EXHIBIT 99.2
SMURFIT-STONE CONTAINER CORPORATION
as "SSCC"
and
STONE CONTAINER CORPORATION
as "Stone"
and
3038727 NOVA SCOTIA COMPANY
as "3038727"
and
ST. LAURENT PAPERBOARD INC.
as "St. Laurent"
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PRE-MERGER AGREEMENT
February 23, 2000
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Stikeman Elliott
TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION
Section 1.1 Definitions........................................................ 1
Section 1.2 Interpretation Not Affected by Headings, etc....................... 9
Section 1.3 Currency........................................................... 9
Section 1.4 Number, etc........................................................ 9
Section 1.5 Date For Any Action................................................ 9
Section 1.6 Entire Agreement................................................... 10
Section 1.7 Schedules.......................................................... 10
Section 1.8 Accounting Matters................................................. 10
Section 1.9 Knowledge.......................................................... 10
ARTICLE 2
THE ARRANGEMENT
Section 2.1 Implementation Steps by St. Laurent................................ 10
Section 2.2 Interim Order...................................................... 11
Section 2.3 Articles of Arrangement............................................ 12
Section 2.4 Circular........................................................... 13
Section 2.5 Securities Compliance.............................................. 13
Section 2.6 Preparation of Filings............................................. 14
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of St. Laurent...................... 15
Section 3.2 Representations and Warranties of the SSCC Parties................. 34
Section 3.3 Survival........................................................... 39
ARTICLE 4
COVENANTS
Section 4.1 Retention of Goodwill.............................................. 39
Section 4.2 Material Commitments............................................... 39
Section 4.3 Covenants of St. Laurent........................................... 40
Section 4.4 Covenants of the SSCC Parties...................................... 45
Section 4.5 Covenants Regarding Non-Solicitation............................... 47
Section 4.6 Notice by St. Laurent of Superior Proposal Determination........... 48
Section 4.7 Access to Information.............................................. 49
Section 4.8 Closing Matters.................................................... 51
Section 4.9 Indemnification.................................................... 51
Section 4.10 Rights Plan........................................................ 51
Section 4.11 Benefits Continuation, etc......................................... 51
(i)
ARTICLE 5
CONDITIONS
Section 5.1 Mutual Conditions Precedent...................................................... 52
Section 5.2 Additional Conditions Precedent to the Obligations of the SSCC Parties........... 53
Section 5.3 Additional Conditions Precedent to the Obligations of St. Laurent................ 54
Section 5.4 Notice and Cure Provisions....................................................... 55
Section 5.5 Satisfaction of Conditions....................................................... 56
ARTICLE 6
AMENDMENT AND TERMINATION
Section 6.1 Amendment........................................................................ 56
Section 6.2 Mutual Understanding Regarding Amendments........................................ 56
Section 6.3 Termination...................................................................... 57
Section 6.4 Break Fee........................................................................ 58
Section 6.5 Effect of Break Fee Payment...................................................... 59
Section 6.6 Remedies......................................................................... 59
ARTICLE 7
GENERAL
Section 7.1 Notices.......................................................................... 59
Section 7.2 Assignment....................................................................... 61
Section 7.3 Binding Effect................................................................... 61
Section 7.4 Waiver and Modification.......................................................... 61
Section 7.5 No Personal Liability............................................................ 61
Section 7.6 Further Assurances............................................................... 62
Section 7.7 Expenses......................................................................... 62
Section 7.8 Consultation..................................................................... 62
Section 7.9 Governing Laws................................................................... 62
Section 7.10 Time of Essence.................................................................. 63
Section 7.11 Counterparts..................................................................... 63
Section 7.12 No Third Party Beneficiaries..................................................... 63
Section 7.13 Language......................................................................... 63
SCHEDULES
Schedule A - Affiliate's Letter
Schedule B - Appropriate Regulatory Approvals
Schedule C - Arrangement Resolution
Schedule D - Plan of Arrangement
(ii)
PRE-MERGER AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 23/rd/ day of February, 2000.
AMONG:
SMURFIT-STONE CONTAINER CORPORATION
a corporation existing under the laws
of the State of Delaware
(hereinafter referred to as "SSCC")
-and-
STONE CONTAINER CORPORATION
a corporation existing under the laws
of the State of Delaware
(hereinafter referred to as "Stone")
-and-
3038727 NOVA SCOTIA COMPANY
an unlimited liability company existing under the
laws of the Province of Nova Scotia
(hereinafter referred to as "3038727")
-and-
ST. LAURENT PAPERBOARD INC.
a corporation existing under the laws of Canada
(hereinafter referred to as "St. Laurent")
THIS AGREEMENT WITNESSES THAT in consideration of the respective covenants
and agreements herein contained, the parties hereto covenant and agree as
follows:
ARTICLE 1
INTERPRETATION
Section 1.1 Definitions.
In this Agreement, unless there is something in the subject matter or
context inconsistent therewith, the following terms shall have the following
meanings respectively:
"1933 Act" means the United States Securities Act of 1933, as amended;
"Acquisition Proposal" means any bona fide proposal with respect to any
merger, amalgamation, arrangement, take-over bid, sale of assets (excluding
inventory sold in the ordinary course of business) or otherwise
representing more than 20% of the book
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value (on a consolidated basis) of St. Laurent's total assets (or any
lease, long-term supply agreement or other arrangement having the same
economic effect as a sale of assets (excluding inventory sold in the
ordinary course of business) or otherwise representing more than 20% of the
book value (on a consolidated basis) of St. Laurent's total assets), any
sale of more than 20% of the St. Laurent Common Shares then outstanding or
similar transactions involving St. Laurent or any subsidiary, or a proposal
to do so, excluding the Arrangement;
"Affected Employee" has the meaning ascribed thereto in Section 4.11;
"affiliate" has the meaning ascribed thereto in the Securities Act
(Quebec), unless otherwise expressly stated herein;
"Affiliate's Letter" means a letter, to be substantially in the form and
content of Schedule A annexed hereto;
"Appropriate Regulatory Approvals" means those sanctions, rulings,
consents, orders, exemptions, permits 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, regulatory agencies or self-
regulatory organizations, as set out in Schedule B annexed hereto;
"Arrangement" means an arrangement under Section 192 of the CBCA on the
terms and subject to the conditions set out in the Plan of Arrangement,
subject to any amendments or variations thereto made in accordance with
Section 6.1 hereof or Article 5 of the Plan of Arrangement or made at the
direction of the Court in the Interim Order or the Final Order;
"Arrangement Resolution" means the special resolution of the St. Laurent
Securityholders, to be substantially in the form and content of Schedule C
annexed hereto;
"Articles of Arrangement" means the articles of arrangement of St. Laurent
in respect of the Arrangement that are required by the CBCA to be sent to
the Director after the Final Order is made;
"Business Day" means any day on which commercial banks are generally open
for business in Chicago, Illinois and Montreal, Quebec other than a
Saturday, a Sunday or a day observed as a holiday in Chicago, Illinois
under the laws of the State of Illinois or the federal laws of the United
States of America or in Montreal, Quebec under the laws of the Province of
Quebec or the federal laws of Canada;
"CBCA" means the Canada Business Corporations Act as now in effect and as
it may be amended from time to time prior to the Effective Date;
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"Circular" means the notice of the St. Laurent Meeting and accompanying
management information circular, including all appendices thereto, to be
sent to holders of St. Laurent Common Shares, St. Laurent Options, St.
Laurent RSUs and St. Laurent Warrants in connection with the St. Laurent
Meeting, as may be amended from time to time;
"Code" has the meaning ascribed thereto in Section 3.1(1)(m)(ii);
"Confidentiality Agreements" means the confidentiality and standstill
letter agreements dated November 29, 1999 from St. Laurent to SSCC and SSCC
to St. Laurent, respectively;
"Court" means the Superior Court of Quebec, District of Montreal;
"Director" means the Director appointed pursuant to Section 260 of the
CBCA;
"Dissent Rights" means the rights of dissent in respect of the Arrangement
described in Section 3.1 of the Plan of Arrangement;
"Dissenting Shareholder" has the meaning ascribed thereto in the Plan of
Arrangement;
"Drop Dead Date" means September 30, 2000, or such later date as may be
mutually agreed by the parties to this Agreement;
"Effective Date" means the date shown on the certificate of arrangement to
be issued by the Director under the CBCA giving effect to the Arrangement
provided that such date occurs on or prior to the Drop Dead Date;
"Effective Time" has the meaning ascribed thereto in the Plan of
Arrangement;
"Environmental Laws" means all applicable Laws relating to the protection
of the environment and public health and safety;
"Environmental Permits" has the meaning ascribed thereto in Section
3.1(1)(l)(ii);
"ERISA" has the meaning ascribed thereto in Section 3.1(1)(n)(i);
"ERISA Affiliate" has the meaning ascribed thereto in Section
3.1(1)(n)(ix);
"Exchange Act" means the United States Securities Exchange Act of 1934, as
amended;
"Exchange Consideration" has the meaning ascribed thereto in the Plan of
Arrangement;
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"Final Order" means the final order of the Court approving the Arrangement
as such order may be amended by the Court at any time prior to the
Effective Date or, if appealed, then, unless such appeal is withdrawn or
denied, as affirmed;
"Former Employees" has the meaning ascribed thereto in Section 4.11;
"Form S-8" has the meaning ascribed thereto in Section 2.5(2);
"Governmental Entity" means any (a) multinational, federal, provincial,
state, regional, municipal, local or other government, governmental or
public department, central bank, court, tribunal, arbitral body,
commission, board, bureau or agency, domestic or foreign, (b) any
subdivision, agent, commission, board, or authority of any of the
foregoing, or (c) any quasi- governmental or private body exercising any
regulatory, expropriation or taxing authority under or for the account of
any of the foregoing;
"Hazardous Substance" means any pollutant, contaminant, waste of any
nature, hazardous substance, hazardous material, toxic substance, dangerous
substance or dangerous good as defined or identified in or regulated by any
Environmental Law;
"holders" means the holders of St. Laurent Common Shares shown from time to
time in the register maintained by or on behalf of St. Laurent in respect
of the St. Laurent Common Shares;
"including" means including without limitation;
"Information" has the meaning ascribed thereto in Section 4.7(2);
"Interim Order" means the interim order of the Court, as the same may be
amended, in respect of the Arrangement, as contemplated by Section 2.2;
"Laws" means all statutes, codes, regulations, statutory rules, orders,
decrees, and terms and conditions of any grant of approval, permission,
authority or license of any court, Governmental Entity, statutory body
(including The Toronto Stock Exchange, the New York Stock Exchange and The
Nasdaq Stock Market) or self-regulatory authority, and the term
"applicable" with respect to such Laws and in the context that refers to
one or more Persons, means that such Laws apply to such Person or Persons
or its or their business, undertaking, property or securities and emanate
from a Governmental Entity having jurisdiction over the Person or Persons
or its or their business, undertaking, property or securities;
"Lien" means any mortgage, hypothec, lien, security interest, lease,
option, right of third parties or other similar charge or encumbrance,
including the lien or retained title of a conditional vendor and any
servitude, easement, right of way or other encumbrance or title to real
property;
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"Material Adverse Change", when used in connection with the SSCC or St.
Laurent, means any change, effect, event or occurrence with respect to its
condition (financial or otherwise), properties, assets, liabilities,
obligations (whether absolute, accrued conditional or otherwise),
businesses, operations or results of operations or those of its
subsidiaries that is, or would reasonably be expected to be, material and
adverse to the business, operations or financial condition of such party
and its subsidiaries taken as a whole;
"Material Adverse Effect" when used in connection with the SSCC or St.
Laurent, means any effect that is, or would reasonably be expected to be,
material and adverse to the business, results of operations or condition
(financial or otherwise) of such party and its subsidiaries taken as a
whole;
"Material Contracts" has the meaning ascribed thereto in Section 3.1(1)(x);
"Material Subsidiary" means each subsidiary of St. Laurent, the total
assets of which constituted more than ten percent of the consolidated
assets of St. Laurent, the total revenues of which constituted more than
ten percent of the consolidated revenues of St. Laurent or the total
operating income of which constituted more than ten percent of the
consolidated operating income of St. Laurent, in each case as set out in
the financial statements of St. Laurent as of and for the year ended
December 31, 1998 and including each affiliate of St. Laurent that directly
or indirectly holds an equity interest in each such subsidiary.
Notwithstanding the foregoing, "Material Subsidiaries" shall include such
other subsidiary identified as such in the St. Laurent Disclosure Letter;
"NSCA" means the Companies Act of Nova Scotia;
"OSC" means the Ontario Securities Commission;
"Permitted Lien" means any Lien which is expressly permitted by the terms
of any financing instrument or security agreement to which SSCC or any of
its subsidiaries is a party or to which St. Laurent or any of its
subsidiaries is a party, as the case may be;
"Person" includes any individual, firm, partnership, joint venture, venture
capital fund, limited liability company, unlimited liability company,
association, trust, trustee, executor, administrator, legal personal
representative, estate, group, body corporate, corporation, unincorporated
association or organization, Governmental Entity, syndicate or other
entity, whether or not having legal status;
"Plan of Arrangement" means the plan of arrangement substantially in the
form and content of Schedule D annexed hereto and any amendments or
variations thereto made in accordance with Section 6.1 hereof or Article 5
of the Plan of Arrangement or made at the direction of the Court in the
Final Order;
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"Pre-Effective Date Period" shall mean the period from and including the
date hereof to and including the Effective Time on the Effective Date;
"Publicly Disclosed by St. Laurent" means disclosed by St. Laurent in a
public filing made by it with the OSC, SEC and/or QSC from January 1, 1999
to and including January 31, 2000;
"Publicly Disclosed by SSCC" means disclosed by SSCC in a public filing
made by it with the SEC from January 1, 1999 to and including January 31,
2000;
"QSC" means the Commission des valeurs mobilieres du Quebec;
"Replacement Option" has the meaning ascribed thereto in Section 2.3(1)(b);
"Replacement Warrant" has the meaning ascribed thereto in Section
2.3(1)(d);
"Representatives" has the meaning ascribed thereto in Section 4.7(1);
"SEC" means the United States Securities and Exchange Commission;
"SEC Reports" has the meaning ascribed thereto in Section 3.2(1)(g);
"Securities Legislation" means the CBCA, the Securities Act (Quebec), the
Securities Act (Ontario) and the equivalent legislation in the other
provinces of Canada, the 1933 Act, the Exchange Act, all as now enacted or
as the same may from time to time be amended, re-enacted or replaced, and
the applicable rules, regulations, rulings, orders and forms made or
promulgated under such statutes and the published policies of the
regulatory authorities administering such statutes, as well as the rules,
regulations, by-laws and policies of The Toronto Stock Exchange, the New
York Exchange and The Nasdaq Stock Market;
"Security Portion" has the meaning ascribed thereto in the Plan of
Arrangement;
"Specified SSCC Event" means the occurrence of a Material Adverse Change
with respect to SSCC, or a breach by a SSCC Party of its obligations
hereunder, if by reason thereof, and taking into account Section 5.4, St.
Laurent would be entitled to rely on the failure of a condition set forth
in Section 5.3(1)(a), Section 5.3(1)(b), Section 5.3(1)(c), Section
5.3(1)(e) or Section 5.3(1)(f) as a reason not to complete the transactions
contemplated herein;
"SSCC Closing Price" means the closing price on The Nasdaq Stock Market of
SSCC Common Shares on the day immediately preceding the Effective Date;
"SSCC Common Shares" means the shares of common stock in the capital of
SSCC;
"SSCC Disclosure Letter" means that certain letter dated as of even date
herewith and delivered by SSCC to St. Laurent;
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"SSCC Material Subsidiary" means each subsidiary of SSCC, the total assets
of which constituted more than ten percent of the consolidated assets of
SSCC, the total revenues of which constituted more than ten percent of the
consolidated revenues of SSCC or the total operating income of which
constituted more than ten percent of the consolidated operating income of
SSCC, in each case as set out in the financial statements of SSCC for the
year ended December 31, 1998 and including each affiliate of SSCC that
directly or indirectly holds an equity interest in each such subsidiary;
"SSCC Option Shares" has the meaning ascribed thereto in Section 2.3(1)(b);
"SSCC Parties" means SSCC, Stone and 3038727, and "SSCC Party" means any
one of them;
"St. Laurent Common Shares" means the common shares in the capital of St.
Laurent;
"St. Laurent Directors' Stock Option and Share Purchase Plan" means that
certain Directors Stock Option and Share Purchase Plan of St. Laurent in
effect as of the date hereof;
"St. Laurent Disclosure Letter" means that certain letter dated as of even
date herewith and delivered by St. Laurent to the SSCC Parties;
"St. Laurent Documents" has the meaning ascribed thereto in Section
3.1(1)(o);
"St. Laurent Employee Share Purchase Plan (Canada)" means the employee
share purchase plan (Canada) of St. Laurent in effect as of the date
hereof;
"St. Laurent Financial Statements" has the meaning ascribed thereto in
Section 3.1(1)(h).
"St. Laurent Intellectual Property Rights" has the meaning ascribed thereto
in Section 3.1(1)(r);
"St. Laurent Long-Term Incentive Plan" means the long-term incentive plan
of St. Laurent in effect as of the date hereof;
"St. Laurent Managers' Share Purchase Plan" means the managers' share
purchase plan of St. Laurent in effect as of the date hereof;
"St. Laurent Managers' Stock Option Plan" mean the managers' stock option
plan of St. Laurent in effect as of the date hereof;
"St. Laurent Meeting" means the special meeting of St. Laurent
Securityholders, including any adjournment thereof, to be called and held
in accordance with the Interim Order to consider the Arrangement;
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"St. Laurent Options" means the options to purchase St. Laurent Common
Shares granted under the St. Laurent Directors' Stock Option and Share
Purchase Plan, the St. Laurent Long-Term Incentive Plan and the St. Laurent
Managers' Stock Option Plan and being outstanding and unexercised;
"St. Laurent Partially-Owned Entity" means Fibre Innovations, LLC, Grafx
Packaging Corp., Innovative Packaging Corp. and Oncorr Innovations, Inc.;
"St. Laurent Performance Share Plan" means the performance share plan of
St. Laurent in effect as of the date hereof;
"St. Laurent Plans" has the meaning ascribed thereto in Section
3.1(1)(n)(i);
"St. Laurent Rights Plan" means the shareholder rights plan of St. Laurent
approved on February 1, 1995, as amended on May 7, 1998 and on February 23,
2000;
"St. Laurent RSUs" means the restricted share units granted by St. Laurent
to certain officers and managers pursuant to the St. Laurent Managers'
Share Purchase Plan and being outstanding and unexercised;
"St. Laurent Securityholders" means the holders of St. Laurent Common
Shares, St. Laurent Options, St. Laurent RSUs and St. Laurent Warrants,
collectively;
"St. Laurent Share Purchase Plans" means, collectively, the St. Laurent
Directors' Stock Option and Share Purchase Plan, the St. Laurent Employee
Share Purchase Plan (Canada), the St. Laurent subsidiary Employee Stock
Purchase Plan (U.S.), the St. Laurent Managers' Share Purchase Plan and the
St. Laurent Performance Share Plan;
"St. Laurent subsidiary Employee Stock Purchase Plan (U.S.)" means that
certain Employee Stock Purchase Plan (U.S.) of a subsidiary of St. Laurent
in effect as of the date hereof;
"St. Laurent Warrants" means the 380,000 Series A Warrants of St. Laurent
issued on January 29, 1999 to purchase 380,000 St. Laurent Common Shares at
an initial exercise price of Canadian $10.95, outstanding as of the date
hereof;
"St. Laurent Warrant Indenture" means that certain Indenture made as of
January 29, 1999 between St. Laurent and Montreal Trust Company;
"subsidiary" means, with respect to a specified body corporate, any body
corporate of which more than 50% of the outstanding shares ordinarily
entitled to elect a majority of the board of directors thereof (whether or
not shares of any other class or classes shall or might be entitled to vote
upon the happening of any event or contingency) are at the time owned
directly or indirectly by such specified body corporate and shall include
any body corporate, partnership, joint venture or other
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entity over which it exercises direction or control or which is in a like
relation to a subsidiary;
"Superior Proposal" means any bona fide proposal by a third party to,
directly or indirectly, acquire assets representing more than 20% of the
book value (on a consolidated basis) of St. Laurent's total assets or more
than 20% of the outstanding St. Laurent Common Shares, whether by way of
merger, amalgamation, arrangement, take-over bid, sale of assets or
otherwise, and that in the good faith determination of the Board of
Directors of St. Laurent after consultation with financial advisors and
outside counsel (a) is reasonably capable of being completed, taking into
account all legal, financial, financing, regulatory and other aspects of
such proposal and the party making such proposal, and (b) would, if
consummated in accordance with its terms, result in a transaction more
favourable to the St. Laurent Securityholders than the transaction
contemplated by this Agreement;
"Tax" and "Taxes" have the respective meanings ascribed thereto in Section
3.1(1)(m)(iii); and
"Tax Returns" means all returns, declarations, reports, information returns
and statements required to be filed with any taxing authority relating to
Taxes.
