each of J. Bruce Newsome, Douglas I. Poirier, J. Robin Bateman, Robert L. Noiles, Henry J. Renaud and Stuart M. MacKenzie represents and warrants with respect to his respective Affiliate which is a Holdco Shareholder that: (i) at the time of closing under the Share Purchase Agreement, such Affiliate will be the registered owner of that number of shares of Holdco as listed opposite the name of such Affiliate in Schedule A, with good and marketable title thereto free and clear of all liens, charges and encumbrances; (ii) except pursuant to the Share Purchase Agreement, no person has any option, contract or agreement, or any right or privilege capable of becoming an option, contract or agreement, for the purchase or acquisition of any of the shares of Holdco or any Shares to be acquired pursuant hereto; (iii) the trustee under such Affiliate has all necessary power and authority to enter into this agreement and to perform its obligations hereunder; and (iv) this agreement has been duly executed and delivered by such Affiliate and is a legal, valid and binding obligation of such Affiliate, enforceable against such Affiliate in accordance with its terms. ARTICLE 3 VOTING, ORGANIZATION AND MANAGEMENT ----------------------------------- 3.1 DESIGNATED REPRESENTATIVE. The representative from time to time of the members of Impark Management (the "Designated Representative") shall be the Chief Executive Officer of the Corporation then in office who shall have the irrevocable and full authority to give and receive all notices, communicate all decisions and otherwise take all actions that are to be given, made or taken pursuant to this agreement by Impark Management and the parties hereto shall be entitled to rely upon the authority of the Designated Representative to bind Impark Management in respect of all matters arising pursuant to this agreement. 3.2 ASSIGNMENT OF VOTING RIGHTS. Each member of Impark Management does hereby irrevocably nominate, constitute and appoint the Designated Representative as his true and lawful attorney with authority to vote any and all of the Shares held from time to time by such member, and to execute resolutions in writing of the shareholders of Canco 1 as holders of such Shares for and on behalf of and in the name of such member, in such manner as may be determined by the Designated Representative in his sole discretion, at all times and on all matters that may come before the shareholders of Canco 1 or any class thereof while this agreement remains in effect and to make, execute, seal and deliver for and on behalf of and in the name of such member of Impark Management, one or more proxies in respect of Shares held by such member of Impark Management from time to time. 10 -10- The members of Impark Management shall each deliver to the current Designated Representative, concurrently with the execution of this agreement and from time to time thereafter upon request therefor, a continuing power of attorney in the form attached hereto as Schedule D in favour of the Designated Representative for the purposes of this section 3.2 and Article 8, which power of attorney shall not be revocable by the member without the consent of FUMI Holdings and which, being coupled with an interest, shall not be revoked by the insolvency, bankruptcy or incapacity of the member or of any Affiliate of the member to which Shares may be transferred in accordance with section 4.2. Each member of Impark Management hereby ratifies and confirms and agrees to ratify and confirm all that such attorney may lawfully do or cause to be done by virtue of the authority hereby or thereby conferred. Upon any change in the Designated Representative, the former Designated Representative and all members of Impark Management shall forthwith agree to the revocation of all such powers of attorney and new powers of attorney shall be forthwith provided in favour of the new Designated Representative. 3.3 AMALGAMATION OF CANCO 1. Forthwith following the Share Purchase Closing, Holdco shall be wound-up into Canco 1 and then Canco 1 and the Corporation shall be amalgamated pursuant to a short form vertical amalgamation under the Canada Business Corporations Act. Following such amalgamation, all references in this agreement to Canco 1 and the Corporation shall be deemed to be references to the continuing corporation formed as a result of the amalgamation of such two corporations. 3.4 BOARD OF DIRECTORS. The Board shall consist of three members. One member of the Board shall be the nominee of the Designated Representative and the other two members of the Board shall be nominees of FUMI Holdings. 3.5 ADJUSTMENT OF PERFORMANCE TARGETS AND CONSOLIDATED ACHIEVEMENT. Notwithstanding the definition of Performance Targets and the definition of Consolidated Performance and the definitions related thereto, the amounts otherwise provided for or determined in accordance with any of such definitions shall be subject to adjustment in the discretion of the Board to be exercised in good faith and after consultation with the Designated Representative and the auditors of Canco 1 in the event of material asset dispositions or in the event of unusual circumstances which would lead to anomalous or inappropriate results and to offset the effect of any office rent paid by Impark to FUR on the First Union Facilities. 3.6 PERFORMANCE ACHIEVEMENT PROGRAM. The Corporation shall establish and implement a performance achievement program for the benefit of Impark Management on the terms set forth in Schedule E. 3.7 PERFORMANCE BONUS PROGRAM. The Corporation shall establish and implement a performance bonus program for the benefit of, inter alia, Impark Management on the terms set forth in Schedule F. 11 -11- 3.8 ADDITIONAL ISSUANCE OF COMMON SHARES. If after the date hereof Canco 1 proposes to issue from treasury any additional Class A Common Shares or Class B Common Shares, Canco 1 shall first offer such Common Shares to the parties hereto (the "Eligible Shareholders") who then hold Common Shares of the class of Common Shares proposed to be issued (the "Offered Class") by notice given to the Eligible Shareholders of the intention of Canco 1 and the number and class of additional Common Shares proposed to be issued. Each Eligible Shareholder shall have the right to purchase his pro rata portion of the Common Shares so offered with such pro rata portion to be determined based on the number of Common Shares of the Offered Class owned by such Eligible Shareholder at the date such notice is given relative to the total outstanding number of Common Shares of the Offered Class as at such date. Each Eligible Shareholder shall have 20 Business Days from the date such notice is given to agree to take up and pay for the Common Shares so offered. Any Common Shares that the Eligible Shareholders have not agreed to take up and pay for within such 20 Business Days may be issued at any time within the ensuing 60 days to such persons as the Board in its discretion determines on terms not more favourable to the purchaser than the terms offered to the Eligible Shareholders. ARTICLE 4 GENERAL RESTRICTIONS ON TRANSFERS --------------------------------- 4.1 GENERAL RESTRICTION. Except as specifically provided in sections 4.2, 4.3 and 4.4 and Articles 5, 6 and 7, no member of Impark Management may, except with the prior written consent of FUMI Holdings, which consent may be withheld in its sole discretion, sell, transfer (including by operation of law, by winding-up or by amalgamation and whether or not for consideration), assign or otherwise dispose of (any of the foregoing being a "sale") or mortgage, charge, encumber, pledge, assign by way of security or grant a security interest in (any of the foregoing being a "pledge") its rights, title or interest in, to or under any Shares to any person other than FUMI Holdings. Any sale or pledge attempted to be made which is not in accordance with this agreement shall be void and of no effect and Canco 1 shall not accept any such sale or pledge or any transfer by any person claiming rights through any such sale or pledge for registration on its books of record. 4.2 TRANSFERS TO AFFILIATES. Subject to the provisions of the articles of Canco 1 and sections 4.5 and 4.6 and Article 6 of this agreement, nothing herein shall prevent the transfer of any Shares or any interests therein by any of the individual members of Impark Management to an Affiliate of such member or by an Affiliate of such individual member to another Affiliate of such individual member provided that: (i) the Affiliate executes and delivers a document agreeing to be bound by the provisions hereof pursuant to section 4.5 and such other instruments as FUMI Holdings may reasonably request to ensure that such Affiliate continues to 12 -12- qualify as an Affiliate of such member; (ii) each of the Affiliate and such individual member agrees with Canco 1 and FUMI Holdings not to effect or agree to effect any sale or pledge of any securities of such Affiliate without the prior written consent of FUMI Holdings, such consent not to be unreasonably withheld; and (iii) such individual member shall remain liable under this agreement as a guarantor to ensure that the Affiliate, or any further Affiliate to which such Shares may be transferred, abides by the terms of this agreement. 4.3 PERMITTED TRANSFERS. Any member of Impark Management may sell all or any portion of such member's or such member's Affiliate's Shares to: (i) with the prior written consent of the Designated Representative, any other member of Impark Management or any person who has been an employee of Impark continuously since April 17, 1997; or (ii) with the prior written consent of FUMI Holdings, such consent not to be unreasonably withheld, any other full-time employee of Impark, provided that such purchaser shall, as a condition precedent to such purchase and sale, execute an agreement as required by section 4.5 and such purchaser shall thereupon become a member of Impark Management for the purposes of this agreement. 4.4 PERMITTED PLEDGES. Any member of Impark Management may, with the prior written consent of FUMI Holdings, such consent not to be unreasonably withheld, pledge all or any portion of such member's or such member's Affiliate's Shares to a recognized Canadian financial institution solely to secure bonafide indebtedness or financial obligations of such member or Affiliate to such financial institution for an amount not exceeding two-thirds (2/3) of the original issue price of the Shares held by such member and such member's Affiliate and solely for the purpose of such member or Affiliate acquiring such Shares, provided that: (i) such financial institution acknowledges in writing, on terms acceptable to FUMI Holdings, to be bound by the terms and provisions of this agreement in dealing with such Shares to the same extent as if it were a member of Impark Management; (ii) such financial institution agrees to notify the Designated Representative and FUMI Holdings of any default by a member of Impark Management with respect to such indebtedness or financial obligations and to grant the Designated Representative and FUMI Holdings the option to purchase such member's Shares in accordance with section 6.2; (iii) such financial institution agrees, in the event of a sale, realization or other disposition of all or any portion of such Shares, that the same shall only be dealt with subject to and in accordance with the terms and provisions of this agreement; and (iv) such financial institution agrees that upon repayment of such indebtedness or financial obligations it will deliver the certificates representing such member's Shares to the Depositary and not to such member. 13 -13- 4.5 AGREEMENT BINDING. If any Shares or any interests therein are transferred, issued or sold to any person who is not an original party to this agreement, as a condition precedent to being registered as a holder of Shares and to the exercise or enjoyment by such acquiror of any rights attaching to such Shares, the acquiror of such Shares shall execute and deliver an agreement, in form and on terms satisfactory to FUMI Holdings, whereby such acquiror agrees to be bound by the provisions hereof, with such amendments hereto and thereto as may be required by FUMI Holdings, as if he were an original party hereto, and such acquiror shall thereupon become a member of Impark Management (for purposes only of this agreement but not for the purposes of the program described in Schedule E) and shall have the same rights, and be subject to the same obligations and restrictions, hereunder as the other members of Impark Management or the original party hereto previously holding such Shares. In the case of a sale of all of the Shares of an original party other than to an Affiliate thereof, the obligations hereunder of such original party as a holder of Shares shall thereupon cease to be effective and such member shall cease to be entitled to any benefits hereunder in respect of such Shares arising after the time of such sale, subject to the continuing liability under section 4.2 in respect of transfers to Affiliates and provided that the foregoing shall not release or affect any rights or obligations arising prior to such time hereunder in respect of such Shares. For greater certainty, if such a transferee is already a member, his rights and obligations as a member hereunder shall thereupon apply to the Shares thus sold to him in the same manner as to his original Shares (provided that such transferee shall not thereby acquire any additional rights for the purposes of the program described in Schedule E). 4.6 LEGENDS ON SHARE CERTIFICATES. Any and all certificates representing Shares now or hereafter issued to any person during the term of this agreement (whether such certificates are issued at present or subsequently issued or sold) shall have typed or otherwise written thereon a legend substantially to the following effect: "The shares represented by this certificate are subject to certain restrictions on the right to transfer, sell, assign or otherwise deal with them, pursuant to a shareholders' agreement made as of the 17th day of April, 1997, and notice of the terms and conditions of such agreement is hereby given." ARTICLE 5 THIRD PARTY OFFERS ------------------ 5.1 DRAG ALONG. If at any time FUMI Holdings proposes to sell any of its Common Shares pursuant to a bonafide offer by, or letter of intent of, a Third Party (a "Third Party Offer"), FUMI Holdings shall deliver a notice in writing to the 14 -14- members of Impark Management setting out the price per Common Share of the Third Party Offer (the "Offer Price") (which shall be the same for both Class A Common Shares and Class B Common Shares) and the other relevant material terms and conditions (the "Offer Terms") of the Third Party Offer and the number of Common Shares that FUMI Holdings intends to sell pursuant to the Third Party Offer and the proportion of the Common Shares held by FUMI Holdings that such number then constitutes (the "FUMI Holdings Proportion"). FUMI Holdings may, at its option, specify in such notice that the members of Impark Management shall be required to sell to the Third Party, at the Offer Price and on the Offer Terms, that proportion of their Common Shares that is equal to the FUMI Holdings Proportion, and, if FUMI Holdings so states in such notice, the members of Impark Management shall sell their Common Shares to the Third Party at the Offer Price and on the Offer Terms. 5.2 TAG ALONG. If FUMI Holdings does not require the members of Impark Management to sell their Common Shares pursuant to section 5.1, then each of the members of Impark Management may, by notice in writing delivered to FUMI Holdings at any time within ten (10) days following the delivery of the notice by FUMI Holdings to such members pursuant to section 5.1, elect either of the following alternatives: (a) to sell that proportion of such member's Common Shares that is equal to the FUMI Holdings Proportion at the Offer Price and on the Offer Terms, in which case FUMI Holdings shall cause the Third Party to purchase, and such member shall sell, such member's Common Shares to the Third Party; or (b) not to sell any Common Shares held by such member pursuant to this section 5.2, in which case FUMI Holdings may proceed to sell the Common Shares indicated in the FUMI Holdings' notice described above in section 5.1 to the Third Party pursuant to the Third Party Offer at the Offer Price and on the Offer Terms. 5.3 PREFERRED SHARES. In the event that as a result of any Third Party Offer all of the Common Shares held by any member of Impark Management are to be sold by such member, FUMI Holdings shall cause all of the Preferred Shares held by such member of Impark Management either to be redeemed by Canco 1 or to be acquired by some other person for a price equal to the then current redemption price of such Preferred Shares, in either event immediately prior to or contemporaneously with the sale of the Common Shares. 5.4 REPRESENTATIONS AND WARRANTIES. In connection with any sale of Common Shares in accordance with this Article 5, FUMI Holdings may require the members of Impark Management to enter into agreements with FUMI Holdings and/or the Third Party in which such members shall represent and warrant that, 15 -15- except as specifically disclosed to FUMI Holdings or the Third Party in writing, such member at the time of closing of such sale does not have actual knowledge that any warranty made by FUMI Holdings pursuant to a written sale agreement, a copy of which was provided to such member, in connection with such sale was untrue in any material respect as of the closing of such sale, provided that no such member need make any independent enquiry or investigation in connection with giving such representation and warranty. The liability of such member for any inaccuracy in such representation and warranty shall be limited to the amount which he receives from the sale of his Shares in connection with such sale and shall be pro rata in accordance with the number of Shares sold by such member in relation to the total number of shares sold to the Third Party. 