EXHIBIT 10.35
Execution Copy
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ASSET PURCHASE AGREEMENT
DATED AS OF AUGUST 25, 2004
BY AND BETWEEN
POTLATCH CORPORATION
AND
XXXXXXXXX LUMBER CO. LTD.
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (herein, together with the Schedules and
Exhibits attached hereto, referred to as this "Agreement"), dated as of August
25, 2004, by and between POTLATCH CORPORATION, a Delaware corporation
("Seller"), and XXXXXXXXX LUMBER CO. LTD., a British Columbia corporation
("Buyer"). Capitalized terms used in this Agreement are defined or otherwise
referenced in Section 9.03.
WITNESSETH:
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, Seller's OSB manufacturing facilities located at Bemidji, Xxxx and
Grand Rapids, Minnesota and Seller's related OSB business; and
WHEREAS, in connection with the purchase and sale of such OSB
facilities, Buyer is willing to assume certain liabilities of Seller on the
terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual representations and
warranties and covenants made herein, Buyer and Seller, each intending to be
legally bound, hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section 1.01 Purchase and Sale of Assets.
(a) At the Closing provided for in Section 2.01, on the
terms and subject to the conditions set forth in this Agreement, Seller shall
sell, convey, transfer, assign and deliver to Buyer, free and clear of any
Encumbrances other than Permitted Encumbrances, and Buyer shall purchase and
acquire from Seller all of the right, title and interest of Seller in and to the
assets and rights set forth below (collectively, the "Purchased Assets"):
(i) the real property of Seller listed in
Schedule 3.07(a) (the "Real Property"), in
each case together with Seller's right,
title and interest in all buildings,
structures, improvements, appurtenances, and
fixtures thereon (collectively, the
"Facilities");
(ii) (A) all raw materials, work-in-process,
finished goods, supplies, parts, spare parts
and other inventories owned by Seller that
as of the Closing are located at the
Facilities and (B) all logs and other raw
materials, work-in-process, finished OSB and
other finished goods, supplies, parts, spare
parts and other inventories owned by Seller
but not located at the Facilities as of the
Closing (including those in transit, on
consignment or in the possession of any
Third Party or otherwise located on or at
properties not included in the
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Facilities) that are primarily held for use
at the Facilities or were manufactured at
the Facilities (collectively, the
"Inventory");
(iii) all of Seller's trade receivables arising
out of the Business reflected on the Final
Closing Statement (the "Receivables");
(iv) the Owned Personal Property and interests
therein and Leased Personal Property and
interests therein of Seller (the "Personal
Property");
(v) except as set forth in Schedule 1.01(b)(ix),
all patents (including all reissues,
divisions, continuations,
continuations-in-part and extensions
thereof), patent applications, patent
rights, trademarks, trademark registrations,
trademark applications, service marks, trade
names, trade dress, business names, brand
names, domain names, copyrights, copyright
registrations, designs, design
registrations, and all rights to and to use
any of the foregoing ("Intellectual
Property") as well as the right to xxx for
any pre-Closing infringements of such
Intellectual Property owned by or licensed
to Seller that are exclusively used, or
exclusively held for use in the Business
including, without limitation, the
Intellectual Property listed in Schedule
1.01(a)(v) ("Assigned Intellectual
Property");
(vi) except as set forth in Schedule 1.01 (b)(ix)
and except for the software license
agreements set forth on Schedule 1.01(b)(i)
relating to software that will be provided
under the Transition Services Agreement, all
trade secrets, Seller confidential
information, inventions, discoveries,
know-how, formulae, practices, methods,
processes, procedures, ideas,
specifications, engineering data, software,
firmware, programs and source disks, source
codes, designs, composition services,
research data and records, records of
invention, technical information, test
information, market surveys and marketing
know-how, instruction manuals, concepts,
unpatented blue prints and all rights to use
any of the aforesaid and all media carrying
any of the aforesaid and all rights to xxx
for pre-Closing infringements of any of the
aforesaid ("Technology") owned by or
licensed to Seller that are exclusively used
or exclusively held for use in the Business
(the "Assigned Technology");
(vii) all Permits of Seller that are set forth on
Schedule 1.01(a)(vii) (the "Assigned
Permits");
(viii) all Contracts to which Seller is a party or
by which Seller is bound that exclusively
relate to, are exclusively used, or are
exclusively held for use in the Business
(other than licenses of Intellectual
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Property and Technology that do not
constitute Assigned Intellectual Property or
Assigned Technology), Contracts listed on
Schedule 1.01(a)(viii) and that portion of
each Shared Contract to the extent
pertaining to the conduct of the operations
of the Business after Closing (the "Assigned
Contracts"), including, without limitation,
all rights to receive goods and services
purchased pursuant to such Assigned
Contracts and to assert claims and take
other actions in respect of breaches or
other violations thereof, in each case
except to the extent related to Excluded
Liabilities;
(ix) all Prepaid Expenses reflected on the Final
Closing Statement;
(x) all rights and claims to the extent relating
to or arising out of any Assumed Liability
(including Tax refunds and credits
attributable to Taxes that constitute
Assumed Liabilities);
(xi) all books and records, files and documents
including, without limitation, all sales and
business records, service records, warranty
records, books of account, ledgers, general,
financial, Tax and accounting records,
personnel records of Continuing Employees
(to the extent permitted by Applicable Law),
files, invoices, inventory records, product
specifications, drawings, engineering,
maintenance, operating and production
records, cost and pricing information,
business plans, catalogs, quality control
records, blueprints, research and
development files, records and laboratory
books, patent disclosures, patent life
histories, patent oppositions, patent
invalidity and patentability opinions,
litigation files, credit records of
customers, customers' and suppliers' lists,
other distribution lists, billing records,
sales and promotional literature, equipment
logs, operating guides and manuals, material
safety data sheets, lock out/tag out
procedures, customer and supplier
correspondence, maps and surveys (in all
cases, in any form or medium) ("Records") of
Seller that are used in the Business (except
to the extent related to an Excluded Asset
or Excluded Liability) or that relate to any
Assumed Liability (the "Assigned Records");
(xii) all computer and automatic machinery,
servers, network equipment and connections,
program documentation, tapes, manuals,
forms, guides and other materials with
respect thereto and related licenses and
other agreements (other than any of such
property that is or relates to Intellectual
Property that does not constitute Assigned
Intellectual Property or Technology that
does not constitute Assigned Technology)
that as of the Closing are owned by or
licensed to Seller and are (A) located at
the Facilities or (B) are not
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located at the Facilities but are
exclusively used or exclusively held for use
in the operation of the Business;
(xiii) all proceeds received or receivable by
Seller prior to the Closing under insurance
policies as a result of damage to or the
destruction of any Purchased Asset that
occurs prior to the Closing (but excluding
any proceeds due under business interruption
insurance) to the extent Seller has not used
such proceeds to repair or replace such
damaged or destroyed assets; and
(xiv) all goodwill generated by or associated with
the Business, including the exclusive right
to represent oneself as the successor of the
Business (it being understood that Seller is
not transferring to Buyer any goodwill
associated with the Potlatch Name) and
Seller's telephone numbers used in
connection with the Business.