Section 1.2 Interpretation Not Affected by Headings, etc.
The division of this Agreement into Articles, Sections and other portions
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation hereof. Unless otherwise
indicated, all references to an "Article" or "Section" followed by a number
and/or a letter refer to the specified Article or Section of this Agreement. The
terms "this Agreement", "hereof", "herein" and "hereunder" and similar
expressions refer to this Agreement (including the Schedules hereto) and, not to
any particular Article, Section or other portion hereof and include any
agreement or instrument supplementary or ancillary hereto.
Section 1.3 Currency.
Unless otherwise specifically indicated, all sums of money referred to in
this Agreement are expressed in lawful money of the United States.
Section 1.4 Number, etc.
Unless the context otherwise requires, words importing the singular shall
include the plural and vice versa and words importing any gender shall include
all genders.
Section 1.5 Date For Any Action.
In the event that any date on which any action is required to be taken
hereunder by any of the parties hereto is not a Business Day, such action shall
be required to be taken on the next succeeding day which is a Business Day.
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Section 1.6 Entire Agreement.
This Agreement and the agreements and other documents herein referred to
(including the St. Laurent Disclosure Letter and the SSCC Disclosure Letter)
constitute the entire agreement between the parties hereto pertaining to the
terms of the Arrangement and supersede all other prior agreements,
understandings, negotiations and discussions, whether oral or written, between
the parties hereto with respect to the terms of the Arrangement.
Notwithstanding anything to the contrary herein, the Confidentiality Agreements
shall survive the execution of this Agreement, and in the event of
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inconsistencies between this Agreement and the Confidentiality Agreements, the
Confidentiality Agreements shall prevail. However, SSCC and the SSCC Parties
shall not be in breach of the "standstill" undertakings contained in the
Confidentiality Agreements solely by reason of the execution of this Agreement
or the consummation of the transactions contemplated herein, which "standstill"
undertakings shall continue to apply in the event of termination of this
Agreement by either SSCC or St. Laurent.
Section 1.7 Schedules.
The following Schedules are annexed to this Agreement and are hereby
incorporated by reference into this Agreement and form part hereof:
Schedule A - Affiliate's Letter
Schedule B - Appropriate Regulatory Approvals
Schedule C - Arrangement Resolution
Schedule D - Plan of Arrangement
Section 1.8 Accounting Matters.
Unless otherwise stated, all accounting terms used in this Agreement in
respect of St. Laurent shall have the meanings attributable thereto under
Canadian generally accepted accounting principles and all determinations of an
accounting nature in respect of St. Laurent required to be made shall be made in
a manner consistent with Canadian generally accepted accounting principles and
past practice. Unless otherwise stated, all accounting terms used in this
Agreement in respect of SSCC shall have the meanings attributable thereto under
United States generally accepted accounting principles and all determinations of
an accounting nature required to be made in respect of SSCC shall be made in a
manner consistent with United States generally accepted accounting principles
and past practice.
Section 1.9 Knowledge.
Each reference herein to the knowledge of a party means, unless otherwise
specified, the actual knowledge of such party without inquiry.
ARTICLE 2
THE ARRANGEMENT
Section 2.1 Implementation Steps by St. Laurent.
(1) St. Laurent covenants in favour of the SSCC Parties that St. Laurent shall:
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(a) subject to Section 2.4, as soon as reasonably practicable, apply in a
manner acceptable to the SSCC Parties, acting reasonably, under
Section 192 of the CBCA for an order approving the Interim Order, and
thereafter proceed with and diligently seek the Arrangement;
(b) subject to Section 2.4, convene and hold the St. Laurent Meeting for
the purpose of considering the Arrangement Resolution (and for any
other proper purpose as may be set out in the notice for such
meeting);
(c) subject to the terms of this Agreement, include in the Circular the
unanimous recommendation of the disinterested directors of St. Laurent
that St. Laurent Securityholders vote in favour of the Arrangement
Resolution;
(d) subject to the terms of this Agreement and obtaining the approvals as
are required by the Interim Order, proceed with and diligently pursue
the application to the Court for the Final Order; and
(e) subject to the terms of this Agreement and obtaining the Final Order
and the satisfaction or waiver of the other conditions herein
contained in favour of each party, send to the Director, for
endorsement and filing by the Director, the Articles of Arrangement
and such other documents as may be required in connection therewith
under the CBCA to give effect to the Arrangement.
Section 2.2 Interim Order.
(1) The notice of motion for the application referred to in Section 2.1(1)(a)
shall request that the Interim Order provide:
(a) for the class of Persons to whom notice is to be provided in respect
of the Arrangement and the St. Laurent Meeting and for the manner in
which such notice is to be provided;
(b) that the requisite approval for the Arrangement Resolution shall be
662/3% of the votes cast on the Arrangement Resolution by St. Laurent
Securityholders present in person or by proxy at the St. Laurent
Meeting (such that each holder of St. Laurent Common Shares is
entitled to one vote for each St. Laurent Common Share held, each
holder of St. Laurent Options is entitled to one vote for each St.
Laurent Common Share such holder would have received on a valid
exercise of such St. Laurent Options, each holder of St. Laurent RSUs
is entitled to one vote for each St. Laurent Common Share such holder
would have received on vesting of such St. Laurent RSUs and each
holder of St. Laurent Warrants is entitled to one vote for each St.
Laurent Common Share such holder would have received on a valid
exercise of such St. Laurent Warrants;
(c) that, in all other respects, the terms, restrictions and conditions of
the by-laws and articles of St. Laurent, including quorum requirements
and all other matters, shall apply in respect of the St. Laurent
Meeting;
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(d) for the grant of the Dissent Rights; and
(e) for the notice requirements respecting the presentation of the
application to the Court for a Final Order.
Section 2.3 Articles of Arrangement.
(1) The Articles of Arrangement shall, with such other matters as are necessary
to effect the Arrangement, and all as subject to the provisions of the Plan
of Arrangement, provide substantially as follows:
(a) each outstanding St. Laurent Common Share that is not held by a holder
who has exercised its Dissent Rights and is ultimately entitled to be
paid the fair value of St. Laurent Common Shares (other than St.
Laurent Common Shares held by any SSCC Party or any affiliate
thereof), will be transferred by the holder thereof to 3038727 in
exchange for the Exchange Consideration, and the name of each such
holder of St. Laurent Common Shares will be removed from the register
of holders of St. Laurent Common Shares and added to the register of
holders of SSCC Common Shares, and 3038727 will be recorded as the
registered holder of such St. Laurent Common Shares so exchanged and
will be deemed to be the legal and beneficial owner thereof;
(b) each St. Laurent Option shall be exchanged for an option (a
"Replacement Option") to purchase that number of SSCC Common Shares
equal to the sum of (i) the Security Portion times the number of St.
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Laurent Common Shares subject to the St. Laurent Option; plus (ii) the
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quotient of (A) $12.50 times the number of St. Laurent Common Shares
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subject to the St. Laurent Option, divided by (B) the SSCC Closing
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Price ("SSCC Option Shares"); the exercise price per SSCC Common Share
for each Replacement Option shall be the quotient of (x) an aggregate
amount equal to the number of St. Laurent Common Shares subject to the
St. Laurent Option exchanged for such Replacement Option times the
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original exercise price per St. Laurent Common Share pursuant to such
St. Laurent Option at the option of the holder (i) converted into its
U.S. dollar equivalent based on the noon spot exchange rate on the day
immediately preceding the Effective Date reported by the Bank of
Canada for Canadian dollars expressed in US dollars, or (ii) expressed
in Canadian dollars, the whole divided by (y) the SSCC Option Shares
----------
subject to such Replacement Option;
(c) each St. Laurent RSU shall be fully vested and entitle its holder to
receive at the Effective Time, with respect to each St. Laurent Common
Share subject to such St. Laurent RSU, the Exchange Consideration; and
(d) each St. Laurent Warrant will be exchanged for a warrant (a
"Replacement Warrant"); each Replacement Warrant will entitle the
holder thereof, upon the exercise of each Replacement Warrant and
payment of the Exercise Price (as defined in the St. Laurent Warrant
Indenture), to receive the Exchange
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Consideration. Except as set out in the preceding sentence, the term
to expiry and all other terms and conditions of each Replacement
Warrant will be unchanged from those of the relevant St. Laurent
Warrant and any document or agreement previously evidencing a St.
Laurent Warrant will thereafter evidence and be deemed to evidence
such Replacement Warrant.
(2) The parties understand and agree that the Exchange Consideration has been
calculated based upon the accuracy of the representations and warranties
set forth in Section 3.1(1)(c) and that, in the event the number of
outstanding St. Laurent Common Shares as of January 31, 2000 or the number
of St. Laurent Common Shares issuable upon the exercise of, or subject to,
options or other agreements exceeds or is less than the amounts
specifically set forth in the St. Laurent Disclosure Letter (including as a
result of any stock split, reverse stock split, stock dividend, including
any dividend or distribution of securities convertible into capital stock
or capital stock equivalents of St. Laurent, recapitalization, or other
like change occurring after the date of this Agreement), the Exchange
Consideration shall be appropriately adjusted upward or downward, as the
case may be. The provisions of this Section 2.3(2) shall not, however,
affect the representations and warranties set forth in Section 3.1(1)(c).
Section 2.4 Circular.
As promptly as practicable after the execution and delivery of this
Agreement, SSCC and St. Laurent shall prepare the Circular together with any
other documents required by Securities Legislation, other applicable Laws or the
Interim Order in connection with the Arrangement, and as promptly as practicable
after the date of execution of this Agreement but in any event not later than
August 18, 2000, St. Laurent shall cause the Circular and other documentation
required in connection with the St. Laurent Meeting to be sent to each holder of
St. Laurent Common Shares, St. Laurent Options, St. Laurent RSUs and St. Laurent
Warrants and filed as required by the Interim Order and applicable Laws,
provided that the SSCC Parties and St. Laurent shall be reasonably satisfied, at
the time the Circular is sent to St. Laurent Securityholders, that the
conditions referred to in Article 5 can be satisfied.
Section 2.5 Securities Compliance.
(1) SSCC shall use all reasonable best efforts to obtain, prior to the
Effective Time, all orders required from the applicable Canadian securities
authorities to permit the issuance and first resale of (a) the SSCC Common
Shares issued pursuant to the Arrangement, and (b) the SSCC Common Shares
issued from time to time upon the exercise of the Replacement Options and
the Replacement Warrants, in each case without qualification with or
approval of or the filing of any document, including any prospectus or
similar document, or the taking of any proceeding with, or the obtaining of
any further order, ruling or consent from, any Governmental Entity or
regulatory authority under any Canadian federal, provincial or territorial
securities or other Laws or pursuant to the rules and regulations of any
regulatory authority administering such Laws, or the fulfilment of any
other legal requirement in any such jurisdiction (other than, with respect
to such first resales, any restrictions on transfer by reason of a holder
being a "control person" of any SSCC Party or St. Laurent for purposes of
Canadian federal, provincial or territorial Securities Legislation).
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(2) As promptly as practicable after the Effective Date, SSCC shall file a
registration statement on Form S-8 (or other applicable form) (the "Form S-
8"), and take such actions as necessary to keep the information therein
current from time to time, in order to register under the 1933 Act those
SSCC Common Shares to be issued from time to time after the Effective Time
upon the exercise of the Replacement Options.
Section 2.6 Preparation of Filings.
(1) Each of the SSCC Parties and St. Laurent shall cooperate and use their
reasonable best efforts in:
(a) the preparation and filing of any application for the orders and the
preparation of any required registration statements and any other
documents reasonably deemed by SSCC or St. Laurent to be necessary to
discharge their respective obligations under United States and
Canadian federal, provincial, territorial or state Securities
Legislation in connection with the Arrangement and the transactions
contemplated hereby;
(b) the taking of all such action as may be required under any applicable
United States and Canadian federal, provincial, territorial or state
Securities Legislation (including "blue sky laws") in connection with
the issuance of the SSCC Common Shares in connection with the
Arrangement or the exercise of the Replacement Options and the
Replacement Warrants; provided, however, that with respect to the
United States "blue sky" and Canadian provincial qualifications,
neither SSCC nor St. Laurent shall be required to register or qualify
as a foreign corporation or to take any action that would subject it
to service of process in any jurisdiction where such entity is not now
so subject, except as to matters and transactions arising solely from
the offer and sale of the SSCC Common Shares; and
(c) the taking of all such action as may be required under the CBCA in
connection with the transactions contemplated by this Agreement and
the Plan of Arrangement.
(2) Each of SSCC and St. Laurent shall furnish to the other all such
information concerning it and its shareholders as may be required (and, in
the case of its shareholders, available to it) for the effectuation of the
actions described in Section 2.4 and Section 2.5 and the foregoing
provisions of this Section 2.6 and the obtention of all Appropriate
Regulatory Approvals, and each covenants that no information furnished by
it (to its knowledge in the case of information concerning its
shareholders) in connection with such actions or otherwise in connection
with the consummation of the Arrangement and the other transactions
contemplated by this Agreement will contain any untrue statement of a
material fact or omit to state a material fact required to be stated in any
such document or necessary in order to make any information so furnished
for use in any such document not misleading in the light of the
circumstances in which it is furnished.
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(3) SSCC and St. Laurent shall each promptly notify the other if at any time
before or after the Effective Time it becomes aware that the Circular or an
application for an order or a registration statement described in Section
2.5 contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements contained therein not misleading in light of the circumstances
in which they are made, or that otherwise requires an amendment or
supplement to the Circular or such application or registration statement.
In any such event, SSCC and St. Laurent shall cooperate in the preparation
of a supplement or amendment to the Circular, application for an order or
registration statement, or such other document, as required and as the case
may be, and, if required, shall cause the same to be distributed to
shareholders of SSCC or St. Laurent and/or filed with the relevant
securities regulatory authorities.
(4) St. Laurent shall use its reasonable best efforts to ensure that the
Circular complies with all applicable Laws and, without limiting the
generality of the foregoing, that the Circular does not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements contained therein not
misleading in light of the circumstances in which they are made (other than
with respect to any information relating to and provided by the SSCC
Parties or any third party that is not an affiliate of St. Laurent).
Without limiting the generality of the foregoing, St. Laurent shall use its
reasonable best efforts to ensure that the Circular provides holders of St.
Laurent Common Shares with information in sufficient detail to permit them
to form a reasoned judgment concerning the matters to be placed before them
at the St. Laurent Meeting and SSCC shall provide all information regarding
it necessary to do so.
(5) SSCC shall ensure that the Form S-8 contemplated in Section 2.5(2) complies
with all applicable Laws and, without limiting the generality of the
foregoing, that such document does not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements contained therein not
misleading in light of the circumstances in which they are made (other than
with respect to any information relating to and provided by St. Laurent or
any third party that is not an affiliate of SSCC) and St. Laurent shall
provide all information regarding it necessary to do so.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of St. Laurent.
(1) St. Laurent represents and warrants to and in favour of the SSCC Parties as
follows and acknowledges that the SSCC Parties are relying upon such
representations and warranties in connection with the matters contemplated
by this Agreement that, except as set forth in the St. Laurent Disclosure
Letter:
(a) Organization.
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(i) Each of St. Laurent and the Material Subsidiaries has been duly
incorporated or formed under all applicable Laws, is validly
subsisting and in good standing under the laws of the
jurisdiction of its incorporation or organization and has full
corporate or legal power to own, lease and operate its properties
and conduct its businesses as currently owned and conducted. Each
of the St. Laurent and the Material Subsidiaries is duly
qualified or licensed as foreign corporations to do business, and
is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of
its business makes such qualification or licensing necessary,
except for such failures to be so qualified or licensed and in
good standing that would not, individually or in the aggregate,
have a Material Adverse Effect. All of the outstanding shares
and other ownership interests of the Material Subsidiaries which
are held directly or indirectly by St. Laurent are validly
issued, fully paid and non-assessable and all such shares and
other ownership interests are owned directly or indirectly by St.
Laurent, free and clear of all Liens, except pursuant to
restrictions on transfer contained in constating documents.
There are no outstanding options, rights, entitlements,
understandings or commitments (contingent or otherwise) regarding
the right to acquire any such shares or other ownership interests
in any of the Material Subsidiaries. St. Laurent has disclosed in
the St. Laurent Disclosure Letter the names and jurisdictions of
incorporation of each of the Material Subsidiaries.
(ii) Neither St. Laurent nor any Material Subsidiary has any minority
interest in any other corporation or entity.
(b) Certificate of Incorporation and By-laws. St. Laurent has heretofore
made available to SSCC a complete and correct copy of the certificate
of incorporation and the by-laws or equivalent organizational
documents, each as amended to date, of St. Laurent and each Material
Subsidiary. Such certificates of incorporation, by-laws and
equivalent organizational documents are in full force and effect.
(c) Capitalization. The authorized capital of St. Laurent consists of an
unlimited number of St. Laurent Common Shares and an unlimited number
of Class A preferred shares, issuable in series. The St. Laurent
Disclosure Letter sets forth, as at January 31, 2000, the number of
St. Laurent Common Shares issued and outstanding and the number of
outstanding St. Laurent Options, St. Laurent RSUs and St. Laurent
Warrants. There are no options, warrants, conversion privileges or
other rights, agreements, arrangements or commitments (pre-emptive,
contingent or otherwise) obligating St. Laurent or any Material
Subsidiary to issue or sell any shares of St. Laurent or any of the
Material Subsidiaries or securities or obligations of any kind
convertible into or exchangeable for any shares of St. Laurent, any
Material Subsidiary or any
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other Person, nor is there outstanding any stock appreciation rights,
phantom equity or similar rights, agreements, arrangements or
commitments based upon the book value, income or any other attribute
of St. Laurent or any subsidiary. The St. Laurent Disclosure Letter
sets forth the holders of all outstanding St. Laurent Options and the
number, exercise prices, vesting schedules and expiration dates of
each grant to such holders. There have been no St. Laurent Common
Shares issued or purchased for cancellation since January 31, 2000
except pursuant to the purchase of St. Laurent Common Shares pursuant
to the St. Laurent Share Purchase Plans and pursuant to the exercise
of securities issued prior to January 31, 2000. All outstanding St.
Laurent Common Shares have been duly authorized and are validly issued
and outstanding as fully paid and non-assessable shares, free of pre-
emptive rights. There are no outstanding bonds, debentures or other
evidences of indebtedness of St. Laurent or any subsidiary having the
right to vote (or that are convertible for or exercisable into
securities having the right to vote) with the holders of the St.
Laurent Common Shares on any matter. There are no outstanding
contractual obligations of St. Laurent to repurchase, redeem or
otherwise acquire any of its outstanding securities or with respect to
the voting or disposition of any outstanding securities of any of the
Material Subsidiaries. To the knowledge of St. Laurent, as of the date
hereof, there are no proxies with respect to any securities of St.
Laurent and there are no agreements or understandings by or among any
persons which affect or relate to the voting or giving written
consents with respect to any securities of St. Laurent.
(d) Authority and No Violation.
(i) St. Laurent has the requisite corporate power and authority to
enter into this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement by St.
Laurent and the consummation by St. Laurent of the transactions
contemplated by this Agreement have been duly authorized by its
Board of Directors and no other corporate proceedings on its part
are necessary to authorize this Agreement, or the transactions
contemplated hereby other than:
(A) with respect to the Circular and other matters relating
solely thereto, including the implementation of the
Arrangement, the approval of the Board of Directors of St.
Laurent; and
(B) with respect to the completion of the Arrangement, the
approval of the St. Laurent Securityholders.
(ii) This Agreement has been duly executed and delivered by St.
Laurent and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency and other applicable Laws affecting
creditors' rights generally, and to general principles of equity
and to the fact that the
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Xxxxxxxx Xxx (Xxxxxx) precludes a court in Canada from giving
judgment in any currency other than Canadian currency.
(iii) The disinterested directors of the Board of Directors of St.
Laurent have (A) determined unanimously that the Arrangement is
fair to the St. Laurent Securityholders and is in the best
interests of St. Laurent, (B) received separate opinions from
Xxxxxxx Xxxxxxx Xxxxxx Read Inc. and Xxxxxxxxx, Lufkin &
Xxxxxxxx to the effect that, as of the date of this Agreement,
the Exchange Consideration and the Arrangement is fair from a
financial point of view to the St. Laurent Securityholders and
(C) determined unanimously to recommend that the St. Laurent
Securityholders vote in favour of the Arrangement. St. Laurent
is not subject to a shareholder rights plan or "poison pill" or
similar plan, other than the St. Laurent Rights Plan.