5.5 CLOSING OF THIRD PARTY PURCHASES. Any purchase and sale of Common Shares pursuant to this Article 5 shall be effected concurrently with the sale of Common Shares by FUMI Holdings to the Third Party in accordance with the provisions of Article 8 and shall be completed at the date and time (the "Date of Closing" and "Time of Closing", respectively, for purposes of Article 8) specified by FUMI Holdings or the Third Party by notice in writing delivered to the member not later than ten (10) days following the date on which the obligations of such member to sell Common Shares have arisen pursuant to this Article 5, and in any event the Date of Closing shall be no later than ninety (90) days following the date of the Third Party Offer. ARTICLE 6 DEATH, DISABILITY, TERMINATION, RESIGNATION AND DEFAULT ------------------------------------ 6.1 OPTION TO PURCHASE. If at any time any individual member of Impark Management has ceased to be employed by Impark or by an affiliate of Impark for any reason (including, without limitation, by reason of voluntary resignation, termination with or without cause, death or Disability), the following rights shall arise with respect to the Shares held by such individual member of Impark Management and by any Affiliate of such individual member (the "Subject Shares"): (a) the Designated Representative shall have the right, at his option, to purchase for cash all but not less than all of the Subject Shares, which option may be exercised by notice in writing to such individual member of Impark Management or the executors or legal personal representatives of an individual member who has died or become mentally incapacitated or the permitted successors and assigns of an Affiliate of that member (the "Selling Manager") and to FUMI Holdings given at any time within 30 days following the date (the Effective Date") which is the effective date of the resignation, the date 16 -16- of giving of notice of termination or the date of death or Disability, as the case may be; (b) if the Designated Representative does not exercise his option as set forth in subsection (a) above within 30 days following the Effective Date or gives notice to the Selling Manager and FUMI Holdings that he does not wish to exercise such option, FUMI Holdings shall have the right, at its option, to purchase for cash all but not less than all of the Subject Shares, which option may be exercised by notice in writing to the Selling Manager given at any time after 30 days following the Effective Date; and (c) if the Designated Representatives does not exercise his option as set forth in subsection (a) above and FUMI Holdings does not exercise its option as set forth in subsection (b) above, the Selling Manager shall have the right, at his option, to sell all of his Common Shares to Canco 1 with the price therefor to be payable by the issuance of additional Preferred Shares at $1 per Preferred Share, which option may be exercised by the Selling Manager giving notice to Canco 1 and FUMI Holdings at any time after 40 days but before 60 days following the Effective Date and, in the event of the exercise of such right, the Preferred Shares issued as a result thereof shall become Subject Shares of such Selling Manager. 6.2 SALE UPON DEFAULT ON INDEBTEDNESS. If a member of Impark Management defaults on any indebtedness referred to in section 4.4 or commits any act of bankruptcy, the Designated Representative and FUMI Holdings shall have the option, exercisable in accordance with the provisions of subsections (a) and (b) of section 6.1, mutatis mutandis, upon notice (the date of which shall be, for these purposes, the "Effective Date") to such member at any time following a default, to purchase all or any portion of the Shares held by such member. 6.3 FUMI HOLDINGS OPTION TO PURCHASE. By notice given to the members of Impark Management at any time after April 17, 2001, FUMI Holdings shall have the right, at its option exercisable from time to time, to purchase all or any portion of the Shares held by any member or members of Impark Management. The date of the giving of any such notice shall be the "Effective Date". 6.4 SALE OF PREFERRED SHARES. By written notice given to Canco 1 and FUMI Holdings, at any time during the month of March in any year commencing with March of 2004, any member of Impark Management who is not at such time employed by any of FUR, FUMI or a subsidiary of any of them (the "Selling Manager") shall have the right, at his option, to require Canco 1 to purchase all of the Preferred Shares then owned by such Selling Manager unless such purchase by Canco 1 would result in a breach or default under any agreement between Canco 1 17 -17- and a Third Party or would otherwise be contrary to law. The date of the giving of any such notice shall be the "Effective Date", subject to such condition. 6.5 PURCHASE PRICE. The purchase price per share for Shares transferred pursuant to sections 6.1, 6.2, 6.3 and 6.4 shall be the Fair Value Per Share as of the Effective Date. 6.6 CONFLICT WITH THIRD PARTY OFFER. If an Effective Date occurs with respect to a member at any time following the delivery of a notice pursuant to section 5.1 setting out a Third Party Offer, the provisions of this Article 6 shall not apply with respect to the Shares held by such member or Affiliate of such member unless (i) FUMI Holdings has not required such member to sell his Shares pursuant to section 5.1 and the member has elected not to sell any Shares held by the member in accordance with alternative (b) of section 5.2, in which case the provisions of this Article 6 shall apply, (ii) the purchase and sale transaction with the Third Party pursuant to section 5.1 is not completed for any reason other than the default of the member, in which case the provisions of this Article 6 shall apply, or (iii) such member has become obligated to sell less than all of his Shares to the Third Party, in which case the provisions of this Article 6 shall apply to those Shares held by such member which he has not become so obligated to sell. 6.7 COMPLETION. Subject as hereinafter provided, each transfer of Shares under this Article 6 shall for all purposes be deemed to have been completed on the Effective Date relating thereto and title to the Shares being transferred shall pass to the transferee thereof on and as of such date. In the case of transfers of Shares other than pursuant to section 6.4 and subsection (c) of section 6.1, the party having the option to purchase shall, in the notice exercising such option, notify the Selling Manager of a date and time (the "Date of Closing" and "Time of Closing", respectively, for the purposes of Article 8) for the payment of the purchase price for the Subject Shares, which date shall be not more than sixty (60) days after the date of such notice and the closing shall be effected in the manner provided for in Article 8. In the case of transfers to Canco 1 of Common Shares pursuant to subsection (c) of section 6.1 and of Preferred Shares pursuant to section 6.4, Canco 1 shall notify the Selling Manager of a date and time (the "Date of Closing" and "Time of Closing", respectively, for the purposes of Article 8) for the payment of the purchase price for the Subject Shares, which date shall be not more than sixty (60) days after the date of such notice and the closing shall be effected in the manner provided for in Article 8. Notwithstanding the foregoing, any transfer of Shares to Canco 1 provided for in section 6.4 or in subsection (c) of section 6.1 shall be conditional upon all of the members of Impark Management, other than the Selling Manager, consenting to such transfer and waiving any rights they may have as a condition precedent to or as a consequence of such transfer in their capacity as holders of Preferred Shares and Common Shares (i) to the immediate payment of any accrued but unpaid dividends on their Preferred Shares or (ii) to the contemporaneous repurchase of any of their Shares. The members of Impark Management hereby consent to any such transfer 18 -18- and waive any such rights to the extent arising as a result of any such transfer and hereby authorize and direct the Designated Representative to execute and deliver on their behalf at the time of any such transfer a document confirming such consent and waiver. ARTICLE 7 FAMILY LAW ---------- 7.1 PREVENTION OF TRANSFER ORDERS. Each member of Impark Management agrees to use his best efforts to prevent or avoid any order or similar act being rendered by any court of competent jurisdiction under the Family Law Act (Ontario), the Divorce Act (Canada) or comparable laws or legislation of any other jurisdiction that would have the effect of transferring beneficial ownership of the Shares held by such member or any Affiliate of such member to any person (other than by reason of that person being the individual's heir or legal personal representative at the time of his or her death or mental incapacity) who was not, immediately prior to the making of such order or similar act, a member of Impark Management (any such act or order being a "Transfer Order"), except that this section 7.1 shall not require any such member to obtain the execution by his Spouse of any instrument binding such Spouse to the terms of this Article 7 prior to the time of any transfer of Shares or any beneficial interest therein to his Spouse. 7.2 RIGHT OF FIRST REFUSAL ON TRANSFER. Each member of Impark Management agrees that any amount that is required to be paid by the member to any Spouse of the member by order of a court of competent jurisdiction shall, if reasonably possible, be satisfied by the transfer to such Spouse of property of the member other than the Shares. If a Transfer Order is made or if any transfer or sale of Shares is required to satisfy a court order, the affected member of Impark Management shall forthwith give written notice thereof to the Designated Representative and FUMI Holdings (the date of the giving of such notice being the "Effective Date") and the Designated Representative and FUMI Holdings shall have first rights, in accordance with the provisions of subsections (a) and (b) of section 6.1, mutatis mutandis, to acquire from such member or any transferee such Shares as are subject to a Transfer Order or otherwise required to be sold, at a price per Share (without interest) equal the Fair Value Per Share of such Shares on the Effective Date. ARTICLE 8 COMPLETION OF PURCHASE AND SALE OF SHARES ----------------------------------------- 8.1 OUTSTANDING INDEBTEDNESS. If any indebtedness of the Vendor to: (i) any authorized pledgee pursuant to any financing in accordance with section 4.4; (ii) the Corporation, Canco 1, FUMI Holdings, 504308 N.B. Inc. or any of their affiliates; or 19 -19- (iii) the Purchaser; is outstanding upon the occurrence of any purchase and sale of Shares hereunder, the Vendor hereby irrevocably authorizes and directs that a portion of the Purchase Price for the Purchased Shares equal to such outstanding indebtedness be applied in repayment of such indebtedness. The Purchased Shares shall not be registered in the name of the Purchaser unless all such indebtedness has been repaid to the extent of the Purchase Price. 8.2 DELIVERY OF SHARES AND PAYMENT. At the Time of Closing on the Date of Closing in respect of any sale and purchase of Purchased Shares, the parties shall attend at the offices where the closing is being held, the Vendor shall deliver to the Purchaser certificates representing the Purchased Shares, duly endorsed in blank for transfer (or, if the Depositary holds such certificates pursuant to Article 9, an acknowledgement that the Depositary holds such certificates for the Purchaser), and the Purchaser shall pay to the Vendor the Purchase Price (or the balance thereof after the repayment of any indebtedness referred to in section 8.1). 8.3 VENDOR DEFAULT. If the Vendor does not attend at the place of closing at the Time of Closing, or fails for any reason whatsoever to produce and deliver to the Purchaser the certificates representing the Purchased Shares duly endorsed in blank for transfer (or, if the Depositary holds such certificates pursuant to Article 9, an acknowledgement that the Depositary holds such certificates for the Purchaser) at or prior to the time payment of the Purchase Price therefor is required to be made, then the Purchase Price shall be deposited at the time otherwise provided for its payment into a special account in the name of the Vendor at the branch of the principal Canadian chartered bank (the "Bank") primarily utilized by the Corporation. Such deposit shall constitute valid and effective payment to the Vendor of the Purchase Price and shall result in title to the Purchased Shares passing to the Purchaser, even if the Vendor has voluntarily sold or pledged any of the Purchased Shares, and notwithstanding that certificates representing any of the Purchased Shares may have been delivered to an authorized pledgee, a transferee or other person. If any of the Purchased Shares have been pledged to an authorized pledgee to secure obligations or indebtedness of the Vendor, the Purchaser may, at its option, in lieu of depositing the Purchase Price as aforesaid, pay all or any part of the Purchase Price to the authorized pledgee to the extent required to discharge such obligations or indebtedness and receive the certificates representing the Purchased Shares from the authorized pledgee and deposit the remainder, if any, of the Purchase Price as aforesaid. 8.4 TRANSFER OF TITLE. From and after the Date of Closing until the time provided for the payment for the Purchased Shares, and thereafter if such payment is then made or if a deposit and/or payment is then made in accordance with section 8.3, and even though the certificates representing the Purchased Shares may not have been delivered to the Purchaser, the purchase of the Purchased Shares shall be deemed to have been fully completed and all right, title, benefit and interest, both at law and in equity, in and to the Purchased Shares (except as provided in section 8.5) 20 -20- shall be deemed to have been transferred and assigned to and become vested in the Purchaser and all right, title, benefit and interest, both at law and in equity, of the Vendor or of any transferee, pledgee or any other person having any interest, legal or equitable, therein or thereto shall cease and determine. 8.5 PAYMENT OF DEFAULTING VENDOR. Subject to section 8.1, the Vendor shall be entitled to receive the Purchase Price deposited with the Bank upon delivery to the Purchaser of the certificates representing the Purchased Shares, duly endorsed in blank for transfer (or, if the Depositary holds such certificates pursuant to Article 9, an acknowledgement that the Depositary holds such certificates for the Purchaser). 8.6 POWER OF ATTORNEY. The Vendor hereby irrevocably constitutes and appoints the Designated Representative (and if the Designated Representative is the Vendor he appoints each of the officers from time to time of FUMI Holdings) as a true and lawful attorney-in-fact and agent for, in the name of and on behalf of, the Vendor to execute and deliver in the name of the Vendor all such assignments, transfers, deeds, receipts, directions and instruments as may be necessary effectively to sell, transfer and assign the Purchased Shares, or any part thereof, to the Purchaser on the books of Canco 1. Each member of Impark Management shall deliver to the Designated Representative concurrently with the execution of this agreement a continuing power of attorney for the purposes set out in section 3.2 and this Article 8 in accordance with section 3.2 and shall hereafter, upon request, provide such additional or replacement powers of attorney for such purposes as may be required to fulfil the requirements of applicable law for valid, effective and enforceable powers of attorney. Each member of Impark Management hereby ratifies and confirms and agrees to ratify and confirm all that the attorney appointed pursuant to this section 8.6 may lawfully do or cause to be done by virtue of the authority hereby and thereby conferred. 8.7 CONSENT. The Vendor hereby irrevocably consents to any sale or transfer of the Purchased Shares made pursuant to the provisions hereof. ARTICLE 9 DEPOSITARY ARRANGEMENTS ----------------------- 9.1 DEPOSIT OF SHARE CERTIFICATES. For so long as this agreement remains in force, the certificates representing all of the Shares that are at any time held by any member of Impark Management shall be held by FUMI Holdings or a person designated by FUMI Holdings (the "Depositary") to be dealt with in accordance with this agreement. Notwithstanding the foregoing, in the event that FUMI Holdings consents to the pledge of any Shares pursuant to section 4.4, Shares that are pledged as a result to any authorized pledgee shall, for so long as they are held by such authorized pledgee pursuant to such pledge, not be governed by this Article 9. 21 -21- 9.2 DEPOSIT RECEIPT. The Depositary will issue in the name of and deliver to each member of Impark Management who deposits with the Depositary a certificate or certificates representing Shares, a receipt (the "Deposit Receipt") in substantially the form annexed hereto as Schedule G to evidence such deposit, which Deposit Receipt shall be non-transferable. 9.3 TRANSFER OF SHARES. If a transfer of Shares has been made in accordance with the provisions of this agreement, upon delivery to the Depositary of (a) the relevant Deposit Receipt and (b) written evidence satisfactory to the Depositary that the transfer of Shares has been made in accordance with the provisions of this agreement, the Depositary shall return the certificates representing such Shares to Canco 1 for cancellation and Canco 1 shall cancel such Share certificates and issue in the name of the transferee new Share certificates evidencing the transferred Shares and, if less than all the Shares held by a transferor have been transferred, issue in the name of the transferor new Share certificates evidencing the Shares that were not transferred, which Share certificates shall be delivered by Canco 1 to the Depositary to be dealt with in accordance with the terms of this agreement. Upon receipt by the Depositary of such new Share certificates, the Depositary shall issue in the name of and deliver to such transferee a Deposit Receipt evidencing such transferee's rights to the deposited Share certificates issued in the transferee's name subject to the terms of this agreement, and, if applicable, shall issue in the name of and deliver to such transferor a Deposit Receipt evidencing such transferor's rights to the deposited Share certificates issued in the transferor's name subject to the terms of this agreement. 9.4 RETURN OF SHARE CERTIFICATES. On the termination of this agreement, each Deposit Receipt shall entitle the holder thereof, or his executors, administrators, legal personal representatives or its successors or assigns, or its or his or their attorney duly appointed by an instrument in writing in form and execution satisfactory to the Depositary, as the case may be, to certificates representing the number of Shares represented thereby on surrender of such Deposit Receipt to the Depositary. Each party agrees that, except as otherwise expressly provided herein, the Shares represented by certificates deposited with the Depositary in accordance with the terms hereof shall not be released by the Depositary except on termination of this agreement and that each such party will not request nor be entitled to the release of certificates except on such basis. 