(b) Notwithstanding anything in this Agreement to the
contrary, specifically excluded from the Purchased Assets are the right, title
and interest of Seller in or to any of following (collectively, the "Excluded
Assets"):
(i) all assets identified on Schedule
1.01(b)(i);
(ii) Seller's corporate charters, minutes and
stock record books and corporate seals;
(iii) all cash and cash equivalents and sales tax
refunds held by Seller;
(iv) all rights, claims and credits of Seller to
the extent arising out of or relating to any
Excluded Asset or any Excluded Liability,
including rights, claims and credits (other
than Prepaid Expenses reflected on the Final
Closing Statement) under Assigned Contracts
arising from or related to the period prior
to the Closing, Tax refunds and credits
attributable to Taxes that constitute
Excluded Liabilities, all insurance policies
and rights, claims and credits to Seller
arising under insurance policies (except to
the extent specified in Section 1.01(a)(x))
and all guarantees, warranties, indemnities
and all other intangible property rights or
claims and similar rights in favor of Seller
in respect of any Excluded Asset or any
Excluded Liability;
(v) all of the Benefit Plans (as defined in
Section 3.10(a)) and assets of the Benefit
Plans;
(vi) all rights of Seller under this Agreement
and any other agreements and instruments
executed and delivered in connection with
this Agreement;
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(vii) all Records prepared by Seller for the
purpose of or in connection with the sale of
the Purchased Assets;
(viii) all Records other than the Assigned Records;
(ix) the Intellectual Property and Technology
described on Schedule 1.01(b)(ix);
(x) all rail cars used in the Business;
(xi) all records that relate primarily to Taxes
that constitute Excluded Liabilities;
(xii) any asset, property right or Contract that
is not included within the Purchased Assets;
(xiii) the Potlatch Name and all goodwill
associated therewith; and
(xiv) all rights of Seller to, and claims for,
indemnification from Third Parties against
Excluded Liabilities.
Section 1.02 Purchase Price.
(a) In consideration of the sale, conveyance, transfer,
assignment and delivery of the Purchased Assets by Seller pursuant to Section
1.01(a), Buyer agrees to (i) pay to Seller U.S. $457,500,000, minus $2,850,000
(to account for certain pension-related adjustments) (the "Base Purchase Price")
payable as set forth in Section 1.03 and subject to adjustment pursuant to
Section 1.06 (the "Purchase Price"), and (ii) undertake, assume and agree to
perform, and otherwise pay, satisfy and discharge when due, and to indemnify and
hold harmless Seller and its Affiliates from and against, only the following
liabilities, obligations, claims, demands, expenses, damages or responsibilities
of Seller, whether known or unknown, absolute, accrued, contingent or otherwise
and whether due or to become due (the "Assumed Liabilities"):
(i) all liabilities, obligations and commitments
of Seller under the Assigned Contracts and
the Assigned Permits arising or related to
(i) the period after the Closing and (ii)
the period prior to the Closing which are
reflected in the Final Closing Statement;
(ii) all accrued property taxes and accrued
association dues of the Business reflected
in the Final Closing Statement;
(iii) all liabilities, obligations and commitments
to the customers of the Business for
products manufactured at the Facilities
after the Closing;
(iv) any liability, obligation or commitment to
any Continuing Employees arising out of
claims made after the Closing Date, but only
to the extent expressly set forth in Section
5.07;
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(v) the specified other liabilities, obligations
and commitments of Seller identified in
Schedule 1.02(a)(v);
(vi) all liabilities and obligations arising out
of or relating to the Business or the
Purchased Assets to the extent arising
during or relating to any period after the
Closing; and,
(vii) all liabilities that arise, are incurred or
are to be performed under the Permitted
Encumbrances after the Closing.
(b) As of the Closing, on the terms and subject to the
conditions set forth in this Agreement, Seller shall assign to Buyer all of its
rights under the Assigned Contracts and the Assigned Permits and all of its
liabilities, obligations and commitments under the Assigned Contracts and the
Assigned Permits, and Buyer shall assume all of Seller's rights thereunder and
shall assume all of Seller's liabilities, obligations and commitments
thereunder; provided, however, that Seller shall assign such rights and
obligations only to the extent that such rights and obligations are assignable
under such Assigned Contracts and Assigned Permits and Applicable Law, and no
action hereunder shall constitute an assignment thereof, except to such extent
and provided, further, that to the extent consent of any Person or Governmental
Authority to the assignment, or notice to any Person or Governmental Authority
of the assignment, is required pursuant to the terms of such Assigned Contract
or Assigned Permit or Applicable Law, no assignment or attempted assignment will
be deemed to have been effected by the provisions of this Agreement without such
consent or notice. To the extent that an Assigned Contract or Assigned Permit or
Applicable Law permits such an assignment, and notice to or consent of any
Person or Governmental Authority is required, Seller shall deliver to the
applicable Person or Governmental Authority the required notice in accordance
with the terms and conditions of the applicable Contract or Permit, and shall
use its commercially reasonable efforts (which shall not require any payment of
money or other consideration) to obtain any required consents prior to the
Closing Date. To the extent that a Contract or Permit or Applicable Law does not
permit Seller to assign any Contract or Permit that would otherwise constitute a
Purchased Asset, Seller shall use its commercially reasonable efforts to (i)
provide to Buyer, at the request of Buyer, the benefits of any such Contract or
Permit (to the extent permitted by Applicable Law), (ii) enforce and perform, at
the request and expense of Buyer, for the account of Buyer, any rights or
obligations of Seller arising from any such Contract or Permit (to the extent
permitted by Applicable Law) against or in respect of any Third Party, including
the right to elect to terminate any Contract or Permit (to the extent permitted
by Applicable Law) in accordance with the terms thereof upon the advice of
Buyer, or otherwise enter into with Buyer such other arrangements sufficient to
provide equivalent benefits and burdens to Buyer and (iii) at the request of
Buyer, assist in the procurement of a transfer to or assumption by the Buyer of
any Permit (to the extent permitted by Applicable Law) or the issuance of a
comparable Permit to the Buyer; provided that Buyer shall reimburse Seller for
reasonable out-of-pocket expenses incurred by Seller in connection with entering
into any such arrangement.
(c) Prior to the Closing, Seller and Buyer shall use
their commercially reasonable efforts to work together (and, if necessary and
desirable, to work with the third parties to the Shared Contracts) in an effort
to (i) divide, modify or replicate (in whole or in part) the respective rights
and obligations under and in respect of the Shared Contracts and (ii) if
possible,
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novate the respective rights and obligations under and in respect of the Shared
Contracts, such that, effective as of the Closing, (A) the Buyer is the
beneficiary of the post-Closing rights and is responsible for the post-Closing
obligations related to that portion of the Shared Contract included in the
Assigned Contracts (the "OSB Portion") (so that, subsequent to the Closing, the
Seller shall have no post-Closing rights or post-Closing obligations with
respect to the OSB Portion of the Shared Contract) and (B) the Seller is the
beneficiary of the rights and is responsible for the obligations related to each
Shared Contract other than the OSB Portion (the "Non-OSB Portion") (so that,
subsequent to the Closing, the Buyer shall have no rights or obligations with
respect to each Non-OSB Portion of the Shared Contract). If the parties are not
able to enter into an arrangement to formally divide, modify or replicate one or
more of the Shared Contracts prior to the Closing as contemplated by the
previous sentence, then (i) the Buyer shall be entitled to the benefits of the
OSB Portion of any such Shared Contract accruing after the Closing Date to the
extent that the Seller may provide such benefits (A) in a manner not in
violation of the terms of such Shared Contract and (B) provided that Buyer shall
reimburse Seller for reasonable out-of-pocket expenses incurred by Seller in
connection with entering into any such arrangement and (ii) if the Seller
provides such benefits to the Buyer, the Buyer shall perform at its sole expense
the obligations of the Seller to be performed after the Closing under the OSB
Portion of such Shared Contract.
