PURCHASE AGREEMENT BY AND AMONG SIMMONS BEDDING COMPANY SIMMONS ACQUISITION INC. SCI INCOME TRUST and SIMMONS CANADA INC. Dated September 20, 2006
EXECUTION
VERSION
BY
AND AMONG
XXXXXXX
BEDDING COMPANY
SIMMONS
ACQUISITION INC.
SCI
INCOME TRUST
and
XXXXXXX
CANADA INC.
Dated
September 20, 2006
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TABLE
OF CONTENTS
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Page
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Article
I
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DEFINITIONS
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1
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1.1
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Certain
Definitions
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1
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1.2
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Terms
Defined in Other Sections
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6
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1.3
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Interpretation
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8
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Article
II
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THE
PURCHASE AND SALE
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8
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2.1
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Sale
and Purchase; Closing
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8
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2.2
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Proxy
Circular; Meetings
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9
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2.3
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Cooperation
in Filings
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10
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Article
III
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REPRESENTATIONS
AND WARRANTIES OF SCI AND XXXXXXX CANADA
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10
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3.1
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Organization
and Qualification; Subsidiaries
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10
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3.2
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Organizational
Documents
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11
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3.3
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Capitalization
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12
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3.4
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Authority
Relative to this Agreement; Title to Common Shares and Notes
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12
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3.5
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No
Conflict; Required Filings and Consents
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13
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3.6
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Compliance;
Permits
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14
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3.7
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Reports;
Financial Statements
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15
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3.8
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No
Undisclosed Liabilities
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16
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3.9
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Absence
of Certain Changes or Events
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17
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3.10
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Absence
of Litigation
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18
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3.11
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Employee
Plans
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18
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3.12
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Labour
Matters
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21
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3.13
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Title
to Property
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22
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3.14
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Insurance
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23
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3.15
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Taxes
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23
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3.16
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Environmental
Matters
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24
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3.17
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Intellectual
Property
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26
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3.18
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Agreements;
Contracts and Commitments
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28
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3.19
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Brokers
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29
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3.20
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Opinions
of Financial Advisor
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29
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3.21
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Transactions
with Affiliates, Shareholders, Officers, Directors and Others
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29
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3.22
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No
Other Representations and Warranties
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29
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Article
IV
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REPRESENTATIONS
AND WARRANTIES OF SIMMONS AND BIDCO
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29
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4.1
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Organization
and Qualification
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30
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4.2
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Authority
Relative to this Agreement
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30
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4.3
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No
Conflict; Required Filings and Consents
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30
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4.4
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Financial
Resources
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31
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4.5
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No
Other Representations and Warranties
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31
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Article
V
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CONDUCT
PRIOR TO THE CLOSING
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31
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5.1
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Conduct
of Business by SCI and Xxxxxxx Canada
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31
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5.2
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Changes
in Pricing
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34
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Article
VI
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ADDITIONAL
AGREEMENTS
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34
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6.1
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Confidentiality;
Access to Information
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34
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6.2
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No
Solicitation
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35
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6.3
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Public
Announcements
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37
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6.4
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Reasonable
Best Efforts: Notification
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38
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6.5
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Regulatory
Filings
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39
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6.6
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Indemnification
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39
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6.7
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Dissolution
of SCI
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40
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6.8
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Option
Plan
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40
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6.9
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Post-Closing
Income Tax Consequences
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40
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6.10
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Expenses
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41
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6.11
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Consents
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41
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Article
VII
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CONDITIONS
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41
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7.1
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Conditions
to Obligations of Each Party
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41
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7.2
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Additional
Conditions to Obligations of SCI and Xxxxxxx Canada
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42
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7.3
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Additional
Conditions to the Obligations of Simmons and Bidco
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42
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Article
VIII
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TERMINATION,
AMENDMENT AND WAIVER
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43
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8.1
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Termination
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43
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8.2
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Notice
of Termination; Effect of Termination
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44
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8.3
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Fees
and Expenses
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45
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8.4
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Amendment.
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46
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8.5
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Extension;
Waiver.
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46
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Article
IX
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GENERAL
PROVISIONS
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47
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9.1
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Non-Survival
of Representations and Warranties
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47
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9.2
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Notices
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47
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9.3
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Counterparts
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49
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9.4
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Entire
Agreement; Third Party Beneficiaries
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49
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9.5
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Severability
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49
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9.6
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Other
Remedies: Specific Performance
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49
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9.7
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Governing
Law
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50
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9.8
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No
Personal Liability
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50
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9.9
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Assignment
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50
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9.10
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Guarantee
of Performance
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51
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9.11
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Currency
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51
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Schedules
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Schedule
“A” − Form of Unitholder Resolution
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This
PURCHASE
AGREEMENT (the “Agreement”)
is made and entered into on September 20, 2006, by and among Xxxxxxx
Bedding Company, a corporation organized and existing under the laws of the
State of Delaware (“Xxxxxxx”),
Xxxxxxx Acquisition Inc., a corporation organized and existing under the laws
of
the Province of Ontario and a wholly-owned direct Subsidiary of Simmons
(“Bidco”),
SCI Income Trust, a trust formed under the laws of the Province of Ontario
(“SCI”),
and Simmons Canada Inc., a corporation organized and existing under the laws
of
the Province of Ontario (“Simmons
Canada”).
RECITALS
| (A) |
SCI
is a publicly held Canadian open-ended, limited purpose trust established
for the purpose of investing and holding securities of Xxxxxxx
Canada.
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| (B) |
SCI
owns beneficially and of record all of the Common Shares of Xxxxxxx
Canada
and the Notes.
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| (C) |
Bidco
wishes to purchase, on the terms and conditions hereinafter set forth,
from SCI all of the Common Shares of Xxxxxxx Canada and the Notes,
and SCI
wishes to sell such Common Shares and Notes on such terms and
conditions.
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| (D) |
Computershare
Trust Company of Canada is the trustee (the “Trustee”)
of SCI and has delegated to Xxxxxxx Canada, as the Administrator
of SCI,
all of the Trustee’s powers and authority to act and be responsible for,
among other things, all matters in connection with any acquisition
transaction involving the purchase of the Common Shares and Notes
of
Xxxxxxx Canada.
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| (E) |
The
board of directors of Xxxxxxx Canada (the “Board”)
having determined, upon a recommendation of the Special Committee
and
after consultation with its financial advisors, that the consideration
per
Trust Unit to be received by the Trust Unitholders upon redemption
of
their Trust Units is fair to the Trust Unitholders and that the
Transactions are in the best interest of SCI, has approved this Agreement
and has resolved to support and recommend that Trust Unitholders
vote in
favour of the Unitholders
Resolution.
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NOW,
THEREFORE,
in consideration of the covenants, promises and representations set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as
follows:
ARTICLE
I
DEFINITIONS
| 1.1 |
Certain
Definitions.
|
In
this Agreement (including the Recitals hereto), the following terms shall have
the following meanings:
“Action”
means any action, claim, suit, litigation, administrative proceeding, demand,
cause of action, charge, complaint, arbitration or contested mediation, or
other
proceeding.
“Administrator”
means Xxxxxxx Canada, the administrator of SCI pursuant to that certain
Administration Agreement dated as of October 16, 1997, as amended, between
SCI
and Xxxxxxx Canada.
“Affiliate”
means, with respect to any Person, any other Person that directly, or through
one or more intermediaries, controls or is controlled by or is under common
control with such Person. For purposes of the foregoing, “control”
means the possession, direct or indirect, or 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.
“Business
Day”
means any day, other than Saturday, Sunday or a statutory holiday in Toronto,
Ontario or New York, New York.
“Canadian
Securities Regulatory Authorities”
means the Ontario Securities Commission and each other securities commission
or
similar regulatory authority in each of the provinces of Canada.
“Common
Shares”
means all common shares in the capital of Xxxxxxx Canada.
“Declaration
of Trust”
means the amended and restated declaration of trust of SCI made as of May 23,
2002.
“Employee
Plan”
means, with respect to any Person, any share purchase, share option, share
appreciation, share incentive, severance, employment, change-in-control,
retention, insurance (including self-insurance), health, dental, medical,
disability, workers compensation, supplemental unemployment, post-employment,
pension, supplemental pension, savings, retirement, profit sharing, fringe,
vacation, multiemployer, collective bargaining, bonus, incentive, deferred
compensation, loan and any other employee benefit plan, agreement, program,
policy or other arrangement (including any funding mechanism therefor now in
effect or required in the future as a result of the transactions contemplated
by
this Agreement or otherwise), whether formal or informal, funded or unfunded,
written or oral.
“Governmental
Entity”
means any applicable (a) multinational, federal, provincial, state,
regional, municipal or other government, governmental or public department,
central bank, court, tribunal, arbitrator, commission, board, bureau or agency,
whether U.S., Canadian, foreign or multinational, (b) subdivision, agent,
commission, board or authority of any of the foregoing or
(c) self-regulatory organization or stock exchange, including the
TSX.
“Hazardous
Substance”
means any pollutant, contaminant, waste, hazardous or toxic material, and any
other substance that is regulated by or could reasonably be expected to result
in liability or give rise to an Action under any applicable Environmental Law
or
which may pose a threat to the environment or to human health or
safety.
“Intellectual
Property”
means all intellectual property rights of any kind or nature, however
denominated, throughout the world, including, without limitation (i) such
intellectual property rights as may be established or perfected under federal,
state, provincial, or foreign and multinational Laws; (ii) rights in patent
and patent applications; (iii) rights in copyrights and copyrightable
works; (iv) trademarks, trade names, domain names, trade dress, service
marks, and other identifiers of brand, source or company along with the goodwill
associated therewith, and all common-law rights relating thereto; (v) trade
secrets; (vi) all rights of privacy and publicity; (vii) moral rights; (viii)
rights in data and proprietary or potentially proprietary product or industrial
design; and (ix) all registrations, applications, recordings and
choses-in-action arising from or related to the foregoing.
“ITA”
means the Income
Tax Act
(Canada), as amended, and the regulations thereunder, as amended, in each case,
except as otherwise provided herein, as of the date hereof.
“Knowledge”
of SCI and Xxxxxxx Canada means the actual knowledge of Xxxxxx X. Xxxxxxxx,
Xxxx
X. Xxxxxxx, Xxxxx X. Xxxx, Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxxxx, Xxxx Xxxxxxxxx,
Xxxxx Xxxxxx, Xxxx XxXxxxxx and Xxxxx Xxxxxxxx.
“Laws”
means all and any laws (including common law), statutes, rules, regulations,
orders, ordinances, codes, by-laws, treaties, and judicial, arbitral,
administrative, ministerial or departmental judgments, awards, and other
requirements of any Governmental Entity.
“Leased
Real Property”
means, with respect to any Person, real property leased for use by or otherwise
occupied by such Person, as more specifically defined in Section 3.13(a) of
the
Disclosure Schedule.
“Lien”
means, with respect to any property, right or asset, any mortgage, lien, pledge,
charge, security interest, purchase option, right of first offer or refusal,
demand, encumbrance or other adverse claim of any kind in respect of such
property or asset.
“Material
Adverse Effect”
means, with respect to a party, any change, state of facts, occurrence, event
or
effect that, individually or in the aggregate, is or would reasonably be
expected to be, material and adverse to the business assets (including
intangible assets), financial condition, or results of operations of such party
and its Subsidiaries, taken as a whole, other than any change, state of facts,
occurrence, event or effect: (i) reasonably attributable to the announcement
of
the execution of this Agreement and the Transactions or other communication
by
Simmons or Bidco of their plans or intentions with respect to the business
of
Xxxxxxx Canada, (ii) relating to changes, circumstances or conditions generally
affecting the industry in which such party operates and not having a
disproportionate effect on such party and its Subsidiaries, taken as a whole,
as
compared to other Persons in the industry in which such Party and its
Subsidiaries operate (iii) relating to changes in general economic conditions
in
the United States or Canada or the securities markets, including changes in
international financial or currency exchange markets, (iv) relating to any
change in the market price or trading volume of the Trust Units, or (v) any
failure by SCI to meet any earnings estimates of equity analysts, for any
period, each of which, for certainty, shall be deemed not to constitute a
“Material Adverse Effect” and shall not be considered in determining whether a
“Material Adverse Effect” has occurred; provided, however, that with respect to
(iv) and (v) above, the underlying cause may independently constitute a
“Material Adverse Effect”.
“Meeting”
means the special meeting of Trust Unitholders, including any adjournment or
postponement thereof, to be called and held to consider and, if deemed
advisable, approve the Unitholders Resolution.
“Misrepresentation”
has the meaning set out in the Securities Act (Ontario).
“Note
Indenture”
means that certain Note Indenture dated October 16, 1997 pursuant to which
promissory notes in the original principal amount of $50,000,000 were issued
by
Xxxxxxx Canada in favour of SCI.
“Notes”
means the promissory notes in the original principal amount of $50,000,000
issued pursuant to the Note Indenture.
“OBCA”
means the Business
Corporations Act (Ontario),
as now in effect and as it may be amended from time to time prior to the
Closing.
“Options”
means any existing rights or options to purchase Trust Units outstanding under
the Xxxxxxx Canada Option Plan.
“Order”
means any legally enforceable judgment, order, decision, writ, injunction,
stipulation, ruling or decree of, or any settlement under jurisdiction of,
any
Governmental Entity.
“Owned
Real Property”
means, with respect to any Person, real property owned by such Person, as more
specifically defined in Section 3.13(a) of the Disclosure Schedule annexed
hereto.
“Permitted
Encumbrances”
means (i) all defects, exceptions, restrictions, easements, rights of way and
encumbrances disclosed in policies of title insurance which have been delivered
to Simmons or Bidco; (ii) statutory liens for current Taxes, assessments or
other governmental charges not yet delinquent or the amount or validity of
which
is being contested in good faith by appropriate proceedings, provided an
appropriate reserve has been established therefor in the Financial Statements
in
accordance with Canadian GAAP; (iii) mechanics’, carriers’, workers’, and
repairers’ liens arising or incurred in the ordinary course of business that are
not material to the business, operations and financial condition of the Xxxxxxx
Canada Properties so encumbered and that are not resulting from a breach,
default or violation by SCI, Xxxxxxx Canada or any of the Subsidiaries of any
Contract or Laws; and (iv) zoning, entitlement and other land use and
environmental regulations by any Governmental Entity, provided
that such regulations have not been violated.
“Person”
shall mean any individual, corporation (including any non-profit corporation),
general partnership, limited partnership, limited liability partnership, joint
venture, estate, trust, company (including any limited liability company,
unlimited liability company or joint stock company), firm or other enterprise,
association, organization, entity or Governmental Entity.
“Proprietary
Subject Matter”
means: (i) all information (whether or not protectable by patent,
copyright, mask work or trade secret rights) not generally known to the public,
including know-how and show-how, discoveries, processes, formulae, designs,
methods, techniques, procedures, concepts, specifications, technical manuals
and
data, libraries, blueprints, drawings, product information, development
work-in-process, inventions and trade secrets; (ii) patentable subject
matter, and inventions subject to patent applications; (iii) industrial
models and industrial designs; (iv) works of authorship and software,
whether or not protected by copyright; (v) mask works whether or not
registered; and (vi) goodwill, whether or not associated with trademarks,
trade names, service marks, brand names, corporate names, emblems, logos, trade
dress, domain names, insignia and related marks.
“Proxy
Circular”
means, collectively, (a) the notice of the Meeting to be sent to Trust
Unitholders and (b) the accompanying management information circular in
connection with the Meeting, in each case as amended, supplemented or otherwise
modified from time to time.
“Qualifying
Amendment”
means an amendment or supplement to the Proxy Circular (including by
incorporation by reference) to the extent it contains (i) a Change in
Recommendation, (ii) a statement of the reasons of the Board for making
such Change in Recommendation, and (iii) additional information reasonably
related to the foregoing.
“Regulatory
Approvals”
means, with respect to a party, those Orders, sanctions, consents, exemptions,
waivers, permits, agreements, certificates, authorizations and other Approvals
(including the lapse, without objection, of a prescribed time under a statute
or
regulation that states that a transaction may be implemented if a prescribed
time lapses following the giving of notice without an objection being made)
of
Governmental Entities that are necessary or advisable in connection with the
Transactions, including those referred to in Section 3.5(b).
“Securities
Act (Ontario)”
means the Securities Act (Ontario) and all rules and regulations enacted
thereunder, as now in effect and as it may be amended from time to time prior
to
the Closing.
“Securities
Laws”
means the Securities
Act (Ontario) and the equivalent legislation in the other provinces of Canada,
all as now enacted or as the same may from time to time be amended, and the
applicable rules and regulations promulgated thereunder.