9.5 RIGHTS TO REMAIN WITH MEMBERS. FUMI Holdings hereby acknowledges and confirms on behalf of itself and any designee of it that may at any time be the Depositary that (a) the Depositary will hold the certificates representing Shares subject to the provisions hereof, (b) the Depositary does not and will not have any beneficial interest in the Shares in respect of which certificates have been delivered to it pursuant to this Article 9 solely by reason of such delivery, and (c) beneficial ownership of the Shares represented by certificates deposited with the Depositary pursuant to this Article 9 and all other rights of ownership with respect 22 -22- thereto shall remain with the members of Impark Management on behalf of whom the same were deposited with the Depositary, subject to the powers of attorney provided under sections 3.2 and 8.6. 9.6 LIMITATION OF DEPOSITARY LIABILITY. The Depositary shall be entitled to rely as to all matters of fact conclusively upon documents and instruments in writing signed by the members of Impark Management registered as holders of Shares or by the Designated Representative as their lawful attorney. The Depositary shall not be liable for relying in good faith on any such document required or permitted to be given hereunder. ARTICLE 10 MISCELLANEOUS ------------- 10.1 NOTICE. Any notice, document or thing required or permitted to be given or delivered hereunder shall be deemed to be properly given or delivered to a party if (a) delivered in person or by courier to the address set out below and acknowledged by written receipt signed by the person receiving such notice, or (b) sent by facsimile transmission and confirmed by prepaid registered letter addressed to the party receiving such notice, at its respective address or fax number set out below: FUMI Holdings: c/o First Union Management, Inc. Suite 1910 55 Public Square Cleveland, Ohio 44113-1937 Attention: Paul F. Levin Fax: (216) 781-7364 23 -23- Canco 1: c/o First Union Management, Inc. Suite 1910 55 Public Square Cleveland, Ohio 44113-1937 Attention: John Dee Fax: (216) 781-7467 Impark Management: Designated Representative c/o Imperial Parking Limited Suite 300, The Station 601 West Cordova Street Vancouver, British Columbia V6B 1G1 Attention: Paul T. Clough Fax: (604) 681-4098 Any notice or delivery given in accordance with the provisions of this section 10.1 shall be deemed to have been given and received, if delivered in person or by courier, on the day of delivery in person or at the time of actual receipt thereof, and if delivered by facsimile transmission on the date of receipt of the facsimile transmission at the time of actual receipt thereof unless received after business hours or on a day other than a Business Day and then on the next Business Day. 10.2 CHANGE OF ADDRESS. Any party may from time to time by notice in writing delivered in accordance with the provisions of this Article 10 change its address for purposes hereof. 10.3 COUNTERPARTS. This agreement may be executed in any number of counterparts, each of which shall constitute an original, and all of which collectively shall constitute a single instrument. 10.4 SUCCESSORS AND ASSIGNS. This agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, legal personal representatives, successors and permitted assigns. FUMI Holdings may assign its rights and obligations hereunder to FUMI or any corporation controlled by FUMI without the consent of any other party hereto. No other party hereunder may assign its rights or obligations hereunder without the prior written consent of FUMI Holdings. 24 -24- 10.5 GOVERNING LAW. This agreement shall be construed and interpreted in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. Each of the parties hereby irrevocably attorns to the non-exclusive jurisdiction of the courts of the Province of Ontario and all courts competent to hear appeals therefrom. 10.6 SEVERABILITY. If any provision contained herein is determined to be void or unenforceable in whole or in part, it shall not be deemed to affect or impair the validity of any other provision herein and each such provision is deemed to be separate and distinct. 10.7 ENTIRE AGREEMENT. This agreement constitutes the entire agreement between the parties hereto pertaining to the respective obligations of Impark Management and the other parties hereto in respect of the Shares, save and except for the Share Purchase Agreement. There are not and shall not be any oral statements, representations, warranties, undertakings or agreements between the parties with respect to the subject matter hereof and this agreement may not be amended or modified in any respect except by written instrument signed by the parties hereto. 10.8 IMPLEMENTATION OF AGREEMENT. The parties hereto hereby covenant and agree to do or cause to be done all acts and things, whether by the directors of the Corporation or Canco 1 or otherwise, to execute and deliver or cause to be executed and delivered all such instruments and to exercise or cause to be exercised any and all voting rights attaching to the Shares held by each of them in order that all provisions of this agreement shall be fully and effectively carried out, implemented and given effect to in accordance with the terms hereof. Canco 1 agrees not to take or approve any action that would contravene any provision of this agreement and shall cause to be provided all necessary approvals for any transfer of Shares that is effected in compliance with this agreement. 25 -25- 10.9 TERMINATION. This agreement shall terminate upon the agreement of shareholders of Canco 1 who hold at least 90% of the voting rights attached to all Class B Common Shares or, if earlier, at the option of FUMI Holdings immediately upon the closing of a sale of 90% or more of the outstanding Common Shares to a Third Party in accordance herewith. IN WITNESS WHEREOF this agreement has been executed by the parties hereto as of the date first above written. SIGNED, SEALED AND DELIVERED ) in the presence of ) ) ) /s/ Paul T. Clough )----------------------------- )Paul T. Clough ) ) /s/ J. Bruce Newsome ) ----------------------------- ) J. Bruce Newsome ) ) /s/ Douglas I. Poirier ) ----------------------------- ) Douglas I. Poirier ) ) /s/ J. Robin Bateman ) ----------------------------- ) J. Robin Bateman ) ) /s/ James MacKay ) ----------------------------- ) James MacKay ) ) /s/ Michael T. Menzies ) ----------------------------- ) Michael T. Menzies ) ) /s/ Robert L. Noiles ) ----------------------------- ) Robert L. Noiles ) ) /s/ Harry J. Renaud ) ----------------------------- ) Harry J. Renaud ) ) /s/ Stuart M. MacKenzie ) ----------------------------- ) Stuart M. MacKenzie 26 -26- ) ) ) ) ----------------------------- ) Daniel Sawchuck ) LAURENTIAN BANK OF CANADA, in trust for J.Bruce Newsome, Accont No. VOO2679 by Authorized Signer ----------------------------- RBC DOMINION SECURITIES INC., in trust for Douglas I. Poirier, Account No. 496-81890-11 by Authorized Signer ----------------------------- GUNDYCO, in trust for J. Robin Bateman, Account No. 590-90333-17 by Authorized Signer ----------------------------- GUNDYCO, in trust for Robert L. Noiles, Account No. 590-77616-12 by Authorized Signer ----------------------------- GUNDYCO, in trust for Stuart M. MacKenzie, Account No. 590-90254-12 by Authorized Signer ----------------------------- 27 -27- MIDLAND WALWYN CAPITAL INC., in trust for Henry J. Renaud, Account No. 8RABNQS by /S/ Authorized Signer ------------------------------- 3355489 CANADA INC. by /S/ Authorized Signer ------------------------------- 3357392 CANADA INC. by /S/ Authorized Signer ------------------------------- 28 SCHEDULE A MEMBERS OF IMPARK MANAGEMENT ----------------------------
Number of Number of Common Individual Common Shares Shares Under Option - ---------- ------------- ------------------- Paul T. Clough 600,000 300,000 J. Bruce Newsome 125,000 112,500 Douglas I. Poirier 100,000 75,000 J. Robin Bateman 60,000 45,000 James MacKay 90,000 45,000 Michael T. Menzies 90,000 45,000 Robert L. Noiles 60,000 45,000 Harry J. Renaud - 45,000 Stuart M. MacKenzie - 22,500 Daniel Sawchuck 45,000 22,500 Trusts - ------ Laurentian Bank of Canada, 100,000 - in trust for account no. VOO2679, a registered retirement savings plan of which J. Bruce Newsome is the sole beneficiary RBC Dominion Securities Inc., 50,000 - in trust for account no. 496-81890-11 a registered retirement savings plan of which Douglas I. Poirier is the sole beneficiary
29 Gundyco, in trust for account 30,000 - no. 590-90333-17, a registered retirement savings plan of which J. Robin Bateman is the sole beneficiary Gundyco, in trust for account 30,000 - no. 590-77616-12, a registered retirement savings plan of which Robert L. Noiles is the sole beneficiary Midland Walwyn Capital Inc., 90,000 - in trust for account no. 8RABNQS, a registered retirement savings plan of which Henry J. Renaud is the sole beneficiary Gundyco, in trust for account 45,000 - no. 590-90254-12, a registered retirement savings plan of which Stuart M. MacKenzie is the sole beneficiary
30
SCHEDULE B - ----------------------------------------------------------------------------------------------------------------------------------- Cash Received Total Shares of (including from Class A Class B Name Holdings at Closing Escrow Account) Common Shares Common Shares Preferred Shares - ---- ------------------- --------------- ------------- ------------- ---------------- Paul T. Clough 900,000 833,560 348,585 96,169 503,956 Bruce Newsome 237,500 337,247 49,878 11,088 72,109 Laurentian Bank 100,000 396,060 - - - (Newsome RRSP) Doug Poirier 175,000 240,616 39,416 9,537 56,984 RBC Dominion Securities 50,000 198,030 - - - (Poirier RRSP) Rob Bateman 105,000 156,826 19,072 4,460 27,573 Gundyco (Bateman RRSP) 30,000 118,818 - - - Jim MacKay 135,000 154,629 41,414 11,425 59,872 Mike Menzies 135,000 154,629 41,414 11,425 59,872 Rob Noiles 105,000 185,279 8,618 1,576 12,459 Gundyco (Noiles RRSP) 30,000 118,818 - - - Harry Renaud 45,000 72,750 6,394 - 9,971 Midland Walwyn Capital 90,000 356,454 - - - (Renaud RRSP) Stuart MacKenzie 22,500 32,922 4,717 98 6,820 Gundyco (MacKenzie RRSP) 45,000 178,227 - - - Dan Sawchuck 67,500 77,314 20,707 5,713 29,936 - -----------------------------------------------------------------------------------------------------------------------------------
31 SCHEDULE C
Shares of Canco 1 to be Acquired ------------------------------------------------------------------------ Subscribers Class A Common Class B Common Preferred Shares - ------------------------------------------------------------------------------------------------------------- Laurentian Bank of Canada, in 71,780 22,476 103,774 trust for account no. VOO2679, a registered retirement savings plan of which J. Bruce Newsome is the sole beneficiary - ------------------------------------------------------------------------------------------------------------- RBC Dominion Securities Inc., 35,890 11,238 51,887 in trust for account no. 496-81890-11 a registered retirement savings plan of which Douglas I. Poirier is the sole beneficiary - ------------------------------------------------------------------------------------------------------------- Gundyco, in trust for account 21,534 6,743 31,132 no. 590-90333-17, a registered retirement savings plan of which J. Robin Bateman is the sole beneficiary - ------------------------------------------------------------------------------------------------------------- Gundyco, in trust for account 21,534 6,743 31,132 no. 590-77616-12, a registered retirement savings plan of which Robert L. Noiles is the sole beneficiary - -------------------------------------------------------------------------------------------------------------
32 - ------------------------------------------------------------------------------------------------------------- Midland Walwyn Capital Inc., 64,602 20,229 93,396 in trust for account no. 8RABNQS, a registered retirement savings plan of which Harry J. Renaud is the sole beneficiary - ------------------------------------------------------------------------------------------------------------- Gundyco, in trust for account 32,301 10,114 46,698 no. 590-90254-12, a registered retirement savings plan of which Stuart M. MacKenzie is the sole beneficiary - ------------------------------------------------------------------------------------------------------------- Paul T. Clough 179,007 48,743 258,067 - -------------------------------------------------------------------------------------------------------------
33 SCHEDULE D POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS that the undersigned hereby irrevocably nominates, constitutes and appoints ________________________ (the "Attorney") , as the true and lawful attorney-in-fact and agent for the undersigned and in the name, place and stead of the undersigned, in the capacity of the undersigned as a shareholder of 3357392 Canada Inc. for the following purposes: (i) to execute and deliver proxies and vote any and all shares of the undersigned in 3357392 Canada Inc. on behalf of the undersigned in respect of any matter on which the undersigned is entitled to vote in such manner as may be determined by the Attorney in his sole discretion; and (ii) to execute and deliver any and all assignments, transfers, deeds, directions, receipts and other instruments as may be necessary effectively to sell, transfer and assign any of such shares in accordance with the provisions of the shareholders' agreement made as of April 17, 1997. The execution of this document indicates the intention of the undersigned that this document provides the Attorney with a continuing power of attorney for property under the [SUBSTITUTE DECISIONS ACT (ONTARIO)] for the purposes set out herein and that such appointment and power of attorney, being coupled with an interest, shall not be revocable at the option of the undersigned and shall not be revoked by the insolvency, bankruptcy or incapacity of the undersigned and shall come into effect upon the date that this document is signed and witnessed. The undersigned hereby ratifies and confirms and agrees to ratify and confirm all that the Attorney may lawfully do or cause to be done by virtue of this power of attorney. DATED this day of , 199 . - ------------------------------------ --------------------------------- Name of Witness Name of Appointor - ------------------------------------ --------------------------------- Signature Signature - ------------------------------------ --------------------------------- Name of Witness - ------------------------------------ Signature 34 SCHEDULE E PERFORMANCE ACHIEVEMENT PROGRAM ------------------------------- 1. DEFINITIONS. Capitalized terms which are defined in the shareholders agreement entered into as of April 17, 1997 between 3355489 Canada Inc., 335392 Canada Inc. and certain employees of Impark have the meanings as provided for therein. In addition, the following terms have the following meanings: "PERFORMANCE ACHIEVEMENT" for any year means the Percentage Achievement for such year of the Performance Bonus Base for such year; "PERCENTAGE ACHIEVEMENT" means as follows: (i) for 1997 and 1998, 100% minus the amount of any Shortfall Percentage for the applicable year; (ii) for 1999, 100% minus the product of 1.5 and any Shortfall Percentage for 1999; and (iii) for 2000, 100% minus the product of 3 and any Shortfall Percentage for 2000; "PERFORMANCE BONUS BASE" means as follows: (i) for 1998, the Percentage Achievement for 1997 of $694,444; (ii) for 1999, the Performance Achievement for 1998; and (iii) for 2000, the Performance Achievement for 1999; and "SHORTFALL PERCENTAGE" for any period means the percentage obtained by multiplying 100% times the quotient of the Performance Shortfall for such period divided by the Performance Target for such period. 2. PARTICIPANTS. Subject as hereinafter provided, the participants in the Program (the "Participants") and the interest of each Participant (the "Participant's Share") will be as follows: 35
Participant Participant's Share ----------- ------------------- Paul T. Clough 52.35% J. Bruce Newsome 12.08% Douglas I. Poirier 7.47% J. Robin Bateman 4.03% James MacKay 4.11% Michael T. Menzies 4.11% Robert L. Noiles 3.00% Harry J. Renaud 7.11% Stuart M. MacKenzie 3.68% Daniel Sawchuck 2.06%
Notwithstanding the foregoing, in the event that individuals who are employed by Impark as at April 17, 1997 become new members of Impark Management prior to June 30, 1997, the Designated Representative shall have the right at any time prior to such date to include any of such new members as Participants and to designate the Participant's Share of each such new Participant provided that the Participant's Share of Paul Clough shall be reduced by the aggregate of the Participant's Shares of such new Participants. The inclusion and designation provided for in the preceding sentence shall be made by written notice delivered to the Corporation and FUMI Holdings on or before June 30, 1997. 3. PERFORMANCE ACHIEVEMENT AWARD. Each Participant will be conditionally entitled to receive a bonus payment in respect of each of the calendar years 1998, 1999 and 2000. The amount to which a Participant will be conditionally entitled in respect of any such year will be such Participant's Share of the Performance Achievement for such year. The actual entitlement of such Participant to such bonus will be dependant upon such Participant being continuously employed by any of Impark, FUR or FUMI or a subsidiary of any of them from April 17, 1997 through to the end of the third calendar year following the year in respect of which such bonus was determined. If the Participant is so continuously employed until the end of such third year, he will be paid the full amount of such bonus on the last day of such third year. If such Participant ceases to be so employed during such third year, he will be paid on or before the last day of such third year a pro rata portion of such bonus based on the number of days he was so employed during such third year relative to the total number of days in such year. 36 4. COORDINATION. The Program shall be coordinated with the comparable program to be instituted by 504463 N.B. Inc. so as to ensure that each member of Impark Management participates in one or the other of the programs without double counting. 37 SCHEDULE F PERFORMANCE BONUS PROGRAM ------------------------- 1. DEFINITIONS. Capitalized terms which are defined in the shareholders agreement entered into as of April 17, 1997 between 3355489 Canada Inc., 335392 Canada Inc. and certain employees of Impark have the meanings as provided for therein. 2. PARTICIPANTS. The participants in the Program (the "Participants") will be the employees from time to time of Impark and the interest of each Participant (the "Participant's Share") will be determined from time to time by the Designated Representative. 3. PERFORMANCE ACHIEVEMENT AWARD. In 1998, 1999, 2000 and 2001, each Participant who is still employed by Impark will be entitled to receive a cash bonus payment equal to such Participant's Share of the amount which is 5% of any amount by which the Consolidated Performance for the immediately preceding calendar year exceeds the Performance Target for such immediately preceding calendar year. 4. COORDINATION. The Program shall be coordinated with the comparable program to be instituted by 504463 N.B. Inc. so as to ensure that each member of Impark Management participates in one or the other of the programs without double counting. 