(d) Notwithstanding anything in this Agreement to the
contrary, Buyer shall not assume, and Seller shall be responsible for the
payment, satisfaction, performance and discharge of, and shall indemnify and
hold harmless Buyer from and against, all liabilities, obligations, claims,
demands, expenses, damages or responsibilities of Seller, whether known or
unknown, absolute, accrued, contingent or otherwise and whether due or to become
due other than the Assumed Liabilities, including, but not limited to, the
following (collectively, the "Excluded Liabilities"):
(i) any liabilities and obligations arising out
of or relating to the Business or any
Purchased Asset to the extent arising during
or relating to the period prior to the
Closing, including, but without limitation,
all Pre-existing Environmental Liabilities;
(ii) any liability, obligation or commitment,
whether express or implied, liquidated,
absolute, accrued, contingent or otherwise,
or known or unknown, to the extent arising
out of the operation or conduct by Seller of
any business other than the Business;
(iii) any liability, obligation or commitment
arising out of any breach of, or
nonperformance under, any Contract or Permit
(including any Assigned Contract or Assigned
Permit), prior to the Closing;
(iv) any liability, obligation or commitment that
relates primarily to, or that arises
primarily out of, any Excluded Asset, or
that arises out of the distribution to, or
ownership or operation by, Seller or any
other Person of any Excluded Asset;
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(v) except as set forth in Section 1.07 and
Section 5.05, any liability, obligation or
commitment for Taxes, whether or not
accrued, assessed or currently due and
payable, (A) of Seller or (B) relating to
the operation or ownership of the Business
or the Purchased Assets for any Tax period
(or portion thereof) ending on or prior to
the Closing Date;
(vi) except as expressly provided in Section
5.07, any liability, obligation or
commitment arising under any Benefit Plan;
(vii) except as set forth on Schedule
1.02(d)(vii), any liability, obligation or
commitment relating to or arising out of
infringement or misappropriation of
Intellectual Property or Technology to the
extent relating to or arising out of the
operation of the Business or products
manufactured at any Facility or shipped or
sold by or on behalf of the Business on or
prior to the Closing;
(viii) except as expressly provided in Section
5.07, (A) any liability, obligation or
commitment relating to or arising out of,
the employment of any Employee or Former
Employee of Seller prior to the Closing and
(B) any liability, obligation or commitment
that relates to, or arises out of, the
termination of the employment by Seller of
any Employee or Former Employee of Seller;
(ix) the industrial development revenue bonds and
the pollution control revenue bonds listed
on Schedule 1.02(d)(ix);
(x) any liability, obligation or commitment to
any Affiliate of Seller; and
(xi) any liabilities, obligations and commitments
in respect of costs and expenses incurred by
Seller or the Business in respect of or
relating to this Agreement, including
compliance by Seller with the terms hereof.
Section 1.03 Payment of Purchase Price. On the Closing Date, Buyer
shall deliver to Seller payment, by wire transfer to a bank account designated
in writing by Seller (such designation to be made at least two Business Days
prior to the Closing Date), of immediately available funds in an amount equal to
the Base Purchase Price plus an amount equal to an estimate prepared by Seller
(and reasonably satisfactory to Buyer) and delivered to Buyer at least two
Business Days prior to the Closing Date of any adjustments to the Base Purchase
Price under Section 1.06 (the Base Purchase Price plus such estimate of any
adjustments under Section 1.06 being herein referred to as the "Closing
Payment").
Section 1.04 Allocation of Purchase Price. As soon as practicable after
the date hereof, Buyer and Seller shall consult with each other and agree upon
the allocation of the Purchase Price among the Purchased Assets. Notwithstanding
any other provision of this Agreement, this Section 1.04 shall survive the
Closing Date indefinitely. Seller and Buyer agree that the values
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attributed to the Purchased Assets shall be arrived at in compliance with
Section 1060 of the Code and the regulations promulgated thereunder. Each of
Seller and Buyer shall (i) timely file all forms required to be filed in
connection with such allocation, (ii) be bound by such allocation for purposes
of determining Taxes, (iii) prepare and file, and cause its Affiliates to
prepare and file, its Tax Returns on a basis consistent with such allocation,
and (iv) not take any position on any return, declaration, report or information
return or statement inconsistent with the allocation set forth in Schedule 1.04,
unless otherwise required by any Applicable Law. Buyer shall prepare and deliver
IRS Form 8594 to Seller within sixty (60) days after the Closing Date to be
filed with the IRS. Any post-Closing adjustment to the Purchase Price shall be
reflected in the final allocation of the Purchase Price among the Purchased
Assets in a manner consistent with Section 1060 of the Code and the regulations
promulgated thereunder. Each party hereto will promptly notify the other if it
receives notice that a Governmental Authority proposes any allocation that is
different from the allocation agreed upon by Buyer and Seller.
Section 1.05 Further Assurances. At the Closing and from time to time
after the Closing, (a) at the request of Buyer and without further
consideration, Seller shall promptly execute and deliver to Buyer such
certificates and other instruments of sale, conveyance, assignment and transfer,
and take such other action, as may reasonably be requested by Buyer more
effectively to sell, convey, assign and transfer to and vest in Buyer or to put
Buyer in possession of the Purchased Assets, and (b) at the request of Seller
and without further consideration, Buyer shall promptly execute and deliver to
Seller such certificates and other instruments of assumption, and take such
other action, as may reasonably be requested by Seller more effectively to
confirm and carry out the assumption by Buyer of the Assumed Liabilities.
Section 1.06 Post Closing Adjustment.
(a) Preparation of Preliminary Closing Statement.
(i) As soon as reasonably practicable after the
Closing Date but in any event within sixty
(60) days thereafter, Seller shall prepare
and deliver to Buyer a statement setting
forth, as of the first instance in time
(Central Time) on the Closing Date, the
Current Assets of the Business and the
Current Liabilities of the Business and the
amount of working capital (calculated as
Current Assets minus Current Liabilities)
(the "Net Working Capital") (the
"Preliminary Closing Statement"). The
Preliminary Closing Statement shall be
prepared in accordance with the U.S. GAAP
and an example of the calculation of Net
Working Capital is set forth in Schedule
1.06(a)(i).
(ii) Buyer will make available to Seller and its
representatives, as requested by Seller, all
Assigned Records deemed reasonably necessary
or desirable by Seller in preparing the
Preliminary Closing Statement.
(b) Review of Preliminary Statements. Buyer and its
independent certified public accountants may review the Preliminary Closing
Statement and the Records and books of
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account of Seller relating to the Business and may make inquiry of the
appropriate employees of Seller and of Seller's accountants. The Preliminary
Closing Statement shall be binding and conclusive upon, and deemed accepted by,
Buyer unless Buyer shall have notified Seller in writing within thirty (30) days
after receipt of the Preliminary Closing Statement of any objections thereto (a
"Dispute Notice"). A Dispute Notice shall specify in reasonable detail the items
of the Preliminary Closing Statement that are being disputed and shall set forth
a reasonably detailed summary of the reasons for such dispute. The parties agree
that any amounts to be paid pursuant to this Section 1.06 which were not
disputed in the Dispute Notice shall be paid to the applicable party within ten
(10) days after the Seller's receipt of the Dispute Notice.
(c) Disputes. At the request of Buyer or Seller, any
dispute between the parties relating to the Preliminary Closing Statement which
cannot be resolved by them within thirty (30) days after Seller's receipt of the
Dispute Notice shall be referred to the Disputes Auditor for decision, and the
decision of the Disputes Auditor shall be final and binding on both parties. The
parties agree that they will require the Disputes Auditor to render its decision
within thirty (30) days after referral of the dispute to the Disputes Auditor
for decision pursuant hereto. Before referring a matter to the Disputes Auditor,
the parties shall agree on procedures to be followed by the Disputes Auditor
(including procedures for presentation of evidence). If the parties are unable
to agree upon procedures before the end of thirty (30) days after Seller's
receipt of the Dispute Notice, the Disputes Auditor shall establish procedures
giving due regard to the intention of the parties to resolve disputes as
quickly, efficiently and inexpensively as possible; the Disputes Auditor's
procedures may be, but need not be, those proposed by either Buyer or Seller;
provided, however, that the Disputes Auditor shall in all cases use U.S. GAAP in
resolving any dispute. The parties shall, as promptly as practicable, submit
evidence in accordance with the procedures agreed upon or established by the
Disputes Auditor, and the Disputes Auditor shall decide the dispute in
accordance therewith as promptly as practicable. The fees and expenses of the
Disputes Auditor for, and relating to, the making of any such decision shall be
borne by the parties equally.