“Xxxxxxx
Canada Employee Plan”
means any Employee Plan under which (i) any current or former director,
officer, consultant or employee of Xxxxxxx Canada has any present or future
right to benefits and which is or has been contributed to, entered into,
sponsored by or maintained by SCI or Xxxxxxx Canada or (ii) Xxxxxxx Canada
has any present or future liability.
“Xxxxxxx
Canada Option Plan”
means the 1998 Trust Unit option plan of SCI.
“Xxxxxxx
Canada Owned Intellectual Property” shall
mean Intellectual Property owned entirely and exclusively by SCI or Xxxxxxx
Canada.
“Xxxxxxx
Canada Owned Proprietary Subject Matter”
shall mean Proprietary Subject Matter owned entirely and exclusively by SCI
or
Xxxxxxx Canada.
“Xxxxxxx
Canada Properties”
means all Leased Real Property and Owned Real Property.
“Special
Committee”
means the committee of the Board formed for the purpose of considering the
Transactions;
“Subsidiary”
shall mean, when used with reference to any party, any Person of which such
party (either alone or through or together with any other Subsidiary) either
owns, directly or indirectly, fifty percent (50%) or more of the outstanding
capital stock or other equity interests the holders of which are generally
entitled to vote for the election of directors or members of any other governing
body of such Person or, in the case of a Person that is a partnership, is a
general partner of such partnership.
“Transactions”
means, collectively, the purchase and sale contemplated by Article II and the
distribution on the Closing Date of an amount equal to the Transaction
Consideration to the Trust Unitholders upon redemption of all the issued and
outstanding Trust Units, as more particularly described in Section
6.7.
“Trust
Unitholders”
means all holders of outstanding Trust Units.
“Trust
Unitholder Approval”
means the requisite approval of the Unitholders Resolution by the Trust
Unitholders at the Meeting, which approval shall be evidenced by the affirmative
votes of the holders of more than 66-2/3% of the Trust Units represented at
the
Meeting and voted upon the Unitholder Resolution.
“Trust
Units”
means the trust units of SCI authorized and issued and outstanding under the
Declaration of Trust.
“TSX”
means The Toronto Stock Exchange.
“Unitholders
Resolution”
means a resolution of the Unitholders substantially in the form of Schedule
“A”
attached to this Agreement.
| 1.2 |
Terms
Defined in Other
Sections.
|
The
following terms are defined elsewhere in this Agreement in the following
Sections:
|
Acquisition
Proposal
|
Section
6.2(a)
|
|
Agreement
|
Preamble
|
|
Approvals
|
Section
3.1(a)
|
|
Bidco
|
Preamble
|
|
Board
|
Recitals
|
|
Canadian
GAAP
|
Section
3.7(b)
|
|
Change
in Recommendation
|
Section 2.2(b)
|
|
Charter
Documents
|
Section
3.2
|
|
Closing
|
Section
2.1(b)
|
|
Closing
Date
|
Section
2.1(b)
|
|
Confidentiality
Agreement
|
Section
6.1(a)
|
|
Contract
|
Section
3.1(c)
|
|
Disclosure
Schedule
|
Article
III
|
|
Documents
|
Section
3.7(a)
|
|
Environmental
Laws
|
Section
3.16(a)
|
|
Environmental
Lien
|
Section
3.16(f)
|
|
Environmental
Permits
|
Section
3.16(c)
|
|
Expenses
|
Section
8.3(c)
|
|
Financial
Statements
|
Section
3.7(b)
|
|
Indemnified
Parties
|
Section
6.6
|
|
Infringe
|
Section
3.17
|
|
Insurance
Policies
|
Section
3.14
|
|
Material
Contract
|
Section
3.18
|
|
Material
Customers
|
Section
5.2
|
|
MEPP
|
Section
3.11(n)
|
|
Occupational
Health and Safety Law
|
Section
3.16(b)
|
|
Permit
|
Section
3.5(a)
|
|
Property
|
Section
3.16(a)
|
|
Registered
Intellectual Property
|
Section
3.17(a)
|
|
Returns
|
Section
3.15(b)(i)
|
|
SCI
|
Preamble
|
|
Simmons
|
Preamble
|
|
Xxxxxxx
Canada
|
Preamble
|
|
Superior
Proposal
|
Section
6.2(b)(ii)
|
|
Tax
|
Section
3.15(a)
|
|
Termination
Date
|
Section
8.1(b)
|
|
Termination
Fee
|
Section
8.3(c)(iii)
|
|
Transaction
Consideration
|
Section
2.1(a)
|
|
Trustee
|
Recitals
|
|
Trustee
Sub
|
Section
6.7
|
| 1.3 |
Interpretation.
|
When
a reference is made in this Agreement to Schedules, such reference shall be
to a
Schedule to this Agreement unless otherwise indicated. When a reference is
made
in this Agreement to Sections, such reference shall be to a Section of this
Agreement unless otherwise indicated. Unless otherwise indicated, the words
“include”, “includes” and “including” when used herein shall be deemed in each
case to be followed by the words “without limitation”. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. When
reference is made herein to “the business of” a Person, such reference shall be
deemed to include the business of such Person and all direct and indirect
Subsidiaries of such Person. Reference to the Subsidiaries of a Person shall
be
deemed to include all direct and indirect Subsidiaries of such
Person.
ARTICLE
II
THE
PURCHASE AND SALE
| 2.1 |
Sale
and Purchase;
Closing.
|
| (a) |
Subject
to the terms and conditions and in reliance upon the representations,
warranties and agreements set forth herein, at the Closing SCI shall
sell,
assign, transfer, convey and deliver to Bidco, and Bidco shall purchase
from SCI, (i) all of the issued and outstanding Common Shares and
(ii) all
of the issued and outstanding Notes for an aggregate purchase price
equal
to the product obtained by multiplying $16.25 by the number of Trust
Units
outstanding immediately prior to the Closing Date (collectively,
the
“Transaction
Consideration”).
Bidco’s payment of the Transaction Consideration for the Common Shares
and
Notes at the Closing shall be made by wire transfer of immediately
available funds to SCI, against SCI’s delivery of stock certificates
representing the Common Shares, together with stock powers duly endorsed
in blank therefor, signature guaranteed, and SCI’s delivery of the Notes,
duly endorsed by SCI and all other documents and materials necessary
or
desirable to effect the assignment, transfer and sale of the Common
Shares
and the Notes to Bidco, as requested by Bidco acting
reasonably.
|
| (b) |
The
Closing (the “Closing”)
will be held as soon as practicable and in any event no later than
the
second Business Day after the satisfaction or waiver (subject to
applicable Laws) of the conditions (excluding conditions that, by
their
terms, cannot be satisfied until the Closing Date, but subject to
the
satisfaction or, where permitted, waiver of those conditions as of
the
Closing Date) set forth in Article
VII,
and is expected to be held on or before 10:00 a.m. on November 15,
2006 or
such other time or date as is agreed to in writing by the parties
hereto
(the “Closing
Date”).
The Closing will take place at the offices of Goodmans LLP, 000 Xxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxx, XX X0X 0X0, on the Closing Date; unless
another place is agreed to in writing by the parties hereto.
|
| (c) |
The
Transaction Consideration shall be allocated first to the Notes as
to the
principal amount outstanding thereunder and accrued interest thereon,
in
each case as at the Closing Date, and the balance shall be allocated
to
the Common Shares. SCI, Xxxxxxx Canada, Xxxxxxx and Bidco shall treat
such
allocation as binding for all purposes, including the filing of all
tax
and other returns and the preparation of all financial statements
and any
other documents and records legally required by the respective
parties.
|
| 2.2 |
Proxy
Circular; Meetings.
|
| (a) |
As
promptly as reasonably practicable after the execution and delivery
of
this Agreement, but in no event later than October 13, 2006, SCI
shall
complete the Proxy Circular together with any other documents required
by
the Securities Laws or other applicable Laws in connection with the
Meeting. The Proxy Circular shall include the opinion referenced
in
Section 3.20. As promptly as practicable after the execution and
delivery
of this Agreement, SCI shall, unless otherwise agreed to by the parties,
cause the Proxy Circular and other documentation required in connection
with the Meeting to be sent to each Trust Unitholder and each other
Person
to whom such documents are required to be sent under applicable Laws
and
the Declaration of Trust.
|
| (b) |
Subject
to the terms of this Agreement, the Board shall (i) recommend in the
Proxy Circular that Trust Unitholders vote in favour of the Unitholders
Resolution and (ii) not withdraw, modify or qualify (or publicly
propose to or publicly state that it intends to withdraw, modify
or
qualify) in any manner adverse to Simmons or Bidco such recommendation
or
take any other action or make any other public statement in connection
with the Meeting inconsistent with such recommendation (collectively,
a
“Change
in Recommendation”),
provided,
however,
that the Board may make such a Change in Recommendation any time
prior to
the Meeting under the circumstances contemplated in Section 6.2(b)
(provided that the earliest that the Board may make such a Change
in
Recommendation is following the expiry of the five (5) Business Day
period
referred to in clause (5) of Section 6.2(b)(ii)).
In connection with a Change in Recommendation, SCI may amend or supplement
the Proxy Circular (including by incorporation by reference) pursuant
to a
Qualifying Amendment to effect such a Change in
Recommendation.
|
| (c) |
SCI
shall, as soon as reasonably practicable following the date of this
Agreement, establish a record date for, duly call, give notice of,
convene
and hold the Meeting. SCI shall not adjourn, postpone or cancel (or
propose for adjournment, postponement or cancellation) the Meeting
without
Simmons’ or Bidco’s prior written consent except as required (i) by
the Securities Laws or other applicable Laws, (ii) for quorum
purposes or (iii) to enable SCI to comply with its obligations under
Section 6.2(b)(ii).
|
| 2.3 |
Cooperation
in Filings.
|
| (a) |
SCI
shall use its reasonable best efforts to ensure that the Proxy Circular
complies with all applicable Laws and the Declaration of Trust and,
without limiting the generality of the foregoing, that the Proxy
Circular
will not contain any Misrepresentation (other than with respect to
any
information relating to and provided by Simmons or Bidco or any third
party that is not one of their Affiliates). Simmons, Bidco and SCI
shall
each promptly notify each other if, at any time before the Closing,
it
becomes aware that the Proxy Circular contains any Misrepresentation,
or
that otherwise requires an amendment or supplement to the Proxy Circular.
In any such event, SCI shall prepare a supplement or amendment to
the
Proxy Circular, as required, and, if required, shall cause the same
to be
distributed to the Trust Unitholders and/or filed with the Canadian
Securities Regulatory Authorities and each other applicable Governmental
Entity.
|
| (b) |
Xxxxxxx,
Bidco and SCI shall cooperate in the preparation, filing and mailing
of
the Proxy Circular. SCI shall cooperate and provide Simmons and Bidco
with
a reasonable opportunity to review and comment on the Proxy Circular
and
any amendments or supplements thereto prior to filing such with the
Canadian Securities Regulatory Authorities and each other applicable
Government Entity, and will provide Simmons and Bidco with a copy
of all
such filings made. SCI will advise Simmons and Bidco promptly after
it
receives notice thereof, of the issuance of any cease trade order,
the
suspension of the qualification of any of the Trust Units for offering
or
sale in any jurisdiction, or any request by the Canadian Securities
Regulatory Authorities or any other Governmental Entity for amendment
of
the Proxy Circular.
|
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF SCI
AND XXXXXXX CANADA
Each
of SCI and Xxxxxxx Canada represents and warrants, jointly and severally, to
Simmons and Bidco, subject to such exceptions provided in this Agreement or
as
are specifically disclosed in writing in the disclosure schedule (arranged
in
sections and subsections corresponding to the numbered and lettered sections
and
subsections contained in this Article
III
with the disclosures in any section or subsection of such schedule qualifying
the corresponding section or subsection in this Article
III,
as well as any other section or subsection of this Article
III
if the relevance of the disclosed item to such other section or subsection
is
readily apparent on its face) supplied by SCI and Xxxxxxx Canada to Simmons
and
Bidco dated as of the date hereof (the “Disclosure
Schedule”),
as follows:
| 3.1 |
Organization
and Qualification;
Subsidiaries.
|
| (a) |
SCI
is a trust established and validly existing under the Laws of the
Province
of Ontario and has the requisite power and authority to own, lease
and
operate its assets and properties and to carry on its business as
now
conducted. Xxxxxxx Canada is a corporation duly organized, validly
existing and in good standing under the OBCA and has the requisite
corporate power and authority to own, lease and operate its assets
and
properties and to carry on its business as now being conducted. Each
of
SCI and Xxxxxxx Canada is in possession of all franchises, grants,
qualifications, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders (“Approvals”)
from all Governmental Entities necessary to own, lease and operate
the
properties it purports to own, operate or lease and to lawfully carry
on
its business as now conducted and as set forth in Section 3.1(a)
of the
Disclosure Schedule, except where the failure to have such Approvals
has
not had and would not be reasonably expected to have, individually
or in
the aggregate, a Material Adverse Effect on Xxxxxxx
Canada.
|
| (b) |
SCI
has no Subsidiaries except for Xxxxxxx Canada and Xxxxxxx Canada
GP Inc.
Xxxxxxx Canada GP Inc. is the sole general partner of Xxxxxxx Canada
L.P.,
a limited partnership existing under the laws of the Province of
Ontario,
and Xxxxxxx Canada is the sole limited partner. Neither Xxxxxxx Canada
GP
Inc. nor Xxxxxxx Canada L.P. has any assets (other than contributed
capital) or liabilities and neither has conducted any
business.
|
| (c) |
Neither
SCI nor Xxxxxxx Canada has agreed nor is it obligated to make nor
is it
bound by any written or oral agreement, commitment, contract, note,
bond,
mortgage, indenture, license, lease, instrument or other binding
arrangement (a “Contract”)
under which Xxxxxxx Canada may become obligated to acquire any material
equity interest or investment in, or make any material capital
contribution to, any Person. Neither SCI nor Xxxxxxx Canada directly
or
indirectly owns any material interest or investment (whether equity
or
debt) nor has any rights to acquire any material interest or investment
in
any Person (other than SCI’s interest in Xxxxxxx
Canada).
|
| (d) |
Xxxxxxx
Canada is duly qualified or otherwise authorized to transact business
as a
corporation and is in good standing, under the Laws of all jurisdictions
set forth in Section 3.1(d) of the Disclosure Schedule where the
nature of
its business requires such qualification or authorization, except
for
those jurisdictions where the failure to be so qualified or authorized,
individually or in the aggregate, has not had and would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse
Effect on Xxxxxxx Canada.
|
| 3.2 |
Organizational
Documents.
|
SCI
has previously furnished to Xxxxxxx and Bidco complete and correct copies of
its
Declaration of Trust and the articles and by-laws of Xxxxxxx Canada (together,
the “Charter
Documents”),
as amended to date. Such Charter Documents, as so amended, are in full force
and
effect. Neither SCI nor Xxxxxxx Canada is in violation of any of the provisions
of their respective Charter Documents.
| 3.3 |
Capitalization.
|
| (a) |
The
authorized capital of SCI consists of an
unlimited number of Trust Units.
As of the close of business on September 20, 2006, there were outstanding
7,806,000 Trust Units. All outstanding Trust Units have been duly
authorized and validly issued and are fully paid and
nonassessable.
In addition, as at September 20, 2006, SCI had outstanding Options to
acquire 614,500 Trust Units.
|
| (b) |
The
authorized capital of Xxxxxxx Canada consists of an unlimited number
of
Common Shares, of which 7,655,000 are issued and outstanding as of
the
date hereof and all of which are held of record and beneficially
by SCI.