38 SCHEDULE G DEPOSIT RECEIPT --------------- THE UNDERSIGNED, ____________________ (the "Depositary"), hereby confirms that ______________________ (the "Holder") is the registered holder of the following shares (the "Shares") in the capital of 3357392 Canada Inc.: Class A Non-voting Common Shares _______________________ Class B Voting Common Shares _______________________ Class A Preferred Shares _______________________ The certificates in respect of such Shares are held by the Depositary pursuant to the agreement (the "Shareholders Agreement") made as of the 17th day of April, 1997 among 3357392 Canada Inc., 3355489 Canada Inc. and the individuals and trusts listed on Schedule A thereto. This Deposit Receipt evidences the ownership by the Holder of the Shares held by the Depositary in accordance with the Shareholders Agreement. The Depositary is bound to hold the Shares in accordance with the Shareholders Agreement and the rights of the Holder with respect to the Shares are expressly subject to, governed by and may be exercised only in accordance with, the terms and conditions set forth in the Shareholders Agreement (as such agreement may be amended from time to time). By acceptance of this Deposit Receipt, the Holder assents to such terms and conditions. This Deposit Receipt is not transferable. IN WITNESS WHEREOF the Depositary has caused this Deposit Receipt to be signed by its duly authorized signatory this ____ day of ________, _____. ____________________________ by _________________________ EX-10.H 10 EXHIBIT 10.H 1 Exhibit (10h) SHAREHOLDERS AGREEMENT MEMORANDUM OF AGREEMENT made as of the 17th day of April, 1997. BETWEEN: 504308 N.B. INC., a corporation incorporated pursuant to the laws of New Brunswick, (hereinafter referred to as "HOLDCO 2"), OF THE FIRST PART, -and- The individuals listed on Schedule A hereto, (subject to the further definition below, such individuals being hereinafter collectively referred to as "IMPARK MANAGEMENT" and individually as a "MEMBER OF IMPARK MANAGEMENT"), OF THE SECOND PART, -and FIRST UNION MANAGEMENT, INC., a corporation incorporated pursuant to the laws of Delaware, (hereinafter referred to as "FUMI"), OF THE THIRD PART. WHEREAS the individuals listed in Schedule A are employed in the management of Impark (as hereinafter defined); AND WHEREAS Holdco 2 has incorporated 504463 N.B. Inc. ("Canco 2") for the purpose of acquiring all of the shares of certain corporations from Imperial Parking Limited; 2 -2- AND WHEREAS, at the date hereof, FUMI holds 448,611 common shares of Holdco 2 being the only outstanding shares of Holdco 2; AND WHEREAS the members of Impark Management wish to become shareholders of Holdco 2; AND WHEREAS the parties to this agreement wish to establish their respective rights and obligations in respect of the shares of Holdco 2 which the members of Impark Management will acquire; NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and of the respective covenants and agreements herein contained and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by each of the parties), the parties covenant and agree as follows: ARTICLE 1 INTERPRETATION 1.1 CERTAIN DEFINITIONS. Where used in this agreement, unless there is something in the context or the subject matter inconsistent therewith, the following terms shall have the following meanings: "ADDITIONAL PARKING FACILITIES" means any parking facilities (other than the Cleveland Parking Facilities and the Transferred Parking Facilities) which are acquired by FUR after April 17, 1997 whether by direct purchase or by acquisition of an entity owning such parking facilities; "ADJUSTED OPERATING INCOME" for any period means the Facilities Operating Income for such period minus the Facilities Return to FUR for such period; "AFFILIATE", in relation to an individual, means a corporation that is controlled by such individual and all of the shares of which are owned by such individual and/or such individual's spouse and/or children or a trust of which such individual and/or such individual's spouse and/or children are the sole beneficiaries; "BASE INDEBTEDNESS" means the amount as of the close of business on April 17, 1997 of the combined indebtedness (excluding indebtedness incurred for normal working capital purposes including without limitation operating lines of credit) of Holdco 2, Canco 2, Canco 1 and Imperial Parking, which is expected to be approximately $77,500,000; 3 -3- "BOARD" means the board of directors of Holdco 2; "BUSINESS DAY" means any day which is not a Saturday, a Sunday or a statutory holiday in Ontario or British Columbia; "CANCO 1" means 3357392 Canada Inc. or any successor thereto; "CLEVELAND PARKING FACILITIES" means the Huntington garage, the West Third Street surface parking lot and the 55 Public Square garage, all in the City of Cleveland, Ohio; "COMMON SHARES" means the common shares in the capital of Holdco 2, any securities into which such common shares may be converted, exchanged, reclassified, redesignated, subdivided or otherwise changed from time to time and any securities of any successor corporation or a corporation continuing from Holdco 2 into which such common shares or such other securities may be changed as a result of any amalgamation, merger, consolidation, plan of arrangement or reorganization, statutory or otherwise; "CONSOLIDATED PERFORMANCE" for any period means the total of the Impark EBITDA and the Adjusted Operating Income for such period; "DATE OF CLOSING" and "TIME OF CLOSING" have the respective meanings ascribed thereto in Articles 5 and 6, as the case may be; "DEPOSITARY" has the meaning ascribed thereto in section 9.1; "DESIGNATED REPRESENTATIVE" means the Designated Representative as determined at the relevant time in accordance with section 3.1; "DISABILITY" means the inability of a member of Impark Management to continue to perform his duties for Impark on a full-time basis for a period of more than six (6) months as a result of physical or mental disability, as determined by a qualified medical practitioner; "EFFECTIVE DATE" has the meaning ascribed thereto in sections 6.1, 6.2, 6.3 and 7.2; "FACILITIES OPERATING INCOME" for a period means, without double counting, the actual revenues realized by Impark during such period from the operation of First Union Facilities less all expenses associated with operating the First Union Facilities (other than real estate taxes, utilities, ground rent and insurance 4 -4- covering damage to the physical facility) incurred by Impark during such period in operating the First Union Facilities (but for greater certainty not deducting any amounts payable to FUR pursuant to any lease or management agreement and not deducting any interest expense); "FACILITIES RETURN TO FUR" for any period means an amount of imputed interest calculated at the rate of 11% per annum on the amount of any outstanding FUR Capital Expenditure; "FAIR VALUE PER SHARE" as at any date means: (i) in the case of Preferred Shares, the Redemption Amount of a Preferred Share as at such date determined in accordance with the articles of Holdco 2 but without regard to the fact that the Preferred Shares are not redeemable prior to April 1, 2002; and (ii) in the case of Common Shares, the amount determined by dividing the Management Enterprise Equity Value as at the end of the immediately preceding calendar year by 1,322,140; "FIRST UNION FACILITIES" means the Cleveland Parking Facilities, the Transferred Parking Facilities and Additional Parking Facilities which are leased to or managed by Impark; "FUMI PROPORTION" has the meaning ascribed thereto in section 5.1; "FUR" means First Union Real Estate Equity and Mortgage Investments, an Ohio business trust; "FUR CAPITAL EXPENDITURE" means the following: (i) the amount of the gross acquisition cost to FUR (including purchase price, fees, commissions and out-of-pocket expenses of acquisition) of Additional Parking Facilities, and such FUR Capital Expenditures shall be deemed to be outstanding during any period while such Additional Parking Facilities constitute First Union Facilities; and (ii) the amount expended directly or indirectly by FUR to make capital improvements to any First Union Facilities on Impark's recommendation for the purpose of increasing the Facilities Operating Income, and such FUR Capital Expenditures shall be deemed to be outstanding from the 5 -5- date any such amount is so expended and for so long as such parking facilities constitute First Union Facilities; "IMPARK" means collectively Imperial Parking and Canco 2 and any direct or indirect subsidiaries of either of them; "IMPARK EBITDA" for any period means the consolidated earnings of Impark before interest expense (or interest income), income taxes, depreciation and amortization, as calculated in accordance with generally accepted accounting principles as used in the December 31, 1996 audited financial statements of Imperial Parking, consistently applied, adjusted as follows: (a) deducting any revenues or expenses of any type related to First Union Facilities for such period; and (b) deducting an amount on account of imputed interest calculated at the rate of 8% per annum on any indebtedness (excluding indebtedness incurred for normal working capital purposes including without limitation operating lines of credit) of Impark which is outstanding at any time during such period in any amount in excess of the Base Indebtedness; "IMPARK MANAGEMENT" means the individuals listed on Schedule A hereto and any other employee of Impark who hereafter becomes a party to this agreement and any legal personal representative of any such individual who dies or becomes mentally incapacitated (the foregoing being "individual members"), and includes any Affiliate of any individual member of Impark Management which holds Shares or to which Shares are transferred or any successor or assign of such Affiliate and also includes individuals to whom Shares are transferred in accordance with the provisions of sections 4.3 and 4.5; and reference herein to the "members" or a "member" means members or a member of Impark Management; "IMPERIAL PARKING" means Imperial Parking Limited or any successor thereto; "MANAGEMENT ENTERPRISE EQUITY VALUE" as at the end of any calendar year means the amount obtained by multiplying $5,555,556 by the Proportionate Change as at such year end and deducting $4,233,416 from such product; "PERFORMANCE SHORTFALL" for any period means the amount, if any, by which the Performance Target for such period exceeds the Consolidated Performance for such period, provided that if such Consolidated Performance exceeds such Performance Target the Performance Shortfall shall be zero; 6 -6- "PERFORMANCE TARGET" means $13,146,105 for the 1997 calendar year, $14,340,350 for the 1998 calendar year, $14,895,964 for the 1999 calendar year, and $15,473,803 for the 2000 calendar year, subject in each case to the provisions of section 3.4; "PERSON" includes an individual, a trust, a firm, a corporation, a syndicate, a partnership, an association, a joint venture and every other legal or business entity whatsoever; "PREFERRED SHARES" means preferred shares in the capital of Holdco 2 having rights and attributes substantially the same as the Class A Preferred Shares of Canco 1, any securities into which such preferred shares may be converted, exchanged, reclassified, redesignated, subdivided or otherwise changed from time to time and any securities of any successor corporation or a corporation continuing from Holdco 2 into which such preferred shares or such other securities may be changed as a result of any amalgamation, merger, consolidation, plan of arrangement or reorganization, statutory or otherwise; "PROPORTIONATE CHANGE" as at the end of a calendar year means (i) one as at the end of 1996, and (ii) other than as at the end of 1996, the Consolidated Performance for such calendar year divided by the Performance Target for 1997; "PURCHASE PRICE" means the purchase price for any Purchased Shares pursuant to any transaction of purchase and sale of Shares provided for in this agreement; "PURCHASED SHARES" means, in the context of any provision hereof pursuant to which a Vendor is selling Shares, such Shares; "PURCHASER" means, in the context of any provision hereof pursuant to which a Vendor is selling Shares, the purchaser of such Shares; "SHARE PURCHASE CLOSING" means the completion of the sale and purchase of shares of Holdco pursuant to the Share Purchase Agreement; "SHARES" means Common Shares and Preferred Shares; "SPOUSE" has the meaning ascribed thereto in Part I of the Family Law Act (Ontario); "THIRD PARTY" means, as applicable to sections 5.1 and 6.4, a person dealing at arm's length (within the meaning of the Income Tax Act (Canada)) with Holdco 7 -7- 2, and for greater certainty, in all cases, neither (i) any individual who is a full time member of the management of FUR or FUMI or any of their respective affiliates, or any corporation wholly-owned, directly or indirectly, by any such individual or a trust related to any such individual, nor (ii) any person that is a firm, corporation, syndicate, partnership, association, joint venture or other legal or business entity whatsoever which is controlled by FUR or FUMI, shall be deemed to be a Third Party; "THIRD PARTY OFFER" has the meaning ascribed thereto in section 5.1; and "TRANSFERRED PARKING FACILITIES" means 633 - 10th Avenue S.W., Calgary, Alberta; 1009 A, B and C - 9th Avenue S.W., Calgary, Alberta; 10040 - 103 Street, Edmonton, Alberta; 10244 - 103 Street, Edmonton Alberta; 10239 - 107 Street, Edmonton, Alberta; 1709 Blanshard Street, Victoria, B.C.; 245 Graham Avenue and 257 Smith Street, Winnipeg, Manitoba; 168 Water Avenue, Winnipeg, Manitoba; 336 Young Street, Winnipeg, Manitoba; 296, 298 and 304 Broadway, Winnipeg, Manitoba; 115 Donald Street, Winnipeg, Manitoba; 178 Queen's Quay East, Toronto, Ontario; and 1724 Broad Street, Regina, Saskatchewan; and "VENDOR" means, in the context of any provision hereof pursuant to which Shares are being sold, the shareholder selling such Shares. 1.2 OTHER RULES OF INTERPRETATION. All words used in this agreement shall be read with such changes in gender and number as are required by the context. Words importing the singular number shall include the plural and vice versa and words importing gender shall include all genders. The terms "this agreement", "hereof", "herein", "hereunder" and similar expressions refer to this agreement and not to any particular Article, section or paragraph or other portion hereof and include any agreement, schedule, amendment or other instrument supplementary or ancillary hereto. Time is of the essence hereof. 1.3 CURRENCY. All dollar amounts stated herein are, unless otherwise indicated, in Canadian dollars. 1.4 HEADINGS AND REFERENCES. The division of this agreement into Articles, sections and paragraphs and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this agreement. Reference in this agreement to an Article, section or Schedule is to the applicable Article, section or Schedule of this agreement unless the context otherwise requires. 8 -8- 1.5 REFERENCE TO STATUTES. Reference in this agreement to a statute means such statute as amended, re-enacted or replaced from time to time and includes all regulations promulgated thereunder. ARTICLE 2 SUBSCRIPTION 2.1 SUBSCRIPTION. Each person named in Schedule A hereby subscribes for and agrees to take up the number of Common Shares set out opposite such person's name in such Schedule and to pay therefor the subscription price of $1.00 per Common Share and, contemporaneously with the execution and delivery of this Agreement, tenders the aggregate subscription price for such Common Shares. Holdco 2 accepts such subscription by each such person. ARTICLE 3 VOTING, ORGANIZATION AND MANAGEMENT 3.1 DESIGNATED REPRESENTATIVE. The representative from time to time of the members of Impark Management (the "Designated Representative") shall be the Chief Executive Officer of Imperial Parking then in office provided he is a holder of Shares who shall have the irrevocable and full authority to give and receive all notices, communicate all decisions and otherwise take all actions that are to be given, made or taken pursuant to this agreement by Impark Management and the parties hereto shall be entitled to rely upon the authority of the Designated Representative to bind Impark Management in respect of all matters arising pursuant to this agreement. 3.2 ASSIGNMENT OF VOTING RIGHTS. Each member of Impark Management does hereby irrevocably nominate, constitute and appoint the Designated Representative as his true and lawful attorney with authority to vote any and all of the Shares held from time to time by such member, and to execute resolutions in writing of the shareholders of Holdco 2 as holders of such Shares for and on behalf of and in the name of such member, in such manner as may be determined by the Designated Representative in his sole discretion, at all times and on all matters that may come before the shareholders of Holdco 2 or any class thereof while this agreement remains in effect and to make, execute, seal and deliver for and on behalf of and in the name of such member of Impark Management, one or more proxies in respect of Shares held by such member of Impark Management from time to time. The members of Impark Management shall each deliver to the current Designated Representative, concurrently with the execution of this agreement and from time to time thereafter upon request therefor, a continuing power of attorney in the form attached hereto as Schedule B in 9 -9- favour of the Designated Representative for the purposes of this section 3.2 and Article 8, which power of attorney shall not be revocable by the member without the consent of FUMI and which, being coupled with an interest, shall not be revoked by the insolvency, bankruptcy or incapacity of the member or of any Affiliate of the member to which Shares may be transferred in accordance with section 4.2. Each member of Impark Management hereby ratifies and confirms and agrees to ratify and confirm all that such attorney may lawfully do or cause to be done by virtue of the authority hereby or thereby conferred. Upon any change in the Designated Representative, the former Designated Representative and all members of Impark Management shall forthwith agree to the revocation of all such powers of attorney and new powers of attorney shall be forthwith provided in favour of the new Designated Representative. 