FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
March 3, 2000
ST. LAURENT PAPERBOARD INC.
(Translation of registrant's name into English)
630 Rene-Levesque Boulevard, West, Suite 3000,
Montreal, Quebec H3B 5C7
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F ...... Form 40-F ..X...
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b)under the Securities Exchange Act of 1934.
Yes ..... No ...X..
INFORMATION FILED WITH THIS REPORT
The following document is filed as an Exhibit to this Report:
Exhibit I -- Material Change Report dated March 3, 2000, of St. Laurent
Paperboard Inc.
<PAGE>
On March 3, 2000 St. Laurent Paperboard Inc. publicly filed a material change
report.
Exhibit I -- Material Change Report, dated March 3, 2000, of St. Laurent
Paperboard Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: March 3, 2000
ST. LAURENT PAPERBOARD INC.
(Registrant)
By: /s/ Richard Garneau
-------------------------------
Name: Richard Garneau
Title: Senior Vice President and
Chief Financial Officer
St. Laurent Paperboard Inc.
<PAGE>
EXHIBIT I
MATERIAL CHANGE REPORT
1. REPORTING ISSUER
St. Laurent Paperboard Inc. ("ST. LAURENT")
630 Rene-Levesque Blvd. West
Suite 3000
Montreal, Quebec
H3B 5C7
2. DATE OF MATERIAL CHANGE
February 23, 2000
3. PRESS RELEASE
A press release disclosing the material change was jointly issued on
February 23, 2000 by St. Laurent and Smurfit-Stone Container Corporation
("SSCC"), copy of which is attached to this material change report.
4. SUMMARY OF MATERIAL CHANGE
St. Laurent, SSCC, Stone Container Corporation ("STONE") and 3038727 Nova
Scotia Company ("3038727") entered into a pre-merger agreement made as of
February 23, 2000 (the "PRE-MERGER AGREEMENT") pursuant to which 3038727
will acquire all of the outstanding shares in the capital of St. Laurent
pursuant to a plan of arrangement (the "ARRANGEMENT") under section 192 of
the CANADA BUSINESS CORPORATIONS ACT ("CBCA"). Pursuant to the Arrangement,
each holder of common shares of St. Laurent will receive US$12.50 in cash
plus one-half share of SSCC common stock for each share of St. Laurent (the
"EXCHANGE CONSIDERATION"). The Pre-Merger Agreement also contains
provisions relating to the other securities of St. Laurent. In this
material change report, where the context permits, references to "St.
Laurent" shall include its material subsidiaries.
A copy of the Pre-Merger Agreement (including the Schedules thereto) is
attached to this material change report.
5. FULL DESCRIPTION OF MATERIAL CHANGE
OVERVIEW
St. Laurent, SSCC, Stone and 3038727 entered into the Pre-Merger Agreement
pursuant to which 3038727 will acquire all of the outstanding shares in the
capital of St. Laurent pursuant to the Arrangement. Pursuant to the
Arrangement, each holder of St. Laurent common shares will receive US
$12.50 in cash plus one-half share of SSCC common stock for each common
share of St. Laurent.
The Arrangement must be approved by the majority required by an interim
order to be obtained from the Superior Court of Quebec, District of
Montreal pursuant to section 192 of the CBCA, which is expected to be at
least two-thirds of the votes cast at a special meeting of St. Laurent's
securityholders (the "ST. LAURENT MEETING") (which will include holders of
St. Laurent common shares and options). The completion of the Arrangement
is conditional upon, among other things, obtaining shareholder approval,
court approval and certain regulatory approvals. If the Arrangement is not
effective on or prior to September 30, 2000, the Pre-Merger Agreement
terminates unless the parties agree to extend the termination date. The
Arrangement will become effective, subject to satisfaction of the above
conditions, upon filing of articles of arrangement with the Director under
the CBCA (the "EFFECTIVE DATE").
PRE-MERGER AGREEMENT
The following is a summary of the material terms of the Pre-Merger
Agreement and as such is qualified in its entirety by the Pre-Merger
Agreement.
DIRECTORS' RECOMMENDATION
The disinterested directors of the board of directors of St. Laurent (the
"BOARD") determined unanimously that the Arrangement is fair to St. Laurent
and is in the best interests of St. Laurent and determined unanimously to
recommend that the St. Laurent securityholders vote in favor of the
Arrangement based on separate opinions from Bunting Warburg Dillon Read
Inc. and Donaldson, Lufkin & Jenrette, financial advisors to St. Laurent,
to the effect that, as of the date of the Pre-Merger Agreement, the
Exchange Consideration is fair from a financial point of view to the St.