(iv) The approval of this Agreement, the execution and delivery by
St. Laurent of this Agreement and the performance by it of its
obligations hereunder and the completion of the Arrangement and
the transactions contemplated thereby, will not:
(A) result in a violation or breach of, require any consent to
be obtained under or give rise to any termination,
purchase or sale rights or payment obligation under any
provision of:
(I) its or any Material Subsidiary's certificate of
incorporation, articles, by-laws or other charter
documents, including any unanimous shareholder
agreement or any other agreement or understanding
relating to ownership of shares or other interests or
to corporate governance with any party holding an
ownership interest in any Material Subsidiary;
(II) subject to obtaining the Appropriate Regulatory
Approvals relating to St. Laurent or any of its
Material Subsidiaries, any Laws, judgment or decree
applicable to St. Laurent or any of its Material
Subsidiaries or by which any property or assets of
St. Laurent or any of its Material Subsidiaries is
bound or affected except to the extent that the
violation or breach of, or failure to obtain any
consent under, any Laws, judgment or decree would
not, individually or in the aggregate, have a
Material Adverse Effect on St. Laurent; or
(III) subject to obtaining the Appropriate Regulatory
Approvals relating to St. Laurent or any Material
Subsidiary and except as would not, individually or
in the aggregate, have a Material Adverse Effect on
St.
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Laurent, any material contract, agreement, license,
franchise or permit to which St. Laurent or any
Material Subsidiary is party or by which St. Laurent
or any Material Subsidiary or any property or asset
of St. Laurent or any Material Subsidiary is
bound or subject or is the beneficiary;
(B) give rise to any right of termination or acceleration of
indebtedness (excluding leases which have not been
capitalized by St. Laurent or any subsidiary in accordance
with Canadian generally accepted accounting principles
applied on a consistent basis) of St. Laurent or any
subsidiary, or cause any such indebtedness to come due before
its stated maturity or cause any available credit of St.
Laurent or any subsidiary to cease to be available other than
as would not, individually or in the aggregate, have a
Material Adverse Effect on St. Laurent;
(C) except as would not, individually or in the aggregate, have a
Material Adverse Effect on St. Laurent, result in the
imposition of any Lien upon any of its assets or the assets
of any Material Subsidiary, or restrict, hinder, impair or
limit the ability of St. Laurent or any Material Subsidiary
to carry on the business of St. Laurent or any Material
Subsidiary as and where it is now being carried on; or
(D) except as would not, individually or in the aggregate, have a
Material Adverse Effect on St. Laurent, result in any payment
(including severance, unemployment compensation, golden
parachute, bonus or otherwise) becoming due to any director,
executive officer or senior management employee of St.
Laurent or any subsidiary or increase any benefits otherwise
payable under any St. Laurent Plan or result in the
acceleration of time of payment or vesting of any such
benefits, including the time of exercise of stock options.
(v) No consent, approval, order or authorization of, or declaration
or filing with, any Governmental Entity is required to be
obtained by St. Laurent and its Material Subsidiaries in
connection with the execution and delivery of this Agreement or
the consummation by St. Laurent of the transactions contemplated
hereby other than (A) any approvals required by the Interim
Order, (B) the Final Order, (C) filings with the Director under
the CBCA, (D) the Appropriate Regulatory Approvals relating to
St. Laurent, (E) any other consents, approvals, orders,
authorizations, declarations or filings of or with a Governmental
Entity which if not obtained would not, individually or in the
aggregate, have
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a Material Adverse Effect on St. Laurent and (F) except as set
forth in the St. Laurent Disclosure Letter.
(e) No Defaults. Subject to obtaining the Appropriate Regulatory
Approvals relating to St. Laurent or any of its Material
Subsidiaries, neither St. Laurent nor any of its Material
Subsidiaries is in default under, and there exists no event,
condition or occurrence which, after notice or lapse of time or
both, would constitute such a default under, any contract,
agreement, license or franchise to which it is a party which
default would have a Material Adverse Effect on St. Laurent.
(f) Absence of Certain Changes or Events. Except as Publicly
Disclosed by St. Laurent, from December 31, 1998 (or, in the case
of (iii) below, January 31, 2000) through to the date hereof,
each of St. Laurent and its Material Subsidiaries has conducted
its business only in the ordinary and regular course of business
and there has not occurred:
(i) a Material Adverse Change with respect to St. Laurent;
(ii) any damage, destruction or loss, whether covered by
insurance or not, that could reasonably be expected to have
a Material Adverse Effect on St. Laurent;
(iii) any redemption, repurchase or other acquisition of St.
Laurent Common Shares by St. Laurent or any declaration,
setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with
respect to St. Laurent Common Shares;
(iv) any material increase in or modification of the
compensation payable or to become payable by it to any of
its directors or executive officers, or any grant to any
such director or executive officer of any increase in
severance or termination pay;
(v) any material increase in or modification of any bonus,
pension, insurance or benefit arrangement (including the
granting of stock options, restricted stock awards or stock
appreciation rights) made to, for or with any of its
directors or executive officers;
(vi) any acquisition or sale of its property or assets having a
value in excess of $10,000,000 individually, other than in
the ordinary and regular course of business;
(vii) any entering into, amendment of, relinquishment,
termination or non-renewal by it of any material contract,
agreement, license, franchise, lease transaction,
commitment or other right or obligation, other than in the
ordinary and regular course of business;
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(viii) any resolution to approve a split, combination or
reclassification of any of its outstanding shares;
(ix) any change in its accounting methods, principles or
practices; or
(x) any incurrence of a material liability (direct,
contingent or otherwise);
(xi) any taking of action that would cause the St. Laurent
Rights Plan to be applicable;
(xii) any failure by St. Laurent, in any material respect, to
revalue any asset in accordance with Canadian generally
accepted accounting principles consistent with past
practice;
(xiii) any agreement or arrangement to take any action which, if
taken prior to the date hereof, would have made any
representation or warranty set forth in this Agreement
materially untrue or incorrect as of the date when made.
(g) Employment Matters.
(i) St. Laurent has made available to SSCC true and complete
copies of all binding employment agreements, contracts,
obligations and understandings to which St. Laurent or any
Material Subsidiary is a party with any director, executive
officer or senior management employee earning in excess of
$200,000 for the year ended December 31, 1999 (including
bonuses). Except as set forth in the management information
circular prepared in connection with the Annual Meeting of
St. Laurent held on May 5, 1999, neither St. Laurent nor
any Material Subsidiary is a party to any binding policy,
agreement, obligation or understanding providing for
severance or termination payments to, or any employment
agreement with, any director, executive officer or senior
management employee earning in excess of $200,000 for the
year ended December 31, 1999 (including bonuses).
(ii) St. Laurent has identified in the St. Laurent Disclosure
Letter and has delivered to SSCC true and complete copies
of all collective bargaining agreements, letters of
understanding, and other contracts to which St. Laurent and
any Material Subsidiary is a party with any labour
organization. Neither St. Laurent nor any Material
Subsidiary is subject to any application for certification
or, to the knowledge of St. Laurent, threatened or apparent
union-organizing campaigns or representation disputes.
There are no current pending or, to the knowledge of St.
Laurent, threatened strikes, slowdowns, stoppages or
disputes at St. Laurent or any Material Subsidiary that
would, individually or in the aggregate, have a Material
Adverse Effect on St. Laurent. No collective bargaining
agreement to which St. Laurent or
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any subsidiary is or may be a party is currently under
negotiation or renegotiation and no existing collective
bargaining agreement is due for expiration, renewal or
renegotiation within the one-year period after the date
hereof.
(iii) Neither St. Laurent nor any Material Subsidiary is subject
to any claim for wrongful dismissal, constructive
dismissal or any other tort claim, actual or, to the
knowledge of St. Laurent, threatened, or any litigation,
actual or, to the knowledge of St. Laurent, threatened,
relating to employment or termination of employment of
employees or independent contractors, other than those
claims or such litigation as would, individually or in the
aggregate, not have a Material Adverse Effect on St.
Laurent. No unfair labour practice complaint against St.
Laurent or any Material Subsidiary is pending before the
National Labour Relations Board or any other tribunal
which would, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on St.
Laurent. Neither St. Laurent nor any Material Subsidiary
is involved in or, to the knowledge of St. Laurent,
threatened with any complaint or grievance which,
individually or in the aggregate, has had or would be
reasonably expected to have a Material Adverse Effect on
St. Laurent. St. Laurent has delivered to SSCC a true and
complete list of all claims, complaints and grievances
that are pending against St. Laurent or any Material
Subsidiary by any current or former employee which would,
individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on St. Laurent.
(iv) Except for any matter which would individually or in the
aggregate not reasonably be expected to have a Material
Adverse Effect on St. Laurent, St. Laurent and its
Material Subsidiaries have operated and are in compliance
with all federal, state and other applicable laws,
domestic or foreign, respecting labour and employment,
including, but not limited to, fair employment practices,
labour standards, equal employment opportunity,
occupational health and safety, employment equity, pay
equity, workers' compensation, human rights, immigration,
wages and hours, plant closing, and the payment of social
security and similar taxes; there are no current, pending
or, to the knowledge of St. Laurent, threatened charges,
claims, suits, actions, proceedings or investigations
against St. Laurent or any Material Subsidiary by or
before any tribunal, federal or state court or
administrative agency with respect to any of the above
areas which, individually or in the aggregate, has had or
would be reasonably expected to have a Material Adverse
Effect on St. Laurent; neither St. Laurent nor any
Material Subsidiary is a government contractor subject to
any obligations imposed by the Office of Federal Contract
Compliance Program or any comparable state or local
affirmative action agency.
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(h) Financial Statements. The audited consolidated financial
statements (including, in each case, any notes thereto) of St.
Laurent as at and for the 12-month periods ended December 31,
1998, December 31, 1997 and December 31, 1996 and the unaudited
consolidated financial statements for the 9-month period ended
September 30, 1999 (the "St. Laurent Financial Statements") have
been prepared in accordance with Canadian generally accepted
accounting principles applied on a consistent basis throughout
the periods indicated (except as may be indicated in the notes
thereto) (subject, in the case of such unaudited financial
statements, to normal and recurring year-end adjustments which
were not and are not expected, individually or in the aggregate,
to be material in amount and the absence of certain footnote
disclosures), the requirements of applicable Governmental
Entities and applicable Securities Legislation; such financial
statements present fairly, in all material respects, the
consolidated financial position, results of operations and cash
flows of St. Laurent and its subsidiaries as of the respective
dates thereof and for the respective periods covered thereby,
subject, in the case of such unaudited financial statements, to
normal and recurring year-end adjustments which were not and are
not expected, individually or in the aggregate, to be material in
amount.
(i) Absence of Undisclosed Liabilities. Except as reflected in the
audited financial statements of St. Laurent for the 12-month
period ended December 31, 1998, as Publicly Disclosed by St.
Laurent or as incurred in the ordinary course of business,
neither St. Laurent nor any of its subsidiaries has any
liabilities or obligations of any nature (absolute, accrued,
contingent or otherwise), which, either individually or in the
aggregate, are material in amount to St. Laurent and its
subsidiaries taken as a whole.
(j) Books and Records. The books, records and accounts of St. Laurent
and its subsidiaries, in all material respects, (i) have been
maintained in accordance with good business practices on a basis
consistent with prior years, (ii) are stated in reasonable detail
and accurately and fairly reflect the transactions and
dispositions of the assets of St. Laurent and its subsidiaries
and (iii) fairly reflect the basis for the consolidated financial
statements of St. Laurent. St. Laurent has devised and maintains
a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in
accordance with management's general or specific authorization;
and (ii) transactions are recorded as necessary (A) to permit
preparation of financial statements in conformity with Canadian
generally accepted accounting principles or any other criteria
applicable to such statements and (B) to maintain accountability
for assets.
(k) Litigation, Etc. Except as Publicly Disclosed by St. Laurent,
there is currently no claim, action, proceeding or investigation
(including any native land claims) pending or, to the knowledge
of St. Laurent, threatened against or affecting St. Laurent or
any Material Subsidiary before any court or
-24-
Governmental Entity that, could reasonably be expected to have a
Material Adverse Effect on St. Laurent, or prevent or materially
delay consummation of the transactions contemplated by this
Agreement or the Arrangement. Neither St. Laurent nor any
Material Subsidiary, nor their respective assets and properties,
is subject to any outstanding judgment, order, writ, injunction
or decree that has had or is reasonably likely to have a Material
Adverse Effect on St. Laurent or that would prevent or materially
delay consummation of the transactions contemplated by this
Agreement or the Arrangement.
(l) Environmental. Except for any matters that, individually or in
the aggregate, would not have a Material Adverse Effect on St.
Laurent:
(i) all operations of St. Laurent and its subsidiaries have
been conducted, and are now, in compliance with all
Environmental Laws;
(ii) St. Laurent and its subsidiaries are in possession of, and
in compliance with, all permits, authorizations,
certificates, licenses, registrations, approvals and
consents necessary under Environmental Laws to own, lease
and operate their properties and to conduct their
respective businesses as they are now being conducted or as
proposed to be conducted (collectively the "Environmental
Permits");
(iii) neither St. Laurent nor any subsidiary is subject to:
(A) any non-compliance with Environmental Laws which
requires or, to the knowledge of St. Laurent, may,
require any work, repairs, construction, change in
business practices or operations, or expenditures,
including capital expenditures for facility upgrades,
environmental investigation and remediation
expenditures, or any other such expenditures;
(B) any written demand or written notice with respect to
the breach of or potential liability under any
Environmental Laws or Environmental Permits by St.
Laurent or any subsidiary, including but not limited to
any regulations respecting the use, generation,
release, storage, treatment, transportation or
disposition (including disposal or arranging for
disposal) of Hazardous Substances;
(C) any written demand or written notice with respect to
potential liability, by contract or under Environmental
Laws relating to St. Laurent or any current or, any
former subsidiary or, to the knowledge of St. Laurent,
any of their respective predecessor entities, divisions
or any formerly owned, leased or operated properties or
assets of the foregoing, including potential liability
with respect to the presence, generation, storage,
treatment, release or discharge of Hazardous
Substances; or
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(D) any changes in the terms or conditions of any
Environmental Permits or any renewal, modification,
revocation, reissuance, alteration, transfer or
amendment of such Environmental Permits, or any review
by, or approval of, any Governmental Entity of such
Environmental Permits that are required in connection
with the execution or delivery of this Agreement, the
consummation of the transactions contemplated hereby or
the continuation of business of St. Laurent or any
subsidiaries following such consummation;
(E) any non-compliance with Environmental Laws pertaining
to underground storage tanks, asbestos containing
materials, or regulated levels of polychlorinated
biphenols existing at any of the facilities owned or
operated by St. Laurent or any subsidiary; and
(iv) with respect to such businesses and operations, neither St.
Laurent nor its subsidiaries have at any time given any written
undertakings with respect to remedying any breach or liability
under Environmental Laws or Environmental Permits which are
required to have been performed and have not been duly performed.
(m) Tax Matters.
(i) St. Laurent and each of its Material Subsidiaries have duly and
timely filed, or caused to be filed, all material Tax Returns
required to be filed by them (all of which returns were correct
and complete in all material respects) and have paid, or caused
to be paid, all material amounts of Taxes shown to be due and
payable thereon, and St. Laurent's most recently published
financial statements contain an adequate provision in accordance
with Canadian generally accepted accounting principles for all
material amounts of Taxes payable in respect of each period
covered by such financial statements and all prior periods to the
extent such Taxes have not been paid, whether or not due and
whether or not shown as being due on any Tax Returns. St. Laurent
and each of its Material Subsidiaries have made adequate
provision in accordance with generally accepted accounting
principles in their books and records for any material amounts of
Taxes accruing in respect of any accounting period which has
ended subsequent to the period covered by such financial
statements.
(ii) Neither St. Laurent nor any Material Subsidiary has received any
written notification that any issues involving a material amount
of Taxes have been raised (and are currently pending) by Revenue
Canada, the United States Internal Revenue Service or any other
taxing authority, including any sales tax authority, in
connection with any of the Tax Returns referred to above and no
waivers of statutes of
-26-
limitations have been given or requested with respect to St.
Laurent or any Material Subsidiary. All Tax Returns of St.
Laurent and the Material Subsidiaries for income taxes have been
examined by applicable Government Entities for all fiscal years
up to and including the fiscal year ended December 31, 1995
(Canada). To the best of the knowledge of St. Laurent, there are
no proposed in writing (but unassessed) additional Taxes
involving a material amount of Taxes and none has been asserted
in writing. No Tax liens have been filed for material amounts of
Taxes other than for Taxes not yet due and payable. Neither St.
Laurent nor any of its subsidiaries has filed any consent
agreement under Section 341(f) of the Internal Revenue Code of
1986, as amended (the "Code"). Neither St. Laurent nor any of its
subsidiaries is party to any agreement providing for the
allocation or payment of Tax liabilities or payment for Tax
benefits. St. Laurent has not made an election under Section
897(i) of the Code to be treated as a domestic corporation for
purposes of Sections 897, 1445 and 6039C of the Code. St. Laurent
is not, nor ever been, a "United States real property holding
company" within the meaning of Section 897(c)(2) of the Code. To
the extent that the classification of a St. Laurent subsidiary is
relevant for U.S. federal income tax purposes, such subsidiary is
treated as a corporation for purposes of the Code. Neither St.
Laurent nor any of its subsidiaries is engaged in a trade or
business or has a permanent establishment in a country other than
the country in which such entity is formed or organized.
(iii) "Tax" and "Taxes" means, with respect to any entity, 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, sales taxes,
use taxes, ad valorem taxes, value added taxes, transfer taxes,
franchise taxes, license taxes, withholding taxes, payroll taxes,
employment taxes, Canada or Quebec Pension Plan premiums,
employment insurance premiums, excise, severance, social security
premiums, workers' compensation premiums, unemployment insurance
or compensation premiums, stamp taxes, occupation taxes, premium
taxes, property taxes, windfall profits taxes, alternative or
add-on minimum taxes, goods and services tax, customs duties or
other taxes, fees, imports, assessments or charges of any kind
whatsoever, together with any interest and any penalties or
additional amounts imposed by any taxing authority (domestic or
foreign) on such entity, and any interest, penalties, additional
taxes and additions to tax imposed with respect to the foregoing.
For purposes of this Section 3.1(m)the term "material amount of
Taxes" shall mean an amount of Taxes that is material to St.
Laurent and its subsidiaries taken as a whole.
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(iv) St. Laurent and each of its Material Subsidiaries have withheld
from each payment made to any of their respective present or
former employees, officers and directors, and to all persons who
are non-residents of Canada for the purposes of the Income Tax
Act (Canada) all amounts of Taxes required by law, and have
remitted such withheld amounts within the prescribed periods to
the appropriate federal or provincial taxing authority to the
extent that the failure to do so would, individually or in the
aggregate, have a Material Adverse Effect on St. Laurent. St.
Laurent and each of its subsidiaries have remitted all Canada
Pension Plan contributions, employment insurance premiums,
employer health taxes and other Taxes payable in respect of their
employees and have or will have remitted such amounts to the
proper taxing authority within the time required by applicable
law, to the extent that the failure to do so would, individually
or in the aggregate, have a Material Adverse Effect on St.
Laurent. St. Laurent and each of its subsidiaries have charged,
collected and remitted on a timely basis all Taxes as required by
applicable law (including Part IX of the Excise Tax Act (Canada)
or the retail sales tax legislation of any province of Canada) on
any sales, supply or delivery whatsoever, made by St. Laurent or
any Material Subsidiary, to the extent that the failure to do so
would, individually or in the aggregate, have a Material Adverse
Effect on St. Laurent.
(n) Pension and Employee Benefits.
(i) St. Laurent has delivered to SSCC a true and complete list as of
the date hereof of each material "employee pension benefit plan"
(as such term is defined in Section 3(2) of the United States
Employee Retirement Income Security Act of 1974, as amended
("ERISA")), material "employee welfare benefit plan" (as such
term is defined in Section 3(1) of ERISA), severance agreement,
bonus, stock option, stock purchase, or other incentive plan
(including any equity or equity-based plan), deferred
compensation plan, salary reduction agreement, or any other
material benefit plan, policy, program or arrangement, with
respect to any employee, former employee, to the extent
applicable, director or any beneficiary or dependent thereof
(including any "employee pension or benefit plan", as defined in
Section 3(3) of ERISA), maintained by St. Laurent or a Material
Subsidiary (collectively referred to as the "St. Laurent Plans").
The St. Laurent Disclosure Letter states which of the St. Laurent
Plans intend to constitute "employee pension benefit plans" (as
defined in Section 3(2) of ERISA) or "employee welfare benefit
plans" (as defined in Section 3(1) of ERISA).
(ii) To the knowledge of St. Laurent, no step has been taken, no event
has occurred and no condition or circumstance exists that has
resulted in or
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could reasonably be expected to result in any St. Laurent Plan
being ordered or required to be terminated or wound up in whole
or in part or having its registration under applicable Laws
refused or revoked, or being placed under the administration of
any trustee or receiver or regulatory authority or being
required to pay any material Taxes, fees, penalties or levies
under applicable Laws. There are no actions, suits, claims
(other than routine claims for payment of benefits in the
ordinary course), trials, demands, investigations, arbitrations
or other proceedings which are pending or, to the knowledge of
St. Laurent, threatened in respect of any of the St. Laurent
Plans or their assets which individually or in the aggregate
could reasonably be expected to have a Material Adverse Effect
on St. Laurent.