3.3 BOARD OF DIRECTORS. The Board shall consist of three members. One member of the Board shall be the nominee of the Designated Representative and the other two members of the Board shall be nominees of FUMI. 3.4 ADJUSTMENT OF PERFORMANCE TARGETS AND CONSOLIDATED ACHIEVEMENT. Notwithstanding the definition of Performance Targets and the definition of Consolidated Performance and the definitions related thereto, the amounts otherwise provided for or determined in accordance with any of such definitions shall be subject to adjustment in the discretion of the Board to be exercised in good faith and after consultation with the Designated Representative and the auditors of Holdco 2 in the event of material asset dispositions or in the event of unusual circumstances which would lead to anomalous or inappropriate results and to offset the effect of any office rent paid by Impark to FUR on the First Union Facilities. 3.5 PERFORMANCE ACHIEVEMENT PROGRAM. Holdco 2 shall cause Canco 2 to establish and implement a performance achievement program for the benefit of Impark Management on the terms set forth in Schedule C. 3.6 PERFORMANCE BONUS PROGRAM. Holdco 2 shall cause Canco 2 to establish and implement a performance bonus program for the benefit of, inter alia, Impark Management on the terms set forth in Schedule D. 3.7 ADDITIONAL ISSUANCE OF COMMON SHARES. If after the date hereof Holdco 2 proposes to issue from treasury any additional Common Shares, Holdco 2 shall first offer such Common Shares to the parties hereto (the "Eligible Shareholders") who then hold Common Shares by notice given to the Eligible Shareholders of the intention of Holdco 2 and the number of additional Common Shares proposed to be issued. Each Eligible Shareholder shall have the right to purchase his pro rata portion of the Common Shares so offered with such pro rata portion to be determined based on the number of Common Shares owned by such Eligible Shareholder at the date such notice 10 -10- is given relative to the total outstanding number of Common Shares as at such date. Each Eligible Shareholder shall have 20 Business Days from the date such notice is given to agree to take up and pay for the Common Shares so offered. Any Common Shares that the Eligible Shareholders have not agreed to take up and pay for within such 20 Business Days may be issued at any time within the ensuing 60 days to such persons as the Board in its discretion determines on terms not more favourable to the purchaser than the terms offered to the Eligible Shareholders. ARTICLE 4 GENERAL RESTRICTIONS ON TRANSFERS 4.1 GENERAL RESTRICTION. Except as specifically provided in sections 4.2, 4.3 and 4.4 and Articles 5, 6 and 7, no member of Impark Management may, except with the prior written consent of FUMI, which consent may be withheld in its sole discretion, sell, transfer (including by operation of law, by winding-up or by amalgamation and whether or not for consideration), assign or otherwise dispose of (any of the foregoing being a "sale") or mortgage, charge, encumber, pledge, assign by way of security or grant a security interest in (any of the foregoing being a "pledge") its rights, title or interest in, to or under any Shares to any person other than FUMI. Any sale or pledge attempted to be made which is not in accordance with this agreement shall be void and of no effect and Holdco 2 shall not accept any such sale or pledge or any transfer by any person claiming rights through any such sale or pledge for registration on its books of record. 4.2 TRANSFERS TO AFFILIATES. Subject to the provisions of the articles of Holdco 2 and sections 4.5 and 4.6 and Article 6 of this agreement, nothing herein shall prevent the transfer of any Shares or any interests therein by any of the individual members of Impark Management to an Affiliate of such member or by an Affiliate of such individual member to another Affiliate of such individual member provided that: (i) the Affiliate executes and delivers a document agreeing to be bound by the provisions hereof pursuant to section 4.5 and such other instruments as FUMI may reasonably request to ensure that such Affiliate continues to qualify as an Affiliate of such member; (ii) each of the Affiliate and such individual member agrees with Holdco 2 and FUMI not to effect or agree to effect any sale or pledge of any securities of such Affiliate without the prior written consent of FUMI, such consent not to be unreasonably withheld; and (iii) such individual member shall remain liable under this agreement as a guarantor to ensure that the Affiliate, or any further Affiliate to which such Shares may be transferred, abides by the terms of this agreement. 4.3 PERMITTED TRANSFERS. Any member of Impark Management may sell all or any portion of such member's or such member's Affiliate's Shares to: 11 -11- (i) with the prior written consent of the Designated Representative, any other member of Impark Management or any person who has been an employee of Impark continuously since April 17, 1997; or (ii) with the prior written consent of FUMI, such consent not to be unreasonably withheld, any other full-time employee of Impark, provided that such purchaser shall, as a condition precedent to such purchase and sale, execute an agreement as required by section 4.5 and such purchaser shall thereupon become a member of Impark Management for the purposes of this agreement. 4.4 PERMITTED PLEDGES. Any member of Impark Management may, with the prior written consent of FUMI, such consent not to be unreasonably withheld, pledge all or any portion of such member's or such member's Affiliate's Shares to a recognized Canadian financial institution solely to secure bonafide indebtedness or financial obligations of such member or Affiliate to such financial institution for an amount not exceeding two-thirds (2/3) of the original issue price of the Shares held by such member and such member's Affiliate and solely for the purpose of such member or Affiliate acquiring such Shares, provided that: (i) such financial institution acknowledges in writing, on terms acceptable to FUMI, to be bound by the terms and provisions of this agreement in dealing with such Shares to the same extent as if it were a member of Impark Management; (ii) such financial institution agrees to notify the Designated Representative and FUMI of any default by a member of Impark Management with respect to such indebtedness or financial obligations and to grant the Designated Representative and FUMI the option to purchase such member's Shares in accordance with section 6.2; (iii) such financial institution agrees, in the event of a sale, realization or other disposition of all or any portion of such Shares, that the same shall only be dealt with subject to and in accordance with the terms and provisions of this agreement; and (iv) such financial institution agrees that upon repayment of such indebtedness or financial obligations it will deliver the certificates representing such member's Shares to the Depositary and not to such member. 4.5 AGREEMENT BINDING. If any Shares or any interests therein are transferred, issued or sold to any person who is not an original party to this agreement, as a condition precedent to being registered as a holder of Shares and to the exercise or enjoyment by such acquiror of any rights attaching to such Shares, the acquiror of such Shares shall execute and deliver an agreement, in form and on terms satisfactory to FUMI, whereby such acquiror agrees to be bound by the provisions hereof, with such amendments hereto and thereto as may be required by FUMI, as if he were an original party hereto, and such acquiror shall thereupon become a member of Impark Management (for purposes only of this agreement but not for the purposes of the 12 -12- program described in Schedule C) and shall have the same rights, and be subject to the same obligations and restrictions, hereunder as the other members of Impark Management or the original party hereto previously holding such Shares. In the case of a sale of all of the Shares of an original party other than to an Affiliate thereof, the obligations hereunder of such original party as a holder of Shares shall thereupon cease to be effective and such member shall cease to be entitled to any benefits hereunder in respect of such Shares arising after the time of such sale, subject to the continuing liability under section 4.2 in respect of transfers to Affiliates and provided that the foregoing shall not release or affect any rights or obligations arising prior to such time hereunder in respect of such Shares. For greater certainty, if such a transferee is already a member, his rights and obligations as a member hereunder shall thereupon apply to the Shares thus sold to him in the same manner as to his original Shares (provided that such transferee shall not thereby acquire any additional rights for the purposes of the program described in Schedule C). 4.6 LEGENDS ON SHARE CERTIFICATES. Any and all certificates representing Shares now or hereafter issued to any person during the term of this agreement (whether such certificates are issued at present or subsequently issued or sold) shall have typed or otherwise written thereon a legend substantially to the following effect: "The shares represented by this certificate are subject to certain restrictions on the right to transfer, sell, assign or otherwise deal with them, pursuant to a shareholders' agreement made as of the 17th day of April, 1997, and notice of the terms and conditions of such agreement is hereby given." ARTICLE 5 THIRD PARTY OFFERS 5.1 DRAG ALONG. If at any time FUMI proposes to sell any of its Common Shares pursuant to a bonafide offer by, or letter of intent of, a Third Party (a "Third Party Offer"), FUMI shall deliver a notice in writing to the members of Impark Management setting out the price per Common Share of the Third Party Offer (the "Offer Price") and the other relevant material terms and conditions (the "Offer Terms") of the Third Party Offer and the number of Common Shares that FUMI intends to sell pursuant to the Third Party Offer and the proportion of the Common Shares held by FUMI that such number then constitutes (the "FUMI Proportion"). FUMI may, at its option, specify in such notice that the members of Impark Management shall be required to sell to the Third Party, at the Offer Price and on the Offer Terms, that proportion of their Common Shares that is equal to the FUMI Proportion, and, if FUMI 13 -13- so states in such notice, the members of Impark Management shall sell their Common Shares to the Third Party at the Offer Price and on the Offer Terms. 5.2 TAG ALONG. If FUMI does not require the members of Impark Management to sell their Common Shares pursuant to section 5.1, then each of the members of Impark Management may, by notice in writing delivered to FUMI at any time within ten (10) days following the delivery of the notice by FUMI to such members pursuant to section 5.1, elect either of the following alternatives: (a) to sell that proportion of such member's Common Shares that is equal to the FUMI Proportion at the Offer Price and on the Offer Terms, in which case FUMI shall cause the Third Party to purchase, and such member shall sell, such member's Common Shares to the Third Party; or (b) not to sell any Common Shares held by such member pursuant to this section 5.2, in which case FUMI may proceed to sell the Common Shares indicated in the FUMI' notice described above in section 5.1 to the Third Party pursuant to the Third Party Offer at the Offer Price and on the Offer Terms. 5.3 PREFERRED SHARES. In the event that as a result of any Third Party Offer all of the Common Shares held by any member of Impark Management are to be sold by such member, FUMI shall cause all of the Preferred Shares held by such member of Impark Management either to be redeemed by Holdco 2 or to be acquired by some other person for a price equal to the then current redemption price of such Preferred Shares, in either event immediately prior to or contemporaneously with the sale of the Common Shares. 5.4 REPRESENTATIONS AND WARRANTIES. In connection with any sale of Common Shares in accordance with this Article 5, FUMI may require the members of Impark Management to enter into agreements with FUMI and/or the Third Party in which such members shall represent and warrant that, except as specifically disclosed to FUMI or the Third Party in writing, such member at the time of closing of such sale does not have actual knowledge that any warranty made by FUMI pursuant to a written sale agreement, a copy of which was provided to such member, in connection with such sale was untrue in any material respect as of the closing of such sale, provided that no such member need make any independent enquiry or investigation in connection with giving such representation and warranty. The liability of such member for any inaccuracy in such representation and warranty shall be limited to the amount which he receives from the sale of his Shares in connection with such sale and shall be pro rata in accordance with the number of Shares sold by such member in relation to the total number of shares sold to the Third Party. 14 -14- 5.5 CLOSING OF THIRD PARTY PURCHASES. Any purchase and sale of Common Shares pursuant to this Article 5 shall be effected concurrently with the sale of Common Shares by FUMI to the Third Party in accordance with the provisions of Article 8 and shall be completed at the date and time (the "Date of Closing" and "Time of Closing", respectively, for purposes of Article 8) specified by FUMI or the Third Party by notice in writing delivered to the member not later than ten (10) days following the date on which the obligations of such member to sell Common Shares have arisen pursuant to this Article 5, and in any event the Date of Closing shall be no later than ninety (90) days following the date of the Third Party Offer. ARTICLE 6 DEATH, DISABILITY, TERMINATION, RESIGNATION AND DEFAULT 6.1 OPTION TO PURCHASE. If at any time any individual member of Impark Management has ceased to be employed by Impark or by an affiliate of Impark for any reason (including, without limitation, by reason of voluntary resignation, termination with or without cause, death or Disability), the following rights shall arise with respect to the Shares held by such individual member of Impark Management and by any Affiliate of such individual member (the "Subject Shares"): (a) the Designated Representative shall have the right, at his option, to purchase for cash all but not less than all of the Subject Shares, which option may be exercised by notice in writing to such individual member of Impark Management or the executors or legal personal representatives of an individual member who has died or become mentally incapacitated or the permitted successors and assigns of an Affiliate of that member (the "Selling Manager") and to FUMI given at any time within 30 days following the date (the Effective Date") which is the effective date of the resignation, the date of giving of notice of termination or the date of death or Disability, as the case may be; (b) if the Designated Representative does not exercise his option as set forth in subsection (a) above within 30 days following the Effective Date or gives notice to the Selling Manager and FUMI that he does not wish to exercise such option, FUMI shall have the right, at its option, to purchase for cash all but not less than all of the Subject Shares, which option may be exercised by notice in writing to the Selling Manager given at any time after 30 days following the Effective Date; and 15 -15- (c) if the Designated Representatives does not exercise his option as set forth in subsection (a) above and FUMI does not exercise its option as set forth in subsection (b) above, the Selling Manager shall have the right, at his option, to sell all of his Common Shares to Holdco 2 with the price therefor to be payable by the issuance of additional Preferred Shares at $1 per Preferred Share, which option may be exercised by the Selling Manager giving notice to Holdco 2 and FUMI at any time after 40 days but before 60 days following the Effective Date and, in the event of the exercise of such right, the Preferred Shares issued as a result thereof shall become Subject Shares of such Selling Manager. 6.2 SALE UPON DEFAULT ON INDEBTEDNESS. If a member of Impark Management defaults on any indebtedness referred to in section 4.4 or commits any act of bankruptcy, the Designated Representative and FUMI shall have the option, exercisable in accordance with the provisions of subsections (a) and (b) of section 6.1, mutatis mutandis, upon notice (the date of which shall be, for these purposes, the "Effective Date") to such member at any time following a default, to purchase all or any portion of the Shares held by such member. 6.3 FUMI OPTION TO PURCHASE. By notice given to the members of Impark Management at any time after April 17, 2001, FUMI shall have the right, at its option exercisable from time to time, to purchase all or any portion of the Shares held by any member or members of Impark Management. The date of the giving of any such notice shall be the "Effective Date". 6.4 SALE OF PREFERRED SHARES. By written notice given to Holdco 2 and FUMI, at any time during the month of March in any year commencing with March of 2004, any member of Impark Management who is not at such time employed by any of FUR, FUMI or a subsidiary of any of them (the "Selling Manager") shall have the right, at his option, to require Holdco 2 to purchase all of the Preferred Shares then owned by such Selling Manager unless such purchase by Holdco 2 would result in a breach or default under any agreement between Holdco 2 and a Third Party or would otherwise be contrary to law. The date of the giving of any such notice shall be the "Effective Date", subject to such condition. 