All outstanding Common Shares have been duly authorized and validly
issued
and are fully paid and
nonassessable.
|
| (c) |
Except
for the Options as set forth in Section 3.3 of the Disclosure Schedule,
there are no options, warrants, phantom shares, stock units, stock
appreciation rights, other equity-based awards, equity securities,
conversion privileges or similar ownership interests, calls, rights
(including preemptive rights), subscriptions or Contracts of any
character
to which SCI or Xxxxxxx Canada is a party or by which it is bound
obligating SCI or Xxxxxxx Canada to issue, deliver or sell, or cause
to be
issued, delivered or sold, or to repurchase, redeem or otherwise
acquire,
or cause the repurchase, redemption or acquisition of, any equity
securities, Trust Units, or similar ownership interests of SCI or
Xxxxxxx
Canada, or obligating SCI or Xxxxxxx Canada to grant, extend, accelerate
the vesting of or enter into any such option, warrant, phantom share,
stock unit, stock appreciation right, other equity-based award, equity
security, call, right, subscription, commitment or agreement. There
are no
outstanding bonds, debentures, or other evidences of indebtedness
of SCI
or Xxxxxxx Canada having the right to vote (or that are convertible
for or
exercisable into securities having the right to vote) with the Trust
Unitholders on any matter. Except as contemplated by this Agreement,
there
is no voting trust, proxy, registration rights agreement, rights
plan,
anti-takeover plan or other Contract or understanding to which SCI
or
Xxxxxxx Canada is a party or by which they are bound with respect
to any
equity security, Trust Unit or similar ownership interest of any
class of
SCI or Xxxxxxx Canada.
|
| 3.4 |
Authority
Relative to this Agreement; Title to Common Shares and
Notes.
|
| (a) |
Each
of SCI and Xxxxxxx Canada has all necessary power (in the case of
SCI) and
corporate power (in the case of Xxxxxxx Canada), respectively, and
authority to execute and deliver this Agreement and to perform its
obligations hereunder and, subject to the receipt of the Trust Unitholder
Approval, to consummate the Transactions. The execution, delivery
and
performance by each of SCI and Xxxxxxx Canada of this Agreement and
the
consummation by each of SCI and Xxxxxxx Canada of the Transactions
have
been duly and validly authorized by all necessary trust action on
the part
of SCI and by all necessary corporate action on the part of Xxxxxxx
Canada, and no other trust proceedings on the part of SCI or corporate
proceedings on the part of Xxxxxxx Canada are necessary to authorize
this
Agreement, or to consummate the Transactions, other than the Trust
Unitholder Approval and the approval of the Proxy Circular by the
Board
prior to mailing of the Proxy Circular. This Agreement has been duly
and
validly executed and delivered by each of SCI and Xxxxxxx Canada
and,
assuming the due authorization, execution and delivery by Xxxxxxx
and
Bidco, constitutes a valid, legal and binding obligation of SCI and
Xxxxxxx Canada, enforceable against SCI and Xxxxxxx Canada in accordance
with its respective terms, except that (i) such enforcement may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other similar Laws, now or hereafter in effect, affecting creditors’
rights generally, (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable
defenses and to the discretion of the court before which any proceeding
may be brought and (iii) the Currency
Act
(Canada) precludes a court in Canada from rendering judgment in any
currency other than Canadian
currency.
|
| (b) |
The
Board, upon receiving the recommendation of the Special Committee
and
after consultation with its financial advisors, has: (i) determined
that the consideration per Trust Unit to be received by the Trust
Unitholders upon the redemption of the Trust Units is fair to the
Trust
Unitholders and in the best interests of SCI; (ii) authorized and
approved this Agreement and the Transactions; and (iii) resolved to
support and to recommend that Trust Unitholders vote in favour of
the
Unitholders Resolution at the Meeting in order to obtain Trust Unitholder
Approval.
|
| (c) |
SCI
is the registered and beneficial owner of the Common Shares and the
Notes.
SCI has good and marketable title to such Common Shares and Notes,
free
and clear of any Lien, except for restrictions on transfer imposed
by
applicable Securities Laws. SCI has the full, absolute and entire
power,
legal right and authority to sell, transfer, assign and deliver such
Common Shares and Notes as provided in this Agreement. Upon delivery
of
the Common Shares and Notes to Bidco and payment therefor pursuant
hereto,
such Common Shares will be owned of record and beneficially by Bidco
and
good and marketable title to such Common Shares, free and clear of
any
Lien, except for restrictions on transfer imposed by applicable Securities
Laws, will pass to Bidco.
|
| 3.5 |
No
Conflict; Required Filings and
Consents.
|
| (a) |
The
execution, delivery and performance by each of SCI and Xxxxxxx Canada
of
this Agreement and the consummation by each of SCI and Xxxxxxx Canada
of
the Transactions, does not and will not, subject to obtaining the
Trust
Unitholder Approval and receipt of the Approvals referred to in Section
3.5(a)
of the Disclosure Schedule or 3.5(b)
below, (i) contravene, conflict with or result in a violation or
breach of any provision of the Charter Documents; (ii) contravene,
conflict with or result in a violation or breach of any provisions
of any
Law applicable to SCI or Xxxxxxx Canada or by which its or any of
their
respective properties is bound or affected; (iii) require any consent
or other action by any Person under, constitute a default (or an
event
that, with or without notice or lapse of time or both, would constitute
a
default) under, or cause or permit the termination, amendment,
acceleration, triggering or cancellation or other change of any right
or
obligation or the loss of any benefit to which SCI or Xxxxxxx Canada
is
entitled under (A) any provision of any Contract binding upon SCI or
Xxxxxxx Canada or (B) any license, permit, franchise, certificate,
approval or other similar authorization (a “Permit”)
held by, or affecting, or relating in any way to, the assets or business
of, SCI or Xxxxxxx Canada; or (iv) result in the creation or imposition
of
any Lien on any asset of SCI or Xxxxxxx Canada, in each case other
than
such exceptions as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on SCI or Xxxxxxx
Canada.
|
| (b) |
The
execution, delivery and performance by each of SCI and Xxxxxxx Canada
of
this Agreement and the consummation by each of SCI and Xxxxxxx Canada
of
the Transactions does not, and shall not, require any Approval, action
by
or in respect of, filing with or notification to, any Governmental
Entity,
to be made or obtained by SCI or Xxxxxxx Canada, except for (A) the
filing with the Canadian Securities Regulatory Authorities and the
mailing
to the Trust Unitholders of the Proxy Circular, (B) such other
filings, authorizations, decisions or orders as may be required by
the
rules and regulations of the TSX, and (C) any other Approvals or
Permits, which, if not obtained, would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect
on
Xxxxxxx Canada.
|
| 3.6 |
Compliance;
Permits.
|
| (a) |
Each
of SCI and Xxxxxxx Canada is, and at all times since January 1, 2003
has
been, in compliance with all Laws and Orders applicable to it or
by which
its properties are bound or affected, other than the violation of
which
could not, individually or in the aggregate, reasonably be expected
to
have a Material Adverse Effect on SCI or Xxxxxxx
Canada.
|
| (b) |
Neither
SCI nor Xxxxxxx Canada is in conflict with, or in default or violation
of,
(i) any Law or Order applicable to SCI or Xxxxxxx Canada or by which
its or any of their respective properties is bound or affected, or
(ii) any Contract, Permit or other instrument or obligation to which
SCI or Xxxxxxx Canada is a party or by which SCI or Xxxxxxx Canada
or its
or any of their respective properties is bound or affected; except,
in
each case, for any conflicts, defaults or violations that have not
had and
would not, individually or in the aggregate, reasonably be expected
to
have a Material Adverse Effect on SCI or Xxxxxxx Canada. No investigation
or review by any Governmental Entity is pending or, to the Knowledge
of
SCI and Xxxxxxx Canada, threatened against SCI or Xxxxxxx
Canada.
|
| (c) |
SCI
is in compliance in all material respects with the applicable listing
requirements of the TSX.
|
| (d) |
Xxxxxxx
Canada owns, possesses or has obtained, and is in compliance with,
all
Permits of or from any Governmental Entity necessary to conduct its
business as now conducted, except for such failures which have not
had and
would not, individually or in the aggregate, reasonably be expected
to
have a Material Adverse Effect on Xxxxxxx
Canada.
|
| 3.7 |
Reports;
Financial Statements.
|
| (a) |
Since
January 1, 2003, SCI has filed with the Canadian Securities Regulatory
Authorities and the TSX the forms, reports and documents, including
financial statements, annual information forms, material change reports
and management proxy circulars required to be filed by SCI under
applicable Securities Laws (collectively, the “Documents”).
The Documents are publicly and freely available on xxx.xxxxx.xxx.
The
Documents, at the time filed (or if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such filing),
complied in all material respects with the requirements of applicable
Securities Laws and did not contain any Misrepresentation as at the
respective dates of such filed Documents. SCI has not filed any
confidential material change report with the Canadian Securities
Regulatory Authorities or any other securities authority or regulator
or
any stock exchange or other self-regulatory authority which as of
the date
hereof remains confidential. Xxxxxxx Canada is not required to file
any
reports or other documents with any of the Canadian Securities Regulatory
Authorities or the TSX.
|
| (b) |
The
annual audited consolidated financial statements of SCI as at, and
for the
financial year ended, December 31, 2005, and the quarterly unaudited
consolidated financial statements as at, and for the six-months ended
June
30, 2006 (including in each case, any related notes thereto) contained
in
the Documents (the “Financial
Statements”)
have been prepared in accordance with Canadian generally accepted
accounting principles (“Canadian
GAAP”)
applied on a basis consistent throughout the periods indicated and
consistent with each other (except as may be indicated in the notes
thereto). The Financial Statements present fairly, in all material
respects, the consolidated financial position, results of operations
and
cash flows of SCI and Xxxxxxx Canada as of the dates and for the
periods
indicated therein (subject, in the case of unaudited statements,
to
normal, recurring year-end adjustments consistently applied and provided
that such unaudited interim financial statements may omit notes which
are
not required in the unaudited financial
statements).
|
| (c) |
The
books and records of SCI and Xxxxxxx Canada, in all material respects,
have been maintained in accordance with good business practices on
a basis
consistent with prior years, state in reasonable detail the material
transactions and dispositions of the assets of SCI and Xxxxxxx Canada
and
accurately and fairly reflect the basis for the Financial Statements.
SCI
and Xxxxxxx Canada have designed and maintained disclosure controls
and
procedures to ensure that material information relating to SCI and
Xxxxxxx
Canada is made known to management of SCI and Xxxxxxx Canada by others
within those entities, and designed and maintain a system of internal
controls over financial reporting sufficient to provide reasonable
assurances regarding the reliability of financial reporting and the
preparation of financial statements, including that (A) transactions
are executed in accordance with management’s general or specific
authorization; and (B) transactions are recorded as necessary (x) to
permit preparation of consolidated financial statements in conformity
with
Canadian GAAP and (y) to maintain accountability of the assets of
SCI and
Xxxxxxx Canada.
The management of SCI and Xxxxxxx Canada have disclosed to SCI’s and
Xxxxxxx Canada’s auditors and the audit committee of Xxxxxxx Canada all
significant deficiencies in the design or operation of internal controls
which could adversely affect SCI’s or Xxxxxxx Canada’s ability to record,
process, summarize and report financial data and have identified
for SCI’s
or Xxxxxxx Canada’s auditors any material weaknesses in internal controls
and any fraud, whether or not material, that involves management
or other
employees who have a significant role in SCI’s or Xxxxxxx Canada’s
internal controls. Management has not made any such disclosure to
SCI’s
and Xxxxxxx Canada’s auditors and the audit committee of Xxxxxxx
Canada.
|
| 3.8 |
No
Undisclosed
Liabilities.
|
| (a) |
Xxxxxxx
Canada has no liabilities (absolute, accrued, contingent, determined,
determinable or otherwise) or obligations, in each case, of the type
that
would be required to be disclosed on a consolidated balance sheet
of SCI
(or the notes thereto) and there is no existing condition, situation
or
set of circumstances that could be reasonably expected to result
in such a
liability or obligation, except (i) liabilities or obligations fully
reflected or reserved against in SCI’s balance sheet as of December 31,
2005 (or the notes thereto), included in the Financial Statements,
(ii) liabilities or obligations disclosed in any Document filed after
December 31, 2005 and prior to the date of this Agreement,
(iii) liabilities incurred since December 31, 2005 in the ordinary
course of business consistent with past practice, (iv) obligations
arising pursuant to the terms of the Contracts disclosed pursuant
to
Section 3.18
(or not required to be so disclosed) or (v) liabilities or
obligations that have not had and would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect
on
Xxxxxxx Canada.
|
| (b) |
SCI
has no liabilities (absolute, accrued, contingent, determined,
determinable or otherwise) or obligations, in each case, of the type
that
would be required to be disclosed on a consolidated balance sheet
of SCI
(or the notes thereto) and there is no existing condition, situation
or
set of circumstances that could be reasonably expected to result
in such a
liability or obligation, except (i) liabilities or obligations fully
reflected or reserved against in SCI’s balance sheet as of December 31,
2005 (or the notes thereto), included in the Financial Statements,
(ii) liabilities or obligations disclosed in any Document filed after
December 31, 2005 and prior to the date of this Agreement,
(iii) liabilities or obligations which would not reasonably be
expected to be $100,000 or more in the aggregate, or (iv) intercompany
liabilities from time to time
existing.
|
| 3.9 |
Absence
of Certain Changes or
Events.
|
Except
as disclosed in the Documents filed prior to the date hereof, since December
31,
2005, the business of Xxxxxxx Canada and SCI has been conducted in the ordinary
course consistent with past practices and there has not been: (i) any
event, occurrence or development of a state of circumstances or facts which
has
had or would, individually or in the aggregate, reasonably be expected to have
any Material Adverse Effect on SCI or Xxxxxxx Canada, (ii) any material
revaluation by SCI or Xxxxxxx Canada of any of its assets, including, writing
down the value of capitalized inventory or writing off notes or accounts
receivable or any material sale of assets of Xxxxxxx Canada or SCI,
(iii) any material damage, destruction or loss (whether or not covered by
insurance) with respect to any material assets of Xxxxxxx Canada or SCI,
(iv) any material Contract cancelled, terminated, or materially adversely
modified, or (v) any loss or threatened loss of any of Xxxxxxx Canada’s top five
(5) customers and top two (2) buying groups, as measured by the dollar amount
of
purchases in fiscal year 2005. Notwithstanding the foregoing, and
without limiting the generality of the foregoing, since December
31, 2005, neither Xxxxxxx Canada nor SCI has:
| (a) |
amended
its Charter Documents;
|
| (b) |
acquired
(by merger, consolidation, acquisition of stock or assets or otherwise),
directly or indirectly, any material
business;
|
| (c) |
other
than pursuant to Contracts in effect as of the date hereof and other
than
sales of inventory in the ordinary course of business consistent
with past
practice, sold, leased, licensed (as licensor or licensee), assigned,
encumbered or otherwise transferred in one transaction or any series
of
related transactions, any material assets or material
rights;
|
| (d) |
incurred,
assumed or guaranteed any indebtedness for borrowed money or issued
or
sold any debt securities or warrants or other rights to acquire debt
securities or entered into any transactions to maintain the financial
condition of any other Person, other than short-term borrowings in
the
ordinary course of business and in amounts and on terms consistent
with
past practices;
|
| (e) |
made
any loan, advance or capital contribution to or investment in any
Person,
other than (i) loans, advances or capital contributions to or investments
in Xxxxxxx Canada, (ii) in connection with acquisitions described
in
Section 3.9(c) above, or (iii) in the ordinary course of business
consistent with past practice, to the extent not individually or
in the
aggregate material to Xxxxxxx
Canada;
|
| (f) |
changed
its methods of accounting or accounting practices in any material
respect,
except as required by concurrent changes in Canadian GAAP or by Law
and
concurred in by SCI’s external auditors or its fiscal
year;
|
| (g) |
settled,
or proposed to settle, any Action or liability to the extent such
settlement provided for any injunctive relief or other material
restriction on the business of Xxxxxxx Canada or any admission by
SCI or
Xxxxxxx Canada of liability or wrongdoing of $100,000 or more in
the
aggregate, or required a payment of $100,000 or more in the aggregate
(whether or not covered by insurance);
or
|
| (h) |
except
as set forth in Section 3.9 of the Disclosure Schedule, made, changed
or
revoked any Tax election, settled or compromised any Tax claim or
liability or entered into a settlement or compromise, or changed
(or made
a request to any taxing authority to change) any material aspect
of its
method of accounting for Tax purposes, or prepared or filed any Return
or
financial statements (or any amendment thereof) unless such Return
or
financial statements shall have been prepared in a manner consistent
with
past practice.
|
| 3.10 |
Absence
of
Litigation.
|
| (a) |
Except
as set forth in Section 3.10 of the Disclosure Schedule, there is
no
Action or investigation of any kind that has been commenced or, to
the
Knowledge of SCI and Xxxxxxx Canada, threatened against or affecting,
SCI
or Xxxxxxx Canada or any of their respective properties, rights or
assets
before any Governmental Entity, except for those Actions and
investigations that are not reasonably likely to result in losses
or
liabilities of $100,000 or more in the
aggregate.
|
| (b) |
Neither
SCI nor Xxxxxxx Canada, nor any of their respective properties, rights
or
assets, is subject to any outstanding
Order.
|
| 3.11 |
Employee
Plans.
|
| (a) |
Section
3.11(a) of the Disclosure Schedule sets forth a correct and complete
list
of all material Xxxxxxx Canada Employee Plans. With respect to the
Xxxxxxx
Canada Employee Plans, no event has occurred and there exists no
condition
or set of circumstances in connection with which Xxxxxxx Canada could
be
subject to any liability that would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on SCI
or
Xxxxxxx Canada under any applicable Laws. Current and complete copies
of
all written Xxxxxxx Canada Employee Plans (or, where oral, written
summaries of the material terms thereof) have been provided or made
available to Xxxxxxx and Bidco, together with current and complete
copies
of all material documents relating to the Xxxxxxx Canada Employee
Plans,
including, as applicable: (i) all documents establishing, creating
or
amending one or more of the Xxxxxxx Canada Employee Plans; (ii) all
trust agreements and funding agreements; (iii) all insurance contracts,
investment management agreements, subscription and participation
agreements; (iv) the three (3) most recent financial statements,
accounting statements and actuarial reports; (v) copies of all material
correspondence with the applicable Governmental Authorities with
respect
to each Xxxxxxx Canada Employee Plan; and (vi) all booklets, summaries,
manuals and written communications of a general nature distributed
or made
available to any employees or former employees concerning any Xxxxxxx
Canada Employee Plan.
|
| (b) |
Each
of the Xxxxxxx Canada Employee Plans has been established, maintained,
amended, funded, invested and administered in compliance in all material
respects with its terms, all employee plan summaries and booklets,
any
applicable collective agreement and all applicable Laws; and to the
Knowledge of SCI and Xxxxxxx Canada, none of Xxxxxxx Canada nor SCI
has
received, in the last six (6) years, any written notice from any
Person or
Governmental Authority questioning or challenging such compliance
and have
no Knowledge of any such notice within the past 6 years from any
Governmental Authority questioning or challenging such compliance
beyond
the last 6 years.
|
| (c) |
All
obligations of SCI and Xxxxxxx Canada required to be performed in
connection with the Xxxxxxx Canada Employee Plans and pension fund
established therefore up to the date hereof have been performed,
except
for such obligations, the non-performance of which are not reasonably
likely to result in losses or liabilities of $100,000 or more in
the
aggregate, and there are no outstanding defaults or violations by
any
party thereto. All required contributions and/or premiums to be made
under
the Xxxxxxx Canada Employee Plans have been fully paid to the date
hereof
in a timely fashion in accordance with the terms of that Xxxxxxx
Canada
Employee Plan and all applicable Laws, and no taxes, penalties or
fees are
owing or exigible under any Xxxxxxx Canada Employee Plan, and there
are no
liabilities or contingent liabilities in respect of any pension,
benefit
or compensation plan that has been discontinued in whole or in part.