(d) Final Closing Statement. The Preliminary Closing
Statement shall become final and binding on both parties upon the earliest of
(i) if no Dispute Notice has been given, the expiration of the period within
which Buyer may notify Seller of any objections to the Preliminary Closing
Statement pursuant to Section 1.06(b), (ii) agreement by Seller and Buyer that
such Preliminary Closing Statement, together with any modifications thereto
agreed to in writing by Seller and Buyer, shall be final and binding and (iii)
the date on which the Disputes Auditor issues its decision with respect to any
dispute relating to such Preliminary Closing Statement. The Preliminary Closing
Statement, as adjusted pursuant to any agreement between the parties or pursuant
to the decision of the Disputes Auditor, when final and binding on both parties,
is herein referred to as the "Final Closing Statement."
(e) Calculation and Payment of Adjusted Purchase Price.
The Base Purchase Price shall be increased by the amount, if any, by which the
Net Working Capital plus Potlatch Liabilities shown on the Final Closing
Statement exceeds the Benchmark Working Capital and the Base Purchase Price
shall be decreased by the amount, if any, by which the Benchmark Working Capital
exceeds the Net Working Capital plus Potlatch Liabilities shown on the Final
Closing Statement (the Base Purchase Price as so increased or decreased shall
hereinafter be referred to as the "Adjusted Purchase Price"). If the Closing
Payment is more than the Adjusted
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Purchase Price Seller shall, and if the Adjusted Purchase Price is more than the
Closing Payment Buyer shall, within ten (10) days after the Final Closing
Statement has been established pursuant to Section 1.06(d), make payment in
immediately available funds by wire transfer to a bank account designated in
writing by the party to which such payment is to be made, of the amount of such
difference, plus interest on such amount at a rate per annum equal to the "prime
rate" as published in the Wall Street Journal under the column titled "Money
Rate" on the Business Day preceding the date of such payment, accruing from the
date that is ten (10) days after delivery to Buyer of the Preliminary Closing
Statement to the date of payment of such amount.
Section 1.07 Proration of Taxes. Buyer and Seller agree that Taxes with
respect to the Purchased Assets and the Business (but in no event including
income Taxes) shall be prorated as of the Closing, with Seller liable to the
extent such items relate to periods ending on or prior to the Closing, and Buyer
liable to the extent such items relate to periods commencing after the Closing
(including, in each case, Taxes attributable to the portion of any Straddle
Period ending or commencing on such date, as appropriate). In connection with
these prorations, in the event that actual figures are not available at the
Closing Date, the proration shall be based upon the actual Taxes or other
amounts accrued through the Closing or paid for the most recent year (or other
appropriate period) for which actual Taxes or other amounts paid are available.
Such prorated Taxes or other amounts shall be re-prorated and paid to the
appropriate party within sixty(60) days of the date that the previously
unavailable actual figures become available. Buyer and Seller agree to furnish
each other with such documents and other records as may be reasonably requested
in order to confirm all adjustment and proration calculations made pursuant to
this Section 1.07. Notwithstanding anything to the contrary herein, no proration
shall be made under this Section 1.07 with respect to (x) accrued property taxes
shown on the Final Closing Statement and (y) Transfer Taxes described in Section
5.05.
ARTICLE II
CLOSING; TERMINATION
Section 2.01 Closing Date. The closing of the transaction contemplated
hereby (the "Closing") shall take place at the offices of Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, 4 Times Square, New York, NY, or such other location as the
parties may agree, as soon as possible, but in no event later than (i) five (5)
Business Days after satisfaction (or waiver) of the conditions set forth in
Article VI (except for the conditions which by their terms are to be satisfied
at or immediately prior to the Closing) or (ii) if the parties receive early
termination of the waiting period under the HSR Act, fifteen (15) Business Days
after such satisfaction (or waiver), or such other time or date as Buyer and
Seller agree in writing. The time and date upon which the Closing occurs is
herein referred to as the "Closing Date."
Section 2.02 Instruments of Conveyance, Transfer, Assumption, Etc.
(a) Seller shall execute and deliver or cause to be
delivered to Buyer at the Closing:
(i) the Xxxx of Sale;
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(ii) the Deeds with respect to the Real Property
to be transferred by Seller to Buyer
pursuant to this Agreement, together with
any and all documents, affidavits and
instruments required to be filed in
connection with the payment of any state,
county or local Transfer Taxes required to
be paid in connection with the transfer of
the Real Property;
(iii) the Assignment and Assumption Agreement;
(iv) a receipt for the Closing Payment;
(v) the Transition Services Agreement;
(vi) the Easement Agreement;
(vii) the Hog Fuel Supply Agreement;
(viii) the OSB Log Supply Agreement;
(ix) the Option Agreement;
(x) a certificate of the Secretary or an
Assistant Secretary (or the equivalent
thereof) of Seller certifying that the
resolutions adopted by the Board of
Directors of Seller attached thereto were
duly and validly adopted and are in full
force and effect, and authorize the
execution and delivery by Seller of this
Agreement and the Ancillary Agreements, and
the performance by Seller of its obligations
hereunder and thereunder;
(xi) the License Agreements;
(xii) a certificate of the Secretary or an
Assistant Secretary (or the equivalent
thereof) of Seller as to the incumbency of
certain of Seller's officers and certifying
that the copies of Seller's Restated
Certificate of Incorporation and By-laws
attached thereto are true and correct;
(xiii) the certificate referred to in Section
6.01(c);
(xiv) all other necessary deeds, conveyances,
bills of sale, assurances, transfers,
assignments and any other documentation
necessary or reasonably required to transfer
the Purchased Assets and the Business as a
going concern to Buyer with good title
thereto, free and clear of all Encumbrances
other than Permitted Encumbrances, including
without limitation, registrable transfers of
the Assigned Intellectual Property, each in
form and substance satisfactory to Buyer,
acting reasonably;
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(xv) all returns, questionnaires, applications or
other documents regarding any Transfer Taxes
or other registration fees that are required
to be filed in order to effectively transfer
the Purchased Assets and the Business as a
going concern to Buyer.
(xvi) all of the Assigned Records that are not
already located at the Facilities;
(xvii) a certification of non-foreign status for
Seller, with respect to the transfer of the
Purchased Assets pursuant to this Agreement,
in the form and manner which complies with
the requirements of Section 1445 of the Code
and the regulations promulgated thereunder;
(xviii) an opinion of Seller's General Counsel or
Associate General Counsel with respect to
the matters set forth on Exhibit A
(xix) an opinion of Seller's outside counsel with
respect to the matters set forth on Exhibit
B;
(xx) all other documents relevant to the closing
of the transactions contemplated in this
Agreement as Buyer, acting reasonably, may
request; and
(xxi) each of the other certificates and other
documents contemplated by Section 6.01
hereof.