Laurent securityholders.
NON-SOLICITATION
St. Laurent agreed to not, directly or indirectly, engage in soliciting,
initiating or knowingly encourage the initiation of any inquiries or
proposals regarding certain BONA FIDE acquisition proposals involving 20%
or more of St. Laurent's total assets or common shares other than the
proposed Arrangement (an "ACQUISITION PROPOSAL"). Although there are
prohibitions on participating in any discussions or negotiations regarding
any Acquisition Proposal, withdrawing or modifying the approval of the
Board, approving or recommending any Acquisition Proposal or entering into
any agreement, arrangement or understanding relating to any Acquisition
Proposal, the Board retains the right, prior to the issuance of the Final
Order in connection with the Agreement, to participate in any discussions
or negotiations and provide information (subject to entering into a
confidentiality agreement) to a party if the Board determines in good
faith, after consultation with its financial advisors and outside counsel,
that such third party's proposal is reasonably likely to result in a
"Superior Proposal", being a BONA FIDE third party proposal involving 20%
or more of St. Laurent's total assets or common shares which the Board
determines is reasonably capable of being completed and is more favorable
to the St. Laurent securityholders than the proposed transaction
contemplated in the Pre-Merger Agreement. Under the Pre-Merger Agreement,
St. Laurent is expressly required to notify SSCC of all such Acquisition
Proposals.
NOTICE OF SUPERIOR PROPOSAL
St. Laurent is required to give notice to SSCC of any Superior Proposal.
Upon receipt of such notice, SSCC will have 5 business days within which to
offer to amend the Pre-Merger Agreement such that on the acceptance of the
offer by St. Laurent, the amendment to the Pre-Merger Agreement would
result in such Superior Proposal ceasing to be a Superior Proposal. If SSCC
fails to do so or if the Board determines that the Superior Proposal
remains a Superior Proposal, St. Laurent may terminate the Pre-Merger
Agreement and enter into the Superior Proposal, provided it concurrently
pays the break fee, if any, referred to below.
St. Laurent also acknowledges that each successive modification relating to
an increase of any consideration offered or any other material provision of
any Acquisition Proposal constitutes a new Acquisition Proposal.
ACCESS TO INFORMATION
St. Laurent is required to give access to SSCC to information relating to
St. Laurent's business, property and personnel. Any such information
received by SSCC is subject to confidentiality provisions.
ORDINARY COURSE OF BUSINESS
In addition, St. Laurent covenanted that, until the earlier of the
termination of the Pre-Merger Agreement or the Effective Date, it will
carry on its business in the ordinary and regular course and will not
undertake certain unusual transactions, (except as contemplated by the
Pre-Merger Agreement or as disclosed to SSCC or with the consent of SSCC).
Such unusual transactions include, among other things, declaration of
dividends or any other distributions in respect of outstanding shares of
St. Laurent, the issuance, pledge, hypothecation, encumbrance, allotment,
sale, setting aside or reservation of shares, the acceleration of any
invested options, the acquisition or disposal of material assets, the
incurring of material indebtedness or material increases in employee
compensation. St. Laurent also covenanted (i) not to enter or modify in any
material respect any contract, agreement which would a material adverse
effect on St. Laurent, (ii) 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 the Pre-Merger Agreement
or the Arrangement prior to the Effective Date unless such settlement or
compromise amounts represent not more that $1,000,000 in the aggregate;
(iii) to keep SSCC fully informed as to the status of discussions or any
developments concerning certain environmental matters and not to settle or
compromise any penalty or fine imposed by a Governmental Entity in
connection therewith except for settlements or compromises in respect of
which St. Laurent and its subsidiaries shall have been fully indemnified;
and (iv) not incur or commit capital expenditures in excess of $12 million
(over those disclosed to SSCC).
St. Laurent also agreed that it will, and will cause its subsidiaries to,
do all things necessary to consummate the transactions contemplated by the
Pre-Merger Agreement. St. Laurent agreed to provide, and will cause its
subsidiaries to provide all necessary cooperation in connection with, among
other things, a reorganization of St. Laurent and its subsidiaries made at
the request of SSCC to satisfy financing requirements and to effect tax and
other efficiencies provided that (i) prior to any such reorganization, SSCC
and St. Laurent have agreed upon the terms of an indemnity in favour of St.
