Exhibit 99.7
================================================================================
CINRAM INTERNATIONAL INCOME FUND
- AND -
CII TRUST
- AND -
CINRAM INTERNATIONAL GENERAL PARTNER INC.
- AND -
CINRAM INTERNATIONAL LIMITED PARTNERSHIP
- AND -
THE HOLDERS OF CLASS B LIMITED PARTNERSHIP UNITS OF
CINRAM INTERNATIONAL LIMITED PARTNERSHIP
EXCHANGE AGREEMENT
MAY 5, 2006
================================================================================
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS AND INTERPRETATION .................................. 2
1.1 Definitions ....................................................... 2
1.2 Headings .......................................................... 5
1.3 Gender and Number ................................................. 5
1.4 Currency .......................................................... 5
1.5 Day Not a Business Day ............................................ 5
1.6 Waiver, Amendment ................................................. 5
1.7 Construction ...................................................... 5
1.8 Calculation of Time ............................................... 5
1.9 Withholding Rights ................................................ 5
ARTICLE 2 EXCHANGE RIGHT .................................................. 6
2.1 Grant of Exchange Right ........................................... 6
2.2 Deemed Exchange ................................................... 6
2.3 Exchange Ratio and Adjustment ..................................... 7
2.4 Restrictions on Exchange .......................................... 7
2.5 Exchange Procedure ................................................ 8
2.6 Exchange Date ..................................................... 9
2.7 Withdrawal of Exercise ............................................ 9
2.8 Effect of Exercise of the Exchange Right .......................... 9
2.9 Compliance ........................................................ 9
2.10 Exchange to Facilitate Tender to a Take-Over Bid .................. 9
2.11 Termination of Special Voting Units ............................... 9
2.12 Timing of Exchange ................................................ 9
ARTICLE 3 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE HOLDERS ........ 10
3.1 Capacity .......................................................... 10
3.2 No Contravention .................................................. 10
3.3 Title ............................................................. 10
3.4 Litigation ........................................................ 10
3.5 Enforceability .................................................... 10
3.6 Status ............................................................ 10
3.7 Consents .......................................................... 10
3.8 Notice of Bona Fide Financing ..................................... 11
ARTICLE 4 COVENANTS OF THE FUND, THE TRUST, THE LP AND THE GP ............. 11
4.1 Validity of Units ................................................. 11
4.2 Reservation of Units .............................................. 11
4.3 Reservation of Trust Units ........................................ 11
4.4 Stock Exchange Listing ............................................ 11
4.5 Covenants ......................................................... 11
ARTICLE 5 FUND SUCCESSORS ................................................. 12
5.1 Certain Requirements in Respect of Combination, Etc. .............. 12
ARTICLE 6 AMENDMENTS AND SUPPLEMENTAL AGREEMENTS .......................... 12
6.1 Amendments, Modifications, Etc. ................................... 12
6.2 Execution of Supplemental Agreements .............................. 12
ARTICLE 7 GENERAL ......................................................... 13
7.1 Term .............................................................. 13
7.2 Severability ...................................................... 13
7.3 Enurement ......................................................... 13
7.4 Assignment ........................................................ 13
7.5 Notices to Parties ................................................ 13
7.6 In Respect of the Fund and the Trust .............................. 14
7.7 In Respect of the LP .............................................. 14
7.8 Counterparts ...................................................... 15
7.9 Authorship ........................................................ 15
7.10 Governing Law ..................................................... 15
7.11 Attornment ........................................................ 15
EXCHANGE AGREEMENT
THIS AGREEMENT is made as of the 5th day of May, 2006.
AMONG:
CINRAM INTERNATIONAL INCOME FUND, a trust formed under the laws of the
Province of Ontario
(the "FUND")
- and -
CII TRUST, a trust formed under the laws of the Province of Ontario
(the "TRUST")
- and -
CINRAM INTERNATIONAL GENERAL PARTNER INC., a corporation incorporated
under the laws of Ontario
(the "GP")
- and -
CINRAM INTERNATIONAL LIMITED PARTNERSHIP, a limited partnership
organized under the laws of the Province of Manitoba
(the "LP")
- and -
HOLDERS OF CLASS B LIMITED PARTNERSHIP UNITS OF THE LP
- and -
EACH PERSON WHO FROM TIME TO TIME EXECUTES THIS AGREEMENT OR IS DEEMED
TO BE A PARTY HERETO
WHEREAS the Parties wish to provide the Holders, from time to time, of
Class B LP Units with the right to exchange such Class B LP Units for Units;
AND WHEREAS the Parties have entered into this Agreement so as to provide
for the rights of the Holders to exchange, from time to time, all or any portion
of the Class B LP Units for Units on the terms and conditions provided for
herein;
AND WHEREAS the LP and the Trust desire to make appropriate arrangements
with the Fund to provide for the issuance of the Units required to be provided
to the Holders under the terms of this Agreement;
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the sufficiency of which is hereby acknowledged
by each of the Parties to this Agreement, the Parties agree as follows:
-2-
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS.
In this Agreement, the following terms shall have the following meanings:
"AFFILIATE" has the meaning under Section 1.2 of National Instrument 45-106
- Prospectus and Registration Exemptions.
"AGREEMENT" means this exchange agreement, as amended, restated or amended
and restated from time to time, and all schedules and instruments in
amendment or confirmation of it.
"APPLICABLE LAWS" means Securities Laws and all other statutes,
regulations, statutory rules, orders, by-laws, codes, ordinances, decrees,
the terms and conditions of any grant of approval, permission, authority or
license, or any judgment, order, decision, ruling, award, policy or
guideline, of any Governmental Body, and the term "applicable" with respect
to such Applicable Laws apply to such Person or Persons or its or their
business, undertaking, property or securities and emanate from a
Governmental Body having jurisdiction over the Person or Persons or its or
their business, undertaking, property or securities.
"APPLICABLE NUMBER OF UNITS" means that number of Units equal to the
product of the number of Class B LP Units specified in an Exchange Notice
multiplied by the Exchange Ratio.
"BUSINESS DAY" means any day except Saturdays, Sundays or banking holidays
in the Provinces of Ontario or Manitoba.
"CDS PARTICIPANT" means a broker, dealer, bank, other financial institution
or other Person who, directly or indirectly, from time to time, effects
book-based transfers with CDS and pledges of securities deposited with CDS.
"CDS" means The Canadian Depository for Securities Limited and its
successors.
"CLASS A LP UNITS" means the Class A limited partnership units of the LP
having the rights, privileges, restrictions and conditions set out in the
Partnership Agreement.
"CLASS B LP UNITS" means the Class B limited partnership units of the LP
having the rights, privileges, restrictions and conditions set out in the
Partnership Agreement.
"CURRENT MARKET PRICE" means, in respect of a Unit, on any date, the
weighted average of the trading prices of Units during a period of 20
consecutive trading days on the Toronto Stock Exchange ending not more than
three trading days before that date, or, if the Units are not then listed
on the Toronto Stock Exchange, on any other stock exchange or automated
quotation system on which the Units are listed or quoted, as the case may
be, as may be selected by the Trustees for this purpose; provided, however,
that if in the reasonable opinion of the Trustees the public distribution
or trading activity of the Units during that period does not create a
market which reflects the fair market value of a Unit, then the Current
Market Price will be determined by the Trustees, in good faith and in their
sole discretion and provided further that any selection, opinion or
determination by the Trustees will be conclusive and binding.