Except as set forth in Section 3.11(c) of the Disclosure Schedule,
no
unfunded liability, solvency deficiency, wind up deficiency, unpaid
special payment or experience deficiency, whether due or not, exists
with
respect to any Xxxxxxx Canada Employee Plan.
|
| (d) |
No
material changes have occurred in respect of any Xxxxxxx Canada Employee
Plan since the date of the most recent financial, accounting, actuarial
or
other report, as applicable, issued in connection with such Xxxxxxx
Canada
Employee Plan, which could reasonably be expected to materially adversely
affect the relevant report (including rendering it misleading in
any
material respect).
|
| (e) |
Except
as set forth in Section 3.11(e) of the Disclosure Schedule, no Xxxxxxx
Canada Employee Plan promises or provides retiree health benefits
or
retiree life insurance benefits or any other non-pension post-retirement
benefits to any person.
|
| (f) |
None
of the Xxxxxxx Canada Employee Plans requires or permits a retroactive
increase in premiums or payments, or requires additional payments
or
premiums on the termination of any Xxxxxxx Canada Employee Plan or
insurance contract in respect thereof, and the level of insurance
reserves, if any, under any insured Xxxxxxx Canada Employee Plan
is
reasonable and sufficient to provide for all incurred but unreported
claims.
|
| (g) |
No
event has occurred respecting any registered Xxxxxxx Canada Employee
Plan
which would result in the revocation of the registration of such
Xxxxxxx
Canada Employee Plan (where applicable) or entitle any Person (without
the
consent of SCI or Xxxxxxx Canada) to wind-up or terminate any Xxxxxxx
Canada Employee Plan, in whole or in part, or which could otherwise
reasonably be expected to adversely affect the tax status of any
such
Xxxxxxx Canada Employee Plan.
|
| (h) |
None
of Xxxxxxx Canada, SCI, any of its Subsidiaries, or to the Knowledge
of
SCI and Xxxxxxx Canada, any administrator or fiduciary in respect
of one
or more of the Xxxxxxx Canada Employee Plans or any agent of any
of the
foregoing have been in breach of any fiduciary obligation with respect
to
the administration of the Xxxxxxx Canada Employee Plans or have engaged
in
any transaction or have acted or failed to act in a manner which
would
subject such Person to any liability for breach of fiduciary duty
under
applicable Laws.
|
| (i) |
There
are no outstanding Actions pending or, to the Knowledge of SCI and
Xxxxxxx
Canada, threatened concerning the assets for the Xxxxxxx Canada Employee
Plans (other than routine claims for the payment of benefits submitted
by
members or beneficiaries in the normal course), or affecting any
Xxxxxxx
Canada Employee Plan which has had or could reasonably be expected
to
have, individually or in the aggregate, a Material Adverse Effect
on
Xxxxxxx Canada, SCI or any of its Subsidiaries or on any Xxxxxxx
Canada
Employee Plan maintained as of the Closing
Date.
|
| (j) |
Except
as set forth in Section 3.11(j) of the Disclosure Schedule, with
respect
to any Xxxxxxx Canada Employee Plan that is a registered pension
plan,
except in accordance with the terms of the respective pension plan
(and
applicable funding agreement) and applicable Laws, no Person has
(i)
withdrawn any funds from the pension plan, (ii) merged the pension
plan
with another registered pension plan, (iii) transferred assets from
another registered pension plan to the pension plan, (iv) taken a
contribution holiday in respect of the pension plan, (v) used assets
from
the pension plan to pay plan administration expenses of the respective
pension plan, or (vi) converted the pension plan from defined benefit
to
defined contribution.
|
| (k) |
Except
as set forth in Section 3.11(k) of the Disclosure Schedule, neither
the
execution and delivery of this Agreement nor the consummation of
the
Transactions will (i) result in any payment becoming due to any employee
of Xxxxxxx Canada, (ii) increase any benefits otherwise payable under
any
Xxxxxxx Canada Employee Plan, (iii) result in the acceleration of
the time
of payment or vesting of any such benefits under any Xxxxxxx Canada
Employee Plan, or (iv) require any contributions or payments to fund
any
obligations under any Xxxxxxx Canada Employee
Plan.
|
| (l) |
No
condition exists that would prevent SCI or Xxxxxxx Canada from amending
or
terminating any Xxxxxxx Canada Employee Plan, other than any limitations
imposed by applicable Laws and the terms of such Xxxxxxx Canada Employee
Plan.
|
| (m) |
SCI
has made available to Xxxxxxx and Bidco prior to the date hereof
current
and complete summaries of the terms of, or copies of, all employment
contracts, severance agreements, gross-ups and option agreements.
All
documents delivered or to be delivered to Xxxxxxx and Bidco (including
all
employee data necessary to administer each Xxxxxxx Canada Employee
Plan)
are true, correct, complete and (where applicable)
up-to-date.
|
| (n) |
Except
as set forth in Section 3.11(n) of the Disclosure Schedule, no Xxxxxxx
Canada Employee Plan is a multi-employer pension plan as defined
under the
provisions of any federal or provincial pension standards legislation
(a
“MEPP”). The sole obligation of Xxxxxxx, SCI or any of its Subsidiaries
to
or in respect of any MEPPs is to make monetary contributions to the
MEPPs
in the amounts and in the manner set forth in the applicable MEPP,
collective agreement or participation
agreement.
|
| 3.12 |
Labour
Matters.
|
| (a) |
There
are no Actions, labour disputes or grievances pending, or, to the
Knowledge of SCI and Xxxxxxx Canada, threatened or reasonably anticipated,
relating to any Laws relating to employees (which, for the purposes
of
Section 3.12,
includes employees, dependent and independent contractors of Xxxxxxx
Canada), including labour relations, occupational health and safety,
workers’ compensation, discrimination, workplace safety and insurance, pay
equity, employment standards and employment equity, including charges
of
unfair labour practices, discrimination or human rights complaints
or any
Actions relating to employees, which has had or would reasonably
be
expected to have, individually or in the aggregate, a Material Adverse
Effect on Xxxxxxx Canada. Xxxxxxx Canada has not engaged in any unfair
labour practices within the meaning of the Labour Relations Act (Ontario)
and there are no outstanding Orders or pending settlements which
place any
obligation upon Xxxxxxx Canada to do or refrain from doing any act,
in
each case which has had or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Xxxxxxx
Canada.
|
| (b) |
Xxxxxxx
Canada is in compliance with all applicable Laws respecting employment,
including employment standards, labour relations, occupational health
and
safety, workers’ compensation, human rights, pay equity, employment
equity, workplace safety and insurance, terms and conditions of employment
and wages and hours, in each case, with respect to employees, and
has
withheld, reported and remitted all amounts required by Law or by
agreement to be withheld, reported and remitted with respect to wages,
salaries and other payments to employees, except as has not had and
would
not be reasonably expected to have, individually or in the aggregate,
a
Material Adverse Effect on Xxxxxxx
Canada.
|
| 3.13 |
Title
to Property.
|
| (a) |
Xxxxxxx
Canada is the beneficial and registered owner of the Owned Real Property
set forth in Section 3.13(a) of the Disclosure Schedule, with good
and
marketable title thereto, and has a good and valid leasehold interest
in
the Leased Real Property set forth in Section 3.13(a) of the Disclosure
Schedule, free and clear of all
Liens.
|
| (b) |
No
notice of any non-compliance with any applicable Laws has been received
by
Xxxxxxx Canada in connection with any Xxxxxxx Canada Properties from
any
Governmental Entity in the past five (5) years which, to the Knowledge
of
SCI and Xxxxxxx Canada, has not been complied with to such Governmental
Entity's satisfaction and which would be reasonably likely to result
in
losses or liabilities of $100,000 or more in the aggregate.
|
| (c) |
No
notice advising of any defects in the construction, state of repair
or
state of completion of the buildings located on any of the Xxxxxxx
Canada
Properties nor ordering or directing that any alteration, repair,
improvement or other work be done with respect thereto or relating
to
non-compliance with any building permit, building or land use by-law,
ordinance, order or regulation, or relating to any threatened or
impending
condemnation has been received by Xxxxxxx Canada from any Governmental
Entity in the past five (5) years which, to the Knowledge of SCI
and
Xxxxxxx Canada, has not been complied with to such Governmental Entity's
satisfaction.
|
| (d) |
Except
as set forth on Section 3.13(d)
of the Disclosure Schedule, the buildings located on the Xxxxxxx
Canada
Properties are in good working order and condition and are in a good
state
of repair having regard to their age, use and reasonable wear and
tear
excepted.
|
| (e) |
There
is free access to and from the Xxxxxxx Canada Properties for loading
and
all other purposes to a public roadway subject to Permitted
Encumbrances.
|
| (f) |
To
the Knowledge of SCI and Xxxxxxx Canada, no portion of any of the
Xxxxxxx
Canada Properties has been designated as a historic site by any
Governmental Entity having jurisdiction and no buildings located
on the
Xxxxxxx Canada Properties has been designated by any such body as
being of
sufficient historical interest that a demolition permit is not available
for such building.
|
| (g) |
Each
of the leases for the Leased Real Property is in full force and effect.
Xxxxxxx Canada is not in default or breach of, nor has Xxxxxxx Canada
received any notice of default or termination under, any of the leases
in
respect of the Leased Real Property, except where such default, breach
or
termination does not have or could reasonably be expected to have
individually or in the aggregate a Material Adverse Effect on Xxxxxxx
Canada.
|
| (h) |
To
the Knowledge of SCI and Xxxxxxx Canada, each of the landlords of
each
Leased Real Property location is in compliance with its obligations
under
the Leased Real Property leases and Xxxxxxx Canada has not given
notice of
default to any landlord.
|
| 3.14 |
Insurance.
|
Section
3.14 of the Disclosure Schedule sets forth a correct and complete list of all
insurance policies (including name of insurer, policy number, policy term and
information on the premiums payable in connection therewith and the scope and
amount of the coverage provided thereunder) maintained by SCI or Xxxxxxx Canada
(collectively, the “Insurance
Policies”).
The Insurance Policies (i) have been issued by insurers which, to the Knowledge
of SCI and Xxxxxxx Canada, are reputable and financially sound, (ii) to the
Knowledge of SCI and Xxxxxxx Canada, provide coverage for the operations
conducted by SCI and Xxxxxxx Canada of a scope and coverage consistent with
customary practice in the industries in which SCI and Xxxxxxx Canada operate
and
(iii) are in full force and effect to and including the Closing Date. Neither
SCI nor Xxxxxxx Canada is in breach or default, except for any breach or default
which is not reasonably likely to result in losses or liabilities of $100,000
or
more in the aggregate, and neither SCI nor Xxxxxxx Canada has taken any action
or failed to take any action which, with notice or the lapse of time, would
constitute such a breach or default, or permit termination or modification,
of
any of the Insurance Policies. The consummation of the Transactions will not,
in
and of itself, cause the revocation, cancellation or termination of any
Insurance Policy.
| 3.15 |
Taxes.
|
| (a) |
Definition
of Taxes.
For the purposes of this Agreement, “Tax”
and “Taxes”
means any and all taxes, charges, fees, levies or other assessments
imposed by Laws, including all income taxes (including any tax on
or based
upon net income, gross income, income as specially defined, earnings,
profits or selected items of income, earnings or profits) and all
capital
taxes, gross receipts taxes, environmental taxes, profits taxes,
disability taxes, registration taxes, sales taxes, use taxes, ad
valorem
taxes, value added taxes, transfer taxes, franchise taxes, license
taxes,
development taxes, education taxes, business taxes, social services
taxes,
surtaxes, land transfer taxes, harmonized sales taxes, withholding
taxes
or other withholding obligations, net worth taxes, recording taxes,
capital stock taxes, payroll taxes, employment taxes, excise taxes,
stamp
taxes, occupation taxes, premium taxes, property taxes, windfall
profits
taxes, alternative or add-on minimum taxes, goods and services taxes,
service use taxes, customs duties or other governmental charges,
estimated
or other taxes, assessments, charges, duties or imposts of any kind
whatsoever, together with any interest, penalties, additional taxes,
additions to tax or other amounts imposed by any taxing authority
with
respect to the foregoing, and any liability for any such amounts
imposed
with respect to any other Person, including under Section 160 of the
ITA or any agreements or arrangements or any liability for taxes
of a
predecessor or transferor entity.
|
| (b) |
Taxes.
|
| (i) |
All
material Tax returns, statements, reports, forms and similar statements
(including estimated Tax returns, claims for refunds, amended returns
and
reports and information returns and reports) required to be filed
with any
taxing authority by or on behalf of SCI or Xxxxxxx Canada (collectively,
the “Returns”),
were filed when due (taking into account any applicable extension
periods)
in accordance with all applicable Laws and were correct and complete
in
all material respects.
|
| (ii) |
SCI
and Xxxxxxx Canada have timely paid, or withheld and remitted to
the
appropriate taxing authority, all Taxes due and payable by any of
them
under any applicable Law, except for any non-payment or failure to
withhold which is not reasonably likely to result in losses or liabilities
of $100,000 or more in the
aggregate.
|
| (iii) |
The
charges, accruals and reserves for Taxes with respect to SCI and
Xxxxxxx
Canada reflected on the Financial Statements (whether or not due
and
whether or not shown on any Return but excluding any provision for
deferred income Taxes) are adequate under Canadian GAAP to cover
Taxes
accruing through the date thereof.
|
| (iv) |
Except
as set forth on Section 3.15(b)
of the Disclosure Schedule, there is no Action (including under any
indemnification or Tax-sharing agreement) assessment, reassessment
or
audit now pending or threatened in writing against or in respect
of any
Tax or “tax asset” of SCI or Xxxxxxx Canada, except as would not
reasonably be likely to result in losses or liabilities of $100,000
or
more in the aggregate. For purposes of this Section 3.15,
the term “tax asset” shall include any net operating loss, net capital
loss, investment tax credit, foreign tax credit, charitable deduction
or
any other credit or Tax attribute which could reduce
Taxes.
|
| (c) |
Tax
Status.