(iii) St. Laurent has made available to SSCC true, correct and
complete copies of all of the St. Laurent Plans as amended (or,
in the case of any unwritten St. Laurent Plan, a description
thereof) together with actuarial reports and applicable audited
financial statements, and the most recent determination letter
from the U.S. Internal Revenue Service or other applicable
Governmental Entity. St. Laurent has made available to SSCC a
true and complete copy of the most recent Annual Report on Form
5500 and accompanying schedules filed with the United States
Internal Revenue Service with respect to each St. Laurent Plan
in respect of which such a report was required. Except as
specifically provided in the foregoing documents delivered to
SSCC, there are no material amendments to any St. Laurent Plan
that have been adopted or approved nor has St. Laurent
undertaken to make any such amendments or to adopt or approve
any new Plan.
(iv) All of the St. Laurent Plans are and have been established,
registered, qualified, invested and administered, in all
material respects, in accordance with all applicable Laws, and
in accordance with their terms and the terms of agreements
between St. Laurent and/or a subsidiary, as the case may be, and
their respective employees. To the knowledge of St. Laurent, no
fact or circumstance exists that could adversely affect the
existing tax status of a St. Laurent Plan.
(v) All material contributions or other amounts required to be paid
by St. Laurent as of the Effective Time by applicable Law or the
terms of a St. Laurent Plan with respect of current or prior
plan years will have been paid or accrued by the Effective Time.
All contributions, payments, premiums, expenses, reimbursements
or accruals for all periods ending prior to or as of the
Effective Time for each St. Laurent Plan (including periods from
the first day of the then current plan year to the Effective
Time) shall have been made or accrued on St. Laurent's financial
statements (in accordance with generally applied accounting
principles, including FAS 87, 88, 106 and 112), and each
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such St. Laurent Plan otherwise does not have nor could have
any unfunded liability (including benefit liabilities as
defined in Section 4001(a)(16) of ERISA) or unfunded actuarial
liabilities or solvency deficiencies within the meaning of the
Quebec Supplemental Pension Plans Act which is not reflected on
financial statements, except where the failure to do so would
not individually or in the aggregate be material in amount. The
same shall be true for all periods ending as of the Effective
Time for each St. Laurent Plan.
(vi) To the knowledge of St. Laurent and other than as Publicly
Disclosed by St. Laurent, each St. Laurent Plan, as the case
may be, has no accumulated funding deficiency, and as of the
date hereof, no notice of under-funding, non-compliance,
failure to be in good standing or otherwise has been received
by St. Laurent or its subsidiaries from any such regulatory
authority.
(vii) All St. Laurent Plans intended to be tax-qualified in the
United States have been the subject of determination letters
from the United States Internal Revenue Service to the effect
that such St. Laurent Plans are qualified and exempt from
United States Federal income taxes under Sections 401(a) and
501(a), respectively, of the Code, and no such determination
letter has been revoked nor, to the knowledge of St. Laurent,
has revocation been threatened, nor has any such St. Laurent
Plan been amended since the date of its most recent
determination letter or application therefor in any respect
that would adversely affect its qualification and, to the
knowledge of St. Laurent, nothing has occurred since the date
of such letter that could reasonably be expected to affect the
qualified status of such plan.
(viii) Except as set forth in the St. Laurent Disclosure Letter, no
amount that could be received (whether in cash or property or
the vesting of property) as a result of the transactions
contemplated by this Agreement or the Arrangement by any
employee, officer or director of St. Laurent or any of its
affiliates who is a "disqualified individual" (as such term is
defined in Code Section 280G(i)) under any employment,
severance or termination agreement, other compensation
arrangement or St. Laurent Plan currently in effect will fail
to be deductible for United States federal income tax purposes
by virtue of Section 280G of the Code.
(ix) No St. Laurent Plan is a "multiemployer pension plan" (as such
term is defined in Section 3(37) of ERISA) or a plan that has
two or more contributing sponsors at least two of whom are not
under common control, within the meaning of Section 4063 of
ERISA (a "multiple employer plan"). Neither St. Laurent nor any
of its ERISA Affiliates (as defined below) has (1) at any time
during the last six years,
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contributed to or been obligated to contribute to any
multiemployer pension plan or multiple employer plan, or (2)
incurred any withdrawal liability to a multiemployer pension
plan as a result of a complete or partial withdrawal from such
multiemployer pension plan that has not been satisfied in full.
There does not now exist, nor, to the knowledge of St. Laurent,
do any circumstances exist that could result in, any liability
that would be a liability of St. Laurent following the
Effective Time under Section 4971 of the Code, or as a result
of a failure to comply with the continuation coverage
requirements of Section 601 et seq. of ERISA and Section 4980B
of the Code which could have a Material Adverse Effect on St.
Laurent. For purposes of this Agreement, "ERISA Affiliate"
shall mean St. Laurent and any trade or business which is under
common control or which is treated as a single employer with
St. Laurent under Section 414(b) or (c) of the Code.
(x) St. Laurent has identified in the St. Laurent Disclosure Letter
and has made available to SSCC true and complete copies of (1)
all material severance and employment agreements with
directors, executive officers, key employees or consultants of
St. Laurent; (2) all material severance programs and policies
of St. Laurent with or relating to its employees; and (3) all
material plans, programs, agreements and other arrangements of
St. Laurent with or relating to its employees, directors or
consultants which contain change in control provisions. Neither
the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will
(either alone or in conjunction with any other event, such as
termination of employment) (A) result in any payment or profit
(including severance, unemployment compensation, golden
parachute or otherwise) becoming due or increased to any
director, employee or consultant of St. Laurent or an Affiliate
from SSCC, St. Laurent or an Affiliate under any St. Laurent
Plan or otherwise, (B) increase any benefits otherwise payable
under any St. Laurent Plan or (C) result in any acceleration of
the time of payment or vesting of any compensation or benefits.
No individual who is a party to an employment or change of
control agreement listed in the St. Laurent Disclosure Letter
with St. Laurent has terminated employment or been terminated.
(xi) No St. Laurent Plan provides benefits, including death or
medical benefits (whether or not insured), with respect to
current or former employees of St. Laurent beyond their
retirement or other termination of service, other than benefits
as accrued as liabilities on the books of St. Laurent.
(xii) To the knowledge of St. Laurent, with respect to each St.
Laurent Plan, no Person: (A) has entered into any "prohibited
transaction," as such
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term is defined in ERISA or the Code and the regulations,
administrative rulings and case law thereunder that is not
exempt under Code Section 4975 or ERISA Section 408 (or any
administrative class exemption issued thereunder); (B) has
breached a fiduciary obligation or violated Sections 402, 403,
405, 503, 510 or 511 of ERISA; (C) has any liability for any
failure to act or comply in connection with the administration
or investment of the assets of such plans; or (D) has engaged
in any transaction or otherwise acted with respect to such
plans in such a manner which could subject SSCC, St. Laurent or
any employee of St. Laurent to liability under Section 409 or
502 of ERISA or Sections 4972 or 4976 through 4980B of the Code
and where such event would have a Material Adverse Effect on
St. Laurent.
(xiii) Each St. Laurent Plan may be amended, terminated, modified or
otherwise revised by St. Laurent, as provided in St. Laurent
Plan, other than benefits protected under Section 411(d) of the
Code, on and after the Effective Time, and except as limited by
any collective bargaining agreement.
(o) Reports. St. Laurent has filed with the QSC, the OSC and the SEC true
and complete copies of all forms, reports, schedules, statements and
other documents required to be filed by it with such entities (such
forms, reports, schedules, statements and other documents, including
any financial statements or other documents, including any schedules
included therein, are referred to as the "St. Laurent Documents"). The
St. Laurent Documents at the time filed (i) did not contain any
misrepresentation (as defined in the Securities Act (Ontario)) and
(ii) complied in all material respects with the requirements of
applicable Securities Legislation. St. Laurent has not filed any
confidential material change report with the OSC or any other
securities authority or regulator or any stock exchange or other self-
regulatory authority which at the date hereof remains confidential. No
Material Subsidiary is required to file any form, report or other
document with the QSC, the OSC or the SEC.
(p) Compliance with Laws. Except as Publicly Disclosed by St. Laurent, St.
Laurent and its Material Subsidiaries have complied with and are not
in violation of any applicable Laws, orders, judgments and decrees
other than non-compliance or violations which would not, individually
or in the aggregate, have a Material Adverse Effect on St. Laurent.
Without limiting the generality of the foregoing, all securities of
St. Laurent (including, all options, rights or other convertible or
exchangeable securities) have been issued in compliance, in all
material respects, with all applicable Securities Legislation and all
securities to be issued upon exercise of any such options, rights and
other convertible or exchangeable securities will be issued in
compliance with all applicable Securities Legislation.
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(q) Restrictions on Business Activities. Except as Publicly Disclosed by
St. Laurent, there is no agreement, judgment, injunction, order or
decree binding upon St. Laurent or any Material Subsidiary that has or
could reasonably be expected to have the effect of prohibiting,
restricting or materially impairing any business practice of St.
Laurent or any Material Subsidiary, any acquisition of property by St.
Laurent or any Material Subsidiary or the conduct of business by St.
Laurent or any Material Subsidiary as currently conducted other than
prohibitions, restrictions or impairment which would not, individually
or in the aggregate, have a Material Adverse Effect on St. Laurent.
(r) Intellectual Property.
(i) St. Laurent and its Material Subsidiaries own, or are licensed
or otherwise possess, legally enforceable rights and are
otherwise legally entitled to use, all patents, trade secrets,
trademarks, trade names, service marks, copyrights and mask
works, all applications for and registrations of such patents,
trademarks, trade names, service marks, copyrights and mask
works, and all processes, formulae, methods, schematics,
technology, know-how, computer software programs or
applications and tangible or intangible proprietary information
or material that are necessary to conduct the business of St.
Laurent and its subsidiaries as currently conducted (the "St.
Laurent Intellectual Property Rights") except to the extent
that the failure to have such rights would not, individually or
in the aggregate, be reasonably expected to have a Material
Adverse Effect on St. Laurent.
(ii) To the knowledge of St. Laurent, neither St. Laurent nor any of
its Material Subsidiaries is or will be as a result of the
execution and delivery of this Agreement, or the performance of
its obligations under this Agreement, in breach of any license,
sublicense or other agreement relating to the St. Laurent
Intellectual Property Rights or any license, sublicense or
other agreement pursuant to which St. Laurent or any of its
subsidiaries is authorized to use any third party patents,
trademarks or copyrights, including software, which are used in
the manufacture of, incorporated in, or form a part of any
product of St. Laurent or any of its subsidiaries, except for
breaches which, individually or in the aggregate, would not be
reasonably expected to have a Material Adverse Effect on St.
Laurent.
(iii) All patents, registered and common law trademarks, service
marks and copyrights held by St. Laurent or any of its Material
Subsidiaries which are material to the business of St. Laurent
and its Material Subsidiaries are valid and enforceable.
Neither St. Laurent nor any of its Material Subsidiaries (i)
has been sued in any suit, action or proceeding which involves
a claim of infringement of any patent, trade
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secret, trademark, service xxxx or copyright or the violation
of any trade secret or other proprietary right of any third
party or (ii) has any knowledge that the manufacturing,
importation, marketing, licensing, sale, offer for sale, or use
of any of its products infringes any patent, trademark, service
xxxx, copyright, trade secret or other proprietary right of any
third party, which infringement, individually or in the
aggregate, would be reasonably expected to have a Material
Adverse Effect on St. Laurent.
(s) Insurance. St. Laurent has policies of insurance in force as of the
date hereof naming St. Laurent and/or its subsidiaries, as the case
may be, as an insured which, having regard to the nature of such risk
and the relative cost of obtaining insurance, St. Laurent believes are
reasonable, except where failure to have such insurance policies would
not, individually or in the aggregate, have a Material Adverse Effect
on St. Laurent.
(t) Property. Except as Publicly Disclosed by St. Laurent, each of St.
Laurent and its Material Subsidiaries has good and marketable title to
all of their respective properties and assets (real and personal,
tangible and intangible, including leasehold interest, leases,
easements, rights of way, permits or licences from land owners or
authorities permitting the use of land by St. Laurent or its Material
Subsidiaries) including all the properties and assets reflected in the
balance sheets forming part of the St. Laurent Financial Statements,
except as indicated in the notes thereto, together with all additions
thereto and less all dispositions thereof in the ordinary course of
their businesses, necessary to permit the operation of their
businesses as presently owned and conducted, in each case subject to
no Lien except for Permitted Liens and as is reflected in the balance
sheets forming part of the audited financial statements of St. Laurent
for the 12-month period ended December 31, 1998, except where the
failure to have such title, individually, or in the aggregate, would
not have a Material Adverse Effect on St. Laurent.
(u) Licences, Etc. St. Laurent and each Material Subsidiary owns,
possesses, or has obtained and is in compliance with, all licences,
permits, certificates, orders, grants and other authorizations of or
from any Governmental Entity necessary to conduct its businesses as
now conducted or as proposed to be conducted except for such failure
that would individually or in the aggregate not have a Material
Adverse Effect on St. Laurent. As of the date hereof, all of the
permits are in full force and effect and no violation, suspension or
cancellation of any of the Permits is pending or, to the knowledge of
St. Laurent threatened, except where not being in full force and
effect or the violation, suspension or cancellation of such permits,
individually or in the aggregate, would not have a Material Adverse
Effect on St. Laurent.
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(v) Registration Rights. No holder of securities issued by St. Laurent
has any right to compel St. Laurent to register or otherwise qualify
such securities for public sale in Canada or the United States.
(w) Certain Business Practices. To the knowledge of St. Laurent, none of
St. Laurent, any of its subsidiaries or any directors, officers,
agents or employees of St. Laurent or any of its subsidiaries has (i)
used any funds for unlawful contributions, gifts, entertainment or
other unlawful expenses related to political activity, (ii) made any
unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns, or
(iii) made any other unlawful payment, except for such matters which
would not individually or in the aggregate have a Material Adverse
Effect on St. Laurent.
(x) Material Contracts. Each agreement, contract or arrangement which is
material to the business or operations of St. Laurent and its
subsidiaries taken as a whole (a "Material Contract") is valid and
binding on St. Laurent (or, to the extent a subsidiary of St. Laurent
is a party, such subsidiary) and is in full force and effect, and St.
Laurent and each subsidiary have performed in all material respects
all material obligations required to be performed by them under each
Material Contract, except where the failure to do so would not
individually or in the aggregate have a Material Adverse Effect on St.
Laurent.
Section 3.2 Representations and Warranties of the SSCC Parties.
(1) The SSCC Parties, on a solidary basis, represent and warrant to and in
favour of St. Laurent as follows and acknowledge that St. Laurent is
relying upon such representations and warranties in connection with the
matters contemplated by this Agreement:
(a) Organization. Each of the SSCC Parties and the SSCC Material
Subsidiaries has been duly incorporated or formed under all applicable
Laws, is validly subsisting and in good standing under the laws of the
jurisdiction of its incorporation or organization and has full
corporate or legal power and authority to own its properties and
conduct its businesses as currently owned and conducted. Each of the
SSCC and the SSCC Material Subsidiaries are duly qualified or licensed
as foreign corporations to do business, and are in good standing, in
each jurisdiction where the character of the properties owned, leased
or operated by them or the nature of their business makes such
qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that would not,
individually or in the aggregate, have a Material Adverse Effect. All
of the outstanding shares of capital stock and other ownership
interests of SSCC's subsidiaries which are held directly or indirectly
by SSCC are validly issued, fully paid and non-assessable and all such
shares and other ownership interests are owned directly or indirectly
by SSCC, free and clear of all Liens. Except as set forth in the SSCC
Disclosure Letter, there are no outstanding options, rights,
-35-
entitlements, understandings or commitments (contingent or otherwise)
regarding the right to acquire any such shares or other ownership
interests in any of the SSCC Material Subsidiaries.
(b) Capitalization. The authorized capital of SSCC consists of 400 million
common shares and 25 million preferred shares. As of February 18,
2000, there were 218,183,007 SSCC Common Shares issued and
outstanding. Except for employee stock options pursuant to employee
compensation plans or as Publicly Disclosed by SSCC or the SSCC
Disclosure Letter, there are no options, warrants, conversion
privileges or other rights, agreements, arrangements or commitments
(pre-emptive, contingent or otherwise) obligating SSCC to issue or
sell any shares or securities or obligations of any kind convertible
into or exchangeable for any shares of SSCC. All outstanding SSCC
Common Shares have been duly authorized and are validly issued and
outstanding as fully paid and non-assessable shares, and, subject to
the SSCC Disclosure Letter, free of pre-emptive rights. There are no
outstanding bonds, debentures or other evidences of indebtedness of
SSCC having the right to vote (or that are convertible for or
exercisable into securities having the right to vote) with the holders
of the SSCC Common Shares on any matter. Other than under employee
stock option plans or Publicly Disclosed by SSCC or in the SSCC
Disclosure Letter, there are no outstanding contractual obligations of
SSCC to repurchase, redeem or otherwise acquire any of its outstanding
securities or with respect to the voting or disposition of any
outstanding securities of any of the SSCC Material Subsidiaries.
(c) Authority and No Violation.
(i) Each of the SSCC Parties has the requisite corporate power and
authority to enter into this Agreement and to perform its
obligations hereunder. The execution and delivery of this
Agreement by each of the SSCC Parties and the consummation by
each of the SSCC Parties of the transactions contemplated by
this Agreement have been duly authorized by its respective
Board of Directors and no other corporate proceedings
(including a vote or approval by the shareholders) on its part
are necessary to authorize this Agreement or the transactions
contemplated hereby.
(ii) This Agreement has been duly executed and delivered by each of
the SSCC Parties and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency and other applicable
Laws affecting creditors' rights generally, and to general
principles of equity.
(iii) Except as set forth in the SSCC Disclosure Letter, the approval
of this Agreement, the execution and delivery by each of the
SSCC Parties of this Agreement and the performance by it of its
obligations hereunder
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and the completion of the Arrangement and the transactions
contemplated thereby, will not:
(A) result in a violation or breach of, require any consent,
vote or approval to be obtained under or give rise to any
termination, purchase or sale rights or payment obligation
under any provision of:
(I) its or any SSCC Material Subsidiary's certificate of
incorporation, articles, by-laws or other charter
documents, including any unanimous shareholder
agreement or any other agreement or understanding
relating to ownership of shares or other interests
or to corporate governance with any party holding an
ownership interest in any SSCC Material Subsidiary;
(II) subject to obtaining the Appropriate Regulatory
Approvals relating to the SSCC Parties, any Laws,
judgment or decree applicable to the SSCC Parties or
any of the SSCC Material Subsidiaries or by which
any property or assets of the SSCC Parties or any of
the SSCC Material Subsidiaries is bound or affected,
except to the extent that the violation or breach
of, or failure to obtain any consent under, any
Laws, judgment or decree would not, individually or
in the aggregate, have a Material Adverse Effect on
SSCC; or
(III) subject to obtaining the Appropriate Regulatory
Approvals relating to the SSCC Parties and except as
would not, individually or in the aggregate, have a
Material Adverse Effect on SSCC or a SSCC Material
Subsidiary, any material contract, agreement,
license, franchise or permit to which SSCC or any
SSCC Material Subsidiary is a party or by which SSCC
or any SSCC Material Subsidiary, or any property or
asset of SSCC or any SSCC Material Subsidiary is
bound or is subject or is the beneficiary;
(B) give rise to any right of termination or acceleration of
indebtedness of any SSCC Party or any SSCC Material
Subsidiary, or cause such indebtedness to come due before
its stated maturity or cause any available credit of any
SSCC Party or any SSCC Material Subsidiary to cease to be
available; or
(C) except as would not, individually or in the aggregate,
have a Material Adverse Effect on SSCC, result in the
imposition of any Lien upon any of its assets or the
assets of any SSCC
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Material Subsidiary, or restrict, hinder, impair or limit
the ability of any SSCC Party or any SSCC Material
Subsidiary to carry on the business as and where it is now
being carried on.
(iv) No consent, approval, order or authorization of, or declaration
or filing with, any Governmental Entity is required to be
obtained by any of the SSCC Parties or the SSCC Material
Subsidiaries in connection with the execution and delivery of
this Agreement or the consummation by any of the SSCC Parties
of the transactions contemplated hereby other than (A) the
Appropriate Regulatory Approvals relating to the SSCC Parties,
and (B) any other consents, approvals, orders, authorizations,
declarations or filings of or with a Governmental Entity which,
if not obtained, would not, individually or in the aggregate,
have a Material Adverse Effect on SSCC.
(d) Absence of Certain Changes or Events. Except as Publicly Disclosed by
SSCC, since December 31, 1998 through to the date hereof each of the
SSCC Parties and each SSCC Material Subsidiary has conducted its
business only in the ordinary and regular course of business
consistent with past practice and there has not occurred:
(i) a Material Adverse Change with respect to SSCC;
(ii) any agreement or arrangement to take any action which, if taken
prior to the date hereof, would have made any representation or
warranty set forth in this Agreement materially untrue or
incorrect as of the date when made;
(iii) any resolution to approve a split, combination or
reclassification of the SSCC Common Shares; or
(iv) any material change in its accounting methods, principles or
practices.