"DECLARATION OF TRUST" means the declaration of trust dated March 21, 2006
under the laws of the Province of Ontario pursuant to which the Fund was
established and is governed, as the same may be further amended,
supplemented, restated or amended and restated from time to time.
"DISTRIBUTION" means a distribution of Units to the public by way of a
prospectus under Securities Laws in any applicable jurisdiction in Canada.
"EXCHANGE" has the meaning given to that term in Section 2.1.
-3-
"EXCHANGE DATE" has the meaning given to that term in Section 2.6.
"EXCHANGE NOTICE" means the notice to be delivered by a Holder to effect
the Exchange in accordance with the terms of this Agreement, the form of
which is attached hereto as Schedule "A".
"EXCHANGE RATIO" has the meaning given to that term in Section 2.3(a).
"EXCHANGE RIGHT" has the meaning given to that term in Section 2.1.
"EXCLUDED PERSON" means a Person that is (i) a Non-Resident; (ii) a Tax
Exempt Person; (iii) a partnership; (iv) a Person, an interest in which is
a "tax shelter investment" for the purposes of the Tax Act; or (v) a Person
which would acquire an interest in the LP as a "tax shelter investment" for
the purposes of the Tax Act.
"FUND" means Cinram International Income Fund, an unincorporated,
open-ended, limited purpose trust established under the laws of Ontario in
accordance with the Declaration of Trust.
"FUND SUCCESSOR" has the meaning given to that term in Section 5.1(a)(i).
"GOVERNMENTAL BODY" means any:
(a) multinational, federal, provincial, state, regional, municipal, local
or foreign government, governmental or public department, central
bank, court, tribunal, arbitral body, arbitrator, board, bureau,
agency or instrumentality, or commission, domestic or foreign;
(b) any subdivision, agent, commission, board or authority of any of the
foregoing; or
(c) any quasi-governmental or private body exercising any regulatory,
expropriation or taxing authority under or for the account of its
members or any of the above and any stock exchange or self-regulatory
authority and, for greater certainty, includes the Securities
Commissions, the Toronto Stock Exchange and Market Regulation Services
Inc.
"GP" means Cinram International General Partner Inc., a corporation
incorporated under the laws of Ontario and any of its successors.
"HOLDERS" means registered holders of Class B LP Units, from time to time.
"LP UNITS" means, collectively, the Class A LP Units and the Class B LP
Units.
"LP" means Cinram International Limited Partnership, a limited partnership
formed under the laws of Manitoba.
"NON-RESIDENT OWNERSHIP LIMITATION" has the meaning given to that term in
Section 2.4(b).
"NON-RESIDENTS" has the meaning given to that term in Section 2.4(b).
"NOTE INDENTURE" means the note indenture between the Trust and
Computershare Trust Company of Canada providing for the issuance of, among
other things, the Series 1 Trust Notes by the Trust.
"NOTICE OF REALIZATION" means the notice to be delivered by a bona fide
pledgee of Exchangeable Partnership Units to effect the Deemed Exchange in
accordance with the terms of this Agreement, the form of which is attached
hereto as Schedule "B".
"OFFER" means an offer to acquire outstanding Units where, as of the date
of the offer to acquire, the Units that are the subject of the offer to
acquire, together with the Offeror's Units, constitute in the aggregate 20%
or more of all outstanding Units.
-4-
"OFFEROR'S UNITS" means Units (including all Units issuable, directly or
indirectly, upon the exchange of all Class B LP Units held by or on behalf
of the Offeror) beneficially owned by the Offeror, any affiliate (as
defined in the Securities Act) or associate (as defined in the Securities
Act) of the Offeror or any Person acting jointly or in concert with the
Offeror.
"OFFEROR" means a Person, or two or more persons acting jointly or in
concert, who makes an Offer.
"PARTIES" means the Fund, the Trust, the LP, the GP and the Holders from
time to time of Class B LP Units, and their respective successors and
permitted assigns.
"PARTNERSHIP AGREEMENT" means the limited partnership agreement of the LP
dated March 24, 2006 among the GP and the Trust, as the same may be amended
or amended and restated from time to time.
"PERSON" means any individual, partnership, limited partnership, limited
liability company, joint venture, syndicate, sole proprietorship, company
or corporation, with or without share capital, unincorporated association,
trust, trustee, executor, administrator or other legal personal
representative, Governmental Body or other entity, whether or not having
legal status.
"RECLASSIFICATION EVENT" has the meaning given to that term is Section
2.3(c).
"REGISTRAR" means the registrar of companies appointed under the CBCA.
"SECURITIES ACT" means the Securities Act (Ontario), as it may be amended
from time to time, and any successor legislation.
"SECURITIES COMMISSIONS" means the applicable securities commission or
other regulatory authority in each of the provinces and territories of
Canada.
"SECURITIES LAWS" means, collectively, the applicable securities laws of
each of the provinces and territories of Canada and the respective
regulations and rules made under those securities laws, together with all
applicable policy statements, instruments, blanket orders and rulings of
the Securities Commissions and all discretionary orders or rulings, if any,
of the Securities Commissions made in connection with the transactions
contemplated by this Agreement.
"TAX ACT" means the Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1 and the
regulations thereunder.
"TAX-EXEMPT PERSON" means a Person that is generally exempt from tax under
Part I of the Tax Act (including, without limitation, trusts governed by
registered retirement savings plans, registered retirement income funds,
deferred profit sharing plans and registered education savings plans).
"TRUST DECLARATION OF TRUST" means the declaration of trust dated March 21,
2006 pursuant to which the Trust is governed, as the same may be amended,
restated or amended and restated from time to time.
"TRUST TRUSTEES" means, at any time, the individuals who are, in accordance
with the Trust Declaration of Trust, the trustees of the Trust at such
time.
"TRUST UNITS" means the trust units of the Trust.
"TRUST" means CII Trust, an open-ended, unincorporated, limited-purpose
trust established under the laws of the Province of Ontario.
"TRUSTEES" means, at any time, the individuals who are, in accordance with
the Declaration of Trust, the trustees of the Fund at such time.
"UNIT REORGANIZATION" has the meaning given to that term in Section 2.3(b).
-5-
"UNITHOLDERS" means, at any time, the holders at that time of one or more
Units, as shown on the register of such holders maintained by the Fund.
"UNITS" means the units of the Fund, each of which represents an equal
undivided interest in the distributions and the assets of the Fund, and
includes a fraction of such a unit of the Fund.
1.2 HEADINGS
The division of this Agreement into articles and sections and the insertion
of headings are for the convenience of reference only and will not affect the
construction or interpretation of this Agreement. Unless something in the
subject matter or context is inconsistent therewith, references herein to
"ARTICLES", "SECTIONS" or "SCHEDULES" are to articles or sections of, or
schedules to, this Agreement.