(b) Buyer shall execute and deliver or cause to be
delivered to Seller at the Closing:
(i) by wire transfer in immediately available
funds to the account or accounts designated
by Seller, the Closing Payment;
(ii) the Xxxx of Sale;
(iii) the Assignment and Assumption Agreement;
(iv) the Transition Services Agreement;
(v) the Easement Agreement;
(vi) the Hog Fuel Supply Agreement;
(vii) the OSB Log Supply Agreement;
(viii) the Option Agreement;
(ix) a certificate of the Secretary or an
Assistant Secretary of Buyer certifying that
the resolutions adopted by Buyer's Board of
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Directors attached thereto were duly and
validly adopted and are in full force and
effect, and authorize the execution and
delivery by Buyer of this Agreement and the
Ancillary Agreements, and the performance by
Buyer of its obligations hereunder and
thereunder;
(x) a certificate of the Secretary or an
Assistant Secretary of Buyer as to the
incumbency of certain officers of Buyer and
certifying that the copies of Buyer's
certificate of amalgamation and articles
attached thereto are true and correct;
(xi) all other documents necessary or reasonably
required with respect to the assumption by
Buyer after the Closing of the Assumed
Liabilities, each in form and substance
acceptable to Seller, acting reasonably;
(xii) the certificate referred to in Section
6.02(c);
(xiii) the License Agreements;
(xiv) an opinion of Buyer's counsel with respect
to the matters set forth on Exhibit C;
(xv) such other documents relevant to the closing
of the transactions contemplated in this
Agreement as Seller, acting reasonably, may
request; and
(xvi) each of the other certificates and other
documents contemplated by Section 6.02
hereof.
Section 2.03 Termination. Anything contained in this Agreement other
than in this Section 2.03 to the contrary notwithstanding, this Agreement may be
terminated in writing at any time:
(a) without liability on the part of any party hereto
(unless occasioned by reason of a breach by any party hereto of any of its
representations, warranties or obligations hereunder) by mutual written consent
of Buyer and Seller;
(b) without liability on the part of any party hereto
(unless occasioned by reason of a breach by any party hereto of any of its
representations, warranties or obligations hereunder) by either Buyer or Seller,
if the Closing shall not have occurred on or before December 31, 2004, (or such
later date as may be agreed upon in writing by the parties hereto) (the
"Termination Date");
(c) by Buyer, if Seller shall breach any of its
representations, warranties or obligations hereunder and such breach shall not
have been cured or waived and Seller shall not have provided reasonable
assurance that such breach will be cured on or before the Termination Date;
provided that, a breach by Seller of any of its representations, warranties or
obligations hereunder shall not give rise to a right of termination under this
Section 2.03 unless such breach,
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together with all other breaches by Seller that have not been cured or waived
and with respect to which Seller shall not have provided reasonable assurance
that such breach will be cured on or before the Termination Date, would result
in the failure of the condition set forth in Section 6.01(a); or
(d) by Seller, if Buyer shall breach any of its
representations, warranties or obligations hereunder and such breach shall not
have been cured or waived and Buyer shall not have provided reasonable assurance
that such breach will be cured on or before the Closing Date; provided that, a
breach by Buyer of any of its representations, warranties or obligations
hereunder shall not give rise to a right of termination under this Section 2.03
unless such breach, together with all other breaches by Buyer that have not been
cured or waived and with respect to which Buyer shall not have provided
reasonable assurance that such breach will be cured on or before the Termination
Date, would result in the failure of the condition set forth in Section 6.02(a).
Section 2.04 Post-Closing Receipts and Invoices. If at any time
following the Closing:
(a) Seller receives, or comes into possession of, any of
the Purchased Assets (including amounts received on payment of any Receivable)
or any invoices for amounts included in the Assumed Liabilities that are payable
by Buyer, Seller shall immediately deliver that Purchased Asset or the invoice
to Buyer, with any endorsements, transfers or assignments as may be necessary or
desirable to ensure that Buyer receives the immediate and full benefit of that
Purchased Asset or any other information available to Seller that is required to
allow Buyer to pay the invoice; or
(b) Buyer receives, or comes into possession of, any
Excluded Asset or any invoices for amounts that are not included in the Assumed
Liabilities that are payable by Seller, Buyer shall immediately deliver that
asset or invoice to Seller, with any endorsements, transfers or assignments as
may be necessary or desirable to ensure that Seller receives the immediate and
full benefit of that asset or any other information available to Buyer that is
required to allow Seller to pay the invoice.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer, as of the date of this
Agreement and as of the Closing Date, as follows:
Section 3.01 Organization, Standing and Power. Seller is a corporation
duly organized, validly existing and in good standing under the laws of Delaware
and has all corporate power and authority to carry on its business as now being
conducted, to own its properties and is duly licensed or qualified and in good
standing as a foreign corporation in each jurisdiction in which it is required
to be so licensed or so qualified, except where the failure to be so licensed or
so qualified would not be or cause a Material Adverse Change.
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Section 3.02 Authority; Enforceability. Seller has full corporate power
and authority to enter into this Agreement and the Ancillary Agreements at
Closing and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance by Seller of this Agreement and the
Ancillary Agreements at Closing have been duly authorized by all requisite
corporate action, including all necessary action of Seller's board of directors
and stockholders. This Agreement has been, and each of the Ancillary Agreements
will be as of the Closing Date, duly executed and delivered by Seller, and
(assuming due execution and delivery by Buyer) this Agreement constitutes, and
each of the Ancillary Agreements when executed and delivered will constitute, a
legal, valid and binding obligation of Seller, enforceable in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights generally
or by general equitable principles.
Section 3.03 No Conflict; Consents. The execution and delivery by
Seller of this Agreement and each Ancillary Agreement will not, and the
consummation of the transactions contemplated hereby and thereby and Seller's
compliance with the terms hereof and thereof will not conflict with, or result
in any violation of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or to
increased, additional, accelerated or guaranteed rights or entitlements of any
Person under, or result in the creation of any Encumbrance upon any Purchased
Asset or the Business under, any provision of (i) the Restated Certificate of
Incorporation or By-laws or other organizational documents of Seller, (ii)
except as set forth on Schedule 3.03, any Assigned Contract which is material to
the Business or the ability of Seller to consummate the transactions
contemplated hereby or by the Ancillary Agreements, or by which any Purchased
Asset is bound; (iii) any judgment, order, writ, injunction, award or decree
("Judgment") or Applicable Law applicable to Seller or any Purchased Asset; or
(iv) any of the Assigned Permits that is material to the Business. No consent,
approval, license, permit, order or authorization ("Consent") of, or
registration, declaration or filing with, any Governmental Authority is required
to be obtained or made by or with respect to Seller in connection with the
execution, delivery and performance of this Agreement or any Ancillary Agreement
or the consummation of the transactions contemplated hereby and thereby, other
than (i) those set forth on Schedule 3.03, (ii) those that may be required
solely by reason of Buyer's (as opposed to any other Third Party's)
participation in the transactions contemplated hereby and by the Ancillary
Agreements and (iii) those that, if not obtained or made by Seller, such failure
would not be reasonably likely to be or cause a Material Adverse Change.
Section 3.04 Financial Statements; Undisclosed Liabilities. True and
complete copies of the Financial Statements, together with the related auditor's
reports, are attached as Schedule 3.04. Except as disclosed in Schedule 3.04,
the Financial Statements have been prepared from, are in accordance with and
accurately reflect in all material respects the books and records of Seller
relating to the Business, have been prepared in accordance with U.S. GAAP and
reconciled to Canadian generally accepted accounting principles, and present
fairly in all material respects the assets, liabilities and financial condition
of the Business and the Purchased Assets as at the date of the Financial
Statements and the sales, earnings and results of operations of the Business for
the periods covered by the Financial Statements. Except as disclosed in the
Financial Statements or in this Agreement (including its Schedules), there are
no liabilities or obligations of the Business of any nature except (i)
liabilities that are reflected or reserved
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against on the Reference Balance Sheet or that are not required under U.S. GAAP
to be reflected on the Reference Balance Sheet, (ii) liabilities incurred in the
ordinary course of business and consistent with past practice since the
Reference Balance Sheet Date, (iii) liabilities incurred since the Reference
Balance Sheet Date outside the ordinary course of business that do not exceed
U.S.$100,000 in the aggregate and (iv) liabilities that constitute Excluded
Liabilities.