SCI has been since its creation, and will continue to be until Closing,
a
mutual fund trust for purposes of the
ITA.
|
| 3.16 |
Environmental
Matters.
|
Except
as set forth in Section 3.16 of the Disclosure Schedules:
| (a) |
(i)
To the Knowledge of SCI and Xxxxxxx Canada, no Hazardous Substance
has
been discharged, disposed of, dumped, pumped, deposited, spilled,
leaked,
emitted or released by SCI or Xxxxxxx Canada or, is otherwise present
at,
on, under or from any property now or previously owned, leased or
operated
by Xxxxxxx Canada or any predecessor entity (“Property”)
in such manner or quantity that exceeds remediation criteria or standards
under any applicable Environmental Laws and as would require investigation
or reporting or other response, action, remediation (either by Xxxxxxx
Canada or for which Xxxxxxx Canada would otherwise be liable) under
any
applicable Environmental Laws or as would adversely affect the business
or
operations of Xxxxxxx Canada and (ii) to the Knowledge of SCI and
Xxxxxxx Canada, there are no liabilities of Xxxxxxx Canada arising
out of
any Environmental Laws or any agreement with a third party relating
to,
at, on, under or about any property, including a Property or otherwise,
except for such liabilities that do not exceed $100,000 in the aggregate.
For the purposes of this Agreement, “Environmental
Laws”
shall mean all Laws and Orders of any international, provincial,
federal,
state, local and any other Governmental Entity that relate to or
otherwise
impose liability or standards of conduct concerning discharges, spills,
releases or threatened releases of noises, odors or any Hazardous
Substances into, or the presence of noises, odors or any Hazardous
Substances in, ambient air, ground or surface water or land, municipal
or
other works or otherwise relating to environmental or health matters
or
the manufacture, processing, generation, labeling, distribution,
use,
treatment, storage, discharge, release, disposal, clean up, transport
or
handling of hazardous substances.
|
| (b) |
The
operations of Xxxxxxx Canada are in compliance in all respects with
all
applicable Environmental Laws and any applicable Law regulating,
relating
to or imposing liability or standards of conduct concerning occupational
health and/or safety (“Occupational
Health and Safety Law”),
except for any non-compliance that is not reasonably likely to result
in
losses or liabilities of $100,000 or more in the
aggregate.
|
| (c) |
(i)
Xxxxxxx Canada holds all material permits under or pursuant to applicable
Environmental Laws (the “Environmental
Permits”)
necessary for the conduct of Xxxxxxx Canada’s business as conducted
currently and through the most recent fiscal year, (ii) all such
Environmental Permits are valid and in full force and effect and
are being
complied with, and (iii) neither SCI nor Xxxxxxx Canada has received
any notice that any material Environmental Permits will be revoked,
adversely modified or not renewed, and to the Knowledge of SCI and
Xxxxxxx
Canada there is no basis for revoking, adversely modifying or refusing
to
renew any such Environmental
Permits.
|
| (d) |
No
Order or Action is pending, and to the Knowledge of SCI and Xxxxxxx
Canada, no Order or Action has been threatened, by any Governmental
Entity
or third party including a notice of responsibility, notice of violation,
notice of intent to bring a “citizens’ suit” against or, to the Knowledge
of SCI and Xxxxxxx Canada, affecting Xxxxxxx Canada concerning any
alleged
violation of or liability under any Environmental Law, Occupational
Health
and Safety Law or concerning any Hazardous
Substance.
|
| (e) |
To
the Knowledge of SCI and Xxxxxxx Canada, there has been no release
of
Hazardous Substance to the environment (including the workplace
environment) resulting in exposure of any Person to any Hazardous
Substance in a manner that would be reasonably likely to result in
liability to Xxxxxxx Canada of more than $100,000 in the
aggregate.
|
| (f) |
To
the Knowledge of SCI and Xxxxxxx Canada no Environmental Lien is
pending;
and no Environmental Lien has been threatened against or affecting
Xxxxxxx
Canada, or any Xxxxxxx Canada Properties. “Environmental
Lien”
means any Lien in favour of any Governmental Entity arising under
Environmental Laws.
|
| (g) |
None
of the current directors or officers of Xxxxxxx Canada, in their
capacity
as such, has ever been convicted of any offence for non-compliance
with
any Environmental Law or Occupational Health and Safety Law, been
fined or
otherwise penalized for non-compliance with an Environmental Law
or
Occupational Health and Safety Law or settled any prosecution for
non-compliance with Environmental Laws or Occupational Health and
Safety
Law short of conviction.
|
| (h) |
Xxxxxxx
Canada has not used any Xxxxxxx Canada Properties in whole or in
part, or
permitted them to be used, to generate, manufacture, refine, treat,
transport, store, handle, dispose, transfer, use, produce or process
Hazardous Substances except in compliance in all respects with all
applicable Environmental Laws and Occupational Health and Safety
Laws,
except for any non-compliance that is not reasonably likely to result
in
losses or liabilities of $100,000 or more in the
aggregate.
|
| (i) |
SCI
and Xxxxxxx Canada have provided Xxxxxxx with copies of all material
documents, records and information concerning any environmental or
occupational health and safety matter relevant to Xxxxxxx Canada
or to any
property now, or formerly operated or leased by Xxxxxxx Canada including
documentation regarding waste disposal, reports or correspondence
related
to environmental or health and safety matters issued by any Governmental
Entity, analysis and monitoring data for soil, ground water and surface
water and all material third party reports pertaining to any environmental
assessments or audits that were obtained by, or in the possession
or
control of SCI and/or Xxxxxxx
Canada.
|
| (j) |
To
the Knowledge of SCI and Xxxxxxx Canada, no polychlorinated-biphenyls
(“PCBs”)
or equipment containing PCBs, asbestos or asbestos containing materials,
or toxic mould are present in any Xxxxxxx Canada Properties, nor
are there
any active or, to the Knowledge of SCI and Xxxxxxx Canada, abandoned
underground storage tanks or above ground storage tanks, present
at
Xxxxxxx Canada Properties.
|
| 3.17 |
Intellectual
Property.
|
|
(a)
|
All
issued patents, published patent applications, registered copyrights,
registered trade and service marks, applications to register trade
or
service marks, registered domain names, unregistered marks owned
by SCI or
Xxxxxxx Canada that are material to the business of SCI or Xxxxxxx
Canada
(collectively, the “Registered
Intellectual Property”)
are set forth in Schedule 3.17(a) of the Disclosure Schedule. SCI
and
Xxxxxxx Canada own all rights, title and interests in and to the
Registered Intellectual Property, and no Registered Intellectual
Property
is encumbered by any Lien. All of the Registered Intellectual Property
is
valid, and enforceable, and neither SCI nor Xxxxxxx Canada has any
reason
to believe that any item of Registered Intellectual Property is abandoned,
invalid or unenforceable.
|
|
(b)
|
Except
as would not, individually or in the aggregate, reasonably be expected
to
have a Material Adverse Effect on Xxxxxxx Canada, Xxxxxxx Canada
is the
owner or has the right to use all Intellectual Property and Proprietary
Subject Matter used in the conduct of its business as it is currently
conducted free and clear of all Liens, and shall continue to have
such
right upon the completion of the
Transactions.
|
|
(c)
|
Except
as set forth in Schedule 3.17(c) of the Disclosure Schedule, there
are no
Orders pending or, to the Knowledge of SCI and Xxxxxxx Canada, threatened
Actions, respecting the ownership, validity, enforceability or use
of any
Xxxxxxx Canada Owned Intellectual Property or Xxxxxxx Canada Owned
Proprietary Subject Matter, and to the Knowledge of SCI and Xxxxxxx
Canada, no facts or circumstances exist as a valid basis for
same.
|
|
(d)
|
To
the Knowledge of SCI and Xxxxxxx Canada, neither SCI nor Xxxxxxx
Canada is
infringing or, within the three (3) years preceding the Closing has
infringed, misappropriated, diluted, or otherwise violated the
Intellectual Property Rights of any third party; or the rights of
any
third party in their Proprietary Subject Matter. Except as set forth
in
Schedule 3.17(d)
of the Disclosure Schedule, to the Knowledge of SCI and Xxxxxxx Canada,
no
third party is currently infringing, misappropriating or otherwise
violating the Xxxxxxx Canada Owned Intellectual Property, the Xxxxxxx
Canada Owned Proprietary Subject Matter, or any other Intellectual
Property Rights or Proprietary Subject Matter that is exclusively
licensed
to SCI or Xxxxxxx Canada.
|
|
(e)
|
SCI
and Xxxxxxx Canada have taken all reasonable actions to obtain, maintain
and protect Xxxxxxx Canada Owned Intellectual Property and Xxxxxxx
Canada
Owned Proprietary Subject Matter, including obtaining the assignment
of
Intellectual Property Rights in Xxxxxxx Canada Owned Intellectual
Property
from all employees and contractors who invented, authored or otherwise
contributed thereto, and taking commercially reasonable steps to
maintain
the secret and confidential nature of any trade secrets or confidential
Proprietary Subject Matter in their possession, custody or control.
|
|
(f)
|
SCI
and Xxxxxxx Canada maintain policies and procedures regarding the
security
and privacy of data on or regarding individuals that are commercially
reasonable and, in any event, in compliance in all respects with
all
applicable Laws, except for any non-compliance that is not reasonably
likely to result in losses or liabilities of $100,000 or more in
the
aggregate. To the Knowledge of SCI and Xxxxxxx Canada there has been
no
material security breaches relating to, violations of any security
policy
regarding or any unauthorized access of any data containing the personally
identifiable information of individuals; and the use and dissemination
by
SCI or Xxxxxxx Canada of any such data (including consumers of its
or its
customers’ products and services, or users of any web sites) is in
compliance in all respects with all applicable privacy policies and
Laws,
except for any non-compliance that is not reasonably likely to result
in
losses or liabilities of $100,000 or more in the aggregate. The
Transactions contemplated to be consummated hereunder, including
the
transfer of data from Canada to the United States, will not violate
in any
respect any applicable privacy policy or Laws relating to the use,
dissemination, or transfer of data on or regarding individuals, except
for
any non-compliance that is not reasonably likely to result in losses
or
liabilities of $100,000 or more in the
aggregate.
|
| 3.18 |
Agreements;
Contracts and
Commitments.
|
Set
forth in Section 3.18 of the Disclosure Schedule is a list of each of the
following to which Xxxxxxx Canada or SCI is a party: (A) Contracts that purports
to limit, curtail or restrict the ability of Xxxxxxx Canada or any of their
existing or future Subsidiaries or Affiliates to compete in any geographic
area
or line of business or restrict the Persons to whom Xxxxxxx Canada or any of
their existing or future Subsidiaries or Affiliates may sell products or deliver
services; (B) Contracts for the licensing, acquisition, sale or lease of
material properties, Intellectual Property Rights, or assets (by merger,
purchase or sale of stock or assets or otherwise); (C) loans or credit
agreements, mortgages, indentures, notes or other Contracts or instruments
evidencing indebtedness for borrowed money by Xxxxxxx Canada or any Contracts
or
instruments pursuant to which indebtedness for borrowed money may be incurred
or
is guaranteed by Xxxxxxx Canada; (D) customer, dealer or supply Contracts that
involve consideration in fiscal year 2005 in excess of $100,000 in the aggregate
or that are reasonably likely to involve consideration in fiscal year 2006
or
fiscal year 2007 in excess of $100,000 in the aggregate; (E) Contracts (other
than customer, client or supply Contracts) that involve consideration (whether
or not measured in cash) of greater than $100,000 in the aggregate; (F)
Contracts with any labour union or association representing any employee of
Xxxxxxx Canada; (G) to the extent material to the business or financial
condition of Xxxxxxx Canada, taken as a whole, (1) lease or rental Contracts,
(2) product design or development Contracts, (3) consulting Contracts, (4)
indemnification Contracts, (5) license or royalty Contracts, or (6)
merchandising, sales representative or distribution Contracts; and (H)
commitments or agreements to enter into any of the foregoing (the Contracts
and
other documents required to be listed in Section 3.18 of the Disclosure
Schedule, each a “Material
Contract”).
Xxxxxxx Canada has heretofore made available to Xxxxxxx and Bidco correct and
complete copies of each Material Contract in existence as of the date hereof,
together with any and all amendments and supplements thereto and material “side
letters” and similar documentation relating thereto. Except for breaches,
violations or defaults which have not had and would not, individually or in
the
aggregate, have a Material Adverse Effect on Xxxxxxx Canada, (i) each of
the Material Contracts is valid and in full force and effect and shall be in
full force and effect after Closing, unamended (except as otherwise permitted
pursuant to Section 5.1),
and (ii) neither SCI nor Xxxxxxx Canada, nor to the Knowledge of SCI and
Xxxxxxx Canada, any other party to a Material Contract, has violated any
provision of, or committed or failed to perform any act which, with or without
notice, lapse of time, or both, would constitute a default under the provisions
of any such Material Contract, and neither SCI nor Xxxxxxx Canada has received
written notice that SCI or Xxxxxxx Canada has breached, violated or defaulted
under, any of the material terms or conditions of any of the Material Contracts.
Neither Xxxxxxx Canada nor SCI is a party to, or otherwise a guarantor of or
liable with respect to, any interest rate, currency or other swap or derivative
transaction, other than any such transactions in the ordinary course of
business.
| 3.19 |
Brokers.
|
Except
for CIBC World Markets Inc., SCI and Xxxxxxx Canada have not incurred, nor
will
they incur, directly or indirectly, any liability for brokers' or finders’ fees
or agent’s commissions or any similar charges in connection with this Agreement
or the Transactions.
| 3.20 |
Opinions
of Financial Advisor.
|
The
Board has received from CIBC World Markets Inc. an opinion, dated the date
of
this Agreement, to the effect that, as of such date, the consideration to be
received by the Trust Unitholders pursuant to the Transactions is fair, from
a
financial point of view, to the Trust Unitholders.
| 3.21 |
Transactions
with Affiliates, Shareholders, Officers, Directors and
Others.
|
Neither
SCI nor Xxxxxxx Canada has any indebtedness owing to any director, officer,
member, shareholder, consultant, or employee of Xxxxxxx Canada or SCI (except
for amounts due as normal salaries, wages, director fees, benefits or
reimbursements of ordinary business expenses). No director, officer, member,
shareholder, consultant, or employee of Xxxxxxx Canada or SCI now has, or on
the
Closing Date will have, indebtedness owing to Xxxxxxx Canada or SCI except
for
ordinary business expense advances. No officer, director, shareholder, member,
consultant, employee or Affiliate of Xxxxxxx Canada or, to the Knowledge of
SCI
and Xxxxxxx Canada, any individual related by blood, marriage or adoption to
any
such individual or any entity in which any such Person or individual owns any
beneficial interest, is a party to any Contract or transaction with SCI or
Xxxxxxx Canada or has any material interest in any property used by SCI or
Xxxxxxx Canada.
| 3.22 |
No
Other Representations and
Warranties.
|
Except
for the representations and warranties contained in this Agreement, neither
SCI
nor Xxxxxxx Canada nor any other Person or its Subsidiaries makes any
representation or warranty, express or implied, on behalf of SCI and Xxxxxxx
Canada with respect to the Transactions.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF XXXXXXX AND BIDCO
Xxxxxxx
and Bidco represent and warrant to SCI as follows:
| 4.1 |
Organization
and Qualification.
|
Each
of Xxxxxxx and Bidco is a corporation duly organized, validly existing and
in
good standing under the Laws of the jurisdiction of its incorporation and each
has the requisite corporate power and authority to own, lease and operate its
respective properties and to carry on its respective business as now conducted.
| 4.2 |
Authority
Relative to this
Agreement.
|
| (a) |
Each
of Xxxxxxx and Bidco has all necessary corporate power and authority
to
execute and deliver this Agreement and to perform its respective
obligations hereunder and to consummate the Transactions. The execution,
delivery and performance by Xxxxxxx and Bidco of this Agreement and
the
consummation by Xxxxxxx and Bidco of the Transactions have been duly
and
validly authorized by all necessary corporate action on the part
of
Xxxxxxx and Bidco, and no other corporate proceedings on the part
of
Xxxxxxx and Bidco are necessary to authorize this Agreement, or to
consummate the Transactions. This Agreement has been duly and validly
executed and delivered by Xxxxxxx and Bidco and, assuming the due
authorization, execution and delivery by SCI and Xxxxxxx Canada,
constitutes a valid, legal and binding obligation of Xxxxxxx and
Bidco,
enforceable against Xxxxxxx and Bidco in accordance with its terms,
except
that (i) such enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws, now
or
hereafter in effect, affecting creditors’ rights generally, (ii) the
remedy of specific performance and injunctive and other forms of
equitable
relief may be subject to equitable defenses and to the discretion
of the
court before which any proceeding may be brought and (iii) the
Currency
Act
(Canada) precludes a court in Canada from rendering judgment in any
currency other than Canadian
currency.
|
| (b) |
Each
of Xxxxxxx’ and Bidco’s board of directors has unanimously authorized and
approved this Agreement and the Transactions.
|
| 4.3 |
No
Conflict; Required Filings and
Consents.
|
| (a) |
Except
as set forth in Section 4.3(a) of the Disclosure Schedule, the execution,
delivery and performance by each of Xxxxxxx and Bidco of this Agreement
and the consummation by each of Xxxxxxx and Bidco of the Transactions
does
not and will not, subject to the receipt of the Approvals referred
to in
Section 4.3(b),
(i) contravene, conflict with or result in a violation or breach of
any provision of its respective charter and by-laws, (ii) contravene,
conflict with or result in a violation or breach of any provisions
of any
Law applicable to Xxxxxxx or Bidco or by which it or any of its properties
is bound or affected or (iii) require any consent or other action by
any Person under, constitute a default (or an event that, with or
without
notice or lapse of time or both, would constitute a default) under,
or
cause or permit the termination, amendment, acceleration, triggering
or
cancellation or other change of any right or obligation or the loss
of any
benefit to which Xxxxxxx or Bidco is entitled under any provision
of any
Contract or other instrument binding upon Xxxxxxx or Bidco.
|
| (b) |
The
execution, delivery and performance by Xxxxxxx and Bidco of this
Agreement
and the consummation by Xxxxxxx and Bidco of the Transactions does
not
require any Approval, action by or in respect of, filing with or
notification to, any Governmental Entity, to be made or obtained
by
Xxxxxxx or Bidco, except for any Approvals or Permits, which, if not
obtained, would not, individually or in the aggregate, reasonably
be
expected to have a Material Adverse Effect on Xxxxxxx or
Bidco.
|
| 4.4 |
Financial
Resources.
|
Immediately
prior to the Closing, Bidco shall be financially capable of completing the
Transactions without recourse to funding sources external to Xxxxxxx other
than
such funding as is already committed. Xxxxxxx is financially capable of funding
Bidco so that Bidco can complete the Transactions.
| 4.5 |
No
Other Representations and
Warranties.
|
Except
for the representations and warranties contained in this Agreement, neither
Xxxxxxx, Bidco nor any other Person makes any representation or warranty,
express or implied, on behalf of Xxxxxxx or Bidco with respect to the
Transactions.