1.3 GENDER AND NUMBER
In this Agreement, words importing the singular number only will include
the plural and vice versa, words importing the masculine gender will include the
feminine and neuter genders and vice versa.
1.4 CURRENCY
Except where otherwise expressly provided, all payments contemplated herein
will be paid in Canadian funds, and all references herein to dollar amounts are
references to dollars in the lawful currency of Canada.
1.5 DAY NOT A BUSINESS DAY
In the event that any day on or before which any action is required to be
taken hereunder is not a Business Day, then such action will be required to be
taken on or before the requisite time on the next succeeding day that is a
Business Day.
1.6 WAIVER, AMENDMENT
Except as expressly provided in this Agreement, no amendment or waiver of
this Agreement will be binding unless executed in writing by the Party to be
bound thereby. No waiver of any provision of this Agreement will constitute a
waiver of any other provision nor will any waiver of any provision of this
Agreement constitute a continuing waiver unless otherwise expressly provided.
1.7 CONSTRUCTION
The words "including" and "includes" where used in this Agreement will be
deemed to mean "including, without limitation" and "includes, without
limitation", respectively.
1.8 CALCULATION OF TIME
In this Agreement, unless otherwise specified, a period of days will be
deemed to begin on the first day after the event that began the period and to
end at midnight (Toronto time) on the last day of the period, except that if the
last day of the period does not fall on a Business Day, the period will
terminate at midnight (Toronto time) on the next succeeding Business Day.
1.9 WITHHOLDING RIGHTS
The Fund, the Trust and the LP will be entitled to deduct and withhold from
any consideration otherwise payable under this Agreement to any Party that has
exercised its Exchange Right under this Agreement any amounts as the Fund, the
Trust and/or the LP are required or permitted to deduct and withhold with
respect to such payment under Applicable Laws, the Declaration of Trust or the
Partnership Agreement, or would be permitted to withhold if an equal amount were
remitted to the appropriate taxing authority. To the extent that amounts are so
withheld, the withheld amounts will be treated for all purposes as having been
paid to the holder of the securities in respect of which such deduction and
withholding was made, provided that the withheld amounts (or equivalent amounts,
if
-6-
applicable) are actually remitted to the appropriate taxing authority. To the
extent that the amount so required or permitted to be deducted or withheld from
any payment to a holder exceeds the cash portion of the consideration otherwise
payable to the holder, the Fund, the Trust or the LP are hereby authorized to
sell or otherwise dispose of such portion of the consideration as is necessary
to provide sufficient funds to the Fund, the Trust or the LP, as the case may
be, to enable it to comply with the deduction or withholding requirement (or
make such permitted deduction) and the Fund, the Trust or the LP, as
appropriate, will notify the holder and remit to the holder any unapplied
balance of the net proceeds of such sale.
ARTICLE 2
EXCHANGE RIGHT
2.1 GRANT OF EXCHANGE RIGHT
In accordance with and subject to Section 3.1(i) of the Partnership
Agreement, each Holder has the right to exchange any or all Class B LP Units
held from time to time by the Holder into Units in accordance with the
provisions of this Agreement. Subject to Sections 2.4 and 2.5, the Fund,
together with the Trust, the GP and the LP, hereby grants to each Holder the
right (the "EXCHANGE RIGHT"), exercisable at any time and from time to time, to
require the Fund, the Trust and the LP to exchange all or any part of the Class
B LP Units held from time to time by such Holder into Units in accordance with
the provisions of this Agreement (the "EXCHANGE"). The Fund, the Trust, the GP
and the LP hereby acknowledge receipt from the Holders, as the only Holders, on
the date of this Agreement, of good and valuable consideration (and the adequacy
of the consideration) for the grant of the Exchange Right hereunder. For greater
certainty, the Exchange Right, as it applies to a Class B LP Unit, shall enure
to the benefit of each valid transferee of a Class B LP Unit held by such
transferee from time to time.
2.2 DEEMED EXCHANGE
(a) Subject to Section 2.4, in the event that:
(i) a Holder has become an Excluded Person; or
(ii) a pledgee of Class B LP Units in connection with a bona fide
financing permitted by the provisions of the Partnership
Agreement (a "BONA FIDE PLEDGEE") shall have delivered to the
Fund, the Trust and the GP a duly executed and completed Notice
of Realization,
the Class B LP Units held by the Holder who has so become an
Excluded Person (in the case of (i)) and the Exchangeable
Partnership Units so pledged (in the case of (ii)) shall be
deemed to have been exchanged by the Holder (the "DEEMED
EXCHANGE") for the Applicable Number of Units for each such Class
B LP Unit (A) immediately prior to the date the Holder became an
Excluded Person and (B) at 8:30 a.m. on the date of the Notice of
Realization, respectively (the "DEEMED EXCHANGE TIME").
(b) Absent an agreement to the contrary, the exchange procedures set forth
in Section 2.5 shall apply to a Deemed Exchange but, for greater
certainty, with retroactive effect to the Deemed Exchange Time.
(c) Each Holder acknowledges and agrees that, subject as hereinafter
provided, none of the Fund, the Trust, the GP, the LP or the Fund's
registrar and transfer agent shall in any way whatsoever be liable or
responsible for any loss or damage suffered by the Holder, and the
Holder indemnifies the Fund, the Trust, the GP, the LP and the Fund's
registrar and transfer agent against any loss or damage suffered by
any of them, in each case by reason only of a Deemed Exchange
contemplated by Section 2.2(i) and the realization of Class B LP Units
contemplated thereby. Nothing herein shall be construed, for greater
certainty, to release or indemnify the Fund, the Trust, the GP, the LP
or the Fund's registrar and transfer agent from any liability to the
Holder properly arising by reason of the Fund's, the Trust's, the
GP's, the LP's or the Fund's registrar and transfer agent's failure to
perform their respective covenants and obligations and otherwise
comply with the provisions of, any agreement entered into by them or
their affiliates with the Holder or accruing to
-7-
the benefit of the Holder, including this Agreement, the Partnership
Agreement and the Declaration of Trust. Each of the Fund, the Trust,
the GP, the LP and the registrar and transfer agent of the Fund shall
be entitled, without further independent investigation, to give effect
to, act in furtherance of and otherwise acknowledge and recognize such
a Deemed Exchange upon receipt of a duly completed and executed Notice
of Realization.
2.3 EXCHANGE RATIO AND ADJUSTMENT
(a) The number of Units issuable for each Class B LP Unit exchanged
pursuant to the exercise of an Exchange Right from time to time,
subject to adjustment as provided in this Section 2.3 and Section
2.10, is one (the "EXCHANGE RATIO").
(b) In the event that there is a change in the number of Units outstanding
from time to time as a result of a subdivision, consolidation,
reclassification, capital reorganization or similar change in the
Units (other than a consolidation as contemplated by Section 3.6 of
the Declaration of Trust) (each such event, a "UNIT REORGANIZATION"),
the Exchange Ratio shall be adjusted by the Fund to produce the number
of Units that would be received in respect of a Class B LP Unit
immediately following the Unit Reorganization as if the Exchange Right
had been exercised in respect of the Class B LP Unit immediately
before the Unit Reorganization.