Laurent and its subsidiaries in the event the Arrangement is not
consummated and St. Laurent incurs losses which would not have been
incurred but for the reorganization, and (ii) the reorganization shall not
be covered by St. Laurent's representations and warranties or otherwise
expand St. Laurent's liability under the Pre-Merger Agreement.
TERMINATION EVENTS
The termination events, as the case may be, under the Pre-Merger Agreement
include the following:
(i) the Pre-Merger Agreement may be terminated by St. Laurent or SSCC,
as the case may be, if certain conditions set out in the Pre-Merger
Agreement are not satisfied on or before the Effective Date of the
Arrangement;
(ii) the Pre-Merger Agreement may be terminated by the mutual agreement
of St. Laurent and the SSCC (without further action on the part of
the St. Laurent securityholders if terminated after the holding of
the St. Laurent Meeting);
(iii) the Pre-Merger Agreement may 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 the Pre-Merger Agreement illegal or
otherwise prohibited or if any injunction, order or decree enjoining
SSCC or St. Laurent from consummating the transactions contemplated
by the Pre-Merger Agreement is entered and such injunction, order or
decree shall become final and non-appealable;
(iv) the Pre-Merger Agreement may be terminated by SSCC if (a) the Board
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 the Pre-Merger Agreement or the Arrangement or
shall have recommended an Acquisition Proposal, or (b) St. Laurent
shall have materially and wilfully breached the non-solicitation
covenants contained in the Pre-Merger Agreement or if St. Laurent
has accepted a Superior Proposal in violation of the Pre-Merger
Agreement or (c) through the fault of St. Laurent (whether by
commission or omission), the Arrangement is not, at least 14 days
prior to September 30, 2000, submitted for the approval of the St.
Laurent securityholders at the St. Laurent Meeting;
(v) the Pre-Merger Agreement may 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 the terms
of the Pre-Merger Agreement and the payment of any fee required to
be paid;
(vi) the Pre-Merger Agreement may 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;
(vii) the Pre-Merger Agreement may be terminated by St. Laurent if
Jefferson Smurfit Corporation (U.S.) or Stone 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; or
(viii) the Pre-Merger Agreement may be terminate if the Effective Date does
not occur on or prior to September 30, 2000.
BREAK FEE EVENTS
The break fee events, as the case may be, under the Pre-Merger Agreement
include the following. If:
(i) St. Laurent terminates the Pre-Merger Agreement in order to enter
into a definitive written agreement with respect to a Superior
Proposal;
(ii) SSCC terminates the Pre-Merger Agreement for the following reasons
(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 the Pre-Merger Agreement or
the Arrangement or shall have recommenced an Acquisition Proposal or
(b) through the fault of St. Laurent (whether by commission or
omission), the Arrangement is not, prior to 14 days prior to
September 30, 2000, submitted for the approval of the St. Laurent
securityholders at the St. Laurent Meeting; or
(iii) either St. Laurent or SSCC shall terminate the Pre-Merger Agreement
in circumstances where St. Laurent securityholder approval has not
been obtained at the St. Laurent Meeting and a BONA FIDE Acquisition
Proposal has been made by any person prior to the St. Laurent
Meeting and not withdrawn more than five (5) days prior to the vote
of the St. Laurent securityholders and St. Laurent enters 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 the
Pre-Merger Agreement, unless at the time of the St. Laurent Meeting
a Specified SSCC Event (as defined below) 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.
A "Specified SSCC Event" is defined in the Pre-Merger Agreement as the
occurrence of a material adverse change with respect to SSCC or a breach of
the obligations of SSCC, Stone or 3038727 under Section 5.3(1)(a), (b),
(c), (e) or (f) of the Pre-Merger Agreement.
Certain exclusions from the break fee are also set out in the Pre-Merger
Agreement relating to the occurrence of a material adverse change with
respect to SSCC or a breach of the obligations by SSCC, Stone or 3038727
under Section 5.3(1) (a), (b), (c), (e) or (f) of the Pre-Merger Agreement
(a "SPECIFIED SSCC EVENT").
6. RELIANCE ON CONFIDENTIALITY PROVISIONS OF SECURITIES LEGISLATION
Not applicable.
7. OMITTED INFORMATION
Not applicable.
8. SENIOR OFFICER
The senior officer of St. Laurent who is knowledgeable about this material
change is:
Richard Garneau
Senior Vice President and Chief Financial Officer
Telephone (514) 861-4011
6. STATEMENT OF SENIOR OFFICER
The foregoing accurately discloses the material change referred to herein.