ARTICLE
V
CONDUCT
PRIOR TO THE CLOSING
| 5.1 |
Conduct
of Business by SCI and Xxxxxxx
Canada.
|
During
the period from the date of this Agreement to the Closing, except as otherwise
expressly contemplated or permitted in this Agreement and except to the extent
Xxxxxxx or Bidco shall otherwise give its prior written consent, Xxxxxxx Canada
and SCI shall each: (i) conduct its business in the ordinary course
consistent with past practice, except as may be required in order to comply
with
this Agreement; (ii) use its reasonable best efforts to comply in all material
respects with applicable Laws; (iii) pay or perform its material
obligations when due in the ordinary course in accordance and consistent with
the previous practice of Xxxxxxx Canada, except those obligations contested
in
good faith by Xxxxxxx Canada or SCI and reserved for in the Financial
Statements; and (iv) use its commercially reasonable efforts consistent
with past practices to: (A) preserve intact its present business
organization, (B) keep available the services of its present officers and
employees, (C) preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others with which it has significant
business dealings, and (D) preserve in all material respects the Xxxxxxx
Canada Intellectual Property. Without limiting the generality of the foregoing,
except as provided in Section 5.1
of the Disclosure Schedule or as expressly contemplated by this Agreement,
without the prior written consent of Xxxxxxx and Bidco, during the period from
the date of this Agreement to the Closing, neither SCI nor Xxxxxxx Canada shall
do any of the following:
| (a) |
amend
its Charter Documents;
|
| (b) |
split,
combine, subdivide or reclassify any Trust Units or shares of its
capital
stock or other equity interests or declare, set aside or pay any
dividend
or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, or redeem,
repurchase or otherwise acquire or offer to redeem, repurchase, or
otherwise acquire any of its securities, except for distributions
with
respect to the Trust Units as may be declared on the last day of
each
month and paid on the 15th of the next successive month, all consistent
with past practice and in the ordinary course, and dividends on the
Common
Shares and interest payments on the Notes sufficient to fund SCI
in
respect of such distribution, in each case with the usual amount,
declaration, record and payment dates and in accordance with SCI’s past
distribution policy;
|
| (c) |
adopt
a plan or agreement of complete or partial liquidation, dissolution,
winding up, merger, consolidation, amalgamation, restructuring,
recapitalization or other material reorganization, or complete the
reorganization described in SCI’s information circular dated March 30,
2006, except that SCI and Xxxxxxx Canada may expend up to $15,000
from the
date hereof until the Closing Date and continue to hold update calls
to
work towards completing such reorganization prior to the Closing
Date in
order to implement such reorganization in a timely manner in the
event of
a termination of this Agreement pursuant to Section 8.1);
|
| (d) |
issue,
deliver or sell, or authorize the issuance, delivery or sale of,
any
shares of its capital stock of any class or other equity interests
or any
securities convertible into or exercisable for, or any rights, warrants
or
options to acquire, any such capital stock or other equity interests,
other than (i) the issuance of Trust Units upon the exercise of
Options outstanding on the date hereof or issued after the date hereof
in
compliance with the terms of this Agreement in accordance with their
present terms, or (ii) issuances required pursuant to the conversion
of convertible securities outstanding on the date
hereof;
|
| (e) |
acquire
(by merger, consolidation, acquisition of stock or assets or otherwise),
directly or indirectly, any material
business;
|
| (f) |
other
than pursuant to Contracts in effect as of the date hereof and other
than
sales of inventory in the ordinary course of business consistent
with past
practice, sell, lease, license (as licensor or licensee), assign,
encumber
or otherwise transfer in one transaction or any series of related
transactions, any material assets or material
rights;
|
| (g) |
incur,
assume or guarantee any indebtedness for borrowed money or issue
or sell
any debt securities or warrants or other rights to acquire debt securities
or enter into any transactions to maintain the financial condition
of any
other Person, other than short-term borrowings in the ordinary course
of
business and in amounts and on terms consistent with past
practices;
|
| (h) |
make
any loan, advance or capital contribution to or investment in any
Person,
other than (i) loans, advances or capital contributions to or investments
in Xxxxxxx Canada, (ii) in connection with acquisitions permitted
by
Section 5.1(e),
or (iii) in the ordinary course of business consistent with past
practice, to the extent not individually or in the aggregate material
to
Xxxxxxx Canada;
|
| (i) |
change
(i) its methods of accounting or accounting practices in any material
respect, except as required by concurrent changes in Canadian GAAP
or by
Law and concurred in by SCI’s external auditors or (ii) its fiscal
year;
|
| (j) |
enter
into, cancel, terminate, fail to renew or amend in any material respect
any Material Contract or any Contract that would be a Material Contract
if
in effect on the date hereof;
|
| (k) |
settle,
or propose to settle, any Action or liability to the extent such
settlement (i) would provide for any injunctive relief or other
material restriction on the business of Xxxxxxx Canada or any admission
by
SCI or Xxxxxxx Canada of liability or wrongdoing of $100,000 or more
in
the aggregate, or (ii) would require a payment of $100,000 or more in
the aggregate (whether or not covered by
insurance);
|
| (l) |
make
any additional capital expenditures or commitments in excess of $500,000
in the aggregate; provided,
however,
no capital expenditures relating to Voice over IP (VOIP), AS/400
upgrade,
Imaging Hardware/Software, or Security Hardware/Software, to the
extent
not previously expended or committed to prior to the date hereof,
shall be
made without the consent of
Xxxxxxx;
|
| (m) |
take
any action that would, or would reasonably be expected to, prevent
or
materially impair or delay the ability of SCI to consummate the
Transactions;
|
| (n) |
fail
to make any filing, pay any fee, or take any other action necessary
to
maintain any Xxxxxxx Canada Owned Intellectual Property or license
granted
under third party Intellectual Property Rights which are material
to the
operation of the business of SCI or Xxxxxxx Canada in the ordinary
course;
|
| (o) |
increase
the salary, bonus or compensation of any directors, officers or employees
of SCI or Xxxxxxx Canada except for normal increases as a result
of
promotions of non-officer employees or normal increases of base pay,
bonuses, compensation or benefits of non-officer employees, in each
case
in the ordinary course of business and consistent with past practices
or
as required by applicable Law, or make any other change in employment
terms for any such Persons or promote any Person to a position that
is an
officer;
|
| (p) |
enter
into any new, or amend any existing, employment agreement, except
in the
ordinary course of business and consistent with past practice with
respect
to employees who are not officers or directors of SCI or Xxxxxxx
Canada,
or enter into any new, or amend any existing, severance agreement
or other
Contract that would result in any payment or benefit to, any director,
officer or employee of SCI or Xxxxxxx Canada or enter into any new
pension, benefit or compensation Plan of Xxxxxxx Canada or amend
any of
the Xxxxxxx Canada Employee Plans;
|
| (q) |
enter
into any new, or amend any existing, Contracts
of guaranty, surety, insurance or indemnification, direct or indirect,
of
SCI
or Xxxxxxx Canada;
|
| (r) |
(i)
make, change or revoke any Tax election, settle or compromise any
Tax
claim or liability or enter into a settlement or compromise, or change
(or
make a request to any taxing authority to change) any material aspect
of
its method of accounting for Tax purposes, or (ii) prepare or file
any
Return or financial statements (or any amendment thereof) unless
such
Return or financial statements shall have been prepared in a manner
consistent with past practice and Xxxxxxx Canada shall have provided
Xxxxxxx and Bidco with a copy thereof (together with supporting papers)
at
least three (3) Business Days prior to the due date thereof for Xxxxxxx
and Bidco to review and approve (such approval not to be unreasonably
withheld or delayed); or
|
| (s) |
agree
or commit to do any of the
foregoing.
|
| 5.2 |
Changes
in Pricing.
|
Prior
to any pricing discussions with Xxxxxxx Canada’s top five (5) customers and top
two (2) buying groups, as measured by the dollar amount of purchases in fiscal
year 2005 (collectively, the “Material
Customers”),
Xxxxxxx Canada shall consult with Xxxxxxx regarding any proposed pricing changes
and shall give Xxxxxxx a reasonable opportunity to provide input regarding
the
same; provided that,
in no event shall Xxxxxxx Canada make any pricing reductions with a Material
Customer which results in a forecasted decline in the overall gross profit
dollars on such Material Customer’s account of five percent (5%) or more for
fiscal year 2007 compared to the forecasted overall gross profit dollars for
such account for fiscal year 2006 without the prior written consent of
Xxxxxxx.
ARTICLE
VI
ADDITIONAL
AGREEMENTS
| 6.1 |
Confidentiality;
Access to Information.
|
| (a) |
Confidentiality.
The parties acknowledge that SCI, Xxxxxxx Canada and Xxxxxxx Company
have
previously executed a Confidentiality and Standstill Agreement, dated
as
of August 11, 2006 (the “Confidentiality
Agreement”),
which Confidentiality Agreement will continue in full force and effect
in
accordance with its terms.
|
| (b) |
Access
to Information.
SCI and Xxxxxxx Canada will afford Xxxxxxx and Bidco and their
accountants, counsel and other representatives reasonable access
during
normal business hours, upon reasonable notice, to SCI’s and Xxxxxxx
Canada's properties, books, records, Contracts and personnel during
the
period prior to the Closing to obtain all information concerning
its
business, properties, results of operations and personnel, as may
be
reasonably requested. At a mutually agreeable time prior to the Closing,
Xxxxxxx Canada shall conduct a physical inventory and representatives
of
Xxxxxxx and Bidco shall be entitled to attend and observe. No information
or knowledge obtained by Xxxxxxx or Bidco in any investigation pursuant
to
this Section 6.1(b)
will affect or be deemed to modify any representation or warranty
contained herein or the conditions to the obligations of the parties
to
consummate the Transactions. Notwithstanding the foregoing, SCI or
Xxxxxxx
Canada may restrict the foregoing access to the extent that any Law
(including Laws relating to the exchange of information and all applicable
antitrust, competition and similar Laws, and attorney-client and
other
privileges) applicable to SCI or Xxxxxxx Canada requires SCI or Xxxxxxx
Canada to restrict or prohibit such access. Xxxxxxx and Bidco will
hold
any information obtained pursuant to this Section 6.1(b)
in confidence in accordance with, and otherwise subject to, the provisions
of the Confidentiality Agreement.
|
| 6.2 |
No
Solicitation.
|
| (a) |
SCI
and Xxxxxxx Canada agree that neither shall, and shall direct and
cause
their employees, agents and representatives (including any investment
banker, attorney or accountant retained by SCI or Xxxxxxx Canada)
not to,
directly or indirectly, initiate, solicit, encourage or otherwise
knowingly facilitate any inquiries or the making by any third party
(other
than Xxxxxxx and Bidco) of any proposal or offer with respect to
a
purchase, merger, reorganization, share exchange, consolidation,
amalgamation, arrangement, business combination, liquidation, dissolution,
recapitalization or similar transaction involving any material portion
of
the consolidated assets of SCI or Xxxxxxx Canada or any units or
shares of
any class of equity securities of SCI or Xxxxxxx Canada (any such
proposal
or offer being hereinafter referred to as an “Acquisition
Proposal”).
SCI and Xxxxxxx Canada further agree that neither they nor any of
their
officers and directors shall, and that they shall direct and cause
their
employees, agents and representatives (including any investment banker,
attorney or accountant retained by SCI or Xxxxxxx Canada) not to,
directly
or indirectly, (i) engage in any negotiations concerning, or provide
any
confidential information or data to, or have any discussions with,
any
Person relating to an Acquisition Proposal, or otherwise knowingly
facilitate any effort or attempt to make or implement an Acquisition
Proposal, (ii) approve or recommend, or propose publicly to approve
or
recommend, any Acquisition Proposal, or (iii) execute or enter into,
or
publicly propose to accept or enter into an agreement with respect
to an
Acquisition Proposal, including a letter of intent, agreement in
principle, option agreement, merger agreement, acquisition agreement
or
other agreement in furtherance of an Acquisition
Proposal.
|
| (b) |
Notwithstanding
the provisions of Section 6.2(a),
nothing contained in this Agreement shall prevent SCI or the Board,
from
(A) complying with Section 99 of the Securities Act (Ontario)
and similar provisions of the Securities Laws of each of the other
provinces and territories of Canada (it being understood that any
such
communication constituting a Change in Recommendation shall be made
in
compliance with Section 2.2
and the balance of this Section 6.2(b)) or from calling and holding
a
meeting of the Trust Unitholders if requisitioned by such Trust
Unitholders; (B) providing information in response to a request
therefor by a Person who has made an unsolicited bona fide written
Acquisition Proposal if the Board receives from the Person so requesting
such information an executed confidentiality agreement on terms no
less
favourable in the aggregate to the disclosing party than those contained
in the Confidentiality Agreement (including so-called “standstill”
provisions); (C) effecting a Change in Recommendation in respect of
an Acquisition Proposal; (D) engaging in any negotiations or
discussions with any Person who has made an unsolicited bona fide
written
Acquisition Proposal; or (E) concurrently with the termination of
this Agreement by SCI pursuant to Section 8.1(h)
and following payment by SCI of the Termination Fee to Xxxxxxx and
Bidco
pursuant to Section 8.3(b)(iii), entering into an agreement with
respect to an Acquisition Proposal or any agreement referred to in
clause
(ii)
of Section 6.2(a)
with respect to an Acquisition Proposal if and only to the extent
that:
|
| (i) |
in
each such case referred to in clause (B), (C) or (D), (1) the Trust
Unitholder Approval has not yet been obtained, (2) the Board
determines in good faith after consultation with outside legal counsel
that failure to take the foregoing action would be inconsistent with
its
fiduciary duties under applicable Law, (3) the Board, determines
in good
faith that such Acquisition Proposal constitutes, or is reasonably
likely
to result in, a Superior Proposal; and
|
| (ii) |
in
the case referred to in clause (E) above, prior to SCI effecting
a
termination of this Agreement pursuant to Section 8.1(h),
(1) the Trust Unitholder Approval shall not have been obtained,
(2) such party shall be in compliance with the provisions of this
Section 6.2,
(3) the Board shall have determined in good faith that such
Acquisition Proposal constitutes a Superior Proposal after giving
effect
to all of the adjustments which may be offered by Bidco during the
five
(5) Business Day period referred to in clause (5) below; (4) SCI
shall have notified Xxxxxxx and Bidco in writing, at least five (5)
Business Days in advance of termination that it is considering terminating
this Agreement pursuant to Section 8.1(h),
specifying the material terms and conditions of such Superior Proposal
and
the identity of the Person making such Superior Proposal and delivering
the documents and information required to be delivered pursuant to
Section 6.2(c);
and (5) during such five (5) Business Day period, SCI shall have
negotiated, and shall have made its financial and legal advisors
available
to negotiate, with Xxxxxxx and Bidco should Bidco elect to make such
adjustments in the terms and conditions of this Agreement. As used
herein,
“Superior
Proposal”
means a bona fide written Acquisition Proposal to purchase or otherwise
acquire, directly or indirectly, 50% or more of the securities or
all or
substantially all of the assets of SCI or Xxxxxxx Canada and that
the
Board concludes in good faith, after consultation with financial
advisors
and outside legal counsel, and taking into account all legal, financial,
regulatory and other aspects of the proposal, is (a) more favourable,
from a financial point of view, to the Trust Unitholders and
(b) fully financed or reasonably capable of being fully financed,
reasonably likely to receive all Approvals on a timely basis and
otherwise
reasonably capable of being completed on a timely basis.