(c) If at any time while any Class B LP Units are outstanding there is any
consolidation, amalgamation, arrangement, merger or other form of
business combination of the Fund with or into any other entity
resulting in a reclassification of the outstanding Units (a
"RECLASSIFICATION EVENT"), then the Exchange Right will be adjusted
simultaneously in a manner approved by the Trustees, acting
reasonably, to ensure that holders of Class B LP Units will be
entitled to receive, in lieu of the number of Units to which they
would otherwise have been entitled in respect of one Class B LP Unit
if such Class B LP Unit had been exchanged for Units pursuant to the
Exchange Right, the kind and number or amount of securities that they
would have been entitled to receive as a result of such
Reclassification Event if, on the effective date thereof, they had
been the registered holder of the number of Units that they would have
received had such Class B LP Unit been exchanged for Units pursuant to
the Exchange Right immediately before the effective date of any such
Reclassification Event.
(d) The adjustments provided for in Section 2.3(b) and Section 2.3(c)
shall be cumulative.
2.4 RESTRICTIONS ON EXCHANGE
(a) Notwithstanding Section 2.1, the Exchange Right shall only be
exercisable at any time if (i) in the opinion of the Trustees (who may
consult counsel) the exchange would not jeopardize the Fund's status
as a "mutual fund trust" under the Tax Act, and (ii) the Fund is
legally entitled to issue Units in connection with the exercise of the
Exchange Right.
(b) The Holders acknowledge and agree that the exercise of the Exchange
Right is subject to the provisions of Section 13.6 of the Declaration
of Trust, including the limitation that at no time may non-residents
of Canada within the meaning of the Tax Act and any partnership that
is not a Canadian partnership within the meaning of the Tax Act
(collectively, "NON-RESIDENTS") be the beneficial owners of more than
45% of the outstanding Units on a basic or fully-diluted basis (the
"NON-RESIDENT OWNERSHIP LIMITATION").
(c) In addition to the deliveries contemplated by Section 2.5 of this
Agreement, the Trustees will require declarations as to the
jurisdictions in which Parties exercising their Exchange Right are
resident. If the Trustees become aware that the beneficial owners of
45% of the Units then outstanding are, or may be, Non-residents or
that such a situation is imminent, the Fund will give the Trust and
each of the Holders exercising their Exchange Right notice thereof and
the Fund, the Trust and the LP will not be required to give effect to
the Exchange Right as provided herein until such time as the Trustees,
in their sole discretion, have determined that the exercise of such
rights would not result in the contravention of the limitations
referenced above. Any purported exercise
-8-
of the Exchange Right that is not effected as a result of these
limitations may be withdrawn by the applicable Holder, provided that
any such exercise(s) that are not so withdrawn will, at the request of
such Holder exercising the Exchange Right, be effected by the Fund,
the Trust and the LP in the order in which they were initially
received, as soon as practicable following the time at which the
Trustees determine that such exercise(s) are permitted as aforesaid.
For greater certainty, this Section 2.4 will not prevent or delay the
exercise of an Exchange Right that would not result in a breach of the
Non-resident Ownership Limitation.
2.5 EXCHANGE PROCEDURE.
(a) In order to effect the exchange of Class B LP Units for Units pursuant
to this Agreement, the Holder exercising its Exchange Right shall
deliver to the Fund, the Trust and the GP (on behalf of the LP) a duly
completed and executed Exchange Notice together with certificates
representing the Class B LP Units being exchanged and the special
voting units of the Fund attached thereto.
(b) Upon the exercise of the Exchange Right in accordance with Section
2.5(a), the exchange shall be effected as follows:
(i) upon receipt of a copy of an Exchange Notice, the Trust will
forthwith issue and deliver to the Fund for each Class B LP Unit
being exchanged a combination of Trust Units and Series 1 Trust
Notes having an aggregate value equal to the product of (A) the
Current Market Price of a Unit, and (B) the Applicable Number of
Units for the Class B LP Units being exchanged as specified in
the Exchange Notice; the relative number of Trust Units and
principal amount of Series 1 Trust Notes will be determined by
the Trust Trustees by notice in writing to the Fund within three
Business Days of the Trust receiving a copy of the Exchange
Notice as aforesaid;
(ii) upon receipt of such Trust Units and Series 1 Trust Notes, the
Fund will forthwith issue and deliver to the Trust the Applicable
Number of Units for the Class B LP Units being exchanged as
specified in the Exchange Notice;
(iii) the Trust will immediately deliver or cause to be delivered to
the LP the Units acquired pursuant to Section 2.5(b)(ii), duly
endorsed in blank for transfer in consideration for the number of
Class A LP Units, having a value equivalent to those Units,
determined by the GP;
(iv) the Exchange will immediately be effected by the GP, on behalf of
the LP by causing to be (A) delivered to the applicable Holder
the Units acquired pursuant to Section 2.5(b)(iii) and (B) issued
in the name of the Trust, certificates representing such number
of Class A LP Units equal to the Applicable Number of Units. The
LP will be deemed to have repurchased the Class B LP Units being
exchanged for cancellation in consideration for the transfer of
such Units and the Holder who exercised the Exchange Right will
be deemed to have transferred all of such Holder's right, title
and interest in and to the Class B LP Units subject to the
Exchange. The GP, as general partner of the LP, shall cause the
exchanged Class B LP Units to be cancelled and enter the Trust in
the LP's register of limited partners in respect of the Class A
LP Units being issued to the Trust (and by making the
corresponding entries to reflect the Exchange of the Class B LP
Units); and
(v) upon the surrender of certificates representing more Class B LP
Units than the number of such securities to be exchanged, the
Holder thereof will be entitled to receive from the LP forthwith,
without expense to such Holder, a new certificate representing
the Class B LP Units not being exchanged at that time.
(c) For so long as Units are held in the book-entry system administered by
CDS, the Fund may elect not to issue certificates for Units pursuant
to the exercise of the Exchange Right and, if the Fund so elects, the
Units issuable on such exercise will be registered in the name of CDS
or its nominee
-9-
and registered on the books of CDS for the benefit of the Holder
exercising the Exchange Right through a CDS Participant selected by
such Holder.
2.6 EXCHANGE DATE.
The exchange date specified in any Exchange Notice (the "EXCHANGE DATE")
must be a Business Day and must not be less than five Business Days nor more
than ten Business Days after the date upon which the Exchange Notice is received
by the Fund. If no such Business Day is specified in the Exchange Notice, the
Exchange Date shall be deemed to be the fifth Business Day after the date on
which the Exchange Notice is received by Fund.
2.7 WITHDRAWAL OF EXERCISE.
At any time prior to the applicable Exchange Date, a Holder who delivers an
Exchange Notice to the Fund will be entitled to withdraw such notice.
2.8 EFFECT OF EXERCISE OF THE EXCHANGE RIGHT.
If the Exchange Right has been exercised, at 8:30 a.m. (Toronto time) on
the Exchange Date:
(a) the closing of the Exchange contemplated by the Exchange Right will be
deemed to have occurred as set out in Section 2.5(b); and
(b) the Holder, upon exercise of the Exchange Right, will be considered
and deemed for all purposes to be the beneficial holder of the Units
issued pursuant to the Exchange Right.