Section 3.05 Litigation. Except as described in Schedule 3.05:
(a) There are no Legal Proceedings outstanding or pending
or to the knowledge of Seller threatened against Seller and relating to the
Business or any of the Purchased Assets or otherwise involving or affecting the
Business or any of the Purchased Assets, (including any that would reasonably be
expected to materially curtail or interfere with the use of the Purchased Assets
or the operation of the Business) or that would prevent Seller from entering
into this Agreement or timely consummating the transactions contemplated by this
Agreement, or any of the Ancillary Agreements, performing its obligations under
this Agreement or any of the Ancillary Agreements or consummating the Closing
and to the knowledge of Seller no state of facts exists that could constitute
the basis of any such Legal Proceeding which would be reasonably likely to be or
cause a Material Adverse Change; and
(b) Seller is not subject to any outstanding consent,
judgment, decree, injunction, ruling, order or award of any Governmental
Authority involving Seller and relating to the Business or the Purchased Assets
or by which any of the Purchased Assets are bound that has had or would be
reasonably likely to have a material adverse effect on the Buyer's ability to
conduct the Business or the Purchased Assets.
(c) This Section 3.05 does not relate to environmental
matters, such items being the subject of Section 3.18.
Section 3.06 Personal Property.
(a) Schedule 3.06(a) sets forth (i) under the heading
"Owned Personal Property" a complete and correct list and the location of each
item of Owned Personal Property treated as a capital asset of the Business and
(ii) under the heading "Leased Personal Property", a complete and correct list
and the location of each item of Leased Personal Property held under lease by
Seller and primarily used or primarily held for use in the Business.
(b) Seller has good and valid title to all of the Owned
Personal Property and a valid leasehold interest in or contractual rights to all
of the Leased Personal Property, in each case free and clear of all
Encumbrances, except Encumbrances that will be discharged prior to or at Closing
and Permitted Encumbrances.
(c) The machinery, tools, equipment and other tangible
physical assets that constitute Personal Property (other than items of
inventory) have been maintained in good working condition and state of repair,
reasonable wear and tear excepted given the age of the asset and the purpose for
which it is used.
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(d) This Section 3.06 does not relate to real property or
interests in real property, such items being the subject of Section 3.07, or to
Intellectual Property, such items being the subject of Section 3.14.
Section 3.07 Real Property.
(a) The Real Property constitutes all the real property,
easements and other interests in real property primarily used or primarily held
for use by Seller in connection with, necessary for the conduct of, or otherwise
material to, the operation or conduct of the Business as a going concern.
Schedule 3.07(a) sets forth a complete and correct list, including legal
descriptions and civic addresses, of each parcel of the Real Property. Seller
has heretofore delivered to Buyer materially complete and correct copies of each
and every of the following, if any, in the possession of Seller: title reports,
title binders, survey documents and data affording information or opinions with
respect to, certifying to, or evidencing the extent of, current title, title
history, title marketability, use, possession, restriction or regulation, if any
(governmental or otherwise), of the Real Property.
(b) Seller is the registered and beneficial owner of and
has good and marketable legal and beneficial title in fee simple to the Real
Property free and clear of all Encumbrances, except Encumbrances that will be
discharged prior to or at Closing and Permitted Encumbrances.
(c) Except as set forth in Schedule 3.07(c), Seller has
good and valid rights of, and free and uninterrupted, ingress and egress to and
from all the Real Property from and to the public street systems for all usual
street, road and utility purposes sufficient for the operation of the Business
as a going concern in the ordinary course.
(d) Except as set forth in Schedule 3.07(d), all
buildings, structures, improvements and appurtenances situated on the Real
Property, including the roof, footings, foundation, sprinkler mains, structural,
mechanical and HVAC systems and masonry wall in any of the improvements upon the
Real Property, are in good operating condition and in a state of good repair,
normal maintenance and capital requirements and reasonable wear and tear
excepted, and are adequate and suitable for the purposes for which they are
currently being used and contain no defects or deficiencies that would
materially adversely affect the operation of the applicable Facility.
(e) None of the buildings, structures, improvements or
appurtenances situated on the Real Property, including the Facilities, or any
equipment in those buildings, structures, improvements or appurtenances, nor the
operation or maintenance thereof, violates any Contract or any provision of any
Applicable Law that would materially adversely affect the operation of the
applicable Facility. Seller has obtained all appropriate certificates of
occupancy, licenses, easements and rights of way, including proofs of dedication
required to use and operate the Real Property in the manner in which the Real
Property is currently being used and operated except those the absence of which
would not be reasonably likely to materially impair the use of the Facilities.
True and complete copies of all such certificates, permits and licenses have
heretofore been furnished to Buyer. Seller has all Permits necessary to own or
operate the Real Property as currently owned and operated, and no such Permits
will be required, as a result of the
18
transactions contemplated in this Agreement, to be issued or reissued after the
date hereof in order to permit Buyer, following the Closing, to continue to own
or operate the Real Property in the same manner as heretofore, other than any
such Permits the absence of which would not be reasonably likely to materially
impair the use of the Facilities. Seller has not made any application for a
rezoning of any of the Real Property and to the knowledge of Seller there is no
proposed or pending change to the zoning of any of the Real Property. To the
knowledge of Seller, all the buildings, machinery and equipment included in the
Purchased Assets, including the Facilities, conform with applicable ordinances
and regulations and building and zoning by-laws in all respects essential to the
effective conduct of the Business as presently conducted. Seller has not
received any written notice of any appropriation, condemnation or like
proceeding, or of any violation of any applicable zoning law, regulation or
other law, order, regulation or requirement relating to or affecting the Real
Property, and to Seller's knowledge, no such proceeding has been threatened or
commenced. All of the Facilities are wholly located within the legal boundaries
of the legal parcels of the Real Property on which they are located and do not
infringe upon or contravene the provisions of any easement, right-of-way or
other Encumbrance registered against or otherwise affecting the Real Property.
To the knowledge of Seller there are no buildings, fixtures, improvements or
facilities on any adjoining lands, whether public or private, that encroach on
the Real Property to such extent that any such encroachment would impair the use
of the Facilities in the manner in which they are currently being used.
(f) Except as set forth in Schedule 3.07(f), all material
accounts due and payable for work and services performed and materials placed or
furnished upon or in respect of the Real Property, including the Facilities,
have been fully paid and satisfied, and to the knowledge of Seller, no Person is
entitled to claim a lien or any other form of security or Encumbrances under any
applicable construction lien legislation against the Real Property or any part
of the Real Property, including the Facilities other than Permitted
Encumbrances.
(g) There is no material amount owing in respect of the
Real Property, including the Facilities, to any municipal corporation or to any
other corporation or commission owning or operating a public utility for water,
gas, electrical power or energy, steam or hot water, or for the use thereof,
other than current accounts in respect of which the payment due date has not yet
passed. There are no delinquent levies, charges, fees or Taxes assessed against
the Real Property, including the Facilities, by any Governmental Authority
(including development or improvement levies, charges or fees).
(h) Seller has not made, and to the knowledge of Seller
no other Person has made, any written or verbal commitments to any Person
relating to any of the Real Property, including the Facilities, which would
impose an obligation upon Buyer or its successors or assigns to make any
contribution or dedications of money or land or to construct, install, or
maintain any improvements of a public or private nature on or off any of the
Real Property, including the Facilities.
(i) Except as set forth in Schedule 3.07(i), no material
alteration, repair, improvement or other work that has not been completed has
been ordered, directed or requested by any competent Governmental Authority to
be done in respect of any of the Real Property, including the Facilities. There
are no pending or, to the knowledge of Seller, threatened appropriation,
condemnation or similar proceedings in eminent domain relating to any of the
19
Real Property, including the Facilities. There is no order outstanding, nor any
action, claim, suit or proceeding pending or, to the knowledge of Seller,
threatened, relating to the ownership, lease, use, occupancy or operation by any
Person of any of the Real Property.