6.5 PURCHASE PRICE. The purchase price per share for Shares transferred pursuant to sections 6.1, 6.2, 6.3 and 6.4 shall be the Fair Value Per Share as of the Effective Date. 6.6 CONFLICT WITH THIRD PARTY OFFER. If an Effective Date occurs with respect to a member at any time following the delivery of a notice pursuant to section 5.1 setting out a Third Party Offer, the provisions of this Article 6 shall not apply with respect to 16 -16- the Shares held by such member or Affiliate of such member unless (i) FUMI has not required such member to sell his Shares pursuant to section 5.1 and the member has elected not to sell any Shares held by the member in accordance with alternative (b) of section 5.2, in which case the provisions of this Article 6 shall apply, (ii) the purchase and sale transaction with the Third Party pursuant to section 5.1 is not completed for any reason other than the default of the member, in which case the provisions of this Article 6 shall apply, or (iii) such member has become obligated to sell less than all of his Shares to the Third Party, in which case the provisions of this Article 6 shall apply to those Shares held by such member which he has not become so obligated to sell. 6.7 COMPLETION. Subject as hereinafter provided, each transfer of Shares under this Article 6 shall for all purposes be deemed to have been completed on the Effective Date relating thereto and title to the Shares being transferred shall pass to the transferee thereof on and as of such date. In the case of transfers of Shares other than pursuant to section 6.4 and subsection (c) of section 6.1, the party having the option to purchase shall, in the notice exercising such option, notify the Selling Manager of a date and time (the "Date of Closing" and "Time of Closing", respectively, for the purposes of Article 8) for the payment of the purchase price for the Subject Shares, which date shall be not more than sixty (60) days after the date of such notice and the closing shall be effected in the manner provided for in Article 8. In the case of transfers to Holdco 2 of Common Shares pursuant to subsection (c) of section 6.1 and of Preferred Shares pursuant to section 6.4, Holdco 2 shall notify the Selling Manager of a date and time (the "Date of Closing" and "Time of Closing", respectively, for the purposes of Article 8) for the payment of the purchase price for the Subject Shares, which date shall be not more than sixty (60) days after the date of such notice and the closing shall be effected in the manner provided for in Article 8. Notwithstanding the foregoing, any transfer of Shares to Holdco 2 provided for in section 6.4 or in subsection (c) of section 6.1 shall be conditional upon all of the members of Impark Management, other than the Selling Manager, consenting to such transfer and waiving any rights they may have as a condition precedent to or as a consequence of such transfer in their capacity as holders of Preferred Shares and Common Shares (i) to the immediate payment of any accrued but unpaid dividends on their Preferred Shares or (ii) to the contemporaneous repurchase of any of their Shares. The members of Impark Management hereby consent to any such transfer and waive any such rights to the extent arising as a result of any such transfer and hereby authorize and direct the Designated Representative to execute and deliver on their behalf at the time of any such transfer a document confirming such consent and waiver. 17 -17- ARTICLE 7 FAMILY LAW 7.1 PREVENTION OF TRANSFER ORDERS. Each member of Impark Management agrees to use his best efforts to prevent or avoid any order or similar act being rendered by any court of competent jurisdiction under the Family Law Act (Ontario), the Divorce Act (Canada) or comparable laws or legislation of any other jurisdiction that would have the effect of transferring beneficial ownership of the Shares held by such member or any Affiliate of such member to any person (other than by reason of that person being the individual's heir or legal personal representative at the time of his or her death or mental incapacity) who was not, immediately prior to the making of such order or similar act, a member of Impark Management (any such act or order being a "Transfer Order"), except that this section 7.1 shall not require any such member to obtain the execution by his Spouse of any instrument binding such Spouse to the terms of this Article 7 prior to the time of any transfer of Shares or any beneficial interest therein to his Spouse. 7.2 RIGHT OF FIRST REFUSAL ON TRANSFER. Each member of Impark Management agrees that any amount that is required to be paid by the member to any Spouse of the member by order of a court of competent jurisdiction shall, if reasonably possible, be satisfied by the transfer to such Spouse of property of the member other than the Shares. If a Transfer Order is made or if any transfer or sale of Shares is required to satisfy a court order, the affected member of Impark Management shall forthwith give written notice thereof to the Designated Representative and FUMI (the date of the giving of such notice being the "Effective Date") and the Designated Representative and FUMI shall have first rights, in accordance with the provisions of subsections (a) and (b) of section 6.1, mutatis mutandis, to acquire from such member or any transferee such Shares as are subject to a Transfer Order or otherwise required to be sold, at a price per Share (without interest) equal the Fair Value Per Share of such Shares on the Effective Date. ARTICLE 8 COMPLETION OF PURCHASE AND SALE OF SHARES 8.1 OUTSTANDING INDEBTEDNESS. If any indebtedness of the Vendor to: (i) any authorized pledgee pursuant to any financing in accordance with section 4.4; (ii) Canco 1, Holdco 2, FUMI, or any of their affiliates; or (iii) the Purchaser; is outstanding upon the occurrence of any purchase and sale of Shares hereunder, the Vendor hereby irrevocably authorizes and directs that a portion of the Purchase Price for the Purchased Shares equal to such outstanding indebtedness be applied in repayment of such indebtedness. The Purchased Shares shall not be registered in the name of the 18 -18- Purchaser unless all such indebtedness has been repaid to the extent of the Purchase Price. 8.2 DELIVERY OF SHARES AND PAYMENT. At the Time of Closing on the Date of Closing in respect of any sale and purchase of Purchased Shares, the parties shall attend at the offices where the closing is being held, the Vendor shall deliver to the Purchaser certificates representing the Purchased Shares, duly endorsed in blank for transfer (or, if the Depositary holds such certificates pursuant to Article 9, an acknowledgement that the Depositary holds such certificates for the Purchaser), and the Purchaser shall pay to the Vendor the Purchase Price (or the balance thereof after the repayment of any indebtedness referred to in section 8.1). 8.3 VENDOR DEFAULT. If the Vendor does not attend at the place of closing at the Time of Closing, or fails for any reason whatsoever to produce and deliver to the Purchaser the certificates representing the Purchased Shares duly endorsed in blank for transfer (or, if the Depositary holds such certificates pursuant to Article 9, an acknowledgement that the Depositary holds such certificates for the Purchaser) at or prior to the time payment of the Purchase Price therefor is required to be made, then the Purchase Price shall be deposited at the time otherwise provided for its payment into a special account in the name of the Vendor at the branch of the principal Canadian chartered bank (the "Bank") primarily utilized by Imperial Parking. Such deposit shall constitute valid and effective payment to the Vendor of the Purchase Price and shall result in title to the Purchased Shares passing to the Purchaser, even if the Vendor has voluntarily sold or pledged any of the Purchased Shares, and notwithstanding that certificates representing any of the Purchased Shares may have been delivered to an authorized pledgee, a transferee or other person. If any of the Purchased Shares have been pledged to an authorized pledgee to secure obligations or indebtedness of the Vendor, the Purchaser may, at its option, in lieu of depositing the Purchase Price as aforesaid, pay all or any part of the Purchase Price to the authorized pledgee to the extent required to discharge such obligations or indebtedness and receive the certificates representing the Purchased Shares from the authorized pledgee and deposit the remainder, if any, of the Purchase Price as aforesaid. 8.4 TRANSFER OF TITLE. From and after the Date of Closing until the time provided for the payment for the Purchased Shares, and thereafter if such payment is then made or if a deposit and/or payment is then made in accordance with section 8.3, and even though the certificates representing the Purchased Shares may not have been delivered to the Purchaser, the purchase of the Purchased Shares shall be deemed to have been fully completed and all right, title, benefit and interest, both at law and in equity, in and to the Purchased Shares (except as provided in section 8.5) shall be deemed to have been transferred and assigned to and become vested in the Purchaser and all right, title, benefit and interest, both at law and in equity, of the Vendor or of 19 -19- any transferee, pledgee or any other person having any interest, legal or equitable, therein or thereto shall cease and determine. 8.5 PAYMENT OF DEFAULTING VENDOR. Subject to section 8.1, the Vendor shall be entitled to receive the Purchase Price deposited with the Bank upon delivery to the Purchaser of the certificates representing the Purchased Shares, duly endorsed in blank for transfer (or, if the Depositary holds such certificates pursuant to Article 9, an acknowledgement that the Depositary holds such certificates for the Purchaser). 8.6 POWER OF ATTORNEY. The Vendor hereby irrevocably constitutes and appoints the Designated Representative (and if the Designated Representative is the Vendor he appoints each of the officers from time to time of FUMI) as a true and lawful attorney-in-fact and agent for, in the name of and on behalf of, the Vendor to execute and deliver in the name of the Vendor all such assignments, transfers, deeds, receipts, directions and instruments as may be necessary effectively to sell, transfer and assign the Purchased Shares, or any part thereof, to the Purchaser on the books of Holdco 2. Each member of Impark Management shall deliver to the Designated Representative concurrently with the execution of this agreement a continuing power of attorney for the purposes set out in section 3.2 and this Article 8 in accordance with section 3.2 and shall hereafter, upon request, provide such additional or replacement powers of attorney for such purposes as may be required to fulfil the requirements of applicable law for valid, effective and enforceable powers of attorney. Each member of Impark Management hereby ratifies and confirms and agrees to ratify and confirm all that the attorney appointed pursuant to this section 8.6 may lawfully do or cause to be done by virtue of the authority hereby and thereby conferred. 8.7 CONSENT. The Vendor hereby irrevocably consents to any sale or transfer of the Purchased Shares made pursuant to the provisions hereof. ARTICLE 9 DEPOSITARY ARRANGEMENTS 9.1 DEPOSIT OF SHARE CERTIFICATES. For so long as this agreement remains in force, the certificates representing all of the Shares that are at any time held by any member of Impark Management shall be held by FUMI or a person designated by FUMI (the "Depositary") to be dealt with in accordance with this agreement. Notwithstanding the foregoing, in the event that FUMI consents to the pledge of any Shares pursuant to section 4.4, Shares that are pledged as a result to any authorized pledgee shall, for so long as they are held by such authorized pledgee pursuant to such pledge, not be governed by this Article 9. 20 -20- 9.2 DEPOSIT RECEIPT. The Depositary will issue in the name of and deliver to each member of Impark Management who deposits with the Depositary a certificate or certificates representing Shares, a receipt (the "Deposit Receipt") in substantially the form annexed hereto as Schedule E to evidence such deposit, which Deposit Receipt shall be non-transferable. 9.3 TRANSFER OF SHARES. If a transfer of Shares has been made in accordance with the provisions of this agreement, upon delivery to the Depositary of (a) the relevant Deposit Receipt and (b) written evidence satisfactory to the Depositary that the transfer of Shares has been made in accordance with the provisions of this agreement, the Depositary shall return the certificates representing such Shares to Holdco 2 for cancellation and Holdco 2 shall cancel such Share certificates and issue in the name of the transferee new Share certificates evidencing the transferred Shares and, if less than all the Shares held by a transferor have been transferred, issue in the name of the transferor new Share certificates evidencing the Shares that were not transferred, which Share certificates shall be delivered by Holdco 2 to the Depositary to be dealt with in accordance with the terms of this agreement. Upon receipt by the Depositary of such new Share certificates, the Depositary shall issue in the name of and deliver to such transferee a Deposit Receipt evidencing such transferee's rights to the deposited Share certificates issued in the transferee's name subject to the terms of this agreement, and, if applicable, shall issue in the name of and deliver to such transferor a Deposit Receipt evidencing such transferor's rights to the deposited Share certificates issued in the transferor's name subject to the terms of this agreement. 9.4 RETURN OF SHARE CERTIFICATES. On the termination of this agreement, each Deposit Receipt shall entitle the holder thereof, or his executors, administrators, legal personal representatives or its successors or assigns, or its or his or their attorney duly appointed by an instrument in writing in form and execution satisfactory to the Depositary, as the case may be, to certificates representing the number of Shares represented thereby on surrender of such Deposit Receipt to the Depositary. Each party agrees that, except as otherwise expressly provided herein, the Shares represented by certificates deposited with the Depositary in accordance with the terms hereof shall not be released by the Depositary except on termination of this agreement and that each such party will not request nor be entitled to the release of certificates except on such basis. 9.5 RIGHTS TO REMAIN WITH MEMBERS. FUMI hereby acknowledges and confirms on behalf of itself and any designee of it that may at any time be the Depositary that (a) the Depositary will hold the certificates representing Shares subject to the provisions hereof, (b) the Depositary does not and will not have any beneficial interest in the Shares in respect of which certificates have been delivered to it pursuant to this Article 9 solely by reason of such delivery, and (c) beneficial ownership of the 21 -21- Shares represented by certificates deposited with the Depositary pursuant to this Article 9 and all other rights of ownership with respect thereto shall remain with the members of Impark Management on behalf of whom the same were deposited with the Depositary, subject to the powers of attorney provided under sections 3.2 and 8.6. 9.6 LIMITATION OF DEPOSITARY LIABILITY. The Depositary shall be entitled to rely as to all matters of fact conclusively upon documents and instruments in writing signed by the members of Impark Management registered as holders of Shares or by the Designated Representative as their lawful attorney. The Depositary shall not be liable for relying in good faith on any such document required or permitted to be given hereunder. ARTICLE 10 MISCELLANEOUS 10.1 NOTICE. Any notice, document or thing required or permitted to be given or delivered hereunder shall be deemed to be properly given or delivered to a party if (a) delivered in person or by courier to the address set out below and acknowledged by written receipt signed by the person receiving such notice, or (b) sent by facsimile transmission and confirmed by prepaid registered letter addressed to the party receiving such notice, at its respective address or fax number set out below: FUMI: c/o First Union Management, Inc. Suite 1910 55 Public Square Cleveland, Ohio 44113-1937 Attention: Paul F. Levin Fax: (216) 781-7364 22 -22- Holdco 2: c/o First Union Management, Inc. Suite 1910 55 Public Square Cleveland, Ohio 44113-1937 Attention: John Dee Fax: (216) 781-7467 Impark Management: Designated Representative c/o Imperial Parking Limited Suite 300, The Station 601 West Cordova Street Vancouver, British Columbia V6B 1G1 Attention: Paul Clough Fax: (604) 681-4098 Any notice or delivery given in accordance with the provisions of this section 10.1 shall be deemed to have been given and received, if delivered in person or by courier, on the day of delivery in person or at the time of actual receipt thereof, and if delivered by facsimile transmission on the date of receipt of the facsimile transmission at the time of actual receipt thereof unless received after business hours or on a day other than a Business Day and then on the next Business Day. 10.2 CHANGE OF ADDRESS. Any party may from time to time by notice in writing delivered in accordance with the provisions of this Article 10 change its address for purposes hereof. 10.3 COUNTERPARTS. This agreement may be executed in any number of counterparts, each of which shall constitute an original, and all of which collectively shall constitute a single instrument. 10.4 SUCCESSORS AND ASSIGNS. This agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, legal personal representatives, successors and permitted assigns. FUMI may assign its rights and obligations hereunder to any corporation controlled by FUMI without the consent of any other party hereto. No other party hereunder may assign its rights or obligations hereunder without the prior written consent of FUMI. 23 -23- 10.5 GOVERNING LAW. This agreement shall be construed and interpreted in accordance with the laws of the Province of New Brunswick and the federal laws of Canada applicable therein. Each of the parties hereby irrevocably attorns to the non-exclusive jurisdiction of the courts of the Province of New Brunswick and all courts competent to hear appeals therefrom. 10.6 SEVERABILITY. If any provision contained herein is determined to be void or unenforceable in whole or in part, it shall not be deemed to affect or impair the validity of any other provision herein and each such provision is deemed to be separate and distinct. 10.7 ENTIRE AGREEMENT. This agreement constitutes the entire agreement between the parties hereto pertaining to the respective obligations of Impark Management and the other parties hereto in respect of the Shares, save and except for the Share Purchase Agreement. There are not and shall not be any oral statements, representations, warranties, undertakings or agreements between the parties with respect to the subject matter hereof and this agreement may not be amended or modified in any respect except by written instrument signed by the parties hereto. 10.8 IMPLEMENTATION OF AGREEMENT. The parties hereto hereby covenant and agree to do or cause to be done all acts and things, whether by the directors of Canco 2 or Holdco 2 or otherwise, to execute and deliver or cause to be executed and delivered all such instruments and to exercise or cause to be exercised any and all voting rights attaching to the Shares held by each of them in order that all provisions of this agreement shall be fully and effectively carried out, implemented and given effect to in accordance with the terms hereof. Holdco 2 agrees not to take or approve any action that would contravene any provision of this agreement and shall cause to be provided all necessary approvals for any transfer of Shares that is effected in compliance with this agreement. 