2.9 COMPLIANCE.
Each of the Parties will execute all documents and take all other actions
necessary or desirable to effect the Exchange Right, including in order to
comply with the Declaration of Trust and Applicable Laws.
2.10 EXCHANGE TO FACILITATE TENDER TO A TAKE-OVER BID.
A Holder may, subject to the provisions of this Section 2.10 and Section
13.13 of the Declaration of Trust, conditionally exchange Class B LP Units held
by such Holder for Units in the event that an Offer is made for outstanding
Units. Such exchange, if conditional, may only be conditional upon the taking up
by the Offeror of Units pursuant to the Offer. The Parties agree to cooperate in
good faith to take such actions to facilitate the exchange of Class B LP Units
for Units so that a Holder can exercise its right under this Agreement to
exchange all or a portion of such holdings for Units in order to tender to an
Offer.
The provisions of Section 13.13 of the Declaration of Trust are hereby
incorporated into this Agreement and will be binding upon the Parties.
2.11 TERMINATION OF SPECIAL VOTING UNITS.
At the time of any Exchange hereunder, the Special Voting Units that were
issued by the Fund in favour of the Holder in connection with the issuance of
the Class B LP Units being exchanged will be automatically cancelled by the Fund
in proportion to the Class B LP Units being exchanged for no consideration
without any action required on the part of the Fund or the Holder to effect such
cancellation.
2.12 TIMING OF EXCHANGE.
Notwithstanding anything to the contrary, no Holder may exercise any
Exchange Rights for a period of 90 days from the date hereof unless otherwise
consented to by the GP.
-10-
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE HOLDERS
Each Holder, separately and not jointly or jointly and severally,
represents, warrants and covenants to the Fund, the Trust, the GP and the LP
that as of the date hereof and as of the date of every Exchange relating to such
Holder:
3.1 CAPACITY.
The Holder has all necessary power and capacity to enter into this
Agreement and to carry out its obligations hereunder, and the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary action on the part of the
Holder.
3.2 NO CONTRAVENTION.
The Holder is not a party to, bound or affected by, or subject to any
indenture, mortgage, lease, agreement, instrument, charter or by-law provision,
order, judgment or decree which would be violated, contravened or breached by,
or which would result in the creation or imposition of or give rise to any
security interest, lien or other encumbrance on, or any rights of others to
acquire any ownership or other interests in the Class B LP Units owned by the
Holder which does or could (whether with notice and/or the passage of time or
otherwise) restrict the ability of the Holder to comply with the Holder's
obligations under this Agreement.
3.3 TITLE.
Immediately prior to any Exchange, the Holder will be the registered and
beneficial owner of the Class B LP Units that are to be exchanged free and clear
of all encumbrances, other than the rights of the LP pursuant to this Agreement
and the rights of a pledgee in connection with a bona fide financing permitted
by the provisions of the Partnership Agreement.
3.4 LITIGATION.
There is no suit, action, litigation, arbitration or governmental
proceeding, including appeals and applications for review, in progress, pending
or, to the best of the Holder's knowledge, threatened against or involving the
Holder, or any outstanding judgment, decree, injunction, rule or order of any
court, Governmental Body or arbitrator respecting the Holder which, in any case,
might adversely affect the ability of the Holder to enter into this Agreement or
to consummate the transactions contemplated hereby.
3.5 ENFORCEABILITY.
This Agreement has been duly executed and delivered by the Holder and
constitutes a legal, valid and binding obligation of the Holder, enforceable
against it in accordance with the terms hereof.
3.6 STATUS.
The Holder is not an Excluded Person.
3.7 CONSENTS.
All necessary consents, approvals, licences, orders or authorizations,
registrations, declarations and filings with any Governmental Body, stock
exchange, or other Person have been obtained by the Holder, in connection with
the Exchange, the execution and delivery by the Holder of this Agreement and the
observance and performance by the Holder of his, her or its obligations under
this Agreement.
-11-
3.8 NOTICE OF BONA FIDE FINANCING
Upon pledging or otherwise granting a security interest in one or more
Class B LP Units in connection with a bona fide financing permitted by the
provisions of the Partnership Agreement, the Holder shall give written notice
thereof to the Fund, the Trust, the GP, the LP and the registrar and transfer
agent of the Fund, substantially in the form attached as Schedule "C".
ARTICLE 4
COVENANTS OF THE FUND, THE TRUST, THE LP AND THE GP
4.1 VALIDITY OF UNITS.
The Fund hereby represents, warrants and covenants that any Unit issuable
as described herein will be duly authorized and validly issued as fully paid and
non-assessable.
4.2 RESERVATION OF UNITS.
The Fund hereby represents, warrants and covenants in favour of the Holders
hereunder that the Fund has reserved for issuance and will, at all times while
this Agreement is outstanding, keep available, free from pre-emptive and other
rights granted by the Fund, such number of Units as are issuable under the
Exchange Right.
4.3 RESERVATION OF TRUST UNITS.
The Trust hereby represents, warrants and covenants in favour of the
Holders and the Fund that the Trust has reserved for issuance and will, at all
times while this Agreement is outstanding, keep available, free from pre-emptive
and other rights granted by the Trust, such number of Trust Units as are
issuable to the Fund in connection with the Exchange Right.
4.4 STOCK EXCHANGE LISTING.
The Fund covenants and agrees that it will make such filings, seek such
regulatory consents and approvals, and take such other reasonable steps, as may
be necessary in order:
(a) that the Units issuable upon the exchange of Class B LP Units will be
issued in compliance with applicable Securities Laws in Canada;
(b) that the Units issuable hereunder will be approved for listing and
posted for trading on the Toronto Stock Exchange or any stock exchange
or market on which the Units then trade from the date of issuance
thereof; and
(c) to preserve the listing on the Toronto Stock Exchange of all
outstanding Units, provided that for greater certainty the Fund will
not be prohibited from repurchasing and cancelling Units.
4.5 COVENANTS
Each of the Fund, the Trust, the LP and the GP will take all such actions
and do all such things as shall be reasonably necessary or advisable to perform
and comply with and to ensure performance and compliance by the Fund, the Trust,
the LP and the GP with all provisions of this Agreement applicable to the Fund,
the Trust, the LP and the GP, respectively, in accordance with the terms hereof
including taking all such actions and doing all such things as shall be
reasonably necessary or advisable to enforce to the fullest extent possible for
the direct benefit of the Holders all rights and benefits in favour of the
Holders under or pursuant hereto.
-12-
ARTICLE 5
FUND SUCCESSORS
5.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC.