Dated at Montreal, Quebec, this 3rd day of March 2000.
By: /s/ Joseph J. Gurandiano
-------------------------------
Joseph J. Gurandiano
President and Chief Executive Officer
<PAGE>
PRESS RELEASE
For immediate release
Contact: Timothy McKenna (investors)
312-580-4637 / 314-746-1254
Tom Lange (media)
314-746-1236
Smurfit-Stone
www.smurfit-stone.com
Richard Garneau
Senior Vice-president and CFO
514-861-4011 ext 223
St. Laurent Paperboard
www.stlaurent.com
SMURFIT-STONE TO ACQUIRE
ST. LAURENT PAPERBOARD FOR CASH AND STOCK
Acquisition will create leader in high-impact graphics packaging
CHICAGO AND MONTREAL, February 23, 2000-- Smurfit-Stone Container Corporation
(Smurfit-Stone, Nasdaq: SSCC) and St. Laurent Paperboard Inc., (St. Laurent,
TSE: SPI, NYSE: SLW) jointly announced today that Smurfit-Stone has agreed to
acquire St. Laurent for about US$1.4 billion consisting of approximately US$625
million in cash, Smurfit-Stone common stock, and the assumption of St. Laurent's
debt.
Ray Curran, president and chief executive officer of Smurfit-Stone,
said, "This transaction has multiple benefits for investors. It will expand our
capabilities to serve the fast-growing market for high-impact graphics
packaging, and it presents an excellent business and geographic fit. It is also
expected to be immediately accretive to our earnings."
Dr. Michael W.J. Smurfit, who is chairman of Smurfit-Stone Container
Corporation and chairman and chief executive officer of Jefferson Smurfit Group,
Smurfit-Stone's largest shareholder, said, "This acquisition is another
important step in expanding the presence of Smurfit-Stone and the worldwide
Jefferson Smurfit Group in the North American packaging market."
The transaction will significantly expand Smurfit-Stone's capabilities
to produce specialty grades of containerboard, such as white top linerboard,
coated and bleached linerboard and lightweight medium used in point-of-purchase
promotional packaging. St. Laurent's corrugated packaging plants will expand
Smurfit-Stone's capabilities to provide microflute and other high impact
graphics packaging to customers throughout North America. St. Laurent's
paperboard operations include four containerboard mills with 1.5 million tons of
capacity and 16 packaging plants.
Under the terms of the agreement, holders of St. Laurent stock will
receive US$12.50 (Cdn$18.50) in cash plus one-half share of Smurfit-Stone common
stock for each share of St. Laurent. In the event that St-Laurent receives a
superior proposal, Smurfit-Stone shall have the right to amend its offer. To
finance the transaction, Smurfit-Stone will raise US$625 million in new debt and
issue approximately 25 million new shares of common stock, increasing the number
of fully diluted shares outstanding to approximately 250 million. Smurfit-Stone
will also refinance about US$386 million of St. Laurent debt. The transaction is
subject to St. Laurent shareholder approval and various regulatory approvals and
is expected to close in the second quarter.
"The combination of these packaging businesses into one North American
unit will generate approximately US$50 million annually in cost savings," Curran
said. "In addition, by joining Smurfit-Stone's containerboard system with St.
Laurent capabilities we will create significant new opportunities to optimize
our containerboard manufacturing costs.
"St. Laurent has superior capabilities in specialty containerboard such
as white top linerboard and lightweight medium. By adding these operations,
Smurfit-Stone develops an unmatched ability to serve customers for microflute
and value graphics packaging and point-of-purchase displays. Finally, St.Laurent
management has done an excellent job in the past twelve months of reducing costs
and increasing production at its white top mills. We expect to continue with
this progress."
Jay J. Gurandiano, president and chief executive officer of St. Laurent
Paperboard, added, "This transaction enhances our shareholder value.
Shareholders will be able to participate in the many benefits accruing from the
combination of St. Laurent's niche in higher value white top linerboard and
microfluting grades and Smurfit-Stone's preeminent position as the largest
container and containerboard producer in North America."
Smurfit-Stone, which was created by the November 1998 merger of
Jefferson Smurfit Corporation and Stone Container Corporation, is the industry's
leading manufacturer of paper and paperboard-based packaging, including
containerboard, corrugated containers, industrial bags, and claycoated recycled
boxboard; and is the world's largest paper recycler. In addition, Smurfit-Stone
is a leading producer of solid bleached sulfate, folding cartons, paper tubes
and cores, and labels. Net sales in 1999 were US$7.2 billion. The company
employs approximately 35,000 and operates about 300 facilities worldwide. The
company has a production capacity of six million tons of containerboard and one
million tons of other packaging grades.