24 -24- 10.9 TERMINATION. This agreement shall terminate upon the agreement of shareholders of Holdco 2 who hold at least 97% of the voting rights attached to all Common Shares or, if earlier, at the option of FUMI immediately upon the closing of a sale of 97% or more of the outstanding Common Shares to a Third Party in accordance herewith. IN WITNESS WHEREOF this agreement has been executed by the parties hereto as of the date first above written. SIGNED, SEALED AND DELIVERED ) in the presence of ) ) /S/ Paul Clough ---------------------- ) Paul T. Clough ) ) ) /S/ Bruce Newsome ---------------------- ) J. Bruce Newsome ) ) ) /S/ Douglas Poirier ---------------------- ) Douglas I. Poirier ) ) ) /S/ J. Robin Bateman ---------------------- ) J. Robin Bateman ) ) ) /S/ James MacKay ---------------------- ) James MacKay ) ) ) /S/ Michael T. Menzies ---------------------- ) Michael T. Menzies ) ) ) /S/ Robert Noiles ---------------------- ) Robert L. Noiles ) ) ) /S/ Harry Renaud ---------------------- ) Harry J. Renaud ) 25 -25- ) ) /S/ Stuart MacKenzie -------------------- ) Stuart M. MacKenzie ) ) ) /S/ Daniel Sawchuck -------------------- ) Daniel Sawchuck ) LAURENTIAN BANK OF CANADA, in trust for J.Bruce Newsome, Account No. VOO2679 by Authorized Signor ------------------------------ RBC DOMINION SECURITIES INC., in trust for Douglas I. Poirier, Account No. 496-81890-11 by Authorized Signor ------------------------------ GUNDYCO, in trust for J. Robin Bateman, Account No. 590-90333-17 by Authorized Signor ------------------------------ GUNDYCO, in trust for Robert L. Noiles, Account No. 590-77616-12 by Authorized Signor ------------------------------ GUNDYCO, in trust for Stuart M. MacKenzie, Account No. 590-90254-12 by Authorized Signor ------------------------------ 26 -26- MIDLAND WALWYN CAPITAL INC., in trust for Henry J. Renaud, Account No. 8RABNQS by Authorized Signor ------------------------------ 504308 N.B. INC. by Authorized Signor ------------------------------ FIRST UNION MANAGEMENT, INC. by Authorized Signor ------------------------------ 27 -27- SCHEDULE A Subscribers Common Shares of Holdco 2 to be Acquired - ----------- ----------------------------------------- Paul T. Clough 19,632 Bruce Newsome 4,531 Doug Poirier 2,805 Rob Bateman 1,512 Jim MacKay 1,542 Mike Menzies 1,542 Rob Noiles 1,123 Harry Renaud 2,663 Stuart MacKenzie 1,379 Dan Sawchuck 771 28 SCHEDULE B POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned hereby irrevocably nominates, constitutes and appoints ________________________ (the "Attorney") , as the true and lawful attorney-in-fact and agent for the undersigned and in the name, place and stead of the undersigned, in the capacity of the undersigned as a shareholder of 504308 N.B. Inc. for the following purposes: (i) to execute and deliver proxies and vote any and all shares of the undersigned in 504308 N.B. Inc. on behalf of the undersigned in respect of any matter on which the undersigned is entitled to vote in such manner as may be determined by the Attorney in his sole discretion; and (ii) to execute and deliver any and all assignments, transfers, deeds, directions, receipts and other instruments as may be necessary effectively to sell, transfer and assign any of such shares in accordance with the provisions of the shareholders' agreement made as of April 17, 1997. The execution of this document indicates the intention of the undersigned that this document provides the Attorney with a continuing power of attorney for property under the [SUBSTITUTE DECISIONS ACT (ONTARIO)] for the purposes set out herein and that such appointment and power of attorney, being coupled with an interest, shall not be revocable at the option of the undersigned and shall not be revoked by the insolvency, bankruptcy or incapacity of the undersigned and shall come into effect upon the date that this document is signed and witnessed. The undersigned hereby ratifies and confirms and agrees to ratify and confirm all that the Attorney may lawfully do or cause to be done by virtue of this power of attorney. DATED this day of , 199 . ___________________________________ _________________________________ Name of Witness Name of Appointor ___________________________________ _________________________________ Signature Signature ___________________________________ Name of Witness ___________________________________ Signature 29 SCHEDULE C PERFORMANCE ACHIEVEMENT PROGRAM 1. DEFINITIONS. Capitalized terms which are defined in the shareholders agreement entered into as of April 17, 1997 between 504308 N.B. Inc., First Union Management, Inc. and certain employees of Impark have the meanings as provided for therein. In addition, the following terms have the following meanings: "PERFORMANCE ACHIEVEMENT" for any year means the Percentage Achievement for such year of the Performance Bonus Base for such year; "PERCENTAGE ACHIEVEMENT" means as follows: (i) for 1997 and 1998, 100% minus the amount of any Shortfall Percentage for the applicable year; (ii) for 1999, 100% minus the product of 1.5 and any Shortfall Percentage for 1999; and (iii) for 2000, 100% minus the product of 3 and any Shortfall Percentage for 2000; "PERFORMANCE BONUS BASE" means as follows: (i) for 1998, the Percentage Achievement for 1997 of $694,444; (ii) for 1999, the Performance Achievement for 1998; and (iii) for 2000, the Performance Achievement for 1999; and "SHORTFALL PERCENTAGE" for any period means the percentage obtained by multiplying 100% times the quotient of the Performance Shortfall for such period divided by the Performance Target for such period. 2. PARTICIPANTS. Subject as hereinafter provided, the participants in the Program (the "Participants") and the interest of each Participant (the "Participant's Share") will be as follows: 30 Participant Participant's Share Paul T. Clough 52.35% J. Bruce Newsome 12.08% Douglas I. Poirier 7.47% J. Robin Bateman 4.03% James MacKay 4.11% Michael T. Menzies 4.11% Robert L. Noiles 3.00% Harry J. Renaud 7.11% Stuart M. MacKenzie 3.68% Daniel Sawchuck 2.06% Notwithstanding the foregoing, in the event that individuals who are employed by Impark as at April 17, 1997 become new members of Impark Management prior to June 30, 1997, the Designated Representative shall have the right at any time prior to such date to include any of such new members as Participants and to designate the Participant's Share of each such new Participant provided that the Participant's Share of Paul Clough shall be reduced by the aggregate of the Participant's Shares of such new Participants. The inclusion and designation provided for in the preceding sentence shall be made by written notice delivered to Holdco 2 and FUMI on or before June 30, 1997. 3. PERFORMANCE ACHIEVEMENT AWARD. Each Participant will be conditionally entitled to receive a bonus payment in respect of each of the calendar years 1998, 1999 and 2000. The amount to which a Participant will be conditionally entitled in respect of any such year will be such Participant's Share of the Performance Achievement for such year. The actual entitlement of such Participant to such bonus will be dependant upon such Participant being continuously employed by any of Impark, FUR or FUMI or a subsidiary of any of them from April 17, 1997 through to the end of the third calendar year following the year in respect of which such bonus was determined. If the Participant is so continuously employed until the end of such third year, he will be paid the full amount of such bonus on the last day of such third year. If such Participant ceases to be so employed during such third year, he will be paid on or before the last day of such third year a pro rata portion of such bonus based on the number of days he was so employed during such third year relative to the total number of days in such year. 31 4. COORDINATION. The Program shall be coordinated with the comparable program to be instituted by Imperial Parking so as to ensure that each member of Impark Management participates in one or the other of the programs without double counting. 32 SCHEDULE D PERFORMANCE BONUS PROGRAM 1. DEFINITIONS. Capitalized terms which are defined in the shareholders agreement entered into as of April 17, 1997 between 504308 N.B. Inc. and certain employees of Impark have the meanings as provided for therein. 2. PARTICIPANTS. The participants in the Program (the "Participants") will be the employees from time to time of Impark and the interest of each Participant (the "Participant's Share") will be determined from time to time by the Designated Representative. 3. PERFORMANCE ACHIEVEMENT AWARD. In 1998, 1999, 2000 and 2001, each Participant who is still employed by Impark will be entitled to receive a cash bonus payment equal to such Participant's Share of the amount which is 5% of any amount by which the Consolidated Performance for the immediately preceding calendar year exceeds the Performance Target for such immediately preceding calendar year. 4. COORDINATION. The Program shall be coordinated with the comparable program to be instituted by Imperial Parking so as to ensure that each member of Impark Management participates in one or the other of the programs without double counting. 33 SCHEDULE E DEPOSIT RECEIPT THE UNDERSIGNED, ____________________ (the "Depositary"), hereby confirms that ______________________ (the "Holder") is the registered holder of the following shares (the "Shares") in the capital of 504308 N.B. Inc.: Common Shares _______________________ Preferred Shares _______________________ The certificates in respect of such Shares are held by the Depositary pursuant to the agreement (the "Shareholders Agreement") made as of the 17th day of April, 1997 between 504308 N.B. Inc., First Union Management, Inc. and the individuals listed on Schedule A thereto. This Deposit Receipt evidences the ownership by the Holder of the Shares held by the Depositary in accordance with the Shareholders Agreement. The Depositary is bound to hold the Shares in accordance with the Shareholders Agreement and the rights of the Holder with respect to the Shares are expressly subject to, governed by and may be exercised only in accordance with, the terms and conditions set forth in the Shareholders Agreement (as such agreement may be amended from time to time). By acceptance of this Deposit Receipt, the Holder assents to such terms and conditions. This Deposit Receipt is not transferable. IN WITNESS WHEREOF the Depositary has caused this Deposit Receipt to be signed by its duly authorized signatory this ____ day of ________, _____. _______________________________ by ___________________________ EX-10.I 11 EXHIBIT 10.I 1 Exhibit (10I) ASSIGNMENT THIS ASSIGNMENT is made this 27th day of March, 1997 by and between First Union Real Estate Equity and Mortgage Investments, an Ohio business trust ("FUR"), and First Union Management, Inc., a Delaware corporation ("FUMI"). WHEREAS, FUR is party to that certain Share Purchase Agreement dated as of February 18, 1997 among FUR, Impark Investments Inc., the persons listed on Schedule 1 thereto and certain others (as amended through the date hereof, the "Share Purchase Agreement"); and WHEREAS, FUR desires to assign its rights and obligations under the Share Purchase Agreement to FUMI and FUMI desires to accept such assignment; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each party, the parties hereby agree as follows: 1. Terms used herein commencing with initial capital letters and not otherwise defined shall have the respective meanings ascribed thereto in the Share Purchase Agreement. 2. In consideration of a Promissory Note issued by FUMI in the amount of (a) U.S. $1,459,125.08, representing the U.S. dollar equivalent as of the date hereof of Can. $2,004,691.95 being the Escrowed Funds (as defined in the Escrow Agreement), plus (b) U.S. $3,200,000, representing the additional fees, costs and expenses incurred by FUR in connection with the Share Purchase Agreement and the transactions contemplated thereby, FUR hereby assigns to FUMI all rights, title, benefits, interest, liabilities and obligations under the Share Purchase Agreement and any other documents related thereto to which any of the Vendors and FUR are parties or which have been executed by any of them for the benefit of FUR (collectively, the "Documents"). 3. FUMI hereby accepts the within assignment to it of the rights, title, benefits and interest of FUR (the "Rights") and hereby covenants and agrees with FUR that it shall and will, from time to time, and at all times hereafter be bound by, observe, perform and fulfil each and every covenant, proviso, obligation, term and condition on the part of FUR in the Documents relating to the acquisition of the Purchased Shares and the payment of the Purchase Price therefor to the same extent as if FUMI had been originally named as a party to the Documents in the place and stead of 2 FUR in so far as the Documents relate to the acquisition of the Purchased Shares. 4. FUMI shall be entitled to hold and enforce all of the Rights in, to and under the Documents (including, without limitation, under the Escrow Agreement). 5. All references to "Purchaser" in the Documents shall be deemed to include FUMI insofar as is necessary to give effect to the assignment of the Rights in, to and under the Documents effected hereby and, for grater certainty, any Loss suffered by FUMI shall be deemed to be a Loss suffered by FUR for purposes of Article 11 of the Purchase Agreement. 6. FUR further covenants to do all such acts and execute all such documents as may be reasonably necessary or desirable to secure the vesting in FUMI of all rights assigned to FUMI hereunder. 7. This Assignment shall be governed by and construed in accordance with the laws of the State of Ohio. 8. This Assignment is for the benefit of FUMI and its subsidiaries and may be assigned by FUMI to any of its direct or indirect subsidiaries. 9. This Assignment constitutes the entire agreement between the parties with respect to the subject matter hereof. No amendment or waiver of any provision of this Assignment shall be binding on any party unless consented to in writing by such party. 3 IN WITNESS WHEREOF, this Assignment has been duly executed by the authorized officers of the parties hereto. FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS By: /s/ Authorized Signer ______________________________ Name: ______________________________ Title: ______________________________ FIRST UNION MANAGEMENT, INC. By: /s/ Authorized Signer ______________________________ Name: ______________________________ Title: ______________________________ EX-10.J 12 EXHIBIT 10.J 1 Exhibit (10J) ASSIGNMENT THIS ASSIGNMENT is made this 16th day of April, 1997 by and between First Union Management, Inc., a Delaware corporation ("FUMI"), and 3355489 Canada Inc., a Canadian corporation ("Holdco 1"). WHEREAS, FUR was party to that certain Share Purchase Agreement dated as of February 18, 1997 among FUR, Impark Investments Inc., the persons listed on Schedule 1 thereto and certain others (as amended through the date hereof, the "Share Purchase Agreement"); and WHEREAS, FUR has assigned its rights and obligations under the Share Purchase Agreement to FUMI and FUMI has accepted such assignment pursuant to an Assignment dated March 27, 1997 between FUR and FUMI (the "Assignment"); WHEREAS, FUMI desires to assign its rights and obligations under the Assignment to Holdco 1 and Holdco 1 desires to accept such assignment; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each party, the parties hereby agree as follows: 1. Terms used herein commencing with initial capital letters and not otherwise defined shall have the respective meanings ascribed thereto in the Share Purchase Agreement. 2. In consideration of assuming all obligations under the Promissory Note issued by FUMI to FUR in the amount of $4,659,125.08, FUMI hereby assigns to Holdco 1 all rights, title, benefits, interest, liabilities and obligations under the Assignment and any other documents related thereto to which any of the Vendors and FUMI are parties or which have been executed by any of them for the benefit of FUMI (collectively, the "Documents"). 3. Holdco 1 hereby accepts the within assignment to it of the rights, title, benefits and interest of FUMI (the "Rights") and hereby covenants and agrees with FUMI that it shall and will, from time to time, and at all times hereafter be bound by, observe, perform and fulfil each and every covenant, proviso, obligation, term and condition on the part of FUMI in the Documents relating to the acquisition of the Purchased Shares and the payment of the Purchase Price therefor to the same extent as if Holdco 1 had been originally named as a party to the Documents in the place 2 and stead of FUMI in so far as the Documents relate to the acquisition of the Purchased Shares. 4. Holdco 1 shall be entitled to hold and enforce all of the Rights in, to and under the Documents (including, without limitation, under the Escrow Agreement). 5. All references to "Purchaser" in the Documents shall be deemed to include Holdco 1 insofar as is necessary to give effect to the assignment of the Rights in, to and under the Documents effected hereby and, for greater certainty, any Loss suffered by Holdco 1 shall be deemed to be a Loss suffered by Purchaser for purposes of Article 11 of the Purchase Agreement. 6. FUMI further covenants to do all such acts and execute all such documents as may be reasonably necessary or desirable to secure the vesting in Holdco 1 of all rights assigned to Holdco 1 hereunder. 7. This Assignment shall be governed by and construed in accordance with the laws of the State of Ohio. 8. This Assignment is for the benefit of Holdco 1 and its subsidiaries and may be assigned by Holdco 1 to any of its direct or indirect subsidiaries. 9. This Assignment constitutes the entire agreement between the parties with respect to the subject matter hereof. No amendment or waiver of any provision of this Assignment shall be binding on any party unless consented to in writing by such party. 