(a) Subject to Section 5.1(c), the Fund will not consummate any
transaction (whether by way of reconstruction, reorganization,
consolidation, merger, transfer, sale, lease or otherwise) whereby all
or substantially all of its undertaking, property and assets would
become the property of any other Person or, in the case of a merger,
of the continuing Person resulting therefrom unless:
(i) such other Person (the "FUND SUCCESSOR"), by operation of law,
becomes bound by the terms and provisions of this Agreement or,
if not so bound, executes, prior to or contemporaneously with the
consummation of such transaction, an agreement supplemental
hereto and such other instruments (if any) as are reasonably
necessary or advisable to evidence the assumption by the Fund
Successor of the liability for all amounts payable and property
deliverable by the Fund hereunder and the covenant of such Fund
Successor to pay and deliver or cause to be paid and delivered
the same and its agreement to observe and perform all the
covenants and obligations of the Fund under this Agreement; and
(ii) such transaction shall be upon such terms and conditions so as to
substantially preserve and not to impair in any material respect
any of the rights, duties, powers and authorities of the other
parties hereunder or of the Holders.
(b) Whenever the conditions of Section 5.1(a) have been duly observed and
performed, if required by Section 5.1(a), the Fund Successor and the
other Parties hereto will execute and deliver the supplemental
agreement provided for herein and thereupon the Fund Successor will
possess and from time to time may exercise each and every right and
power and will be subject to each and every obligation of the Fund
under this Agreement in the name of the Fund or otherwise and any act
or proceeding under any provision of this Agreement required to be
done or performed by the Fund or any officer of the Fund may be done
and performed with like force and effect by the directors or officers
of such Fund Successor.
(c) Nothing herein will be construed as preventing the merger or similar
transaction of any wholly-owned, direct or indirect subsidiary of the
Fund with or into the Fund or the winding-up, liquidation or
dissolution of any wholly-owned subsidiary of the Fund provided that
all of the assets of such subsidiary are transferred to the Fund or
another wholly-owned direct or indirect subsidiary of the Fund.
ARTICLE 6
AMENDMENTS AND SUPPLEMENTAL AGREEMENTS
6.1 AMENDMENTS, MODIFICATIONS, ETC.
Except as provided in Section 6.2, this Agreement may not be amended or
modified, or any provision hereof waived, except by an agreement in writing
executed by the Fund, the Trust, the LP, the GP and approved by a majority of
votes cast by Holders (with each Holder entitled to that number of votes as is
equal to the Class B LP Units held by such Holder voting in respect of any such
amendment).
6.2 EXECUTION OF SUPPLEMENTAL AGREEMENTS.
From time to time the Parties may, subject to the provisions of these
presents, and they shall, when so directed by these presents, execute and
deliver by their proper officers agreements or other instruments supplemental
hereto, which thereafter shall form part hereof, for any one or more of the
following purposes:
-13-
(a) evidencing the succession of any Fund Successor and the covenants of
and obligations assumed by each such Fund Successor in accordance with
the provisions of Article 5;
(b) making any additions to, deletion from or alterations of the
provisions of this Agreement to incorporate, reflect or comply with
any legislation the provisions of which apply to any of the Parties or
this Agreement and which, in the opinion of the Fund, will not be
prejudicial to the interests of the Parties that have been granted an
Exchange Right hereunder or of the Fund; and
(c) for any other purposes not inconsistent with the provisions of this
Agreement, including to make or evidence any amendment to this
Agreement as contemplated hereby, provided that, in the opinion of the
Fund (which, for this purpose, may rely on the advice of counsel), the
interests of the Holders or the Fund will not be prejudiced thereby.
Notwithstanding Section 6.1, amendments or modifications to this Agreement
contemplated by subsections 6.2(a), (b) and (c) may be made by the Parties other
than the Holders.
ARTICLE 7
GENERAL
7.1 TERM.
This Agreement will continue until there are no outstanding Class B LP
Units.
7.2 SEVERABILITY.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule or law, or public policy, all other
conditions and provisions of this Agreement will nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated by this Agreement is not affected in any manner materially adverse
to any Party. Upon any determination that any term or other provision is
invalid, illegal or incapable of being enforced, the Parties to this Agreement
will negotiate in good faith to modify this Agreement so as to effect the
original intent of the Parties as closely as possible in an acceptable manner to
the end that the transactions contemplated by this Agreement are fulfilled to
the fullest extent possible.
7.3 ENUREMENT.
This Agreement shall be binding upon and enure to the benefit of the
Parties and their respective successors and permitted assigns. In the case of a
transfer of Class B LP Units effected in accordance with the provisions of the
Partnership Agreement, the transferee of such Class B LP Units shall be deemed
to be a Holder hereunder.
7.4 ASSIGNMENT.
The rights of Holders hereunder shall be automatically assigned to any
transferee of Class B LP Units, as if it were an original signatory hereto, if
the transfer of such Class B LP Units has been effected in accordance with the
provisions of the Partnership Agreement. This Agreement may not be assigned by
the other Parties hereto.
7.5 NOTICES TO PARTIES.
(a) All notices and other communications between the Parties hereunder
shall be in writing and shall be deemed to have been given if
delivered personally or by confirmed telecopy to the Parties at the
following addresses (or at such other address for such Party as shall
be specified in like notice):
(i) if to the Fund or the Trust:
Cinram International Income Fund or CII Trust
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
-▇▇-
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Cinram International Income Fund/ CII Trust
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Fogler, ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇-▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ May
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to the GP or the LP:
Cinram International General Partner Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Chief Executive Officer
Fax: ▇▇▇-▇▇▇-▇▇▇▇
(b) Any and all notices to be given and any documents to be sent to any
Holder may be given or sent to the address of such Holder shown on the
register of Holders in any manner permitted by the Partnership
Agreement and shall be deemed to be received (if given or sent in such
manner) at the time specified in the Partnership Agreement, the
provisions of which Partnership Agreement shall apply mutatis mutandis
to notices or documents as aforesaid sent to such Holders.
(c) Any such communication shall be deemed to have been validly and
effectively given (i) if personally delivered, on the date of such
delivery if such date is a Business Day and such delivery was made
prior to 4:00 p.m. (Toronto time) and otherwise on the next Business
Day, or (ii) if transmitted by facsimile or similar means of recorded
communication on the Business Day following the date of transmission
of confirmation of receipt. 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 such party at its
changed address.
7.6 IN RESPECT OF THE FUND AND THE TRUST
Each of the Parties acknowledges the obligations of the Fund and the Trust
under this Agreement and that such obligations will not be personally binding
upon any of the Trustees or the Trust Trustees, any registered or beneficial
holder of Units or Trust Units or any beneficiary under a plan of which a holder
of such units acts as a trustee or carrier, and that resort will not be had to,
nor will recourse be sought from, any of the foregoing or the private property
of any of the foregoing in respect of any indebtedness, obligation or liability
of the Fund or the Trust arising hereunder, and recourse for such indebtedness,
obligations or liabilities of the Fund or the Trust, as the case may be, will be
limited to, and satisfied only out of, the assets of the Fund or the Trust, as
the case may be.