|
| (c) |
SCI
shall notify in writing Xxxxxxx and Bidco promptly (but in any event
within 24 hours) if any such inquiries, proposals or offers are received
by, any such information is requested from, or any such discussions
or
negotiations are sought to be initiated or continued with, any of
its
representatives, indicating, in connection with such notice, the
name of
such Person and the material terms and conditions of any proposals
or
offers and providing, within one (1) Business Day of receipt thereof,
a
copy of all documentation setting forth the terms of any such inquiry,
proposal or offer, and thereafter shall keep Xxxxxxx and Bidco informed,
on a current basis, of the status and terms of any such proposals
or
offers and the status of any such discussions or negotiations (including
by delivering any further documentation of the type referred to
above).
|
| (d) |
SCI
and Xxxxxxx Canada shall immediately cease and cause to be terminated
any
existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any Acquisition Proposal. SCI
shall
promptly request each Person that has heretofore executed a
confidentiality agreement in connection with its consideration of
acquiring it or Xxxxxxx Canada to return or destroy all confidential
information heretofore furnished to such Person by or on behalf of
it or
Xxxxxxx Canada.
|
SCI
shall not terminate, amend, modify or waive any provision of any confidentiality
or standstill or similar agreement to which SCI or Xxxxxxx Canada is a
party.
| (e) |
SCI
shall take the necessary steps to promptly inform the individuals
or
entities referred to in the first sentence hereof of the obligations
undertaken in this Section 6.2.
|
| 6.3 |
Public
Announcements.
|
Xxxxxxx,
Bidco, SCI and Xxxxxxx Canada shall use reasonable best efforts (i) to develop
a
joint communications plan, (ii) to ensure that all press releases and other
public statements with respect to this Agreement and the Transactions shall
be
consistent with such joint communications plan, and (iii) except in respect
of
any announcement required by applicable Law or by obligations pursuant to any
listing agreement with or rules of any securities exchange (in which case the
disclosing party will use reasonable commercial efforts to consult with each
other before issuing any press release or, to the extent practical, otherwise
making any public statement with respect to this Agreement or the Transactions)
no party shall issue any press release or otherwise make any public statement
or
disclosure concerning this Agreement, the Transactions, or the other party
or
the other party’s business, financial condition or results of operations without
the consent of such other party, which consent shall not be unreasonably
withheld or delayed.
| 6.4 |
Reasonable
Best Efforts:
Notification.
|
| (a) |
Each
of Xxxxxxx, Bidco, Xxxxxxx Canada and SCI shall perform all obligations
required or desirable to be performed by such party under this Agreement,
cooperate with the other party in connection therewith, and do all
such
other acts and things as may be necessary or desirable in order to
consummate and make effective, as soon as reasonably practicable,
the
Transactions and, without limiting the generality of the foregoing,
each
party shall:
|
| (i) |
in
the case of SCI, use its reasonable commercial efforts to obtain
the Trust
Unitholder Approval, except to the extent that the Board has effected
a
Change in Recommendation in compliance with the terms hereof (including
Sections 2.2
and 6.2);
|
| (ii) |
apply
for and use its reasonable commercial efforts to promptly obtain
all
Regulatory Approvals to be obtained by it and Xxxxxxx Canada, including
all filings required under any applicable antitrust, competition
or
similar Laws and, in doing so, keep the other party reasonably informed,
subject to ensuring that confidential competitively sensitive information
is exchanged among outside counsel only, as to the status of the
proceedings related to obtaining the Regulatory Approvals, including,
but
not limited to, (A) providing such other party with copies of all
material
related applications and notifications prepared for submission to
any
other Person or Governmental Entity, in draft form, in order for
such
other party to provide its reasonable comments and providing such
other
party with copies of all related material correspondence, (B) consulting
with the other party to the extent practicable in advance of any
meeting
or conference with Governmental Entities or, in connection with any
proceeding by a private party, with any other Person and, to the
extent
permitted by such Governmental Entities, to permit the other party
to
attend such meetings and conferences, in each case to the extent
relating
to the Transactions, and (C) receiving the prior written consent
of the
other party before agreeing to extend any waiting period under any
foreign
antitrust merger control Laws or enter into any agreement with the
Federal
Trade Commission or the United States Department of Justice or any
other
Governmental Entity regarding antitrust, competition or similar
Laws;
|
| (iii) |
use
its reasonable commercial efforts to obtain all necessary Approvals
or
consents required to be obtained by SCI or Xxxxxxx Canada from third
parties in connection with the
Transactions;
|
| (iv) |
use
its reasonable commercial efforts to comply promptly with all requirements
which applicable Laws may impose on SCI or Xxxxxxx Canada with respect
to
the Transactions;
|
| (v) |
in
the case of Xxxxxxx Canada, use its reasonable commercial efforts
to act
and do all that is required by it to serve as Administrator;
|
| (vi) |
in
the case of Xxxxxxx Canada, cooperate
with Xxxxxxx in connection with converting Xxxxxxx Canada’s historical
Canadian GAAP financial statements for 2003, 2004 and 2005 to generally
accepted accounting principles in the United States; and
|
| (vii) |
promptly
advise the other party orally and, if then requested, in writing
of any
event occurring subsequent to the date of this Agreement that, if
uncured
at the Closing, would render it incapable of satisfying any condition
to
be satisfied by it pursuant to Article
VII.
|
| 6.5 |
Regulatory
Filings.
|
Without
limiting the generality of Section 6.4,
as soon as may be reasonably practicable, SCI, Xxxxxxx and Bidco each shall
file
any merger notification forms required by the merger notification or control
Laws of any applicable jurisdiction, which Xxxxxxx and Bidco and SCI reasonably
determine to be necessary. SCI, Xxxxxxx Canada, Xxxxxxx and Bidco each shall
promptly (a) supply the other with any information which may be required in
order to effectuate such filings and (b) supply any additional information
which reasonably may be required by the competition or merger control
authorities of any jurisdiction.
| 6.6 |
Indemnification.
|
From
and after the Closing, Xxxxxxx and Bidco will fulfill, and will cause Xxxxxxx
Canada and/or its successors to fulfill and honor in all respects its
obligations pursuant to any indemnification agreements between Xxxxxxx Canada
and its directors and officers as the case may be (the “Indemnified
Parties”)
in effect and any indemnification provisions under its organizational documents,
in each case as in effect on the date hereof (and shall also pay expenses in
advance of the final disposition of any such action, suit or proceeding to
each
Indemnified Party to the fullest extent permitted under applicable Law, upon
receipt from the Indemnified Party to whom expenses are advanced of the
undertaking to repay such advances if indemnification is subsequently found
by a
court of competent jurisdiction, which finding is no longer subject to appeal
or
further proceedings, that such person is not entitled to indemnification).
Xxxxxxx and Bidco shall cause Xxxxxxx Canada and/or its successors to not amend,
repeal or otherwise modify the provisions with respect to exculpation and
indemnification contained in its organizational documents as in effect on the
date hereof for a period of six (6) years from the Closing in any manner that
would adversely affect the rights thereunder of individuals who, immediately
prior to the Closing, were directors or officers of Xxxxxxx Canada, unless
such
modification is required by Law. Xxxxxxx and Bidco will secure directors’ and
officers’ runoff liability insurance for a period of six (6) years after the
Closing covering those persons who are currently covered by Xxxxxxx Canada’s
directors’ and officers’ liability insurance policy with respect to claims
arising from facts or events that occurred on or before the Closing on terms
no
less favorable to those applicable to the current directors and officers of
Xxxxxxx Canada and with an insurance company having substantially the same
or
better credit quality than Xxxxxxx Canada’s current insurance company; provided,
however, that in no event shall Xxxxxxx or Bidco be required to pay aggregate
premiums for insurance under this Section 6.6 in excess of $150,000. This
Section 6.6
is intended to be for the benefit of, and shall be enforceable by, the
Indemnified Parties referred to herein, their heirs and personal
representatives. The provisions of this Section 6.6
shall survive the termination of this Agreement as a result of the occurrence
of
the Closing.
| 6.7 |
Dissolution
of SCI.
|
The
parties acknowledge that immediately following the Closing and prior to the
distribution of the Transaction Consideration to the Trust Unitholders, all
members of the Board and the Trustee intend to resign, Xxxxxxx Canada intends
to
resign as Administrator of SCI and SCI will have no material assets other than
the Transaction Consideration. Effective as of the Closing Date, Xxxxxxx Canada
shall form a new Subsidiary of Xxxxxxx Canada (“Trustee Sub”), which shall be
appointed immediately prior to the resignation of the Board and the Trustee,
and
shall agree to act as trustee of SCI. Subject to Section 6.9, Trustee Sub shall
cause the distribution on the Closing Date of an amount equal to $16.25 per
Trust Unit to the Trust Unitholders upon redemption of the Trust Units and
will
thereafter proceed to dissolve SCI. All costs, expenses and liabilities
associated with such redemption and the subsequent winding up or dissolution
of
SCI shall be the responsibility of Xxxxxxx Canada and/or Trustee Sub, as the
case may be.
| 6.8 |
Option
Plan.
|
Each
of the parties acknowledges and agrees that the Board, acting on behalf of
Xxxxxxx Canada as Administrator of SCI, shall resolve to permit all Persons
holding options to acquire Trust Units under the Xxxxxxx Canada Option Plan,
whether currently exercisable or not, to exercise such options prior to the
Closing Date, including by causing the vesting thereof to be accelerated.
Xxxxxxx Canada shall use its reasonable best efforts to cause all optionholders
to exercise such options prior to Closing. All Trust Units issued upon the
exercise of such Options shall receive the same consideration per Trust Unit
as
existing Unitholders.
| 6.9 |
Post-Closing
Income Tax
Consequences.
|
Xxxxxxx
and Bidco hereby agree that they shall take all steps necessary to:
|
(a)
|
ensure
that, with respect to a Trust Unitholder whose Trust Units are redeemed
under the Transactions, the income tax consequences to such Trust
Unitholder (with respect to such redemption or otherwise) will not
be
adversely affected by transaction or events involving SCI or Xxxxxxx
Canada that occur subsequent to the completion of the Transactions;
and
|
|
(b)
|
ensure
that Trustee Sub designates pursuant to subsection 104(21) of the
ITA, in
respect of each Trust Unitholder, that Trust Unitholder’s portion of SCI’s
net taxable capital gains realized in respect of the sale of the
Common
Shares and the Note to Bidco.
|
Notwithstanding
the foregoing, nothing in this section 6.9 shall prevent Trustee Sub from
deducting amounts under subsection 104(6) of the ITA in respect of the
distributions made to the Trust Unitholders on the redemption of such Trust
Units in respect of income of SCI arising or accruing on or prior to the
completion of the Transactions.
| 6.10 |
Expenses.
|
SCI
and Xxxxxxx Canada have delivered to Xxxxxxx and Bidco a good faith estimate
of
their transaction expenses as of the Closing and shall deliver a further good
faith estimate of such expenses to Xxxxxxx and Bidco three (3) Business Days
prior to Closing.
| 6.11 |
Consents.
|
Each
of SCI and Xxxxxxx Canada shall use its reasonable commercial efforts, and
Xxxxxxx and Bidco shall cooperate with SCI and Xxxxxxx Canada, to obtain all
necessary Approvals or consents required to be obtained by SCI or Xxxxxxx Canada
from third parties in connection with the Transactions, including, without
limitation, providing information, including financial information, regarding
Xxxxxxx and Bidco. Xxxxxxx and Bidco agree to abide by the terms of the existing
agreements with such third parties from which SCI and Xxxxxxx Canada are
required to obtain such Approvals or consents and shall not renegotiate or
otherwise attempt to alter the existing terms of such agreements prior to the
Closing.
ARTICLE
VII
CONDITIONS
| 7.1 |
Conditions
to Obligations of Each Party.
|
The
respective obligations of each party to this Agreement to consummate the
Transactions shall be subject to the satisfaction at or prior to the Closing
of
the following conditions:
| (a) |
Trust
Unitholder Approval.
The Trust Unitholder Approval shall have been
obtained.
|
| (b) |
No
Orders.
No Order or Law entered, enacted, promulgated, enforced or issued
by any
court or other Governmental Entity of competent jurisdiction shall
be in
effect which restrains or enjoins the consummation of the Transactions
or
makes the Transactions illegal.
|
| (c) |
Regulatory
Approvals.
Xxxxxxx, Bidco, Xxxxxxx Canada and SCI shall have obtained all material
Regulatory Approvals.
|
| (d) |
No
Termination.
This Agreement shall not have been terminated pursuant to Article
VIII.
|
| 7.2 |
Additional
Conditions to Obligations of SCI and Xxxxxxx
Canada.
|
The
obligation of SCI to consummate the Transactions shall be subject to the
satisfaction at or prior to the Closing of each of the following conditions,
any
of which may be waived, in writing, exclusively by SCI:
| (a) |
Representations
and Warranties.
The representations and warranties of Xxxxxxx and Bidco contained
in this
Agreement (without giving effect to any materiality (including the
word
“material”) or “Material Adverse Effect” qualification) shall be true and
correct as of the Closing Date with the same effect as if made at
and as
of the Closing Date (other than such representations that are made
as of a
specified date, which shall be true and correct as of such date),
except
as would not have, or would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Xxxxxxx
or
Bidco, as applicable. SCI shall have received a certificate with
respect
to the foregoing signed on behalf of Xxxxxxx and Bidco by an authorized
officer of Xxxxxxx and Bidco.
|
| (b) |
Agreements
and Covenants.
Xxxxxxx and Bidco shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement
to
be performed or complied with by them on or prior to the Closing
Date, and
SCI shall have received a certificate to such effect signed on behalf
of
Xxxxxxx and Bidco by an authorized officer of Xxxxxxx and
Bidco.
|
| 7.3 |
Additional
Conditions to the Obligations of Xxxxxxx and
Bidco.
|
The
obligations of Xxxxxxx and Bidco to consummate the Transactions shall be subject
to the satisfaction at or prior to the Closing of each of the following
conditions, any of which may be waived, in writing, exclusively by Xxxxxxx
and
Bidco:
| (a) |
Representations
and Warranties.
The representations and warranties of SCI and Xxxxxxx Canada contained
in
this Agreement (without giving effect to any materiality (including
the
word “material”) or “Material Adverse Effect” qualification) shall be true
and correct as of the Closing Date with the same effect as if made
at and
as of the Closing Date (other than such representations that are
made as
of a specified date, which shall be true and correct as of such date),
except as would not have, or would not reasonably be expected to
have,
individually or in the aggregate, a Material Adverse Effect on SCI
or
Xxxxxxx Canada. Xxxxxxx and Bidco shall have received a certificate
with
respect to the foregoing signed on behalf of SCI and Xxxxxxx Canada
by an
authorized officer of SCI and Xxxxxxx
Canada.
|
| (b) |
Agreements
and Covenants.
SCI and Xxxxxxx Canada shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement
to
be performed or complied with by them at or prior to the Closing
Date, and
Xxxxxxx and Bidco shall have received a certificate to such effect
signed
on behalf of SCI and Xxxxxxx Canada by an authorized officer of SCI
and
Xxxxxxx Canada.
|
| (c) |
Dissolutions.
SCI and Xxxxxxx Canada shall have caused the dissolution of Xxxxxxx
Canada
GP and Xxxxxxx Canada L.P.
|
| (d) |
Third
Party Consents.
SCI and Xxxxxxx Canada shall have received those consents listed
on
Section 7.3(d) of the Disclosure
Schedule.
|
| (e) |
No
Material Adverse Change.
Since the date hereof, there shall not have occurred any fact, event,
change, development, circumstance or effect which, individually or
in the
aggregate, has had or would reasonably be expected to have a Material
Adverse Effect on SCI or Xxxxxxx
Canada.
|
| (f) |
Options.
All options shall have been
exercised.
|
| (g) |
Credit
Facility.