St. Laurent Paperboard is a leading North American producer, supplier
and converter of high quality, value-added specialty containerboard and high
impact graphics packaging, with more than 4,500 employees serving a diverse
customer base in North America and selected international markets. Formed in
1994, the company had sales of US$916 million in 1999. In addition to its four
mills and 16 packaging plants, the company also owns 920,000 acres of forest
land in Quebec and solid wood products operations.
- 30 -
This document contains certain forward-looking statements within the meaning of
Section 21 E of the Securities Exchange Act of 1934, as amended, about
Smurfit-Stone Container Corporation. Although the company believes that, in
making any such statements, its expectations are based on reasonable
assumptions, any such statement may be influenced by factors that could cause
actual outcomes and results to be materially different from those projected.
When used in this document, the words "anticipates," "believes," "expects,"
"intends," and similar expressions as they relate to Smurfit-Stone Container
Corporation or its management are intended to identify such forward-looking
statements. These forward-looking statements are subject to numerous risks and
uncertainties. Important factors that could cause actual results to differ
materially from those in forward-looking statements, certain of which are beyond
the control of Smurfit-Stone Container Corporation, include: the impact of
general economic conditions in the U.S. and Canada and in other countries in
which Smurfit-Stone Container Corporation and its subsidiaries currently do
business (including Asia, Europe and Latin and South America); industry
conditions, including competition and product and raw material prices;
fluctuations in exchange rates and currency values; capital expenditure
requirements; legislative or regulatory requirements, particularly concerning
environmental matters; interest rates; access to capital markets; the timing of
and value received in connection with asset divestitures; and obtaining required
approvals, if any, of debt holders. The actual results, performance or
achievement by Smurfit-Stone Container Corporation could differ materially from
those expressed in, or implied by, these forward-looking statements and,
accordingly, no assurances can be given that any of the events anticipated by
the forward-looking statements will transpire or occur, or if any of them do so,
what impact they will have on the results of operations and financial condition
of Smurfit-Stone Container Corporation.
<PAGE>
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"
- --------------------------------------------------------------------------------
PRE-MERGER AGREEMENT
February 23, 2000
- --------------------------------------------------------------------------------
STIKEMAN ELLIOTT
<PAGE>
TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION
<TABLE>
<CAPTION>
<S> <C> <C>
Section 1.1 Definitions...................................................................1
Section 1.2 Interpretation Not Affected by Headings, etc.................................10
Section 1.3 Currency.....................................................................10
Section 1.4 Number, etc..................................................................10
Section 1.5 Date For Any Action..........................................................10
Section 1.6 Entire Agreement.............................................................10
Section 1.7 Schedules....................................................................11
Section 1.8 Accounting Matters...........................................................11
Section 1.9 Knowledge....................................................................11
ARTICLE 2
THE ARRANGEMENT
Section 2.1 Implementation Steps by St. Laurent..........................................11
Section 2.2 Interim Order................................................................12
Section 2.3 Articles of Arrangement......................................................13
Section 2.4 Circular.....................................................................14
Section 2.5 Securities Compliance........................................................15
Section 2.6 Preparation of Filings.......................................................15
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of St. Laurent................................17
Section 3.2 Representations and Warranties of the SSCC Parties...........................39
Section 3.3 Survival.....................................................................45
ARTICLE 4
COVENANTS
Section 4.1 Retention of Goodwill........................................................45
Section 4.2 Material Commitments.........................................................45
Section 4.3 Covenants of St. Laurent.....................................................45
Section 4.4 Covenants of the SSCC Parties................................................51
Section 4.5 Covenants Regarding Non-Solicitation.........................................53
Section 4.6 Notice by St. Laurent of Superior Proposal Determination.....................55
Section 4.7 Access to Information........................................................56
Section 4.8 Closing Matters..............................................................58
Section 4.9 Indemnification..............................................................58
Section 4.10 Rights Plan..................................................................59
Section 4.11 Benefits Continuation, etc...................................................59
<PAGE>
ARTICLE 5
CONDITIONS
Section 5.1 Mutual Conditions Precedent..................................................60
Section 5.2 Additional Conditions Precedent to the Obligations of the SSCC Parties.......61
Section 5.3 Additional Conditions Precedent to the Obligations of St. Laurent............62
Section 5.4 Notice and Cure Provisions...................................................63
Section 5.5 Satisfaction of Conditions...................................................64
ARTICLE 6
AMENDMENT AND TERMINATION
Section 6.1 Amendment....................................................................65
Section 6.2 Mutual Understanding Regarding Amendments....................................65
Section 6.3 Termination..................................................................65
Section 6.4 Break Fee....................................................................67
Section 6.5 Effect of Break Fee Payment..................................................68
Section 6.6 Remedies.....................................................................68
ARTICLE 7
GENERAL
Section 7.1 Notices......................................................................68
Section 7.2 Assignment...................................................................70
Section 7.3 Binding Effect...............................................................70
Section 7.4 Waiver and Modification......................................................70
Section 7.5 No Personal Liability........................................................71
Section 7.6 Further Assurances...........................................................71
Section 7.7 Expenses.....................................................................71
Section 7.8 Consultation.................................................................71
Section 7.9 Governing Laws...............................................................72
Section 7.10 Time of Essence..............................................................72