(e) Financial Statements. The audited consolidated financial statements
(including any notes thereto) of SSCC for the year ended December 31,
1998 and the unaudited consolidated financial statements for the 9-
month period ended September 30, 1999 have been prepared in accordance
with United States generally accepted accounting principles applied on
a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) (subject, in the case of such
unaudited financial statements to normal and recurring year-end
adjustments which were not and are not expected, individually or in
the aggregate, to be material in amount and the absence of certain
footnote disclosures), the requirements of applicable Governmental
Entities and applicable Securities Legislation; such financial
statements present fairly, in all material respects, the consolidated
financial position, results of operations and cash-flows of SSCC and
its subsidiaries as of the respective dates thereof and for the
respective periods covered thereby,
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subject, in the case of such unaudited financial statements to normal
and recurring year-end adjustments which were not and are not
expected, individually or in the aggregate, to be material in amount.
(f) Absence of Undisclosed Liabilities. Except as disclosed in the SSCC
Financial Statements, or as Publicly Disclosed by SSCC or as incurred
in the ordinary course of business, neither SSCC nor any of the SSCC
Material Subsidiaries has any liabilities or obligations of any nature
(absolute, accrued, contingent or otherwise) which either individually
or in the aggregate, are material in amount to SSCC and the SSCC
Material Subsidiaries taken as a whole.
(g) Reports. SSCC and each SSCC Material Subsidiary has filed with the SEC
all forms, reports, schedules, registration statements and definitive
proxy statements (the "SEC Reports") required to be filed by SSCC and
each SSCC Material Subsidiary with the SEC since December 31, 1998.
As of their respective dates, the SEC Reports complied in all material
respects with the requirements of the Exchange Act or the 1933 Act and
the rules and regulations of the SEC promulgated thereunder
applicable, as the case may be, to such SEC Reports, and none of the
SEC Reports contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading.
(h) SSCC Common Shares. The SSCC Common Shares to be issued pursuant to
the Arrangement or upon the exercise from time to time of the
Replacement Options will, in all cases, be duly and validly issued by
SSCC on their respective dates of issue as fully paid and non-
assessable shares.
(i) Compliance with Laws. Except as disclosed in the SSCC Disclosure
Letter or Publicly Disclosed by SSCC, SSCC and the SSCC Material
Subsidiaries have complied with and are not in violation of any
applicable Laws, orders, judgments and decrees other than non-
compliance or violations which would not, individually or in the
aggregate, have a Material Adverse Effect on SSCC. Without limiting
the generality of the foregoing, all securities of SSCC (including all
options, rights or other convertible or exchangeable securities) have
been issued in compliance in all material respects with all applicable
Securities Legislation and all securities to be issued upon exercise
of any such options, rights and other convertible or exchangeable
securities will be issued in compliance with all applicable Securities
Legislation.
(j) Litigation, Etc. Except as disclosed in the SSCC Disclosure Letter or
Publicly Disclosed by SSCC, there is currently no claim, action,
proceeding or investigation (including any native land claims) pending
or, to the knowledge of SSCC, threatened against or affecting SSCC or
any SSCC Material Subsidiary before any court or Governmental Entity
that, could reasonably be expected to have a Material Adverse Effect
on SSCC, or prevent or materially
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delay consummation of the transactions contemplated by this Agreement
or the Arrangement. Neither SSCC nor any SSCC Material Subsidiary, nor
their respective assets and properties, is subject to any outstanding
judgment, order, writ, injunction or decree that has had or is
reasonably likely to have a Material Adverse Effect on SSCC or that
would prevent or materially delay consummation of the transactions
contemplated by this Agreement or the Arrangement.
(k) Information Supplied. Neither the information supplied or to be
supplied in writing by or on behalf of any SSCC Party for inclusion,
nor the information incorporated by reference from documents filed by
a SSCC Party with the SEC, in the Circular or any other document to be
filed by any SSCC Party or St. Laurent with the SEC or any other
Governmental Entity in connection with the transactions contemplated
hereby will, on the date of its filing, or, with respect to the
Circular, as of the date it is mailed to the holders of the St.
Laurent Common Shares, St. Laurent Options, St. Laurent RSUs and St.
Laurent Warrants and as of the date of the St. Laurent Meeting,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they are made, not misleading.
Section 3.3 Survival.
For greater certainty, the representations and warranties of St. Laurent
and each SSCC Party contained herein shall survive the execution and delivery of
this Agreement and shall terminate on the earlier of the termination of this
Agreement in accordance with Section 6.3 and the Effective Time. Any
investigation by a party hereto and its advisors shall not mitigate, diminish or
affect the representations and warranties of another party to this Agreement.
ARTICLE4
COVENANTS
Section 4.1 Retention of Goodwill.
During the Pre-Effective Date Period, St. Laurent will continue to carry on
the business of St. Laurent and its subsidiaries in a manner consistent with
prior practice, using all reasonable efforts to preserve the attendant goodwill
of such entities and to contribute to retention of that goodwill to and after
the Effective Date, but subject to the following provisions of this Article 4.
The following provisions of this Article 4 are intended to be in furtherance of
this general commitment.
Section 4.2 Material Commitments.
Subject to applicable Law and the other provisions of this Agreement,
during the Pre-Effective Date Period, St. Laurent and its subsidiaries will
consult on an ongoing basis with senior officers of SSCC in order that the
representatives of SSCC will become more familiar with the philosophy and
techniques of St. Laurent and its subsidiaries, as well as with their
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business and financial affairs and in order to provide experience as a basis for
ongoing relationships following the Effective Date.
Section 4.3 Covenants of St. Laurent.
(1) St. Laurent covenants and agrees that, until the Effective Date or the
earlier termination of this Agreement in accordance with Article 6, except
(i) with the consent of SSCC on behalf of the SSCC Parties to any deviation
therefrom, which consent shall not be unreasonably withheld; (ii) with
respect to any matters which were disclosed in the St. Laurent Disclosure
Letter; or (iii) with respect to any matter contemplated by this Agreement
or the Plan of Arrangement, including the transactions involving the
businesses of St. Laurent and SSCC contemplated hereby, St. Laurent will,
and will cause its subsidiaries to:
(a) carry on its business in, and only in, the ordinary and regular course
in substantially the same manner as heretofore conducted and, to the
extent consistent with such business, use all reasonable efforts to
preserve intact its present business organization and keep available
the services of its present officers and employees and others having
business dealings with it to the end that its goodwill and business
shall be maintained;
(b) not commence to undertake a substantial expansion of its business
facilities that is out of the ordinary and regular course of business;
(c) not split, combine or reclassify any of the outstanding shares of St.
Laurent nor declare, set aside or pay any dividends on or make any
other distributions on or in respect of the outstanding shares of St.
Laurent;
(d) not amend the articles or by-laws of St. Laurent or materially amend
the articles or by-laws of any subsidiary;
(e) not sell, pledge, hypothecate, encumber, allot, reserve, set aside or
issue, authorize or propose the sale, pledge, encumbrance, allotment,
reservation, setting aside or issuance of, or purchase or redeem or
propose the purchase or redemption of, any shares in its capital stock
or of any subsidiary thereof or any class of securities convertible or
exchangeable into, or rights, warrants or options to acquire, any such
shares or other convertible or exchangeable securities, except for (a)
transactions between two or more wholly-owned St. Laurent subsidiaries
or between a wholly-owned subsidiary of St. Laurent and St. Laurent;
(b) the issuance of St. Laurent Common Shares pursuant to fully vested
St. Laurent Options or pursuant to the exercise of St. Laurent RSUs or
St. Laurent Warrants granted prior to the date hereof; and (c) the
purchase of St. Laurent Common Shares with respect to the St. Laurent
Directors' Stock Option and Purchase Plan, the St. Laurent Employee
Share Purchase Plan (Canada) and/or the St. Laurent subsidiary Stock
Purchase Plan (U.S.);
(f) not, whether through its Board of Directors or otherwise, accelerate
the vesting of any unvested St. Laurent Options or accelerate the
release of, or the
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expiry date of any hold period relating to, any St. Laurent Common
Shares held in the St. Laurent Share Purchase Plans, or otherwise
amend, vary or modify such plans or such other plans relating to the
Options;
(g) not reorganize, amalgamate or merge St. Laurent or any of its
subsidiaries with any other Person, nor acquire or agree to acquire by
amalgamating, merging or consolidating with, purchasing substantially
all of the assets of or otherwise, any business of any corporation,
partnership, association or other business organization or division
thereof, which acquisition would be material to its business or
financial condition on a consolidated basis (other than relating to
transactions between two or more wholly-owned St. Laurent subsidiaries
or between a wholly-owned subsidiary of St. Laurent and St. Laurent);
(h) except with respect to the sale of assets of St. Laurent or any
subsidiary in the ordinary and regular course of business, not sell,
pledge, hypothecate, encumber, lease or otherwise dispose of any
material assets (other than relating to transactions between two or
more wholly-owned St. Laurent subsidiaries or between a wholly-owned
subsidiary of St. Laurent and St. Laurent) or create or cause to be
created any Lien, except in the ordinary and regular course of
business;
(i) not guarantee the payment of material indebtedness of Persons other
than its subsidiaries or incur material indebtedness for money
borrowed or issue or sell any debt securities except in the ordinary
and regular course of business;
(j) carry out the terms of the Interim Order and the Final Order
applicable to it and use its reasonable efforts to comply promptly
with all requirements which applicable Laws may impose on St. Laurent
or its subsidiaries with respect to the transactions contemplated
hereby and by the Arrangement;
(k) not, and cause each of its subsidiaries not:
(i) other than in the usual, ordinary and regular course of
business or pursuant to existing employment, pension,
supplemental pension, termination, compensation arrangements or
policies, enter into or materially modify any employment,
severance, collective bargaining or similar agreements,
policies or arrangements with, or grant any material bonuses,
salary increases, stock options, pension or supplemental
pension benefits, profit sharing, retirement allowances,
deferred compensation, incentive compensation, severance or
termination pay to, or make any loan to, any officers or
directors of it; or
(ii) other than in the usual, ordinary and regular course of
business or pursuant to existing employment, pension,
supplemental pension, termination, compensation arrangements or
policies, in the case of
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employees who are not officers or directors, take any action
with respect to the entering into or modifying of any material
employment, severance, collective bargaining or similar
agreements, policies or arrangements or with respect to the
grant of any material bonuses, salary increases, stock options,
pension or supplemental pension benefits, profit sharing,
retirement allowances, deferred compensation, incentive
compensation, severance or termination pay or any other form of
compensation or profit sharing or with respect to any increase
of benefits payable;
(l) subject to Section 4.3(1)(o), not, except in the ordinary and regular
course of business: (A) satisfy or settle any claims or liabilities
prior to the same being due, except such as have been reserved against
in St. Laurent Financial Statements or disclosed in the St. Laurent
Disclosure Letter, which are, individually or in the aggregate,
material; (B) grant any waiver, exercise any option or relinquish any
contractual rights which are, individually or in the aggregate,
material; or (C) enter into any interest rate, currency or commodity
swaps, xxxxxx or other similar financial instruments;
(m) use its reasonable commercial efforts (or cause each of its
subsidiaries to use reasonable commercial efforts) to cause its
current insurance (or re-insurance) policies not to be cancelled or
terminated or any of the coverage thereunder to lapse, unless
simultaneously with such termination, cancellation or lapse,
replacement policies underwritten by insurance and re-insurance
companies of nationally recognized standing providing coverage equal
to or greater than the coverage under the cancelled, terminated or
lapsed policies for substantially similar premiums are in full force
and effect;
(n) except for the settlement or compromise amounts which represent not
more than $1,000,000 in the aggregate, not, and will cause its
subsidiaries not to, settle or compromise any claim brought by any
present, former or purported holder of any of its securities in
connection with the transactions contemplated by this Agreement or the
Arrangement prior to the Effective Date;
(o) except where disclosure would violate any confidentiality arrangements
or result in the loss of any client/solicitation privilege, keep SSCC
fully informed as to the status of the discussions or any developments
concerning the matters referred to in Section 3.1(1)(l)(i) of the St.
Laurent Disclosure Letter and not to settle or compromise any penalty
or fine imposed by a Governmental Entity in connection therewith
except for the settlement or compromise in respect of which St.
Laurent and its subsidiaries, as the case may be, shall have been
indemnified;
(p) not, and will cause its subsidiaries not to, enter into or modify in
any material respect any contract, agreement, commitment or
arrangement which new contract or series of related new contracts or
modification to an existing
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contract or series of related existing contracts would have a Material
Adverse Effect on St. Laurent;
(q) incur or commit to capital expenditures prior to the Effective Date
only in the ordinary course and not, in any event, exceeding by $12
million, individually or in the aggregate those set forth in the St.
Laurent Disclosure Letter;
(r) not make any changes to existing accounting practices relating to St.
Laurent or any subsidiary except as required by Law or required by
generally accepted accounting principles or make any material Tax
election or file any Tax return inconsistent with past practice; and
(s) promptly advise SSCC in writing:
(i) of any event occurring subsequent to the date of this Agreement
that would render any representation or warranty of St. Laurent
contained in this Agreement (except any such representation or
warranty which speaks as of a date prior to the occurrence of
such event), if made on or as of the date of such event or the
Effective Date, untrue or inaccurate in any material respect;
(ii) of any Material Adverse Change in respect of St. Laurent; and
(iii) of any material breach by St. Laurent of any covenant or
agreement contained in this Agreement.
(2) St. Laurent shall and shall cause its subsidiaries to perform all
obligations required or desirable to be performed by St. Laurent or any of
its subsidiaries under this Agreement, co-operate with SSCC 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 contemplated in this Agreement and, without
limiting the generality of the foregoing, St. Laurent shall and where
appropriate shall cause its subsidiaries to:
(a) use all reasonable efforts to obtain the approvals of St. Laurent
Securityholders to the Arrangement including, by including in the
Circular the unanimous recommendation of the disinterested directors
of St. Laurent that St. Laurent Securityholders vote in favour of the
Arrangement Resolution, subject, however, to the exercise by the Board
of Directors of St. Laurent of its fiduciary duties as provided
herein;
(b) waive the application of the provisions of the St. Laurent Rights Plan
(including the separation of the rights thereunder) with respect to
the transactions contemplated by the Arrangement;
(c) apply for and use all reasonable best efforts to obtain all
Appropriate Regulatory Approvals relating to St. Laurent or any of its
subsidiaries and, in
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doing so, to keep SSCC reasonably informed as to the status of the
proceedings related to obtaining the Appropriate Regulatory Approvals,
including, but not limited to, providing SSCC with copies of all
related applications and notifications, in draft form, in order for
SSCC to provide its reasonable comments;
(d) apply for and use all reasonable efforts to obtain the Interim Order
and the Final Order;
(e) use its reasonable best efforts to defend and in defending all
lawsuits or other legal, regulatory or other proceedings challenging
or affecting this Agreement or the consummation of the transactions
contemplated hereby;
(f) use its reasonable best efforts to have lifted or rescinded any
injunction or restraining order or other order which may adversely
affect the ability of the parties to consummate the transactions
contemplated hereby;
(g) effect all necessary registrations, filings and submissions of
information required by Governmental Entities from St. Laurent or any
of its subsidiaries;
(h) use its reasonable efforts to obtain all necessary waivers, consents
and approvals required to be obtained by St. Laurent or a subsidiary
from other parties to loan agreements, leases or other contracts; and
(i) use its reasonable efforts to ensure that St. Laurent's affiliates (as
defined in and for the purposes of Rule 145 under the 0000 Xxx)
execute and deliver to SSCC, on or prior to the Effective Date, an
Affiliate's Letter.
St. Laurent agrees to provide, and will cause its subsidiaries and will use
its reasonable efforts to cause its and their respective officers, employees,
advisors and representatives to provide, all necessary cooperation in connection
with (i) the arrangement of any financing by the SSCC Parties to be consummated
in connection with the transactions contemplated by this Agreement, (ii) any
amendments or waivers required under SSCC's existing credit facilities and (iii)
a reorganization (whether by merger, asset or stock transfer or amalgamation) of
St. Laurent and its subsidiaries made or implemented at the request of the SSCC
Parties to satisfy financing requirements and to effect tax and other
efficiencies for the SSCC Parties (and St. Laurent and its subsidiaries assuming
the consummation of the Arrangement), on or prior to the Effective Time;
provided, however, (A) prior to any such reorganization, SSCC and St. Laurent
-------- -------
shall agree upon the terms of an indemnity agreement in favor of St. Laurent and
its subsidiaries indemnifying St. Laurent and its subsidiaries in the event the
Arrangement is not consummated from any losses, costs or expenses incurred by
St. Laurent or any of its subsidiaries which would not have been so incurred but
for the reorganization and (B) any transactions effected pursuant to such
reorganization shall not be covered by St. Laurent's representations and
warranties contained in Article 3 of this Agreement or St. Laurent's other
covenants contained in Article 4 of this Agreement or otherwise expand St.
Laurent's liability under this Agreement.
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Section 4.4 Covenants of the SSCC Parties.
(1) Each of the SSCC Parties hereby on a solidary basis covenants and agrees
(and, if applicable, will cause its subsidiaries):
(a) to perform all obligations required or desirable to be performed by it
under this Agreement, to co-operate with St. Laurent in connection
therewith, and to 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 contemplated by this
Agreement and, without limiting the generality of the foregoing, to:
(i) apply for and use all reasonable best efforts to obtain all
Appropriate Regulatory Approvals relating to the SSCC Parties,
and, in doing so, to keep St. Laurent reasonably informed as to
the status of the proceedings related to obtaining the
Appropriate Regulatory Approvals, including, but not limited
to, providing St. Laurent with copies of all related
applications and notifications, in draft form, in order for St.
Laurent to provide its reasonable comments;
(ii) use its reasonable best efforts to defend and in defending all
lawsuits or other legal, regulatory or other proceedings to
which it is a party challenging or affecting this Agreement or
the consummation of the transactions contemplated hereby;
(iii) use all reasonable best efforts to have lifted or rescinded any
injunction or restraining order or other order relating to the
SSCC Parties which may adversely affect the ability of the
parties to consummate the transactions contemplated hereby;
(iv) effect all necessary registrations, filings and submissions of
information required by Governmental Entities from the SSCC
Parties or their subsidiaries; and
(v) cause SSCC to reserve a sufficient number of SSCC Common Shares
for issuance upon the completion of the Arrangement and the
exercise from time to time of Replacement Options;
(b) carry out the terms of the Interim Order and Final Order applicable to
it and use its reasonable efforts to comply promptly with all
requirements which applicable Laws may impose on SSCC or its
subsidiaries with respect to the transactions contemplated hereby and
by the Arrangement;
(c) in connection with the consummation of the transactions contemplated
hereby and by the Arrangement, use its reasonable efforts to obtain
all necessary waivers, consents and approvals required to be obtained
by SSCC or a subsidiary of SSCC from other parties to loan agreements,
leases or other
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contracts and take all reasonable steps to obtain the financing
necessary to pay the cash portion of the Exchange Consideration;
(d) to use reasonable best efforts to cause Jefferson Smurfit Corporation
(U.S.) and Stone Container Corporation to obtain, as soon as possible,
but no later than March 25, 2000, the consents from their respective
banking syndicates required to consummate the transactions
contemplated by the Arrangement; and
(e) until the Effective Date or the earlier termination of this Agreement
in accordance with Article 6, except (i) with the consent of St.
Laurent to any deviation therefrom, which shall not be unreasonably
withheld; (ii) with respect to any matters which were disclosed by
SSCC to St. Laurent in writing in the SSCC Disclosure Letter; or (iii)
with respect to any matter contemplated by this Agreement or the Plan
of Arrangement, including the transactions involving the businesses of
St. Laurent and SSCC contemplated hereby, SSCC will:
(i) not split, combine or reclassify any of the outstanding shares
of SSCC nor declare, set aside or pay any dividends on or make
any other distributions on or in respect of the outstanding
shares of SSCC;
(ii) promptly advise St. Laurent in writing:
(A) of any event occurring subsequent to the date of this
Agreement that would render any representation or warranty
of SSCC contained in this Agreement (except any such
representation or warranty which speaks as of a date prior
to the occurrence of such event), if made on or as of the
date of such event or the Effective Date, untrue or
inaccurate in any material respect;
(B) of any Material Adverse Change in respect of SSCC; and
(C) of any material breach by SSCC of any covenant or
agreement contained in this Agreement;
(iii) not make any changes to existing accounting practices related
to SSCC except as required by a change in United States
generally accepted accounting practice or by applicable Law;
and
(iv) not reorganize, amalgamate, or merge SSCC with any other
Person, nor acquire by amalgamating, merging or consolidating
with, purchasing a majority of voting securities or
substantially all of the assets of or otherwise, any business
or Person which acquisition would result in SSCC's financing
commitment for the Arrangement being terminated or withdrawn
and not being replaced.