(j) Seller has not received written or, to the knowledge
of Seller, oral notice, and to the knowledge of Seller no Governmental Authority
intends to impose any special or other assessment against any of the Real
Property, including the Facilities, or any part thereof.
(k) None of the Real Property comprises "agricultural
land" as that term is defined in each of Minnesota Statutes, sections 500.221
and 500.24.
(l) There are no leasehold interests in real property
held by Seller in connection with or that are required for the ownership of the
Purchased Assets or the operation of the Business as a going concern, nor does
Seller lease to any Third Party any interest in the Real Property.
(m) Pursuant to Minnesota Statutes, Section 103I.235,
Schedule 3.07(m) sets out a list of all Minnesota Well Disclosure Statement and
Minnesota Private Sewer System Disclosure Statement for every well and sewer
system located on any of the Real Property, including the Facilities, true and
complete copies of which have been provided to Buyer by Seller.
(n) This Section 3.07 does not relate to environmental
matters, such items being the subject of Section 3.18.
Section 3.08 IRB Financing. Schedule 3.08 lists all of the bonds
secured by the Purchased Assets or the existence of which affect the operation
of the Purchased Assets (the "IRBs") and the principal financing documents
pertaining thereto have been made available to Buyer. Except as described in
Schedule 3.08, Seller has the right to cause the defeasance of all such
indebtedness and to obtain the release of all related Liens on Purchased Assets
at or prior to the Closing.
Section 3.09 Tax Matters. Seller has duly and timely filed (taking into
account any valid extension of time within which to file) all material state and
local Tax Returns required to be filed by Seller (relating to the Business or
the Purchased Assets) on or prior to the date hereof. All such Tax Returns are
true, complete and correct in all material respects. All material state and
local Taxes due and payable by Seller have been paid or adequate provision for
the payment thereof has been made on the financial statements of Seller. There
are no Encumbrances for material state or local Taxes upon any of the Purchased
Assets except for Encumbrances for Taxes not yet due, or in the case of property
Taxes, not yet subject to penalties for delinquency. All material state and
local Taxes that Seller is required by Law to withhold or collect, for all
periods through and including the date hereof, have been duly withheld or
collected and, to the extent required, have been paid over to the proper
Governmental Authorities or are held in separate bank accounts for such purpose.
Neither Seller nor any of its Affiliates has received written notification from
any state or local Governmental Authority that any audit, examination or other
proceeding is pending or threatened with respect to material state or local
Taxes relating to or attributable to the Business or the Purchased Assets. There
has been no issue raised or
20
adjustment proposed (and none is pending) by any state or local Governmental
Authority with respect to material state or local Taxes attributable to the
Purchased Assets or the Business. There has not been a waiver or extension of
the application of any statute of limitations of any jurisdiction regarding the
assessment or collection of any material state or local Taxes relating to the
Business or the Purchased Assets.
Section 3.10 Employee Benefits Matters.
(a) Schedule 3.10(a) contains a true and complete list of
each employee benefit plan (as defined in Section 3(3) of ERISA), each
employment, personal services, compensation, incentive, stock option, restricted
stock, stock appreciation right, phantom equity, change in control, severance,
separation, vacation, each other plan, arrangement, program, agreement or
commitment providing for insurance coverage, workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits, retirement,
life, health, or accident benefits, or for deferred compensation, profit
sharing, or other forms of compensation or benefits with respect to which Seller
or any ERISA Affiliate has any obligations on behalf of employees of the
Business or their dependents or beneficiaries and any other similar agreement,
plan, policy and other arrangement (and any amendments thereto) with respect to
which Seller or any ERISA Affiliate has any obligations on behalf of one or more
current employees of Seller or any of its ERISA Affiliates, who principally
works for or with respect to the Business (each, a "Business Employee") (each, a
"Benefit Plan"). For purposes of this Agreement, "ERISA Affiliate" means any
entity which is under common control or affiliated with Seller within the
meaning of Section 4001 of ERISA or Section 414 of the Code. True and complete
copies of all Benefit Plans, the most recent summary plan description, and the
most recent favorable determination letter (if applicable) have been delivered
or made available to Buyer.
(b) Except as disclosed in Schedule 3.10(b), each Benefit
Plan complies in all material respects with all Applicable Laws, including
ERISA, and, to obtain taxation advantages, the Code and the regulations
promulgated thereunder. All benefits, contributions and premiums relating to
each Benefit Plan have been timely paid or made in all material respects, in
accordance with the terms of such Benefit Plan and the terms of all Applicable
Laws. No filing has been made by Seller or any ERISA Affiliate with the PBGC,
and no proceeding has been commenced by the PBGC, to terminate any Benefit Plan
which could result in a liability of Buyer. No condition exists and no event has
occurred that could constitute grounds for the termination of any Benefit Plan
by the PBGC.
(c) Neither Seller nor any ERISA Affiliate has, at any
time on behalf of any current or former employees of the Business, contributed
to or been required to contribute to, a "multiemployer plan" (within the meaning
of Section 3(37) of ERISA) which is subject to Title IV of ERISA.
(d) Each Benefit Plan that is intended to be qualified
within the meaning of Section 401(a) of the Code has received a determination
letter from the IRS to that effect, and, to the knowledge of Seller, no fact or
event has occurred since the date of such determination letter that would
reasonably be expected to adversely affect the qualified status of any such
Benefit Plan.
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(e) With respect to each of the Benefit Plans that is a
"group health plan" (as defined in Code Section 5000(b)), Seller has at all
times been in compliance in all material respects with the provisions of Section
4980B of the Code and Parts 6 and 7 of Title I of ERISA and any similar
applicable state laws.
(f) There are no pending or, to the knowledge of Seller,
threatened claims (other than routine claims for benefits) by, on behalf of or
against any of the Benefit Plans or related trusts, or with respect to any
Business Employee or employment matter.
(g) Except as disclosed in Schedule 3.10(g), (i) no
Benefit Plan (A) provides for defined benefit pension benefits, (B) is a
"multiemployer plan" (as defined in Section 3(37) of ERISA), (C) is a "multiple
employer welfare arrangement" (as defined in Section 3(40) of ERISA) or (D)
provides or promises post-termination health or life benefits to current or
former employees of the Business, except to the extent required under any
applicable state law or Section 601 of ERISA or Section 4980B of the Code, other
than death benefits under any "pension plan," as that term is defined in Section
3(2) of ERISA, or benefits the full cost of which is borne by the current or
former employee (or the employee's beneficiary); and (ii) no Business Employee
is, or at any time will become, entitled to any payment, benefit or right, or
any increased or accelerated payment, benefit or right, as a result of the
execution of this Agreement or the consummation of the transactions contemplated
hereby, other than a payment, benefit or right that would be available to such
Business Employee upon termination of employment in the ordinary course of
business.