Section 7.11 Counterparts.................................................................72
Section 7.12 No Third Party Beneficiaries.................................................72
Section 7.13 Language.....................................................................72
</TABLE>
SCHEDULES
Schedule A - Affiliate's Letter
Schedule B - Appropriate Regulatory Approvals
Schedule C - Arrangement Resolution
Schedule D - Plan of Arrangement
<PAGE>
PRE-MERGER AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 23rd 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:
<PAGE>
"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 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;
<PAGE>
"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;
"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;
<PAGE>
"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;
"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;
<PAGE>
"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;
"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;
<PAGE>
"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;
"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);
<PAGE>
"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;
"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;
<PAGE>
"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;
"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);
<PAGE>
"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 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
<PAGE>
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.
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
<PAGE>
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 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:
<PAGE>
(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;
<PAGE>
(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;
(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. 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 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;
<PAGE>
(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
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
<PAGE>
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).
(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;
<PAGE>
(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.
(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.
<PAGE>
(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.
(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
<PAGE>
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
other Person, nor is there outstanding any stock appreciation
<PAGE>
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.
<PAGE>
(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
CURRENCY ACT (Canada) 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 Bunting
Warburg Dillon Read Inc. and Donaldson, Lufkin &
Jenrette 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
<PAGE>
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. 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
<PAGE>
(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 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;
<PAGE>
(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;
(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.
<PAGE>
(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 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
<PAGE>
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.
<PAGE>
(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.
<PAGE>
(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 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;
<PAGE>
(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
(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.
<PAGE>
(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 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
<PAGE>
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.
(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
<PAGE>
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 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
<PAGE>
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
<PAGE>
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 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
<PAGE>
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,
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
<PAGE>
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 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
<PAGE>
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.
(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
<PAGE>
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
secret, trademark, service mark 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
mark, 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
<PAGE>
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.
(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
<PAGE>
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, 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 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 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,
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 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.
ARTICLE 4
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 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 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) otherthan 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 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, hedges 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 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 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 1933 Act) 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.
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 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.
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 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).
(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 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.
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 St. Laurent 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
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;
(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;
(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. 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
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 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 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.
620 Rene-Levesque Blvd. West
Suite 3000
Montreal, Quebec
H3B 5C7
Attention: Marion Allaire
Telecopier No.: (514) 861-9408
with a copy to:
Goodman Phillips & Vineberg
1501 McGill College Avenue
26th Floor
Montreal, Quebec
H3A 3N9
Attention: Sylvain Cossette
Telecopier No.: (514) 841-6449
and to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York
10153
Attention: Ellen J. Odoner
Telecopier No.: (212) 310-8007
(b) If to a SSCC Party, at:
Smurfit-Stone Container Corporation
150 North Michigan Avenue
Chicago, Illinois
60601
Attention: Craig A. Hunt
Telecopier No.: (312) 580-4625
with a copy to:
Stikeman Elliott
1155 Rene-Levesque Blvd W.
Montreal, Quebec
H3B 3V2
Attention: Pierre Raymond and Christine Desaulniers
Telecopier No.: (514) 397-3222
and to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois
60601
Attention: Joseph A. Walsh Jr.
Telecopier No.: (312) 558-5700
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.
(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 Bunting Warburg Dillon Read Inc.. and
Donaldson, Lufkin & Jenrette 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.