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Section 4.5 Covenants Regarding Non-Solicitation.
(1) Except as expressly provided herein, St. Laurent shall not, directly or
indirectly, and shall use its best efforts to cause its representatives not
to, (a) solicit, initiate or knowingly encourage (including by way of
furnishing information or entering into any form of agreement, arrangement
or understanding) the initiation of any inquiries or proposals regarding an
Acquisition Proposal, (b) participate in any discussions or negotiations
regarding any Acquisition Proposal, (c) withdraw or modify in a manner
adverse to SSCC the approval of the Board of Directors of St. Laurent of
the transactions contemplated hereby, (d) approve or recommend any
Acquisition Proposal or (e) enter into any agreement, arrangement or
understanding related to any Acquisition Proposal. Notwithstanding the
preceding part of this Section 4.5(1) and any other provision of this
Agreement but subject to the provisions of Section 4.5(2), nothing shall
prevent the Board of Directors of St. Laurent prior to the issuance of the
Final Order from considering, participating in any discussions or
negotiations, or entering into a confidentiality agreement and providing
information pursuant to Section 4.5(3), regarding an unsolicited bona fide
written Acquisition Proposal that did not otherwise result from a breach of
this Section 4.5 and that the Board of Directors of St. Laurent determines
in good faith, after consultation with financial advisors and outside
counsel, is reasonably likely to result in a Superior Proposal; provided,
however, that prior to taking such action, the Board of Directors must
receive written opinion of outside counsel that it is appropriate that the
Board of Directors of St. Laurent take such action in order to discharge
properly its fiduciary duties. St. Laurent shall not consider, negotiate,
accept, approve or recommend an Acquisition Proposal after the date of the
issuance of the Final Order. St. Laurent shall, and shall cause the
officers, directors, employees, representatives and agents of St. Laurent
and its subsidiaries to, cease immediately all discussions and negotiations
regarding any proposal received prior to the execution of this Agreement
that constitutes, or may reasonably be expected to lead to, an Acquisition
Proposal.
(2) St. Laurent shall promptly notify SSCC, at first orally and then in
writing, of any Acquisition Proposal and any inquiry that could reasonably
be expected to lead to an Acquisition Proposal, or any amendments to the
foregoing, or any request for non-public information relating to St.
Laurent or any Material Subsidiary in connection with an Acquisition
Proposal or for access to the properties, books or records of St. Laurent
or any Material Subsidiary by any Person that informs St. Laurent or such
subsidiary that it is considering making, or has made, an Acquisition
Proposal. Such notice shall include a description of the material terms and
conditions of any proposal (including a copy of any written proposal), and
the identity of the Person making such proposal, inquiry or contact. St.
Laurent shall (i) keep SSCC fully informed of the status including any
change to the material terms of any such Acquisition Proposal or inquiry
and (ii) provide to SSCC as soon as practicable after receipt or delivery
thereof with copies of all correspondence and other written material sent
or provided to St. Laurent or any Material Subsidiary from any Person in
connection with any Acquisition Proposal sent or provided by St. Laurent to
any Person in connection with any Acquisition Proposal. SSCC shall treat
any documents received pursuant to this
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Section 4.5(2) as confidential information in accordance with the
provisions of the Confidentiality Agreements.
(3) If St. Laurent receives a request for material non-public information from
a Person who has made an unsolicited bona fide written Acquisition Proposal
and St. Laurent is permitted, as contemplated under the second sentence of
Section 4.5(1), to negotiate the terms of such Acquisition Proposal, then,
and only in such case, the Board of Directors of St. Laurent may, subject
to the execution by such Person of a confidentiality agreement containing a
standstill provision substantially similar to that contained in the
Confidentiality Agreements, provide such Person with access to information
regarding St. Laurent; provided, however, that the Person making the
Acquisition Proposal shall not be precluded under such confidentiality
agreement from making the Acquisition Proposal (but not any material
amendment thereto, which shall be treated for the purposes hereof as a new
Acquisition Proposal) and provided further that St. Laurent sends a copy of
any such confidentiality agreement to SSCC promptly upon its execution and
SSCC is provided with a list of or copies of the information provided to
such Person and immediately provided with access to similar information to
which such Person was provided.
(4) St. Laurent shall ensure that its officers, directors and senior employees
and its subsidiaries and their officers, directors and senior employees and
any financial advisors or other advisors or representatives retained by it
are aware of the provisions of this Section 4.5, and it shall be
responsible for any breach of this Section 4.5 by its officers, directors,
employees, financial advisors or other advisors or representatives.
(5) Notwithstanding Section 4.5(1)(c), the Board of Directors of St. Laurent
may withdraw or modify in a manner adverse to SSCC the approval of the
Board of Directors of St. Laurent of the transactions contemplated hereby
if a Specified SSCC Event has occurred and is continuing.
Section 4.6 Notice by St. Laurent of Superior Proposal Determination.
(1) Provided that the provisions of Section 4.5(1) and Section 4.5(2) are
complied with, St. Laurent may accept, approve, recommend or enter into any
agreement in respect of a Superior Proposal if, and only if, (i) it has
provided SSCC with a copy of the Superior Proposal document, (ii) five
Business Days shall have elapsed from the later of the date SSCC received
written notice advising SSCC that St. Laurent's Board of Directors has
resolved, subject only to compliance with this Section 4.6 and termination
of this Agreement, to accept, approve, recommend or enter into an agreement
in respect of such Superior Proposal, specifying the terms and conditions
of such Superior Proposal and identifying the Person making such Superior
Proposal, and the date SSCC received a copy of such Superior Proposal and
(iii) it has previously or concurrently will have (A) paid to SSCC the
break fee, if any, payable under Section 6.4 and (B) terminated this
Agreement pursuant to Section 6.3. Any information provided by St. Laurent
to SSCC pursuant to this Section 4.6 or pursuant to Section 4.5 shall
constitute "Information" under Section 4.7(2).
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(2) During such five Business Day period, St. Laurent agrees that SSCC shall
have the right, but not the obligation, to offer to amend the terms of this
Agreement. The Board of Directors of St. Laurent will review any offer by
SSCC to amend the terms of this Agreement in good faith in order to
determine, in its discretion in the exercise of its fiduciary duties,
whether SSCC's offer upon acceptance by St. Laurent would result in such
Superior Proposal ceasing to be a Superior Proposal. If the Board of
Directors of St. Laurent so determines, it will enter into an amended
agreement with SSCC reflecting SSCC's amended proposal. If the Board of
Directors of St. Laurent continues to believe, in good faith and after
consultation with financial advisors and outside counsel, that such
Superior Proposal remains a Superior Proposal and therefore rejects SSCC's
amended proposal, St. Laurent may terminate this Agreement pursuant to
Section 6.3(3)(d); provided, however, that St. Laurent must concurrently
pay or cause to be paid to SSCC the break fee, if any, payable to SSCC
under Section 6.4 and must concurrently with termination enter into a
definitive agreement with respect to such Acquisition Proposal. St. Laurent
acknowledges and agrees that payment of the break fee, if any, payable
under Section 6.4 is a condition to valid termination of this Agreement
under Section 6.3(3)(d) and this Section 4.6.
(3) St. Laurent also acknowledges and agrees that each successive modification
relating to an increase in the consideration offered or any other material
provision of any Acquisition Proposal shall constitute a new Acquisition
Proposal for purposes of the requirement under clause (ii) of this Section
4.6 to initiate an additional five Business Day notice period.
Section 4.7 Access to Information.
(1) Subject to Section 4.7(2) and Section 4.7(3) and applicable Laws, upon
reasonable notice, St. Laurent shall (and shall cause each of its
subsidiaries to) afford SSCC's officers, employees, counsel, accountants
and other authorized representatives and advisors ("Representatives")
access, during normal business hours from the date hereof and until the
earlier of the Effective Date or the termination of this Agreement, to its
properties, books, contracts and records as well as to its management
personnel, and, during such period, St. Laurent shall (and shall cause each
of its subsidiaries to) furnish promptly to SSCC all information concerning
St. Laurent's business, properties and personnel as SSCC may reasonably
request. Subject to Section 4.7(2) and Section 4.7(3) and applicable Laws,
as part of such investigation, SSCC and SSCC's Representatives may make
inquiries of customers of St. Laurent and its Material Subsidiaries;
provided, however, SSCC and SSCC's Representatives shall not contact any
-----------------
such customers without the prior written consent of St. Laurent which
consent may be withheld by St. Laurent in its sole and absolute discretion
and St. Laurent shall have the opportunity to participate in any such
inquiries. Subject to Section 4.7(2) and Section 4.7(3) and applicable
laws, upon reasonable notice, SSCC shall afford St. Laurent's
Representatives access, upon reasonable notice and during normal business
hours from the date hereof and until the earlier of the Effective Date or
the termination of this Agreement, to such of SSCC's management personnel
as SSCC may determine, acting reasonably, and, during such period, SSCC
shall furnish promptly to St. Laurent all information respecting material
changes in SSCC's
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business, properties and personnel as St. Laurent may reasonably request.
Nothing in this Section 4.7(1) shall require St. Laurent or SSCC, as the
case may be, to disclose information subject to a written confidentiality
agreement with third parties or customer-specific or competitively
sensitive information relating to areas or projects where the other party
is in direct competition with it.
(2) In accordance with the Confidentiality Agreements, each of SSCC and St.
Laurent acknowledges that certain information provided to it under Section
4.7(1) above will be non-public and/or proprietary in nature (the
"Information"). Except as permitted below, each of SSCC and St. Laurent
will keep Information confidential and will not, without the prior written
consent of the other, disclose it, in any manner whatsoever, in whole or in
part, to any other Person, and will not use it for any purpose other than
to evaluate the transactions contemplated by this Agreement and to assist
in arranging the financing necessary to consummate such transactions. Each
of SSCC and St. Laurent will make all reasonable, necessary and appropriate
efforts to safeguard the Information from disclosure to anyone other than
as permitted hereby and to control the copies, extracts or reproductions
made of the Information. The Information may be provided to the
Representatives of each of SSCC and St. Laurent who require access to the
same to assist it in proceeding in good faith with the transactions
contemplated by this Agreement and whose assistance is required for such
purposes, provided that it has first informed such Representatives to whom
Information is provided that the Representative has the same obligations,
including as to confidentiality, restricted use and otherwise, that it has
with respect to such Information. This provision shall not apply to such
portions of the Information that: (i) are or become generally available to
the public otherwise than as a result of disclosure by a party or its
Representatives; or (ii) become available to a party on a non-confidential
basis from a source other than, directly or indirectly, the other party or
its Representatives, provided that such source is not to the knowledge of
the first party, upon reasonable inquiry, prohibited from transmitting the
Information by a contractual, legal or fiduciary obligation; (iii) were
known to a party or were in its possession on a non-confidential basis
prior to being disclosed to it by the other party or by someone on its
behalf; or (iv) are required by applicable Laws or court order to be
disclosed. The provisions of this Section 4.7(2) shall survive the
termination of this Agreement.
(3) The parties acknowledge that certain Information may be competitively
sensitive and that disclosure thereof shall be limited to that which is
reasonably necessary for the purpose of (i) preparing submissions or
applications in order to obtain the Appropriate Regulatory Approvals, (ii)
preparing the Circular, (iii) avoiding conflicts, (iv) integrating the
operations of SSCC and St. Laurent, and (v) arranging the financing
necessary to consummate the transactions contemplated in this Agreement.
(4) Notwithstanding any other provision, no investigation pursuant to this
Section 4.7 shall affect or be deemed to affect or modify any of the
representations and warranties made by St. Laurent in this Agreement, and
no such investigation shall entitle SSCC to terminate this Agreement.
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Section 4.8 Closing Matters.
Each of the SSCC Parties and St. Laurent shall deliver, at the closing of
the transactions contemplated hereby, such customary certificates, resolutions
and other closing documents as may be required by the other parties hereto,
acting reasonably.
Section 4.9 Indemnification.
(1) SSCC agrees that, from and after the Effective Time, all rights to
indemnification or exculpation now existing in favour of the directors or
officers of St. Laurent or any subsidiary as provided in its articles of
incorporation or by-laws in effect on the date hereof shall survive the
Arrangement and shall continue in full force and effect for a period of not
less than six years from the Effective Time.
(2) There shall be maintained in effect, for not less than six years from the
Effective Time, coverage equivalent to that in effect under the current
policies of the directors' and officers' liability insurance maintained by
St. Laurent or any of its subsidiaries, as the case may be, which, in the
aggregate, are no less advantageous, and with no gaps or lapses in
coverages with respect to matters occurring prior to the Effective Time;
provided, neither SSCC nor any of its subsidiaries shall be required to pay
an annual premium in excess of 200% of the last annual premium paid by St.
Laurent prior to the date hereof and if SSCC is not able to obtain the
insurance required by this Section 4.9, it shall obtain as much comparable
insurance as possible for an annual premium equal to such maximum amount.
Section 4.10 Rights Plan.
St. Laurent shall not redeem the rights issued under the St. Laurent Rights
Plan or terminate the St. Laurent Rights Plan until immediately prior to the
Effective Time unless required to do so by a court of competent jurisdiction or
any Regulatory Authority.
Section 4.11 Benefits Continuation, etc.
(1) Comparable Benefits. In addition to SSCC's obligations pursuant to the next
sentence, for not less than one year following the Effective Date, SSCC
shall maintain, or shall cause St. Laurent and its subsidiaries to
maintain, compensation and employee benefit plans, welfare benefit plans,
pension plans and arrangements for employees of St. Laurent and its
subsidiaries ("Affected Employees") that are, in the aggregate, no less
favorable than as provided under the St. Laurent Plans as in effect on the
date hereof. Without limiting the generality of the foregoing, for not less
than one year following the Effective Date, SSCC shall provide, or cause
St. Laurent and its subsidiaries to provide, severance pay and other
severance benefits to each Affected Employee as of the Effective Date that
are no less favorable than under the St. Laurent Plans as in effect as of
the date of this Agreement. Nothing in this Agreement shall be construed as
granting to any employee any rights of continuing employment.
(2) Honoring St. Laurent Employee Plans and Accrued Vacation. SSCC shall, or
shall cause St. Laurent or its subsidiaries to, honor all St. Laurent Plans
and other contractual commitments in effect immediately prior to the
Effective Date between
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Xx. Xxxxxxx or its subsidiaries and Affected Employees or former employees
of St. Laurent or its subsidiaries. Without limiting the generality or the
foregoing, SSCC shall honor all vacation, holiday, sickness and personal
days accrued by Affected Employees and, to the extent applicable, former
employees of St. Laurent and its subsidiaries ("Former Employees") as of
the Effective Date.
(3) Participation in Benefit Plans. Employees and, to the extent applicable,
Former Employees shall be given credit for all service with St. Laurent and
its subsidiaries (or service credited by St. Laurent or such subsidiaries)
under all employee benefit plans, welfare benefit plans, pension plans and
other arrangements currently maintained by SSCC or any of its subsidiaries
in which they are or become participants for purposes of eligibility and
vesting to the same extent as if rendered to SSCC or any of its
subsidiaries. SSCC shall cause to be waived any pre-existing condition
limitation under its employee benefit plans, welfare benefit plans, pension
plans and other arrangements that might otherwise apply to an Affected
Employee or, to the extent applicable, a Former Employee.
ARTICLE 5
CONDITIONS
Section 5.1 Mutual Conditions Precedent.
(1) The respective obligations of the parties hereto to complete the
transactions contemplated by this Agreement shall be subject to the
satisfaction, on or before the Effective Date, of the following conditions
precedent, each of which may only be waived by the mutual consent of SSCC,
on behalf of the SSCC Parties, and St. Laurent:
(a) the Arrangement shall have been approved at the St. Laurent Meeting by
not less than two-thirds or such other percentage as set forth in the
Interim Order of the votes cast by the holders of St. Laurent Common
Shares who are represented at the St. Laurent Meeting;
(b) the Arrangement shall have been approved at the St. Laurent Meeting in
accordance with any conditions in addition to those set out in Section
5.1(1)(a) which may be imposed by the Interim Order;
(c) the Interim Order and the Final Order shall each have been obtained in
form and terms satisfactory to each of St. Laurent and SSCC, acting
reasonably, and shall not have been set aside or modified in a manner
unacceptable to such parties on appeal or otherwise;
(d) there shall not be in force any order or decree restraining or
enjoining the consummation of the transactions contemplated by this
Agreement and there shall be no proceeding (other than an appeal made
in connection with the Arrangement), of a judicial or administrative
nature or otherwise, brought by a Governmental Entity in progress or
threatened that relates to or results from
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the transactions contemplated by this Agreement that would, if
successful, result in an order or ruling that would preclude
completion of the transactions contemplated by this Agreement in
accordance with the terms hereof or would otherwise be inconsistent
with the Appropriate Regulatory Approvals which have been obtained;
(e) this Agreement shall not have been terminated pursuant to Article 6;
(f) the Appropriate Regulatory Approvals, and the expiry of any waiting
periods, in connection with, or required to permit, the consummation
of the Arrangement, the failure of which to obtain or the non-expiry
of which would constitute a violation of applicable Law, or would have
a Material Adverse Effect on SSCC or St. Laurent, as the case may be,
shall have been obtained or received on terms that will not have a
Material Adverse Effect on SSCC and/or St. Laurent; there shall not be
pending any suit, action or proceeding by any Governmental Entity nor
shall the parties have been advised by the applicable Governmental
Entity that the Government Entity has determined to file a suit,
action or proceeding (i) seeking to prohibit or restrict the
acquisition by SSCC or 3038727 of any St. Laurent Common Shares,
seeking to restrain or prohibit the consummation of the Plan of
Arrangement or seeking to obtain from St. Laurent or SSCC any damages
that are material in relation to St. Laurent and its subsidiaries
taken as a whole, (ii) seeking to prohibit or materially limit the
ownership or operation by SSCC or any of its subsidiaries of any
material portion of the business or assets of St. Laurent or any of
its subsidiaries or to compel SSCC or any of its subsidiaries to
dispose of or hold separate any material portion of the business or
assets of St. Laurent and of its subsidiaries, taken as a whole, as a
result of the Plan of Arrangement, (iii) seeking to impose limitations
on the ability of SSCC or any of its subsidiaries to acquire or hold,
or exercise full rights of ownership of, any St. Laurent Common
Shares, including the right to vote the St. Laurent Common Shares
purchased by it on all matters properly presented to the shareholders
of St. Laurent, (iv) seeking to prohibit SSCC or 3038727 from
effectively controlling in any material respect the business or
operations of St. Laurent and its subsidiaries or (v) which otherwise
is reasonably likely to have a Material Adverse Effect on St. Laurent
or SSCC.
Section 5.2 Additional Conditions Precedent to the Obligations of the SSCC
Parties.
(1) The obligations of the SSCC Parties to complete the transactions
contemplated by this Agreement shall also be subject to the fulfilment of
each of the following conditions precedent (each of which is for the SSCC
Parties' exclusive benefit and may be waived by SSCC on behalf of the SSCC
Parties):
(a) all covenants of St. Laurent under this Agreement to be performed on
or before the Effective Date shall have been duly performed by St.
Laurent in all material respects;
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(b) the representations and warranties of St. Laurent shall be true and
correct in all material respects as of the Effective Date as if made
on and as of such date (except to the extent such representations and
warranties speak as of an earlier date, in which event such
representations and warranties shall be true and correct in all
material respects as of such earlier date, or except as affected by
transactions contemplated or permitted by this Agreement) and the SSCC
Parties shall have received a certificate of St. Laurent addressed to
the SSCC Parties and dated the Effective Date, signed on behalf of St.
Laurent by the Chief Executive Officer and Chief Financial Officer of
St. Laurent, confirming the same as at the Effective Date;
(c) between the date hereof and the Effective Date, there shall not have
occurred a Material Adverse Change to St. Laurent;
(d) the Board of Directors of St. Laurent shall have adopted all necessary
resolutions, and all other necessary corporate action shall have been
taken by St. Laurent and the subsidiaries to permit the consummation
of the Arrangement.
(2) The SSCC Parties may not rely on the failure to satisfy any of the above
conditions precedent as a basis for non-compliance by the SSCC Parties with
their obligations under this Agreement if the condition precedent would
have been satisfied but for a material default by the SSCC Parties in
complying with their obligations hereunder.
Section 5.3 Additional Conditions Precedent to the Obligations of St. Laurent.
(1) The obligations of St. Laurent to complete the transactions contemplated by
this Agreement shall also be subject to the following conditions precedent
(each of which is for the exclusive benefit of St. Laurent and may be
waived by St. Laurent):
(a) all covenants of the SSCC Parties under this Agreement to be performed
on or before the Effective Date shall have been duly performed by the
SSCC Parties in all material respects;
(b) the representations and warranties of the SSCC Parties shall be true
and correct in all material respects as of the Effective Date as if
made on and as of such date (except to the extent such representations
and warranties speak as of an earlier date, in which event such
representations and warranties shall be true and correct in all
material respects as of such earlier date) and St. Laurent shall have
received a certificate of each of the SSCC Parties addressed to St.