3 IN WITNESS WHEREOF, this Assignment has been duly executed by the authorized officers of the parties hereto. FIRST UNION MANAGEMENT, INC. By: /s/ Authorized Signer _______________________________ Name: _______________________________ Title: _______________________________ 3355489 CANADA INC. By: /s/ Authorized Signer _______________________________ Name: _______________________________ Title: _______________________________ 4 ALLONGE TO DEMAND PROMISSORY NOTE 3355489 Canada Inc. assumes all obligations and rights of First Union Management, Inc. ("FUMI") under the Demand Promissory Note in the amount of U.S. $4,659,125.08 dated March 27, 1997 issued by FUMI and payable to the order of First Union Real Estate Equity and Mortgage Investments. Dated: April 17, 1997 3355489 CANADA INC. By:__________________________ Name:________________________ Title:_______________________ Accepted and Agreed: FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS By:___________________________ Name:_________________________ Title:________________________ 5 ALLONGE TO DEMAND PROMISSORY NOTE 3357392 Canada Inc. assumes all obligations and rights of 3355489 Canada Inc. under the Demand Promissory Note in the amount of U.S. $4,659,125.08 dated March 27, 1997 issued by FUMI and assumed be 3355489 Canada Inc. and payable to the order of First Union Real Estate Equity and Mortgage Investments. Dated: April 17, 1997 3357392 CANADA INC. By:__________________________ Name:________________________ Title:_______________________ Accepted and Agreed: FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS By:___________________________ Name:_________________________ Title:________________________ EX-10.K 13 EXHIBIT 10.K 1 Exhibit (10K) ASSIGNMENT THIS ASSIGNMENT is made this 16th day of April, 1997 by and between 3355489 Canada Inc., a Canadian corporation ("Holdco 1"), and 3357392 Canada Inc., a Canadian corporation ("Canco 1"). WHEREAS, FUR was party to that certain Share Purchase Agreement dated as of February 18, 1997 among FUR, Impark Investments Inc., the persons listed on Schedule 1 thereto and certain others (as amended through the date hereof, the "Share Purchase Agreement"); and WHEREAS, FUR has assigned its rights and obligations under the Share Purchase Agreement to FUMI and FUMI has accepted such assignment pursuant to an Assignment dated March 27, 1997 between FUR and FUMI (the "FUMI Assignment"); WHEREAS, FUMI has assigned its rights and obligations under the FUMI Assignment to Holdco 1 and Holdco 1 has accepted such assignment pursuant to an Assignment dated April 16, 1997 between FUMI and Holdco 1 (the "Assignment"); WHEREAS, Holdco 1 desires to assign its rights and obligations under the Assignment to Canco 1 and Canco 1 desires to accept such assignment; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each party, the parties hereby agree as follows: 1. Terms used herein commencing with initial capital letters and not otherwise defined shall have the respective meanings ascribed thereto in the Share Purchase Agreement. 2. In consideration of assuming all obligations under the Promissory Note issued by FUMI to FUR in the amount of $4,659,125.08 and assumed by Holdco 1, Holdco 1 hereby assigns to Canco 1 all rights, title, benefits, interest, liabilities and obligations under the Assignment and any other documents related thereto to which any of the Vendors and Holdco 1 are parties or which have been executed by any of them for the benefit of Holdco 1 (collectively, the "Documents"). 3. Canco 1 hereby accepts the within assignment to it of the rights, title, benefits and interest of Holdco 1 (the "Rights") and hereby covenants and agrees with Holdco 1 that it shall and will, from time to time, and at all times hereafter be bound by, observe, perform and fulfil each and 2 every covenant, proviso, obligation, term and condition on the part of Holdco 1 in the Documents relating to the acquisition of the Purchased Shares and the payment of the Purchase Price therefor to the same extent as if Canco 1 had been originally named as a party to the Documents in the place and stead of Holdco 1 in so far as the Documents relate to the acquisition of the Purchased Shares. 4. Canco 1 shall be entitled to hold and enforce all of the Rights in, to and under the Documents (including, without limitation, under the Escrow Agreement). 5. All references to "Purchaser" in the Documents shall be deemed to include Canco 1 insofar as is necessary to give effect to the assignment of the Rights in, to and under the Documents effected hereby and, for greater certainty, any Loss suffered by Canco 1 shall be deemed to be a Loss suffered by Purchaser for purposes of Article 11 of the Purchase Agreement. 6. Holdco 1 further covenants to do all such acts and execute all such documents as may be reasonably necessary or desirable to secure the vesting in Canco 1 of all rights assigned to Canco 1 hereunder. 7. This Assignment shall be governed by and construed in accordance with the laws of the Province of Ontario. 8. This Assignment is for the benefit of Canco 1 and its subsidiaries and may be assigned by Canco 1 to any of its direct or indirect subsidiaries. 9. This Assignment constitutes the entire agreement between the parties with respect to the subject matter hereof. No amendment or waiver of any provision of this Assignment shall be binding on any party unless consented to in writing by such party. 3 IN WITNESS WHEREOF, this Assignment has been duly executed by the authorized officers of the parties hereto. 3355489 CANADA INC. By: /s/ Authorized Signer _______________________________ Name: _______________________________ Title: _______________________________ 3357392 CANADA INC. By: /s/ Authorized Signer _______________________________ Name: _______________________________ Title: _______________________________ EX-10.L 14 EXHIBIT 10.L 1 Exhibit (10L) AMENDMENT TO ASSIGNMENT THIS AMENDMENT TO ASSIGNMENT is made this 8th day of May, 1997 by and between First Union Real Estate Equity and Mortgage Investments, an Ohio business trust ("FUR"), and Imperial Parking Limited, a Canadian corporation ("Impark") but is to be effective as of March 27, 1997. WHEREAS, FUR and First Union Management, Inc. ("FUMI") are parties to an Assignment dated March 27, 1997 (the "Assignment") pursuant to which FUR assigned its rights and obligations under the Share Purchase Agreement dated as of February 18,1997 among FUR, Impark Investments Inc., the persons listed on Schedule 1 thereto and certain others (as amended from time to time, the "Share Purchase Agreement") to FUMI and FUMI accepted such assignment; WHEREAS, FUMI assigned its rights and obligations under the Assignment to 3355489 Canada Inc., a Canadian corporation ("Holdco 1"), and Holdco 1 accepted such assignment pursuant to an assignment dated April 16, 1997 (the "Holdco Assignment"); WHEREAS, Holdco 1 assigned its rights and obligations under the Holdco Assignment to 3357392 Canada Inc., a Canadian corporation ("Canco 1"), and Canco 1 accepted such assignment pursuant to an assignment dated April 16, 1997 (the "Canco Assignment"); WHEREAS, Impark is the successor by amalgamation to the obligations of Canco 1 under the Canco Assignment; WHEREAS, the parties hereto desire to amend the Assignment to correct an error in the calculation of the fees and expenses incurred by FUR in connection with the Share Purchase Agreement; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each party, the parties hereby agree as follows: 1. The amount U.S. $3,200,000 appearing in clause (b) of Section 2 of the Assignment reflected the estimated costs to complete the transactions contemplated by the Share Purchase Agreement and not the actual costs incurred and paid by FUR as of the date of the Assignment. In order to correct this error and to reflect the true intent of the parties, clause (b) of Section 2 to the Assignment is amended in its entirety to read as follows: "(b) U.S. $36,630, representing the additional fees, costs and expenses incurred and paid by FUR in connection with the Share Purchase Agreement and the transactions contemplated thereby,". 2 2. The Promissory Note referenced in Section 2 of the Assignment, the obligations of which were assumed by Impark pursuant to the amalgamation with Canco 1, is hereby terminated and declared null and void and is replaced in its entirety with the Promisoory Note attached hereto as Exhibit A. 3. This Amendment shall be governed by and construed in accordance with the laws of the State of Ohio. IN WITNESS WHEREOF, this Amendment has been duly executed by the authorized officers of the parties hereto. FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS By: /s/ Authorized Signer _______________________________ Name: _______________________________ Title:_______________________________ IMPERIAL PARKING LIMITED By: /s/ Authorized Signer _______________________________ Name: _______________________________ Title:_______________________________ 3 $4,659,125.08 March 27, 1997 The undersigned, First Union Management, Inc., a Delaware corporation ("FUMI"), hereby promises to pay to the order of First Union Real Estate Equity and Mortgage Investments, an Ohio business trust ("FUR"), on demand the principal amount of Four Million Six Hundred Fifty-Nine Thousand One Hundred Twenty-Five and 08/100 Dollars ($4,659,125.08), together with interest on the unpaid principal amount hereof from time to time outstanding at the rate of 9.5% per annum (calculated on the basis of a year of 360 days consisting of twelve 30-day months) from and including the date hereof to maturity. All accrued interest hereon shall be payable in a lump sum on the earlier of (i) demand and (ii) March 31, 2002 (or if such date is not a business day, the immediately preceding business day). The accumulation of interest on this Note on or prior to such interest payment date shall not bear interest. This Note may be prepaid without penalty, in whole or in part, by FUMI at any time and from time to time. Payments of both principal and interest on this Note will be made by internal bank or wire transfer of funds to the account of FUR at 55 Public Square, Suite 1900, Cleveland, Ohio 44113, or at any other payment office in the United States previously designated to FUMI in writing by the holder of this Note, in lawful money of the United States of America. FUMI hereby waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note. This Note shall be governed by the laws of the State of Ohio. IN WITNESS WHEREOF, First Union Management, Inc. has executed this Note as of the date first written above. FIRST UNION MANAGEMENT, INC. Address: 55 Public Square, Suite 1900 Cleveland, Ohio 44113 By: _____________________________ Attention: Chief Investment Its: _____________________________ Officer EX-11 15 EXHIBIT 11 1 EXHIBIT 11 FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS AND FIRST UNION MANAGEMENT, INC. STATEMENTS RE: COMPUTATION OF PER SHARE EARNINGS (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED MARCH 31, ------------------ 1997 1996 ---- ---- Shares Outstanding: For computation of primary net income per share - Weighted average 19,896 17,262 Share equivalents - Options 419 -- - Restricted shares 196 -- ------ ------ Adjusted shares outstanding 20,511 17,262 ====== ====== For computation of fully diluted net income per share - Weighted average, without regard to, exercise under share option plans, or purchase of outstanding shares 19,896 17,198 Assumption of exercise under share option plans 419 -- Weighted average of restricted shares granted 196 64 ------ ------ Adjusted shares outstanding 20,511 17,262 ====== ====== Net Income (loss): Net income (loss) applicable to shares of beneficial interest (used for computing primary and fully diluted net income per share) $ 970 $ (877) ====== ====== Net income (loss) per share of beneficial interest: Primary and fully diluted Net income (loss) $ .05 $ (.05) ====== ======
The proforma basic earnings per share for the three months ended March 31, 1997 in accordance with SFAS 128 (Earnings per Share) is $.05 per Share. 7 EX-12 16 EXHIBIT 12 1 EXHIBIT 12 FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS AND ----------------------------------------------------------- FIRST UNION MANAGEMENT, INC. ---------------------------- STATEMENTS OF RATIOS OF COMBINED INCOME FROM OPERATIONS ------------------------------------------------------- AND COMBINED NET INCOME TO FIXED CHARGES ---------------------------------------- (IN THOUSANDS, EXCEPT RATIOS)
3 Months Ended March 31, Years Ended December 31, ------------------ ------------------------------------------------------ 1997 1996 1996 1995 1994 1993 1992 ------- ------- -------- -------- -------- -------- ------ Income (loss) before capital gain or loss, extraordinary loss and cumulative effect of accounting change $ 2,178 $ (877) $ 4,422 $ 3,256 $ 6,485 $10,276 $12,657 Add fixed charges, exclusive of construction interest capitalized 5,404 5,869 24,018 22,987 21,865 19,103 19,469 ------- ------ ------- ------- ------- ------ ------- Income from operations, as defined 7,582 4,992 28,440 26,243 28,350 29,379 32,126 Capital gains --- --- --- 29,870 --- 4,948 5,775 Reduction for unrealized loss on carrying value of assets identified for disposition --- --- --- ( 14,000) --- --- --- ------- ------- ------- ------- ------- ------- ------- Net income, as defined $ 7,582 $ 4,992 $28,440 $42,113 $28,350 $34,327 $37,901 ======= ======= ======= ======= ======= ======= ======= Fixed charges: Interest - Mortgage loans $ 2,426 $ 1,825 $ 8,877 $ 7,670 $ 7,335 $ 5,777 $ 6,182 - Senior notes 2,219 2,326 9,090 9,305 9,305 5,779 4,199 - 10.25% debentures --- --- --- --- --- 3,214 3,858 - Bank loans and other 611 1,568 5,459 5,422 4,640 3,747 4,694 - Capitalized interest --- 81 121 169 --- --- --- Amortization of debt issue costs 52 49 196 184 168 162 122 Rents (1) 96 101 396 406 417 424 414 ------- -------- ------- ------- ------- ------- ------- Fixed charges, as defined $ 5,404 $ 5,950 $24,139 $23,156 $21,865 $19,103 $19,469 ======= ======== ======= ======= ======= ======= ======= Preferred dividend accrued $ 1,208 $ --- $ 845 $ --- $ --- $ --- $ --- ====== ======= ====== ====== ====== ====== ====== Ratio of income from operations, as defined, to fixed charges 1.40 .84 1.18 1.13 1.30 1.54 1.65 ======= ======== ======= ======= ====== ======= ======= Ratio of net income, as defined, to fixed charges 1.40 .84 1.18 1.82 1.30 1.80 1.95 ======= ======== ======= ======= ====== ======= ======= Ratio of net income from operations as defined, to fixed charges and preferred dividend 1.15 .84 1.14 1.82 1.30 1.80 1.95 ======= ======== ======= ======= ====== ======= ======= (1) The interest portion of rentals is assumed to be one-third of all ground rental and net lease payments.
8 EX-20 17 EXHIBIT 20 1 EXHIBIT 20 FIRST UNION REAL ESTATE EQUITY and MORTGAGE INVESTMENTS - ------------------------------------------------------- Combined Balance Sheets
Unaudited (In thousands, except shares) March 31, December 31, 1997 1996 --------- ---------- ASSETS Investments in real estate Land $ 51,723 $ 52,891 Buildings and improvements 398,203 406,672 --------- --------- 449,926 459,563 Less - Accumulated depreciation (110,692) (112,614) --------- --------- Total investments in real estate 339,234 346,949 Investment in joint venture 31,191 30,776 Mortgage loans receivable 26,999 42,266 Other assets Cash and cash equivalents 39,613 2,951 Accounts receivable and prepayments 8,323 8,440 Deferred charges and other, net 5,328 5,225 Unamortized debt issue costs 3,770 3,923 --------- --------- $ 454,458 $ 440,530 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Mortgage loans and note payable $ 120,199 $ 129,068 Senior notes 100,000 100,000 Bank loans 25,800 Accounts payable and accrued liabilities 17,978 14,549 Deferred obligations 10,821 10,825 Deferred capital gains and other deferred income 7,718 7,735 Shareholders' equity, including shares of beneficial interest, $1 par, unlimited authorization, outstanding 1997--21,625,503; 1996--17,621,799 197,742 152,553 --------- --------- $ 454,458 $ 440,530 ========= =========
2 FIRST UNION REAL ESTATE EQUITY and MORTGAGE INVESTMENTS - ------------------------------------------------------- Combined Statements of Income
Unaudited (In thousands, except per share data) Three Months Ended March 31, ---------------------- 1997 1996 -------- -------- Revenues Rents $ 19,003 $ 18,463 Interest - Mortgage loans 931 1,205 - Short-term investments 348 7 Equity in income from joint venture 337 Management fees 767 Other 736 222 -------- -------- 22,122 19,897 -------- -------- Expenses Property operating 6,914 7,166 Real estate taxes 2,339 2,020 Depreciation and amortization 3,230 3,753 Interest - Mortgage loans 2,426 1,825 - Senior notes 2,219 2,326 - Bank loans and other 611 1,568 General and administrative 2,205 2,116 -------- -------- 19,944 20,774 -------- -------- Net income (loss) before preferred dividend 2,178 (877) Preferred dividend (1,208) -------- -------- Net income (loss) applicable to shares of beneficial interest $ 970 $ (877) -------- -------- Per share Net income (loss) applicable to shares of beneficial interest $ .05 $ (.05) -------- -------- Adjusted shares of beneficial interest 20,511 17,262 -------- --------
3 FIRST UNION REAL ESTATE EQUITY and MORTGAGE INVESTMENTS - ------------------------------------------------------- Combined Statements of Changes in Cash
Unaudited (In thousands) Three Months Ended March 31, ---------------------------- 1997 1996 ---------- ---------- Cash provided by (used for) operations Net income (loss) before preferred dividend $ 2,178 $ (877) Adjustments to reconcile net income (loss) to net cash provided by operations -- Depreciation and amortization 3,230 3,753 Increase in deferred charges, net (313) (329) Increase in deferred interest on mortgage investments, net (65) (96) (Decrease) increase in deferred obligations (4) 40 Net changes in other assets and liabilities 2,096 2,586 -------- ------- Net cash provided by operations 7,122 5,077 -------- ------- Cash provided by (used for) investing Repayment of mortgage investment 16,200 Principal received from mortgage investments 47 42 Proceeds from sale of properties 8,988 1,825 Investment in capital and tenant improvements (4,143) (8,662) -------- ------- Net cash provided by (used for) investing 21,092 (6,795) -------- ------- Cash provided by (used for) financing Increase in mortgage loans 12,500 (Decrease) increase in short-term loans (25,800) 100 Repayment of mortgage loans - Normal payments (722) (720) - Balloon payments (8,301) Dividends paid to shares of beneficial interest (1,923) (2,028) Dividends paid to preferred shares of beneficial interest (1,248) Debt issue costs paid (23) (611) Purchase of First Union shares (7,125) Sale of First Union shares 46,465 79 Sale of interest rate protection agreement 1,025 Other 2 -------- ------- Net cash provided by financing 8,448 3,222 -------- ------- Increase in cash and cash equivalents 36,662 1,504 Cash and cash equivalents at beginning of period 2,951 3,402 -------- ------- Cash and cash equivalents at end of period $ 39,613 $ 4,906 -------- -------
Notes to Combined Financial Statements 1. Income per share of beneficial interest has been computed on weighted average shares and share equivalents outstanding for the applicable periods. 2. In January 1997, the Trust sold a shopping center in Wilkesboro, North Carolina for $9 million in cash resulting in a loss of $4.9 million. In February 1996, the Trust sold two office buildings in Cleveland, Ohio for $1.8 million in cash and a $7 million mortgage note, which was subsequently repaid, resulting in a loss of $5.6 million. Both losses had been previously recognized during the fourth quarter of 1995 as part of a $14 million unrealized loss on carrying value of assets identified for disposition. EX-27 18 EXHIBIT 27
5 0000037008 FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS 1 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 39,613,000 0 8,323,000 0 0 47,936,000 449,926,000 (110,692,000) 454,458,000 17,978,000 220,199,000 143,633,000 54,109,000 0 0 454,458,000 22,122,000 22,122,000 0 9,253,000 5,435,000 0 5,256,000 0 0 970,000 0 0 0 970,000 .05 .05
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