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;
<PAGE>
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first written above.
SMURFIT-STONE CONTAINER CORPORATION
By: /s/ Raymond M. Curran
-----------------------------------------------
Raymond M. Curran
STONE CONTAINER CORPORATION
By: /s/ Raymond M. Curran
-----------------------------------------------
Raymond M. Curran
3038727 NOVA SCOTIA COMPANY
By: /s/ Raymond M. Curran
-----------------------------------------------
Raymond M. Curran
ST. LAURENT PAPERBOARD INC.
By: /s/ Jay J. Gurandiano
-----------------------------------------------
Jay J. Gurandiano
<PAGE>
SCHEDULE A TO THE
PRE-MERGER AGREEMENT
[Form of Affiliate's Letter]
__________, 2000
Smurfit-Stone Container Corporation
150 North Michigan Avenue
Chicago, Illinois 60601
Attention: Secretary
Ladies and Gentlemen:
Reference is made to the Pre-Merger Agreement dated as of February 23, 2000
(the "Agreement"), among Smurfit-Stone Container Corporation, a Delaware
corporation ("SSCC"), Stone Container Corporation, a Delaware corporation
("Stone"), 3038727 Nova Scotia Company, an unlimited liability company existing
under the laws of the Province of Nova Scotia, and St. Laurent Paperboard Inc.,
a corporation existing under the laws of Canada (the "Company"), providing for a
Plan of Arrangement (the "Arrangement"), pursuant to which I may receive a cash
payment plus shares of SSCC's common stock, par value $0.01 per share (the "SSCC
Securities"), in exchange for the common shares of the Company owned by me at
the Effective Time of the Plan of Arrangement. Capitalized terms used herein and
not defined herein have the respective meanings ascribed to them in the
Agreement. This agreement is being delivered pursuant to Section 4.3 of the
Agreement.
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of the Company, as that term is defined for purposes of Rule 145 of
the rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") promulgated under the Securities Act of
1933, as amended (the "Act"). Neither my entering into this agreement, nor
anything contained herein, shall be deemed an admission on my part that I am
such an "affiliate" for any purpose.
I represent and warrant to SSCC that in such event:
A. I shall not make any sale, transfer or other dispositio of the SSCC
Securities in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Agreement and discussed their
requirements and other applicable limitations upon my ability to sell, transfer
or otherwise dispose of SSCC Securities, to the extent I felt necessary, with my
counsel or counsel for the Company.
C. I have been advised that, in reliance on the exemption accorded by
Section 3(a)(10) of the Act, the issuance of SSCC Securities to me pursuant to
the Plan of Arrangement has not been registered with the Commission under the
Act. I have also been advised that because I may be deemed to have been an
affiliate of the Company prior to the completion of the Plan of Arrangement and
a distribution by me of SSCC Securities has not been registered under the Act,
the SSCC Securities must be held by me indefinitely unless (i) a distribution of
SSCC Securities by me has been registered under the Act, (ii) a sale of SSCC
Securities by me is made in conformity with the volume and other limitations of
Rule 145 promulgated by the Commission under the Act, or (iii) in the opinion of
counsel reasonably acceptable to SSCC, some other exemption from registration is
available with respect to a proposed sale, transfer or other disposition of SSCC
Securities by me.
D. I understand that SSCC is under no obligation to register the sale,
transfer or other disposition of SSCC Securities by me or on my behalf or to
take any other action necessary in order to make compliance with an exemption
from registration under the Act available.
E. I also understand that stop transfer instructions will be given to
SSCC's transfer agents with respect to the SSCC Securities and that there will
be placed on the certificates for the SSCC Securities delivered to me, or,
subject to the last paragraph of this letter, any substitutions therefor, a
legend stating in substance:
"The shares represented by this certificate have been issued in a
transaction to which Rule 145 promulgated under the Securities Act of 1933
applies and may only be sold, transferred or otherwise disposed of in
compliance with the requirements of Rule 145 or pursuant to a registration
statement under said act or an exemption from such registration"
<PAGE>
F. I also understand that unless the transfer by me of my SSCC Securities
has been registered under the Act or is a sale made in conformity with the
provisions of Rule 145, SSCC reserves the right to put the following legend on
the certificates issued to my transferee:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and were acquired from a person who
received such shares in a transaction to which Rule 145 promulgated under
the Securities Act of 1933 applies. The shares have been acquired by the
holder not with a view to, or for resale in connection with, any
distribution thereof within the meaning of the Securities Act of 1933 and
may not be sold, pledged or otherwise transferred except in accordance with
an exemption from the registration requirements of the Securities Act of
1933."