Laurent and dated the Effective Date, signed on behalf of each of the
SSCC Parties by two senior executive officers of the relevant SSCC
Party, confirming the same as at the Effective Date;
(c) between the date hereof and the Effective Date, there shall not have
occurred a Material Adverse Change to SSCC;
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(d) the Boards of Directors of the SSCC Parties shall have adopted all
necessary resolutions, and all other necessary corporate action shall
have been taken by the SSCC Parties to permit the consummation of the
Arrangement and the issue of SSCC Common Shares pursuant to the
Arrangement and upon the exercise from time to time of the Replacement
Options;
(e) the SSCC Common Shares issuable pursuant to the Arrangement, upon
exercise of the Replacement Options and the St. Laurent Warrants from
time to time shall have been approved for listing on The Nasdaq Stock
Market, subject to notice of issuance; and
(f) the issuance and first resale of the SSCC Common Shares to be issued
to the holders of St. Laurent Common Shares as of the Effective Time
shall be permitted without qualification with or approval of or the
filing of any document under Securities Legislation, except with
respect to Affiliates who shall receive SSCC Common Shares subject to
the terms and restrictions of the Affiliate's Letter and except for
such first resales, any restrictions or transfer by reason of a holder
being a "control person" of any SSCC Party or St. Laurent for purposes
of Canadian, federal, provincial or territorial Securities
Legislation.
(2) St. Laurent may not rely on the failure to satisfy any of the above
conditions precedent as a basis for noncompliance by St. Laurent with its
obligations under this Agreement if the condition precedent would have been
satisfied but for a material default by St. Laurent in complying with its
obligations hereunder.
Section 5.4 Notice and Cure Provisions.
(1) The SSCC Parties and St. Laurent will give prompt notice to the other of
the occurrence, or failure to occur, at any time from the date hereof until
the Effective Date, of any event or state of facts which occurrence or
failure would, or would be likely to:
(a) cause any of the representations or warranties of the other party
contained herein to be untrue or inaccurate in any material respect on
the date hereof or on the Effective Date; or
(b) result in the failure in any material respect to comply with or
satisfy any covenant, condition or agreement to be complied with or
satisfied by the other hereunder prior to the Effective Date.
(2) Neither the SSCC Parties nor St. Laurent may elect not to complete the
transactions contemplated hereby pursuant to the conditions precedent
contained in Section 5.1, Section 5.2, Section 5.3, or exercise any
termination right arising therefrom, unless forthwith and in any event
prior to the filing of the Final Order for acceptance by the Director, the
SSCC Parties or St. Laurent, as the case may be, have delivered a written
notice to the other specifying in reasonable detail all breaches of
covenants, representations and warranties or other matters which the SSCC
Parties or St.
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Laurent, as the case may be, are asserting as the basis for the non-
fulfilment of the applicable condition precedent or the exercise of the
termination right, as the case may be. If any such notice is delivered,
provided that the SSCC Parties or St. Laurent, as the case may be, are
proceeding diligently to cure such matter and if such matter is susceptible
to being cured using commercially reasonable efforts, the other may not
terminate this Agreement as a result thereof until the later of August 30,
2000 and the expiration of a period of thirty (30) days from such notice.
If such notice has been delivered prior to the date of the St. Laurent
Meeting, such meeting shall be postponed until the expiry of such period.
If such notice has been delivered prior to the making of the application
for the Final Order or the filing of the Articles of Arrangement with the
Director, such application and such filing shall be postponed until the
expiry of such period. For greater certainty, in the event that such matter
is cured within the time period referred to herein, this Agreement may not
be terminated.
Section 5.5 Satisfaction of Conditions.
The conditions precedent set out in Section 5.1, Section 5.2 and Section
5.3 shall be conclusively deemed to have been satisfied, waived or released
when, with the agreement of SSCC and St. Laurent, a certificate of arrangement
in respect of the Arrangement is issued by the Director.
The parties hereto agree that no condition to the obligation of SSCC
Parties to complete the transactions contemplated by this Agreement set forth in
Section 5.2(1)(a), Section 5.2(1)(b) or Section 5.2(1)(c) shall be deemed not to
have been satisfied as a result of any occurrence of circumstances directly or
indirectly related to the effect of the existence or performance of this
Agreement or the transactions contemplated hereby on any existing agreements of
St. Laurent or its affiliates relating to the St. Laurent Partially-Owned Entity
or its affiliates or St. Laurent's relations with such persons referred to in
the St. Laurent Disclosure Letter.
ARTICLE 6
AMENDMENT AND TERMINATION
Section 6.1 Amendment.
This Agreement may, at any time and from time to time before or after the
holding of the St. Laurent Meeting but not later than the Effective Date, be
amended by mutual written agreement of the parties hereto provided, however,
that any such amendment does not invalidate any required security holder
approval of the Arrangement.
Section 6.2 Mutual Understanding Regarding Amendments.
(1) The parties will continue, from and after the date hereof and through and
including the Effective Date, to use their respective reasonable efforts to
maximize present and future financial and tax planning opportunities for
SSCC and for St. Laurent as and to the extent that the same shall not
prejudice any party or its security holders from the
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situation arising hereunder. The parties will ensure that such planning
activities do not impede the progress of the Arrangement in any material
way.
(2) The parties agree that if the SSCC Parties or St. Laurent, as the case may
be, propose any amendment or amendments to this Agreement or to the Plan of
Arrangement, the other will act reasonably in considering such amendment
and if the other and its shareholders are not prejudiced by reason of any
such amendment the other will co-operate in a reasonable fashion with the
SSCC Parties or St. Laurent, as the case may be, so that such amendment can
be effected subject to applicable Laws and the rights of the security
holders.
Section 6.3 Termination.
(1) If any condition contained in Section 5.1 or Section 5.2 is not satisfied
at or before the Effective Date to the satisfaction of the SSCC Parties,
then, subject to Section 5.4, SSCC on behalf of the SSCC Parties may by
notice to St. Laurent terminate this Agreement and the obligations of the
parties hereunder except as otherwise herein provided, but without
detracting from the rights of the SSCC Parties arising from any breach by
St. Laurent.
(2) If any condition contained in Section 5.1 or Section 5.3 is not satisfied
at or before the Effective Date to the satisfaction of St. Laurent, then,
subject to Section 5.4, St. Laurent may by notice to SSCC on behalf of the
SSCC Parties terminate this Agreement and the obligations of the parties
hereunder except as otherwise herein provided, but without detracting from
the rights of St. Laurent arising from any breach by the SSCC Parties.
(3) This Agreement may:
(a) be terminated by the mutual agreement of St. Laurent and the SSCC
Parties (without further action on the part of the St. Laurent
Securityholders if terminated after the holding of the St. Laurent
Meeting);
(b) be terminated by either St. Laurent or SSCC, if there shall be passed
any law or regulation applicable to SSCC or St. Laurent, as the case
may be, that makes consummation of the transactions contemplated by
this Agreement illegal or otherwise prohibited or if any injunction,
order or decree enjoining SSCC or St. Laurent from consummating the
transactions contemplated by this Agreement is entered and such
injunction, order or decree shall become final and non-appealable;
(c) be terminated by SSCC if (A) the Board of Directors of St. Laurent
shall have failed to recommend or withdrawn or modified or changed in
a manner adverse to SSCC its approval or recommendation of this
Agreement or the Arrangement or shall have recommended an Acquisition
Proposal, or (B) St. Laurent shall have materially and willfully
breached the covenants contained in Section 4.5(1)(a) or if St.
Laurent has accepted a Superior Proposal in violation of Section 4.6
or (C) through the fault of St. Laurent (whether by
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commission or omission), this Arrangement is not, prior to 14 days
prior to the Drop Dead Date, submitted for the approval of the St.
Laurent Securityholders at the St. Laurent Meeting;
(d) be terminated by St. Laurent in order to enter into a definitive
written agreement with respect to a Superior Proposal, provided St.
Laurent has complied with Section 4.6 and the payment of any fee
required to be paid pursuant to Section 6.4;
(e) be terminated by St. Laurent or SSCC if St. Laurent Securityholder
approval shall not have been obtained by reason of the failure to
obtain the required vote at the St. Laurent Meeting; or
(f) be terminated by St. Laurent if Jefferson Smurfit Corporation (U.S.)
or Stone Container Corporation shall not have obtained on or before
March 25, 2000 the consents from their respective banking syndicates
required to consummate the transactions contemplated by the
Arrangement;
in each case, prior to the Effective Date (except in the case of (f) above
only after March 25, 2000).
(4) If the Effective Date does not occur on or prior to the Drop Dead Date,
then this Agreement shall terminate.
(5) If this Agreement is validly terminated by either SSCC or St. Laurent
pursuant to Section 6.3, this Agreement shall forthwith become null and
void and there will be no liability or obligation on the part of either
SSCC or St. Laurent (or any of their respective directors, officers,
representatives or affiliates), except (i) that Section 6.4, Section 7.7
and this Section 6.3(5) shall continue to survive any such termination and
(ii) that nothing contained herein shall relieve any party hereto from
liability for willful breach of its representations, warranties, covenants
or agreements contained in this Agreement.
Section 6.4 Break Fee.
If:
(a) St. Laurent shall terminate this Agreement pursuant to Section
6.3(3)(d);
(b) SSCC shall terminate this Agreement pursuant to Section 6.3(3)(c)(A)
or Section 6.3(3)(c)(C); or
(c) either St. Laurent or SSCC shall terminate this Agreement pursuant to
Section 6.3(3)(e) in circumstances where St. Laurent Securityholder
approval has not been obtained at the St. Laurent Meeting, and (x) a
bona fide Acquisition Proposal has been made by any person other than
a SSCC Party prior to the St. Laurent Meeting and not withdrawn more
than five (5) days prior to the vote of the St. Laurent
Securityholders and (y) St. Laurent enters
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into an acquisition agreement with respect to an Acquisition Proposal,
or an Acquisition Proposal is consummated, after the date hereof and
prior to the expiration of 12 months following termination of this
Agreement, unless at the time of the St. Laurent Meeting a Specified
SSCC Event has occurred and is continuing;
then in any such case St. Laurent shall pay to SSCC US$30 million in
immediately available funds to an account designated by SSCC. Such payment
shall be due (i) in the case of a termination specified in clause (a),
prior to the termination of this Agreement, (ii) in the case of a
termination specified in clause (b), within five Business Days after
written notice of termination by SSCC or (iii) in the case of a termination
specified in clause (c), at or prior to the earlier of the entering into of
the acquisition agreement and the consummation of the transaction referred
to therein. St. Laurent shall not be obligated to make more than one
payment pursuant to this Section 6.4.
Section 6.5 Effect of Break Fee Payment.
For greater certainty, the parties hereto agree that if St. Laurent pays to
SSCC amounts required by Section 6.4 as a result of the occurrence of any of the
events referenced in Section 6.4, the SSCC Parties shall have no other remedy
for any breach of this Agreement by St. Laurent.
Section 6.6 Remedies.
Subject to Section 6.5, the parties hereto acknowledge and agree that an
award of money damages would be inadequate for any breach of this Agreement by
any party or its representatives and any such breach would cause the non-
breaching party irreparable harm. Accordingly, the parties hereto agree that, in
the event of any breach or threatened breach of this Agreement by one of the
parties, the non-breaching party will also be entitled, without the requirement
of posting a bond or other security, to injunctive relief and specific
performance. Such remedies will not be the exclusive remedies for any breach of
this Agreement but will be in addition to all other remedies available at law or
equity to each of the parties.
ARTICLE 7
GENERAL
Section 7.1 Notices.
(1) All notices and other communications which may or are required to be given
pursuant to any provision of this Agreement shall be given or made in
writing and shall be deemed to be validly given if served personally or by
telecopy, in each case addressed to the particular party at:
(a) If to St. Laurent, at:
St. Laurent Paperboard Inc.
000 Xxxx-Xxxxxxxx Xxxx. West
-60-
Suite 3000
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxxxx Xxxxxxx
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxxx & Xxxxxxxx
1501 XxXxxx Xxxxxxx Xxxxxx
00/xx/ Xxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxxxxx Xxxxxxxx
Telecopier No.: (000) 000-0000
and to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
00000
Attention: Xxxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
(b) If to a SSCC Party, at:
Smurfit-Stone Container Corporation
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx
00000
Attention: Xxxxx X. Xxxx
Telecopier No.: (000) 000-0000
with a copy to:
Stikeman Elliott
0000 Xxxx-Xxxxxxxx Xxxx X.
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxxxx Xxxxxxx and Xxxxxxxxx Xxxxxxxxxxx
Telecopier No.: (000) 000-0000
-61-
and to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx
00000
Attention: Xxxxxx X. Xxxxx Xx.
Telecopier No.: (000) 000-0000
or at such other address of which any party may, from time to time,
advise the other parties by notice in writing given in accordance with
the foregoing. The date of receipt of any such notice shall be deemed
to be the date of delivery or telecopying thereof.
Section 7.2 Assignment.
No party hereto may assign its rights or obligations under this Agreement
or the Arrangement except that the SSCC Parties (other than SSCC) shall be
permitted to assign their rights and obligations under this Agreement to a
direct or indirect wholly-owned subsidiary of SSCC, provided such assignment
shall not release any such SSCC Party from liability hereunder.
Section 7.3 Binding Effect.
This Agreement and the Arrangement shall be binding upon and shall enure to
the benefit of the parties hereto and their respective successors and no third
party shall have any rights hereunder.
Section 7.4 Waiver and Modification.
St. Laurent and the SSCC Parties may waive or consent to the modification
of, in whole or in part, any inaccuracy of any representation or warranty made
to them hereunder or in any document to be delivered pursuant hereto and may
waive or consent to the modification of any of the covenants herein contained
for their respective benefit or waive or consent to the modification of any of
the obligations of the other parties hereto. Any waiver or consent to the
modification of any of the provisions of this Agreement, to be effective, must
be in writing executed by the party granting such waiver or consent. No failure
or delay by any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.
Section 7.5 No Personal Liability.
(1) No director or officer of any SSCC Party shall have any personal liability
whatsoever to St. Laurent under this Agreement, or any other document
delivered in connection with the Arrangement on behalf of a SSCC Party.
-62-
(2) No director or officer of St. Laurent shall have any personal liability
whatsoever to any SSCC Party under this Agreement, or any other document
delivered in connection with the Arrangement on behalf of St. Laurent.
Section 7.6 Further Assurances.
Each party hereto shall, from time to time, and at all times hereafter, at
the request of the other parties hereto, but without further consideration, do
all such further acts and execute and deliver all such further documents and
instruments as shall be reasonably required in order to fully perform and carry
out the terms and intent hereof.
Section 7.7 Expenses.
(1) Subject to Section 6.4, the parties agree that all out-of-pocket expenses
of the parties relating to the Arrangement and the transactions
contemplated hereby, including legal fees, accounting fees, financial
advisory fees, regulatory filing fees, all disbursements of advisors and
printing and mailing costs, shall be paid by the party incurring such
expenses.
(2) St. Laurent represents and warrants to the SSCC Parties that, except for
any amounts owing to Xxxxxxx Warburg Dillon Read Inc.. and Xxxxxxxxx,
Xxxxxx & Xxxxxxxx by St. Laurent pursuant to and in accordance with the
terms of written and executed agreements existing as at the date hereof,
copies of which have been given to the SSCC Parties on or prior to the date
hereof, no broker, finder or investment banker is or will be entitled to
any brokerage, finder's or other fee or commission from St. Laurent or any
subsidiary of St. Laurent in connection with the transactions contemplated
hereby or by the Arrangement.
Section 7.8 Consultation.
SSCC and St. Laurent agree to consult with each other as to the general
nature of any news releases or public statements with respect to this Agreement
or the Arrangement, and to use their respective reasonable efforts not to issue
any news releases or public statements inconsistent with the results of such
consultations. Subject to applicable Laws, each party shall use its reasonable
efforts to enable the other parties to review and comment on all such news
releases prior to the release thereof. The parties agree to issue jointly a news
release with respect to this Arrangement as soon as practicable following the
execution of this Agreement. SSCC and St. Laurent also agree to consult with
each other in preparing and making any filings and communications in connection
with any Appropriate Regulatory Approvals.
Section 7.9 Governing Laws.
This Agreement shall be governed by and construed in accordance with the
laws of the Province of Quebec and the laws of Canada applicable therein and
shall be treated in all respects as a Quebec contract. Each party hereby
irrevocably attorns to the jurisdiction of the courts of the Province of Quebec
in respect of all matters arising under or in relation to this Agreement.
-63-
Section 7.10 Time of Essence.
Time shall be of the essence in this Agreement.
Section 7.11 Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together shall constitute one
and the same instrument.
Section 7.12 No Third Party Beneficiaries
Except as provided in Section 4.9 and this Section 7.12, this Agreement
(including the documents and instruments referred to herein) is not intended to
confer upon any Person other than the parties hereto any rights or remedies
hereunder.
Section 7.13 Language.
The Parties have required that this Agreement and all instruments relating
thereto be in the English language; les parties ont exige que la presente
convention et tout autre document afferent aux presentes soient en langue
anglaise.
-64-
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the date first written above.
SMURFIT-STONE CONTAINER CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
_____________________________________
Xxxxxxx X. Xxxxxx
STONE CONTAINER CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
_____________________________________
Xxxxxxx X. Xxxxxx
3038727 NOVA SCOTIA COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
_____________________________________
Xxxxxxx X. Xxxxxx
ST. LAURENT PAPERBOARD INC.
By: /s/ Xxx X. Gurandiano
_____________________________________
Xxx X. Gurandiano
SCHEDULE D TO THE
PRE-MERGER AGREEMENT
PLAN OF ARRANGEMENT
UNDER SECTION 192
OF THE CANADA BUSINESS CORPORATIONS ACT
ARTICLE 1
INTERPRETATION
Section 1.1 Definitions
In this Plan of Arrangement, unless there is something in the subject
matter or context inconsistent therewith, the following terms shall have the
respective meanings set out below and grammatical variations of such terms shall
have corresponding meanings:
1.1 "Arrangement" means an arrangement under section 192 of the CBCA on the
terms and subject to the conditions set out in this Plan of Arrangement,
subject to any amendments or variations thereto made in accordance with
Section 6.1 of the Pre-Merger Agreement or Article 5 or made at the
direction of the Court in the Final Order.
"Arrangement Resolution" means the special resolution of the St. Laurent
Securityholders, to be substantially in the form and content of Schedule C
annexed to the Pre-Merger Agreement.
"Articles of Arrangement" means the articles of arrangement of St. Laurent
in respect of the Arrangement that are required by the CBCA to be sent to
the Director after the Final Order is made.
"Business Day" means any day on which commercial banks are generally open
for business in Chicago, Illinois and Montreal, Quebec, other than a
Saturday, a Sunday or a day observed as a holiday in Chicago, Illinois
under the laws of the State of Illinois or the federal laws of the United
States of America or in Montreal, Quebec under the laws of the Province of
Quebec or the federal laws of Canada.
"CBCA" means the Canada Business Corporations Act, as amended.
"Certificate" means the certificate of arrangement giving effect to the
Arrangement, issued pursuant to subsection 192(7) of the CBCA after the
Articles of Arrangement have been filed.
"Circular" means the notice of the St. Laurent Meeting and accompanying
management information circular, including all appendices thereto, to be
sent to holders of St. Laurent Common Shares, St. Laurent Options, St.
Laurent RSUs and St. Laurent Warrants in connection with the St. Laurent
Meeting, as may be amended from time to time.
-2-
"Court" means the Superior Court of Quebec, District of Montreal.
"Depositary" means Montreal Trust Company at its offices located at
Montreal, Quebec.
"Director" mean the Director appointed pursuant to section 260 of the CBCA.
"Dissent Rights" has the meaning ascribed thereto in Section 3.1.
"Dissenting Shareholder" means a holder of St. Laurent Common Shares who
dissents in respect of the Arrangement in strict compliance with the
Dissent Rights.
"Drop Dead Date" means September 30, 2000, or such later date as may be
mutually agreed by the parties to the Pre-Merger Agreement.
"Effective Date" means the date shown on the Certificate, provided that
such date occurs on or prior to the Drop Dead Date.
"Effective Time" means 12:01 a.m. (Montreal time) on the Effective Date.
"Exchange Consideration" has the meaning ascribed thereto in Section 2.3.
"Final Order" means the final order of the Court approving the Arrangement
as such order may be amended by the Court at any time prior to the
Effective Date or, if appealed, then, unless such appeal is withdrawn or
denied, as affirmed.
"Government Entity" means any (a) multinational, federal, provincial,
state, regional, municipal, local or other government, governmental or
public department, central bank, court, tribunal, arbitral body,
commission, board, bureau or agency, domestic or foreign, (b) any
subdivision, agent, commission, board, or authority of any of the
foregoing, or (c) any quasi-governmental or private body exercising any
regulatory, expropriation or taxing authority under or for the account of
any of the foregoing.