-15-
7.7 IN RESPECT OF THE LP
The LP is a limited partnership formed under the laws of the Province of
Manitoba, a limited partner of which is only liable, subject to the Partnership
Agreement and the Partnership Act (Manitoba), for any of the LP's liabilities or
any of the LP's losses to the extent of the amount that the limited partner has
contributed or agreed to contribute to its capital and the limited partner's pro
rata share of any undistributed income. The parties hereto acknowledge that the
obligations of the LP shall not be personally binding upon, nor shall resort be
had to, the property of any of the limited partners, their heirs, successors and
assigns, and that resort shall only be had to the property of the LP or the
property of the GP. The sole general partner of the LP is the GP.
7.8 COUNTERPARTS.
This Agreement may be executed in counterparts (including counterparts by
facsimile), each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
7.9 AUTHORSHIP.
The Parties hereto agree that the terms and language of this Agreement are
the result of negotiations between the parties hereto and, as a result, there
will be no presumption that any ambiguity in this Agreement will be resolved
against any Party hereto.
7.10 GOVERNING LAW.
This Agreement shall be construed and enforced in accordance with the laws
of the Province of Ontario and the laws of Canada applicable therein.
7.11 ATTORNMENT.
Each Party to this Agreement agrees that any action or proceeding arising
out of or relating to this Agreement may be instituted in the courts of Ontario,
waives any objection which it may have now or hereafter to the venue of any such
action or proceeding, irrevocably submits to the jurisdiction of such courts in
any such action or proceeding, agrees to be bound by any judgment of such courts
and agrees not to seek, and hereby waives, any review of the merits of any such
judgment by the courts of any other jurisdiction.
IN WITNESS WHEREOF the Parties have executed this Agreement.
CINRAM INTERNATIONAL INCOME FUND
By: (signed)
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Trustee
CII TRUST
By: (signed)
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Trustee
CINRAM INTERNATIONAL GENERAL PARTNER
INC.
By: (signed)
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Secretary
CINRAM INTERNATIONAL LIMITED PARTNERSHIP
BY ITS GENERAL PARTNER, CINRAM
INTERNATIONAL GENERAL PARTNER INC.
By: (signed)
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Secretary
SCHEDULE "A"
EXCHANGE NOTICE
TO: Cinram International Limited Partnership
AND TO: Cinram International General Partner Inc.
AND TO: CII Trust
AND TO: Cinram International Income Fund
RE: NOTICE PURSUANT TO SECTION 2.4 OF THE EXCHANGE AGREEMENT DATED MAY 5,
2006 (THE "EXCHANGE AGREEMENT")
This is to authorize and direct you to:
(a) exchange ______________ Class B LP Units of Cinram International
Limited Partnership on __________, 20__ (the "Exchange Date"); and
(b) cancel all of the Special Voting Units relating to the securities
exchanged in (a) above, effective upon completion of the Exchange,
and this shall be your good and sufficient authority for so doing.
All capitalized words and expressions used in this Exchange Notice that are
defined in the Exchange Agreement have the meanings ascribed to such words and
expressions in the Exchange Agreement.
Dated the ____ day of ______________, 20__.
------------------------------------- ----------------------------------------
Witness
NOTE: This Exchange Notice must be completed and this Exchange Notice
together with the certificates for the Class B LP Units must be deposited
with Cinram International Limited Partnership. The Units resulting from the
exchange of the Class B LP Units may, at the election of Cinram
International Income Fund, be issued and registered in the name of CDS &
Co. or its nominee and registered on the books of CDS for the benefit of
the Holder exercising the Exchange Right through a CDS Participant selected
by such Holder.
Date: __________________, _____
-2-
Name of Person in Whose Name
Securities(1) are to be Registered,
Issued or Delivered (please print): ________________________________________
Street Address or P.O. Box: ________________________________________
Signature of Unitholder:
----------------------------------------
Signature Guaranteed by:
----------------------------------------
NOTE: If this Exchange Notice is for
less than all of the Class B LP Units
represented by the certificates
accompanying this Exchange Notice,
certificates representing the remaining
Class B LP Units represented by such
certificates will be issued and
registered in the name of the
undersigned above as it appears on the
register of Cinram International Limited
Partnership, unless the foregoing is
duly completed in respect of such Class
B LP Units.
(1) For so long as Units may be held in the Book-Entry System administered by
the Canadian Depository for Securities Limited, the following additional
information shall be provided and the Units may, at the election of Cinram
International Income Fund, be registered in the name of the Canadian
Depository for Securities Limited or its nominee:
Name of CDS participant through which
Units will be held: ___________________________________________
FINS Number of CDS participant: _______________________________
Name and telephone number of
Registered Representative at CDS participant: _________________
SCHEDULE "B"
NOTICE OF REALIZATION
TO: Cinram International Limited Partnership (the "LP")
AND TO: Cinram International General Partner Inc. (the "GP")
AND TO: CII Trust (the "TRUST")
AND TO: Cinram International Income Fund (the "FUND")
AND TO: Computershare Investor Services Inc.
RE: NOTICE PURSUANT TO SECTION 2.3 OF THE EXCHANGE AGREEMENT DATED MAY 5,
2006 (THE "EXCHANGE AGREEMENT")
The undersigned, ________________________, represents, warrants,
covenants and declares, as a condition to the exchange of Class B limited
partner units of the LP for units of the Fund (the "DEEMED EXCHANGE")
contemplated hereby, as follows:
(c) __________________ (insert name of registered holder of Pledged Class
B LP Units) (the "REGISTERED HOLDER") has incurred certain
indebtedness and obligations (collectively, the "OBLIGATIONS") to the
undersigned;
(d) as security for the due and prompt performance of the Obligations, the
undersigned has been pledged or granted a security interest (the
"SECURITY INTEREST") in _________________ (insert number of Pledged
Class B LP Units) Class B limited partner units of Cinram
International Limited Partnership (the "PLEDGED EXCHANGEABLE
PARTNERSHIP UNITS") registered in the name of the Registered Holder;
(e) the undersigned has not transferred or otherwise changed the
registered ownership of the Pledged Exchangeable Partnership Units
from that of the Registered Holder;
(f) the Borrower is in default in the payment of the Obligations and the
undersigned has the right and irrevocably intends either to sell or
retain in satisfaction of the Obligations the units of the Fund
issuable upon the Deemed Exchange contemplated hereby (the
"REALIZATION RIGHT");
(g) the undersigned authorizes or directs the Fund to issue the units of
the Fund issuable upon the Deemed Exchange contemplated hereby in the
name of ________________________ (insert name of undersigned or its
nominee);
(h) the undersigned represents and warrants that the undersigned is not a
non-resident of Canada within the meaning of the Income Tax Act,
R.S.C. 1985 (5th Supp.), c.1 (the "TAX ACT") or a partnership (that is
not a Canadian partnership within the meaning of the Tax Act);
(i) the undersigned acknowledges and agrees that, subject as hereinafter
provided, none of the Fund, the Trust, the GP, the LP or the Fund's
registrar and transfer agent shall in any way whatsoever be liable or
responsible for any loss or damage suffered by the undersigned, and
the undersigned indemnifies the Fund, the Trust, the GP, the LP and
the Fund's registrar and transfer agent against any loss or damage
suffered by any of them, in each case by reason only of the
undersigned's exercise of the Realization Right and the Deemed
Exchange resulting therefrom. Nothing herein shall be construed, for
greater certainty, to release or indemnify the Fund, the Trust, the
GP, the LP or the Fund's registrar and transfer agent from any
liability to the undersigned properly arising by reason of the Fund's,
the Trust's, the GP's, the LP's or the Fund's registrar and transfer
agent's failure to perform their respective covenants and obligations,
and otherwise comply with the provisions of, any agreement entered
into by them or their affiliates with the undersigned, including the
Exchange Agreement, Agreement in relation to Realization of
Exchangeable
-2-
Partnership Units and any subordination agreement entered into in
relation to the Obligations). The undersigned acknowledges and agrees
that each of the Fund, the Trust, the GP, the LP and the Fund's
registrar and transfer agent shall rely, without further independent
investigation, upon the representations, warranties, covenants and
declarations made by the undersigned in this Notice of Realization to
give effect to, act in furtherance of and otherwise acknowledge and
recognize the Deemed Exchange contemplated hereby;
(j) the undersigned acknowledges and agrees that upon receipt of the
Notice of Realization (duly executed and completed), the Pledged Class
B LP Units shall be deemed exchanged with effect from and after 8:30
a.m. on the date hereof in accordance with the provisions of the
Exchange Agreement; and
(k) the undersigned acknowledges and agrees that all of the special voting
units of the Fund relating to the Pledged Class B LP Units shall be
cancelled effective upon completion of the Deemed Exchange
contemplated hereby.