It is understood and agreed that the legends set forth in paragraph E and F
above shall be removed by delivery of substitute certificates without such
legend if the undersigned shall have delivered to SSCC a copy of a letter from
the staff of the Commission, or an opinion of counsel reasonably acceptable to
SSCC to the effect that such legend is not required for purposes of the Act. In
such event, SSCC will also rescind the stock transfer instructions referred to
above.
Very truly yours,
-------------------------------
Name:
Accepted this ____ day of
__________, 2000, by:
SMURFIT-STONE CONTAINER CORPORATION
By: _________________________
Name:
Title:
<PAGE>
SCHEDULE B TO THE
PRE-MERGER AGREEMENT
APPROPRIATE REGULATORY APPROVALS
CANADA
- - expiration or earlier termination of the waiting period under Part IX
of the COMPETITION ACT (Canada) and receipt of an advance ruling
certificate ("ARC") pursuant to the COMPETITION ACT (Canada) or, in the
alternative to an ARC, a no-action letter from the Commissioner of
Competition;
- - determination by the Minister responsible for Investment Canada under
the INVESTMENT CANADA ACT that the Arrangement is of "net benefit to
Canada" for purposes of such Act, subject to conditions satisfactory to
SSCC, acting reasonably; and
- - exemption orders from the provincial securities regulators from the
registration and prospectus requirements with respect to the issuance
and first resale of SSCC Common Shares.
UNITED STATES AND OTHER
- - expiration or earlier termination of the waiting period under the
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976; and
- - approval of The Nasdaq Stock Market regarding the listing of the SSCC
Common Shares subject to official notice of issuance.
<PAGE>
SCHEDULE C TO THE
PRE-MERGER AGREEMENT
ARRANGEMENT RESOLUTION
SPECIAL RESOLUTION OF THE ST. LAURENT SECURITYHOLDERS
BE IT RESOLVED THAT:
1. The arrangement (the "Arrangement") under Section 192 of the Canada
Business Corporations Act (the "CBCA") involving St. Laurent
Paperboard Inc. ("St. Laurent"), as more particularly described and
set forth in the Management Information Circular (the "Circular") of
St. Laurent accompanying the notice of this meeting (as the
Arrangement may be modified or amended) is hereby authorized, approved
and adopted.
2. The plan of Arrangement (the "Plan of Arrangement") involving St.
Laurent, the full text of which is set out as Schedule D to the
Pre-Merger Agreement made as of February 23, 2000 among Smurfit-Stone
Container Corporation, Stone Container Corporation, 3038727 Nova
Scotia Company and St. Laurent (the "Pre-Merger Agreement"), (as the
Plan of Arrangement may be or may have been amended) is hereby
approved and adopted.
3. Notwithstanding that this resolution has been passed (and the
Arrangement adopted) by the shareholders, holders of options, holders
of restricted share units and holders of the Series A warrants of St.
Laurent or that the Arrangement has been approved by the Superior
Court of Quebec, District of Montreal, the directors of St. Laurent
are hereby authorized and empowered (i) to amend the Pre-Merger
Agreement, or the Plan of Arrangement to the extent permitted by the
Pre-Merger Agreement, and (ii) not to proceed with the Arrangement
without further approval of the shareholders, holders of options,
holders of restricted share units and holders of the Series A warrants
of St. Laurent, but only if the Pre-Merger Agreement is terminated in
accordance with Article 6 thereof.
4. Any officer or director of St. Laurent is hereby authorized and
directed for and on behalf of St. Laurent to execute, under the seal
of St. Laurent or otherwise, and to deliver articles of arrangement
and such other documents as are necessary or desirable to the Director
under the CBCA in accordance with the Pre-Merger Agreement for filing.
5. Any officer or director of St. Laurent is hereby authorized and
directed for and on behalf of St. Laurent to execute or cause to be
executed, under the seal of St. Laurent or otherwise, and to deliver
or cause to be delivered, all such other documents and instruments and
to perform or cause to be performed all such other acts and things as
in such person's opinion may be necessary or desirable to give full
effect to the foregoing resolution and the matters authorized thereby,
such determination to be conclusively evidenced by the execution and
delivery of such document, agreement or instrument or the doing of any
such act or thing.
<PAGE>
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.
"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, 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.
"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.
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 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
andpayment 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.
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 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, 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 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.
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.