"holders" means the holders of St. Laurent Common Shares shown from time to
time in the register maintained by or on behalf of St. Laurent in respect
of the St. Laurent Common Shares.
"Interim Order" means the interim order of the Court, as the same may be
amended, in respect of the Arrangement, as contemplated by Section 2.2 of
the Pre-Merger Agreement.
"Meeting Date" means the date of the St. Laurent Meeting.
"Nasdaq" means The Nasdaq Stock Market.
"NSCA" means the Companies Act (Nova Scotia).
"Person" includes any individual, firm, partnership, joint venture, venture
capital fund, limited liability company, unlimited liability company,
association, trust, trustee,
-3-
executor, administrator, legal personal representative, estate, group, body
corporate, corporation, unincorporated association or organization,
Governmental Entity, syndicate or other entity, whether or not having legal
status.
"Pre-Merger Agreement" means the pre-merger agreement made as of the 23rd
day of February, 2000 among SSCC, Stone, 3038727 and St. Laurent, as
amended, supplemented and/or restated in accordance therewith prior to the
Effective Date, providing for, among other things, the Arrangement.
"Replacement Option" has the meaning ascribed thereto in Section 2.2(c).
"Replacement Warrant" has the meaning ascribed thereto in Section 2.2(e).
"Security Portion" has the meaning ascribed thereto in Section 2.3.
"SSCC" means Smurfit-Stone Container Corporation, a corporation existing
under the laws of the State of Delaware.
"SSCC Closing Price" means the closing price on Nasdaq of SSCC Common
Shares on the day immediately preceding the Effective Date.
"SSCC Common Shares" means the shares of common stock in the capital of
SSCC.
"SSCC Option Shares" has the meaning ascribed thereto Section 2.2(c).
"St. Laurent" means St. Laurent Paperboard Inc., a corporation existing
under the laws of Canada.
"St. Laurent Common Shares" means the common shares in the capital of St.
Laurent.
"St. Laurent Directors' Stock Option and Share Purchase Plan" means that
certain Directors Stock Option and Share Purchase Plan of St. Laurent in
effect as of the date hereof.
"St. Laurent Employee Share Purchase Plan (Canada)" means the employee
share purchase plan (Canada) of St. Laurent in effect as of the date
hereof.
"St. Laurent Long-Term Incentive Plan" means the long-term incentive plan
of St. Laurent in effect as of the date hereof.
"St. Laurent Managers' Share Purchase Plan" means the managers' share
purchase plan of St. Laurent in effect as of the date hereof.
"St. Laurent Managers' Stock Option Plan" mean the managers' stock option
plan of St. Laurent in effect as of the date hereof.
-4-
"St. Laurent Meeting" means the special meeting of St. Laurent
Securityholders, including any adjournment thereof, to be called and held
in accordance with the Interim Order to consider the Arrangement.
"St. Laurent Options" means the options to purchase St. Laurent Common
Shares granted under the St. Laurent Directors' Stock Option and Share
Purchase Plan, the St. Laurent Long-Term Incentive Plan and the St. Laurent
Managers' Stock Option Plan and being outstanding and unexercised.
"St. Laurent Performance Share Plan" means the performance share plan of
St. Laurent in effect as of the date hereof.
"St. Laurent Rights Plan" means the shareholder rights plan of St. Laurent
approved on February 1, 1995, as amended on May 7, 1998 and on February 23,
2000.
"St. Laurent RSUs" means the restricted share units granted by St. Laurent
to certain officers and managers pursuant to the St. Laurent Managers'
Share Purchase Plan and being outstanding and unexercised on the Effective
Date.
"St. Laurent Securityholders" means the holders of St. Laurent Common
Shares, St. Laurent Options, St. Laurent RSUs and St. Laurent Warrants,
collectively.
"St. Laurent Share Purchase Plans" means, collectively, the St. Laurent
Directors' Stock Option and Purchase Plan, the St. Laurent Employee Share
Purchase Plan (Canada), the St. Laurent subsidiary Employee Stock Purchase
Plan (U.S.), the St. Laurent Managers' Share Purchase Plan and the St.
Laurent Performance Share Plan.
"St. Laurent subsidiary Employee Stock Purchase Plan (U.S.)" means that
certain Employee Stock Purchase Plan (U.S.) of a subsidiary of St. Laurent
in effect as of the date hereof.
"St. Laurent Warrants" means the 380,000 Series A Warrants of St. Laurent
issued on January 29, 1999 to purchase 380,000 St. Laurent Common Shares at
an initial exercise price of Canadian $10.95, outstanding as of the date
hereof.
"St. Laurent Warrant Indenture" means that certain Indenture made as of
January 29, 1999 between St. Laurent and Montreal Trust Company.
"Stone" means Stone Container Corporation, a corporation existing under the
laws of the State of Delaware.
"Weighted Average Price of the SSCC Common Shares" means the weighted
average of the closing prices of the SSCC Common Shares on Nasdaq for the
twenty (20) Business Day period ending on the second (2nd) Business Day
prior to the Meeting Date.
"3038727" means 3038727 Nova Scotia Company, an unlimited liability company
existing under the laws of the Province of Nova Scotia and being a
subsidiary of Stone.
-5-
Section 1.2 Sections and Headings
The division of this Plan of Arrangement into sections and the insertion of
headings are for reference purposes only and shall not affect the interpretation
of this Plan of Arrangement. Unless otherwise indicated, any reference in this
Plan of Arrangement to a section or an exhibit refers to the specified section
of or exhibit to this Plan of Arrangement.
Section 1.3 Number, Gender and Persons
In this Plan of Arrangement, unless the context otherwise requires, words
importing the singular number include the plural and vice versa and words
importing any gender include all genders.
ARTICLE 2
ARRANGEMENT
Section 2.1 Binding Effect
This Plan of Arrangement will become effective at, and be binding at and
after, the Effective Time on (i) St. Laurent, (ii) SSCC, Stone and 3038727,
(iii) all holders and all beneficial holders of St. Laurent Common Shares, and
(iv) all holders of St. Laurent Options, St. Laurent RSUs and St. Laurent
Warrants.
Section 2.2 Arrangement
Commencing at the Effective Time, the following shall occur and shall be
deemed to occur in the following order without any further act or formality:
(a) St. Laurent shall transfer to one or more new wholly-owned
subsidiaries governed by the CBCA all of its operating assets other
than securities and all of its operating liabilities, for a
consideration payable through the issuance of stock to St. Laurent;
(b) each St. Laurent Common Share will be transferred by the holder
thereof, without any act or formality on its part, to 3038727 in
exchange for the Exchange Consideration, and the name of each such
holder will be removed from the register of holders of St. Laurent
Common Shares and added to the register of holders of SSCC Common
Shares and 3038727 will be recorded as the registered holder of such
St. Laurent Common Shares so exchanged and will be deemed to be the
legal and beneficial owner thereof;
(c) each St. Laurent Option shall be exchanged for an option (a
"Replacement Option") to purchase that number of SSCC Common Shares
equal to the sum of (i) the Security Portion times the number of St.
-----
Laurent Common Shares subject to the St. Laurent Option; plus (ii) the
quotient of (A) $12.50 times the number of St. Laurent Common Shares
-----
subject to the St. Laurent Option, divided by (B) the SSCC Closing
----------
Price ("SSCC Option Shares"); the exercise price per SSCC Common Share
for each Replacement Option shall be the quotient of (x) an aggregate
amount equal to the number of St. Laurent Common Shares subject to
-6-
the St. Laurent Option exchanged for such Replacement Option times the
-----
original exercise price per St. Laurent Common Share pursuant to such
St. Laurent Option, at the option of the holder (i) converted into its
U.S. dollar equivalent based on the noon spot exchange rate on the day
immediately preceding the Effective Date reported by the Bank of
Canada for Canadian dollars expressed in US dollars, or (ii) expressed
in Canadian dollars, the whole divided by (y) the SSCC Option Shares
----------
subject to such Replacement Option;
(d) each St. Laurent RSU shall be fully vested and entitle its holder to
receive at the Effective Time, with respect of each St. Laurent Common
Share subject to such St. Laurent RSU, the Exchange Consideration
without any further act or formality;
(e) each St. Laurent Series A Warrant will be exchanged for a warrant (a
"Replacement Warrant"); each Replacement Warrant will entitle the
holder thereof, upon the exercise of each Replacement Warrant and
payment of the Exercise Price (as defined in the St. Laurent Warrant
Indenture), to receive the Exchange Consideration. Except as set out
in the preceding sentence, the term to expiry and all other terms and
conditions of each Replacement Warrant will be unchanged from those of
the relevant St. Laurent Warrant and any document or agreement
previously evidencing a St. Laurent Warrant will thereafter evidence
and be deemed to evidence such Replacement Warrant; and
(f) St. Laurent will be continued under the NSCA without any further act
or formality in accordance with sections 130 and following of the
NSCA.
Section 2.3 Exchange Consideration
For purposes hereof, "Exchange Consideration" means, with respect to each
St. Laurent Common Share, US$12.50 payable in cash plus 0.5 SSCC Common Share
(the "Security Portion").
Section 2.4 Adjustments to Consideration
The Security Portion of the Exchange Consideration and the conversion
formula for the St. Laurent Options shall be adjusted to reflect fully the
effect of any stock split, reverse split, stock dividend (including any dividend
or distribution of securities convertible into SSCC Common Shares or St. Laurent
Common Shares other than stock dividends paid in lieu of ordinary course
dividends), reorganization, recapitalization or other like change with respect
to SSCC Common Shares or St. Laurent Common Shares occurring after the date of
the Pre-Merger Agreement and prior to the Effective Time.
-7-
ARTICLE 3
RIGHTS OF DISSENT
Section 3.1 Rights of Dissent
Holders of St. Laurent Common Shares may exercise rights of dissent with
respect to such shares pursuant to and in the manner set forth in section 190 of
the CBCA and this Section 3.1 (the "Dissent Rights") in connection with the
Arrangement; provided that, notwithstanding subsection 190(5) of the CBCA, the
written objection to the Arrangement Resolution referred to in subsection 190(5)
of the CBCA must be received by St. Laurent not later than 5:00 p.m. (Montreal
time) on the Business Day preceding the St. Laurent Meeting. Holders of St.
Laurent Common Shares who duly exercise such rights of dissent and who:
(a) are ultimately determined to be entitled to be paid fair value for
their St. Laurent Common Shares shall be deemed to have transferred
such St. Laurent Common Shares to 3038727 in accordance with Section
2.2(b) hereof, to the extent the fair value therefor is paid by
3038727; or
(b) are ultimately determined not to be entitled, for any reason, to be
paid fair value for their St. Laurent Common Shares shall be deemed to
have participated in the Arrangement on the same basis as a non-
dissenting holder of St. Laurent Common Shares and shall receive the
Exchange Consideration on the basis determined in accordance with
Section 2.2(b),
but in no case shall SSCC, 3038727, St. Laurent or any other Person be required
to recognize such holders as holders of St. Laurent Common Shares after the
Effective Time, and the names of such holders of St. Laurent Common Shares shall
be deleted from the registers of holders of St. Laurent Common Shares at the
Effective Time.
ARTICLE 4
CERTIFICATES, CHEQUES AND FRACTIONAL SHARES
Section 4.1 Exchange of Certificates for SSCC Common Shares and Payment in Cash
At or promptly after the Effective Time, 3038727 shall deposit with the
Depositary, for the benefit of the holders of St. Laurent Common Shares who will
receive SSCC Common Shares in connection with the Arrangement, certificates
representing that whole number of SSCC Common Shares and the cash portion of the
Exchange Consideration to be delivered pursuant to Section 2.2 upon the exchange
of St. Laurent Common Shares. Upon surrender to the Depositary for cancellation
of a certificate which immediately prior to the Effective Time represented
outstanding St. Laurent Common Shares that were exchanged for the Exchange
Consideration under the Arrangement, together with such other documents and
instruments as would have been required to effect the transfer of the shares
formerly represented by such certificate under the CBCA and the by-laws of St.
Laurent and such additional documents and instruments as the Depositary may
reasonably require, the holder of such surrendered certificate shall be entitled
to receive in exchange therefor, and the Depositary shall deliver to such
holder, a certificate representing that number (rounded down to the nearest
whole number) of SSCC Common Shares
-8-
and a cheque representing the cash portion of the Exchange Consideration which
such holder has the right to receive (together with any dividends or
distributions with respect thereto pursuant to Section 4.2 and any cash in lieu
of fractional SSCC Common Shares pursuant to Section 4.3), and the certificate
so surrendered shall forthwith be cancelled. In the event of a transfer of
ownership of St. Laurent Common Shares which is not registered in the transfer
records of St. Laurent, a certificate representing the proper number of SSCC
Common Shares and a cheque representing the cash portion of the Exchange
Consideration may be issued to the transferee if the certificate representing
such St. Laurent Common Shares is presented to the Depositary, accompanied by
all documents required to evidence and effect such transfer. Until surrendered
as contemplated by this Section 4.1, each certificate which immediately prior to
the Effective Time represented one or more outstanding St. Laurent Common Shares
that were exchanged for SSCC Common Shares and cash shall be deemed at all times
after the Effective Time to represent only the right to receive upon such
surrender (i) the certificate representing SSCC Common Shares as contemplated by
this Section 4.1, (ii) a cash payment representing the cash portion of the
Exchange Consideration, (iii) a cash payment in lieu of any fractional SSCC
Common Shares as contemplated by Section 4.3 and (iv) any dividends or
distributions with a record date after the Effective Time theretofore paid or
payable with respect to SSCC Common Shares as contemplated by Section 4.2.
Section 4.2 Distributions with Respect to Unsurrendered Certificates
No dividends or other distributions declared or made after the Effective
Time with respect to SSCC Common Shares with a record date after the Effective
Time shall be paid to the holder of any unsurrendered certificate which
immediately prior to the Effective Time represented outstanding St. Laurent
Common Shares that were exchanged pursuant to Section 2.2, and no cash payment
in lieu of fractional shares shall be paid to any such holder pursuant to
Section 4.3 and no interest shall be earned or payable on these proceeds, unless
and until the holder of such certificate shall surrender such certificate in
accordance with Section 4.1 and, in such event, only for the period commencing
five (5) Business Days following such surrender. Subject to applicable law, at
the time of such surrender of any such certificate (or, in the case of clause
(iii) below, at the appropriate payment date), there shall be paid to the holder
of the certificates representing St. Laurent Common Shares, as the case may be,
without interest, (i) the amount of any cash payable in lieu of a fractional
SSCC Common Share to which such holder is entitled pursuant to Section 4.3, (ii)
the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to the SSCC Common Shares, as the
case may be, to which such holder is entitled pursuant hereto and (iii) on the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such SSCC Common Shares, as the
case may be.
Section 4.3 No Fractional Shares
No certificates representing fractional SSCC Common Shares shall be issued
upon the surrender for exchange of certificates pursuant to Section 4.1. In lieu
of any such fractional securities, each Person otherwise entitled to a
fractional interest in a SSCC Common Share will receive a cash payment from the
Depositary equal to the product of such fractional interest and the SSCC Trading
Price. 3038727 shall from time to time as necessary provide the Depositary with
funds sufficient to satisfy these obligations. On the sixth anniversary of the
Effective Date,
-9-
the aggregate number of SSCC Common Shares for which no certificates were issued
as a result of the foregoing provisions of this Section 4.3 shall be deemed to
have been surrendered by the Depositary for no consideration to 3038727 or SSCC,
as the case may be and the cash portion of the Exchange Consideration shall be
returned to the Depositary.
Section 4.4 Lost Certificates
In the event any certificate which immediately prior to the Effective Time
represented one or more outstanding St. Laurent Common Shares that were
exchanged pursuant to Section 2.2 shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such
certificate to be lost, stolen or destroyed, the Depositary will issue in
exchange for such lost, stolen or destroyed certificate, any cash pursuant to
Section 4.3 and/or one or more certificates representing one or more SSCC Common
Shares (and any dividends or distributions with respect thereto) deliverable in
accordance with the terms of the Arrangement. When authorizing such payment in
exchange for any lost, stolen or destroyed certificate, the Person to whom
certificates representing SSCC Common Shares and cheques representing the cash
portion of the Exchange Consideration are to be issued shall, as a condition
precedent to the issuance thereof, give a bond satisfactory to 3038727, SSCC and
their respective transfer agents in such sum as 3038727 or SSCC may direct or
otherwise indemnify 3038727 and SSCC in a manner satisfactory to UCL and SSCC
against any claim that may be made against 3038727 or SSCC with respect to the
certificate alleged to have been lost, stolen or destroyed.
Section 4.5 Extinction of Rights
Any certificate which immediately prior to the Effective Time represented
outstanding St. Laurent Common Shares that were exchanged pursuant to Section
2.2 that is not deposited with all other instruments required by Section 4.1 on
or prior to the sixth anniversary of the Effective Date shall cease to represent
a claim or interest of any kind or nature as a shareholder or creditor for the
cash portion of the Exchange Consideration of 3038727, Stone or SSCC. On such
date, the SSCC Common Shares (or cash in lieu of fractional interests therein,
as provided in Section 4.3) and the cash portion of the Exchange Consideration
to which the former holder of the certificate referred to in the preceding
sentence was ultimately entitled shall be deemed to have been surrendered for no
consideration to 3038727 or SSCC, as the case may be, together with all
entitlements to dividends, distributions and interest in respect thereof held
for such former holder. None of SSCC, 3038727 or the Depositary shall be liable
to any person in respect of any SSCC Common Shares or payment in cash (or
dividends, distributions and interest in respect thereof) delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
Section 4.6 Withholding Rights
3038727, Stone, SSCC and the Depositary shall be entitled to deduct and
withhold from any dividend or consideration otherwise payable to any holder of
St. Laurent Common Shares or SSCC Common Shares such amounts as 3038727, Stone,
SSCC or the Depositary is required to deduct and withhold with respect to such
payment under the ITA, the United States Internal Revenue Code of 1986 or any
provision of provincial, state, local or foreign tax law, in each case, as
amended. To the extent that amounts are so withheld, such withheld amounts shall
be treated for all purposes hereof as having been paid to the holder of the
shares in respect of which
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such deduction and withholding was made, provided that such withheld amounts are
actually remitted to the appropriate taxing authority. To the extent that the
amount so required to be deducted or withheld from any payment to a holder
exceeds the cash portion of the Exchange Consideration otherwise payable to the
holder, 3038727, Stone, SSCC and the Depositary are hereby authorized to sell or
otherwise dispose of such portion of the Exchange Consideration as is necessary
to provide sufficient funds to 3038727, Stone, SSCC or the Depositary, as the
case may be, to enable it to comply with such deduction or withholding
requirement and 3038727, Stone, SSCC or the Depositary shall notify the holder
thereof and remit any unapplied balance of the net proceeds of such sale.
ARTICLE 5
AMENDMENTS
Section 5.1 Amendments to Plan of Arrangement
(1) St. Laurent reserves the right to amend, modify and/or supplement this Plan
of Arrangement at any time and from time to time prior to the Effective
Date, provided that each such amendment, modification and/or supplement
must be (i) set out in writing, (ii) approved by SSCC, (iii) filed with the
Court and, if made following the St. Laurent Meeting, approved by the Court
and (iv) communicated to holders of St. Laurent Common Shares, St. Laurent
Options, St. Laurent RSUs and St. Laurent Warrants if and as required by
the Court.
(2) Any amendment, modification or supplement to this Plan of Arrangement may
be proposed by St. Laurent at any time prior to the St. Laurent Meeting
(provided that SSCC shall have consented thereto) with or without any other
prior notice or communication, and if so proposed and accepted by the
Persons voting at the St. Laurent Meeting (other than as may be required
under the Interim Order), shall become part of this Plan of Arrangement for
all purposes.
(3) Any amendment, modification or supplement to this Plan of Arrangement that
is approved by the Court following the St. Laurent Meeting shall be
effective only if (i) it is consented to by each of St. Laurent and SSCC
and (ii) if required by the Court, it is consented to by holders of the St.
Laurent Common Shares, St. Laurent Options, St. Laurent RSUs or St. Laurent
Warrants voting in the manner directed by the Court.
(4) Any amendment, modification or supplement to this Plan of Arrangement may
be made following the Effective Date unilaterally by SSCC, provided that it
concerns a matter which, in the reasonable opinion of SSCC, is of an
administrative nature required to better give effect to the implementation
of this Plan of Arrangement and is not adverse to the financial or economic
interests of any holder of St. Laurent Common Shares, St. Laurent Options,
St. Laurent RSUs or St. Laurent Warrants.
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ARTICLE 6
FURTHER ASSURANCES
Section 6.1
Notwithstanding that the transactions and events set out herein shall occur
and be deemed to occur in the order set out in this Plan of Arrangement without
any further act or formality, each of the parties to the Pre-Merger Agreement
shall make, do and execute, or cause to be made, done and executed, all such
further acts, deeds, agreements, transfers, assurances, instruments or documents
as may reasonably be required by any of them in order further to document or
evidence any of the transactions or events set out herein.