Dated the __ day of __________, 20__.
[NAME OF PLEDGEE OF PLEDGED CLASS B LP
UNITS]
By:
-----------------------------------
Name:
----------------------------------
Title
----------------------------------
NOTE: This Notice of Realization must be completed and this Notice of
Realization together with the certificates for the Pledged Class B LP Units must
be deposited with the registrar and transfer agent of the Fund. Such deposit
shall be on terms and conditions which will maintain the perfection and priority
of the security interest in the Pledged Class B LP Units of the person
delivering this Notice of Realization. The Units resulting from the exchange of
the Pledged Class B LP Units will be issued and registered in the name and
delivered to the person indicated below
Name of Person in Whose Name
Securities are to be Registered,
Issued or Delivered (please print)
(1): ___________________________________________
Street Address or P.O. Box: ___________________________________________
----------
(1) If Units are to be held, pursuant to the book-based system, by or through a
depositary services participant of the Canadian Depository for Securities
Limited, the following additional information shall be provided and the
Units will be registered in the name of the Canadian Depository for
Securities Limited or its nominee:
Name of CDS participant through which
Units will be held: ___________________________________________
FINS Number of CDS participant: _______________________________
Name and telephone number of
Registered Representative at CDS participant: _________________
-3-
NOTE: If this Exchange Notice is for less than all of the Class B LP Units
represented by the certificates accompanying this Exchange Notice, certificates
representing the remaining Class B LP Units represented by such certificates
will be issued and registered in the name of the Holder as it appears on the
register of Cinram International Limited Partnership.
SCHEDULE "C"
NOTICE OF BONA FIDE FINANCING
TO: Cinram International Limited Partnership (the "LP")
AND TO: Cinram International General Partner Inc. (the "GP")
AND TO: CII Trust (the "TRUST")
AND TO: Cinram International Income Fund (the "FUND")
AND TO: Computershare Investor Services Inc.
RE: NOTICE PURSUANT TO SECTION 3.8 OF THE EXCHANGE AGREEMENT DATED MAY 5,
2006 (THE "EXCHANGE AGREEMENT")
As required by Section 3.8 of the Exchange Agreement, the undersigned hereby
gives notice, represents, warrants and covenants as follows:
(a) _______________________ (insert name of lender) (the "LENDER") has
made one or more loans or advances (the "OBLIGATIONS") to the
undersigned or the undersigned has guaranteed the obligations of
his/her/its affiliates to the Lender pursuant to, under and in
accordance with the provisions of ________________________________
(insert description of lending, guarantee and/or security documents)
(the "LENDING DOCUMENTS");
(b) as security for the due and prompt performance of the Obligations, the
undersigned has pledged or otherwise granted to the Lender a security
interest in ____________________________ (insert number of Class B LP
Units subject to pledge/security interest) Class B limited partner
units of Cinram International Limited Partnership (the "PLEDGED CLASS
B LP UNITS"), all in accordance with the provisions of the Lending
Documents;
(c) the Obligations evidenced by the Lending Documents represent a bona
fide financing (or the permitted guarantee of a bona fide financing)
on the part of the undersigned;
(d) the Lender is a third party to the undersigned, is neither an
affiliate nor an associate of the undersigned (each within the meaning
of National Instrument 45-106 - Prospectus and Registration
Exemptions) and is otherwise not related to the undersigned (within
the meaning of the Tax Act); and
(e) the undersigned acknowledges and agrees that, subject as hereinafter
provided, none of the Fund, the Trust, the GP, the LP or the Fund's
registrar and transfer agent shall in any way whatsoever be liable or
responsible for any loss or damage suffered by the undersigned, and
the undersigned indemnifies the Fund, the Trust, the GP, the LP and
the Fund's registrar and transfer agent against any loss or damage
suffered by any of them, in each case by reason only of any
realization of the Pledged Class B LP Units by the Lender and the
deemed exchange for units of the Fund resulting therefrom. Nothing
herein shall be construed, for greater certainty, to release or
indemnify the Fund, the Trust, the GP, the LP or the Fund's registrar
and transfer agent from any liability to the undersigned properly
arising by reason of the Fund's, the Trust's, the GP's, the LP's or
the Fund's registrar and transfer agent's failure to perform their
respective covenants and obligations, and otherwise comply with the
provisions of, any agreement entered into by them or their affiliates
with the undersigned or accruing to the benefit of the undersigned,
including the Exchange Agreement, the LP's Limited Partnership
Agreement dated March 24, 2006, as the same may be further
supplemented, amended or restated from time to time, and the Fund's
Declaration of Trust dated March 21, 2006, as the same may be
supplemented, amended or restated from time to time.
-2-
DATED the __ day of ___________, 20__.
------------------------------------- ----------------------------------------
Witness
ACKNOWLEDGEMENT, AGREEMENT, REPRESENTATION AND WARRANTY OF LENDER
The undersigned hereby acknowledges, agrees, represents and warrants:
(a) the undersigned has not, is not permitted to and shall not transfer or
otherwise change the registered ownership of the Pledged Class B LP
Units from the name of _______________________;
(b) upon delivery of a Notice of Realization substantially in the form of
Schedule "C" attached to the Exchange Agreement, the Pledged Class B
LP Units shall be deemed to have been exchanged in accordance with the
provisions of the Exchange Agreement with effect from and after 8:30
a.m. on the date of the Notice of Realization; and
(c) the undersigned is not a non-resident of Canada within the meaning of
the Income Tax Act, R.S.C. 1985 (5th Supp.), c.1 (the "TAX ACT") or a
partnership (that is not a Canadian partnership within the meaning of
the Tax Act).
DATED the __ day of ___________, 20__.
[INSERT NAME OF LENDER]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------