Immediately prior to Closing, SCI and Xxxxxxx Canada shall have terminated
the credit agreement by and between Xxxxxxx Canada and Canadian Imperial
Bank of Commerce dated September 8, 2005 and shall have delivered to
Xxxxxxx and Bidco payoff letters from the lenders thereunder in respect
of
any outstanding indebtedness thereunder, together with evidence of
the
release of any Liens relating
thereto.
|
ARTICLE
VIII
TERMINATION,
AMENDMENT AND WAIVER
| 8.1 |
Termination.
|
This
Agreement may be terminated at any time prior to the Closing, whether before
or
after the Trust Unitholder Approval of SCI (except in the case of clause (h)
below):
| (a) |
by
mutual written consent duly authorized by the respective Board of
Directors of each of Xxxxxxx and Bidco and the
Board;
|
| (b) |
by
either SCI, Xxxxxxx or Bidco, if the Transactions shall not have
been
consummated by November 29, 2006 for any reason (the “Termination
Date”),
subject to extension by Xxxxxxx or Bidco until no later than December
15,
2006; provided, however, that the right to terminate this Agreement
under
this Section 8.1(b)
shall not be available to any party whose action or failure to act
has
been a principal cause of or resulted in the failure of the Closing
to
occur on or before such date and such action or failure to act constitutes
a breach of this Agreement;
|
| (c) |
by
either SCI, Xxxxxxx or Bidco, if there shall be passed any Law that
makes
the consummation of the Transactions illegal or otherwise prohibited,
or
if a Governmental Entity shall have issued an Order or taken any
other
action, in any case having the effect of permanently restraining,
enjoining or otherwise prohibiting the Closing, which Order or other
action is final and nonappealable;
|
| (d) |
by
either SCI, Xxxxxxx or Bidco, if the Trust Unitholder Approval shall
not
have been obtained by reason of the failure to obtain the Trust Unitholder
Approval upon a vote taken thereon at the duly convened Meeting or
at any
adjournment or postponement thereof;
|
| (e) |
by
SCI, upon a breach of any representation, warranty, covenant or agreement
on the part of Xxxxxxx or Bidco set forth in this Agreement such
that the
conditions set forth in Section 7.2(a)
or 7.2(b)
would not be satisfied, and in either case, such breach is not capable
of
being cured prior to the earlier of (A) 20 Business Days following
notice
of such breach to Xxxxxxx and Bidco by SCI and (B) the Termination
Date;
|
| (f) |
by
Xxxxxxx or Bidco, upon a breach of any representation, warranty,
covenant
or agreement on the part of SCI or Xxxxxxx Canada set forth in this
Agreement such that the conditions set forth in Section 7.3(a)
or 7.3(b)
would not be satisfied, and in either case, such breach is not capable
of
being cured prior to the earlier of (A) 20 Business Days following
notice
of such breach to SCI or Xxxxxxx Canada by Xxxxxxx and Bidco and
(B) of
being satisfied on or before the Termination
Date;
|
| (g) |
by
Xxxxxxx or Bidco if (i) the Board shall have effected a Change in
Recommendation or (ii) SCI shall have intentionally and materially
breached its obligations under Section 6.2
or its obligation to duly convene the Meeting;
or
|
| (h) |
by
SCI, provided that (A) SCI has received a Superior Proposal, (B) SCI
has provided notice to Xxxxxxx and Bidco in writing in respect of
such
Superior Proposal in accordance with Section 6.2(b)(ii)(4)
and satisfied the duty to negotiate in accordance with Section
6.2(b)(ii)(5),
(C) at least five (5) days following receipt by Xxxxxxx and Bidco of
such notice, and after taking into account any revised proposal made
by
Xxxxxxx and Bidco during such five (5) day period, Xxxxxxx Canada,
as the
Administrator of SCI, has determined in good faith that such Superior
Proposal remains a Superior Proposal which the Board has determined
to
accept, and (D) SCI is in compliance with the terms of
Section 6.2,
and (E) immediately prior to the termination of this Agreement, SCI
pays
to Xxxxxxx and Bidco the Termination Fee in accordance with
Section 8.3(b)(iii).
|
| 8.2 |
Notice
of Termination; Effect of
Termination.
|
Subject
to Section 8.1(h),
any termination of this Agreement under Section 8.1
above will be effective immediately upon the delivery of written notice of
the
terminating party to the other party hereto. In the event of the termination
of
this Agreement as provided in Section 8.1,
this Agreement shall be of no further force or effect, except that
(i) Section 6.1(a),
Section 8.2,
Section 8.3
and Article IX (General Provisions) shall survive the termination of this
Agreement, and (ii) nothing herein shall relieve any party from liability
for any intentional or willful breach of this Agreement.
| 8.3 |
Fees
and Expenses.
|
| (a) |
General.
Except as set forth in this Section 8.3,
all fees and expenses incurred in connection with this Agreement
and the
Transactions shall be paid by the party incurring such expenses whether
or
not the Closing occurs; provided that, if the Closing does occur,
the
expenses of SCI and Xxxxxxx Canada will be paid by Xxxxxxx
Canada.
|
| (b) |
Xxxxxxx
Canada Payments.
|
| (i) |
Xxxxxxx
Canada shall pay Xxxxxxx and Bidco in immediately available funds,
within
one (1) business day after demand by Xxxxxxx and Bidco, Expenses
of
Xxxxxxx and Bidco, if this Agreement is terminated by Xxxxxxx or
Bidco
pursuant to Section 8.1(f).
|
| (ii) |
If
this Agreement is terminated by Xxxxxxx, Bidco or SCI pursuant to
Section
8.1(d) and, (A) at the time of such termination an Acquisition
Proposal in respect of SCI or Xxxxxxx Canada shall have been publicly
announced, and
(B) within twelve (12) months following the termination of this
Agreement, the Acquisition Proposal with respect to SCI or Xxxxxxx
Canada
which was announced at or prior to termination of this Agreement
is
consummated, then Xxxxxxx Canada shall pay the Termination Fee to
Xxxxxxx
and Bidco within one (1) business day after demand by Xxxxxxx and
Bidco
from funds placed in escrow upon the announcement that such alternative
transaction has been entered into.
|
| (iii) |
SCI
shall pay to Xxxxxxx and Bidco in immediately available funds the
Termination Fee immediately prior to the termination of this Agreement
by
SCI pursuant to Section 8.1(g) or
8.1(h).
|
| (iv) |
SCI
acknowledges that the agreements contained in this
Section 8.3(b)
are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, Xxxxxxx and Bidco would not enter
into
this Agreement; accordingly, if SCI fails to pay in a timely manner
the
amounts due pursuant to this Section 8.3(b)
and, in order to obtain such payment, Xxxxxxx and Bidco make a claim
that
results in a judgment against SCI for the amounts set forth in this
Section 8.3(b),
Xxxxxxx Canada shall pay to Xxxxxxx and Bidco their reasonable costs
and
expenses (including reasonable attorneys’ fees and expenses) in connection
with such suit, together with interest on the amounts set forth in
this
Section 8.3(b)
at the prime rate charged by Xxxxxxx’ and Bidco's principal senior lenders
in effect on the date such payment was required to be made. Payment
of the
fees described in this Section 8.3(b)
shall not be in lieu of damages incurred in the event of intentional
or
willful breach of this Agreement.
|
| (c) |
Defined
Terms.
For purposes of Section 8.3(b),
the following terms shall have the following
meaning:
|
| (i) |
“Acquisition
Proposal”
shall have the meaning set forth in Section 6.2(a),
as modified by Section 6.2(b).
|
| (ii) |
“Expenses”
means all out-of-pocket fees and expenses (including all fees and
expenses
of counsel, accountants, financial advisors and investment bankers
to
Xxxxxxx, Bidco and their Affiliates), up to $3,500,000 in
the aggregate, incurred by Xxxxxxx and Bidco or on their behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of this Agreement and the documents and
agreements referenced herein, the filing of any required notices
under
applicable antitrust Laws or in connection with other Regulatory
Approvals, and all other matters related to the transactions contemplated
hereby.
|
| (iii) |
“Termination
Fee”
means an amount equal to
$3,750,000.
|
| 8.4 |
Amendment.
|
Subject
to applicable Law, this Agreement may be amended, not later than the Closing,
whether before or after the Trust Unitholder Approval has been obtained, by
action taken or authorized by the respective board of directors or similar
governing body of the parties (or, to the extent permitted by Laws, any duly
empowered committee thereof) at any time by execution of an instrument in
writing signed on behalf of each of Xxxxxxx, Bidco, SCI and Xxxxxxx Canada;
provided that after the Trust Unitholder Approval is obtained, no such amendment
which requires further approval by the Trust Unitholders shall be effected
without such further approval.
| 8.5 |
Extension;
Waiver.
|
At
any time prior to the Closing, any party hereto may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations
or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall
be
valid only if set forth in an instrument in writing signed on behalf of such
party, shall be limited to its terms and shall not be deemed to extend or waive
any other provision of this Agreement. Delay in exercising any right under
this
Agreement shall not constitute a waiver of such right.
ARTICLE
IX
GENERAL
PROVISIONS
| 9.1 |
Non-Survival
of Representations and
Warranties.
|
The
representations and warranties of SCI, Xxxxxxx Canada, Xxxxxxx and Bidco
contained in this Agreement shall terminate at the Closing, and only the
covenants and agreements that by their terms survive the Closing (which shall
include Section 6.6)
shall survive the Closing.
| 9.2 |
Notices.
|
All
notices and other communications hereunder shall be in writing and shall be
deemed given if delivered personally or by commercial delivery service, or
sent
via telecopy (receipt confirmed) to the parties at the following addresses
or
telecopy numbers (or at such other address or telecopy numbers for a party
as
shall be specified by like notice):
| (a) |
if
to Bidco and Simmons, to:
|
Xxxxxxx
Bedding Company
Xxx
Xxxxxxxxx Xxxxxxx
Xxxxx
000
Xxxxxxx,
XX 00000
XXX
Attention: Xxxxxxx
Xxxxx
Telecopy
No.: (000) 000-0000
Simmons
Acquisition Inc.
c/o
Simmons Company
Xxx
Xxxxxxxxx Xxxxxxx
Xxxxx
000
Xxxxxxx,
XX 00000
XXX
Attention: Xxxxxxx
Xxxxx
Telecopy
No.: (000) 000-0000
with
copies to:
Xxxxxx
X. Xxx Partners, L.P.
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx,
XX 00000
XXX
Attention: Xxxxx
X. Xxxxxx
Telecopy
No.: (000) 000-0000
and
Xxxxxxx
Company
Xxx
Xxxxxxxxx Xxxxxxx
Xxxxx
000
Xxxxxxx,
XX 00000
XXX
Attention: Xxxxxxx
X. XxXxxxxx
Telecopy
No.: (000) 000-0000
and
Weil,
Gotshal & Xxxxxx LLP
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx,
XX 00000
XXX
Attention: Xxxxxxx
Xxxxxx
Telecopy
No.: (000) 000-0000
and
Goodmans
LLP
000
Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx,
XX X0X 0X0
Xxxxxx
Attention: Neill
May
Telecopy
No.: (000) 000-0000
| (b) |
if
to SCI, to:
|
SCI
Income Trust
c/x
Xxxxxxx Canada Inc.
0000
Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx,
Xxxxxxx X0X 0X0
Xxxxxx
Attention:
Xxxxx
Xxxx
Telecopy
No.:
(000) 000-0000
with
a copy to:
Davies
Xxxx Xxxxxxxx & Xxxxxxxx LLP
X.X.
Xxx 00, Xxxxx 0000
0
Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx,
XX X0X 0X0
Xxxxxx
Attention: Xxxxxxx
X. Xxxxxx
Telecopy
No.: (000) 000-0000
| 9.3 |
Counterparts.
|
This
Agreement may be executed in one or more counterparts, which may be delivered
by
facsimile transmission, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that all parties need not sign the same counterpart.
| 9.4 |
Entire
Agreement; Third Party
Beneficiaries.
|
This
Agreement and the documents and instruments and other agreements among the
parties hereto as contemplated by or referred to herein, including the
Disclosure Schedule, (a) constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior
representations, agreements and understandings, both written and oral, among
the
parties with respect to the subject matter hereof, and neither party is relying
on any prior oral or written representations, agreements, understandings or
undertakings with respect to the subject matter hereof, it being understood
that
the Confidentiality Agreement shall continue in full force and effect and shall
survive any termination of this Agreement; and (b) are not intended to
confer upon any other Person any rights or remedies hereunder except as
specifically provided in Section 6.6.
| 9.5 |
Severability.
|
In
the event that any provision of this Agreement, or the application thereof,
becomes or is declared by a court of competent jurisdiction to be illegal,
void
or unenforceable, the remainder of this Agreement will continue in full force
and effect and the application of such provision to other Persons or
circumstances will be interpreted so as reasonably to effect the intent of
the
parties hereto. The parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes
of
such void or unenforceable provision.
| 9.6 |
Other
Remedies: Specific
Performance.
|
Except
as otherwise provided herein, any and all remedies herein expressly conferred
upon a party will be deemed cumulative with and not exclusive of any other
remedy conferred hereby, or by Laws or equity upon such party, and the exercise
by a party of any one remedy will not preclude the exercise of any other remedy.
The parties hereto agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of Canada, this being in addition to any other remedy to
which they are entitled at law or in equity.
| 9.7 |
Governing
Law.
|
This
Agreement shall be deemed to be made in and in all respects shall be
interpreted, construed and governed by and in accordance with, and any disputes
arising out of or related to this Agreement shall be interpreted, construed
and
governed by and in accordance with, the laws of the Province of Ontario. The
parties hereby irrevocably submit to the non-exclusive jurisdiction of the
courts of the Province of Ontario solely in respect of the interpretation and
enforcement of the provisions of this Agreement and of the documents referred
to
in this Agreement, and in respect of the Transactions. The parties hereby
consent to and grant any such court jurisdiction over the person of such parties
and over the subject matter of such dispute and agree that mailing of process
or
other papers in connection with any such Action in the manner provided in
Section 9.2
or in such other manner as may be permitted by Law shall be valid and sufficient
service thereof.
| 9.8 |
No
Personal Liability.
|
| (a) |
No
director, officer, employee or Affiliate of Xxxxxxx or Bidco shall
have
any personal liability whatsoever to SCI, Xxxxxxx Canada or any Trust
Unitholders under this Agreement, or any other document delivered
in
connection with the Transactions on behalf of Xxxxxxx and
Bidco.
|
| (b) |
No
director, officer or employee of SCI or Xxxxxxx Canada shall have
any
personal liability whatsoever to Xxxxxxx or Bidco under this Agreement,
or
any other document delivered in connection with the Transactions
on behalf
of SCI or Xxxxxxx Canada.
|
| 9.9 |
Assignment.
|
No
party may assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the other parties;
provided,
however,
that Xxxxxxx and Bidco may assign all or any portion of their rights under
this
Agreement to any Affiliate of Xxxxxxx or Bidco, any Person from which Xxxxxxx
or
Bidco has borrowed money or any Person to which Xxxxxxx or Bidco or any of
its
respective Affiliates proposes to sell all or substantially all of the assets
relating to the business of SCI or Xxxxxxx Canada; provided,
that no such assignment shall release Xxxxxxx and Bidco from their liabilities
and obligations hereunder. Upon any such permitted assignment, the references
in
this Agreement to Xxxxxxx and Bidco shall also apply to any such assignee unless
the context otherwise requires. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
| 9.10 |
Guarantee
of Performance.
|
Xxxxxxx
shall cause Bidco to perform all of its obligations hereunder and hereby agrees
to guarantee payment of the Transaction Consideration.
| 9.11 |
Currency.
|
Unless
otherwise specifically indicated, all sums of money referred to in this
Agreement are expressed in Canadian Dollars.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by
their duly authorized respective officers as of the date first written
above.
|
XXXXXXX
BEDDING COMPANY
|
|||
|
By:
|
/s/
Xxxxxxx X. Xxxxxxxxx
|
||
|
Name:
|
Xxxxxxx
X. Xxxxxxxxx
|
||
|
Title:
|
Executive
Vice President and Chief Financial Officer
|
||
|
XXXXXXX
ACQUISITION INC.
|
|||
|
By:
|
/s/
Xxxxxxx X. Xxxxxxxxx
|
||
|
Name:
|
Xxxxxxx
X. Xxxxxxxxx
|
||
|
Title:
|
Director
|
||
|
XXXXXXX
CANADA INC., in its capacity as the Administrator of SCI INCOME
TRUST
|
|||
|
By:
|
/s/
Xxxxx X. Xxxx
|
||
|
Name:
|
Xxxxx
X. Xxxx
|
||
|
Title:
|
President
and Chief Executive Officer
|
||
|
XXXXXXX
CANADA INC.
|
|||
|
By:
|
/s/
Xxxxx X. Xxxx
|
||
|
Name:
|
Xxxxx
X. Xxxx
|
||
|
Title:
|
President
and Chief Executive Officer
|
||