Section 3.11 Collective Agreements. Except as set forth in Schedule
3.11:
(a) Seller is neither party to, nor bound by, any
collective bargaining agreement or similar agreement, work rules or practices
with any labor union, labor organization, works council or employee association
having bargaining rights for or applicable to any Employees of Seller related to
the Business or any of the Purchased Assets, nor has Seller made commitments to
or conducted negotiations with any labor union or employee association with
respect to any future collective bargaining or similar agreements, work rules or
practices;
(b) to the knowledge of Seller, no labor union, labor
organization, works council, or group of employees of Seller associated with the
Business or any of the Purchased Assets has made a pending demand for
recognition or certification, and there are no representation or certification
proceedings or petitions seeking a representation proceeding presently pending
or threatened in writing to be brought or filed with the National Labor
Relations Board or any other labor relations tribunal or authority;
(c) to the knowledge of Seller there are no labor union
organizing activities with respect to any Employees;
(d) there are no written personnel policies, handbooks,
manuals, rules or procedures applicable to any of the Employees or Former
Employees;
(e) there is currently no labor strike, dispute,
slowdown, stoppage or lock-out occurring or pending or, to the knowledge of
Seller, threatened by or affecting the Employees or
22
otherwise affecting the Business as a going concern or the Purchased Assets, and
there has not been at any time during the last five years;
(f) to the knowledge of Seller, there are no
circumstances or facts, including any outstanding employee disciplinary
proceedings or sanctions, reprimands or notices, which could be reasonably
expected to give rise to a material claim by an Employee or Former Employee
against Buyer after the completion of the Closing;
(g) there are no current or pending grievances (including
charges of employment discrimination, retaliation or unfair labor practices)
against Seller of which Seller has received written notice or is otherwise aware
under any collective bargaining agreement or otherwise relating to the Business
or the Purchased Assets or to the knowledge of Seller threatened in or before
any Governmental Authority; and
(h) to the knowledge of Seller none of its employment
policies or practices relating to the Business or any of the Purchased Assets is
currently being audited or investigated or subject to imminent audit or
investigation by any Governmental Authority and Seller is not subject to any
consent decree, court order or settlement in respect of any labor or employment
matters relating to the Business or any of the Purchased Assets.
Section 3.12 Employees. Except as set forth and identified in Schedule 3.12,
there is no agreement, policy, plan or program of paying severance pay or any
form of severance, separation, termination or compensation in connection with
the termination of any of the Employees or Former Employees.
(a) Schedule 3.12(a) contains a complete and accurate
list of:
(i) the names of all Employees, specifying the
length of service (actual and deemed),
position, title or classification and rate
of salary or hourly pay for each Employee,
current rate of accrual of paid time off,
any commission or bonus entitlements for
each Employee, and a description of their
status (whether active or on leave of
absence). To the extent any Employee is on
leave of absence, Schedule 3.12(a) describes
the type of leave, the date it commenced and
the expected duration of the leave. Except
as set forth in Schedule 3.12(a), there are
no employees on layoff, and there are no
individuals not currently listed as
employees on Schedule 3.12(a) with recall or
preferential rehire rights and no employees
listed on Schedule 3.12(a) have any such
rights except pursuant to the express terms
of the Labor Agreement. Separate lists are
provided of Union Employees and Non-Union
Employees. The list of Non-Union Employees
identifies which Non-Union Employees are
salaried employees and which are hourly
employees (if any).
(ii) all Employees, including those on lay-off
and those in receipt of benefits under
workers' compensation legislation, who have
been
23
absent continually from work for a period in
excess of one month, as well as the reasons
for their absence.
(b) Except as described in Schedule 3.12(b), with respect
to the Business,
(i) there are no written complaints, claims or
charges against Seller, outstanding or to
the knowledge of Seller threatened by, nor
are there any orders, decisions, directions
or convictions currently registered or
outstanding by, any Governmental Authority
against or in respect of Seller under or in
respect of any Applicable Law relating to
employment matters;
(ii) Seller has at all times been in compliance
with all Applicable Laws respecting
employment and employment practices, terms
and conditions of employment, wages, hours
of work, occupational safety and health,
child labor, immigration, employment
discrimination, disability rights or
benefits, equal opportunity, plant closures
and layoffs, affirmative action, workers'
compensation, labor relations, employee
leave issues and unemployment insurance with
respect to the Employees and Former
Employees, and is not and has not engaged in
any unfair labor practices as defined in the
National Labor Relations Act or other
Applicable Law, with respect to the
Employees or Former Employees, in any such
case, other than those the violation of
which would not be material to the Business;
(iii) there is no unfair labor practice charge or
complaint against Seller pending or, to the
knowledge of Seller, threatened before the
National Labor Relations Board or any
similar state, local or foreign agency or
other Governmental Authority with respect to
any of the Employees or Former Employees, no
charges with respect to or relating to any
of the Employees or Former Employees are
pending or, to the knowledge of Seller,
threatened before the Equal Employment
Opportunity Commission or other Governmental
Authority responsible for the prevention of
unlawful employment practices;
(iv) there are no actions pending or, to the
knowledge of Seller, threatened in any forum
by or on behalf of any Employee or Former
Employee or any applicant for employment or
classes of the foregoing alleging that
Seller engaged in any conduct that
constitutes, or would reasonably be expected
to constitute a breach of any express or
implied contract of employment, any
Applicable Law governing employment or the
termination thereof or other discriminatory,
wrongful or tortuous conduct in connection
with the employment relationship, in any
such case, other than those the violation of
which would not be material to the Business;
and
24
(v) to the knowledge of Seller, no Employee is
in any respect in violation of any term of
any employment agreement, nondisclosure
agreement, non-competition agreement or
similar restrictive covenant to a former
employer of any such Employee relating to
the use of trade secrets or proprietary
information.
Section 3.13 Sufficiency of Assets. The Purchased Assets (together with
the services provided pursuant the Transition Services Agreement) comprise all
of the assets (both tangible and intangible) and rights required in order for
Buyer to conduct the Business immediately following the Closing in all material
respects as conducted on the date of this Agreement by Seller.
Section 3.14 Intellectual Property.
(a) Schedule 3.14(a) sets forth a true and complete list
of all material Intellectual Property, owned, used with the permission of the
owner or licensor, filed by or licensed to Seller and used or held for use in
the operation of the Business, other than so-called "embedded technology"
relating to equipment purchased from Third-Party manufacturers and other than
unregistered trademarks, service marks, trade names, trade dress, business
names, brand names, domain names, designs, know-how and copyrights that,
individually and in the aggregate, are not material to the conduct of the
Business as presently conducted. Schedule 3.14(a) identifies (i) with respect to
each item of Intellectual Property, whether such item of Intellectual Property
is used by Seller or held for use by Seller exclusively in the operation of the
Business and therefore constitutes Assigned Intellectual Property, or whether
such item of Intellectual Property will be an Excluded Asset, (ii) with respect
to each item of Intellectual Property listed on Schedule 3.14(a) that is
identified as an Excluded Asset, whether such item of Intellectual Property will
be licensed to Buyer by Seller after the Closing pursuant to the Cross License
and (iii) with respect to each item of Intellectual Property listed on Schedule
3.14(a), whether such item of Intellectual Property will be licensed to Seller
by Buyer after the Closing pursuant to the Cross License. With respect to all
Assigned Intellectual Property owned by Seller that is registered or subject to
an application for registration, Schedule 3.14(a) sets forth a list of all
jurisdictions in which such Assigned Intellectual Property owned by Seller is
registered or registrations applied for and all registration and application
numbers. Except as set forth in Schedule 3.14(a), (i) Seller is listed in the
records of the appropriate United States, state or foreign agency as the sole
owner of record for each application and registration of Assigned Intellectual
Property or, to the knowledge of Seller, possessed valid rights to use any
licenses or Assigned Intellectual Property (in each case free and clear of all
material Encumbrances), and all material Assigned Intellectual Property owned by
Seller has been duly registered in, filed in or issued by the appropriate
Governmental Authority where such registration, filing or issuance is necessary
for the conduct of the Business as conducted on the date of the most recent of
the Financial Statements and as presently conducted, and to the knowledge of
Seller, such registrations are valid and subsisting, in full force and effect in
all material respects, (ii) to the knowledge of Seller, Seller is, and on the
Closing Date Buyer will be, the owner of, and Seller has, and on the Closing
Date Buyer will have in connection with the Business, the right to use, execute,
reproduce, display, perform, modify, enhance, distribute, prepare derivative,
continuation, divisional and improvement works of and sublicense, without
payment to any other Person, all Assigned Intellectual Property owned by Seller
and all
25
Assigned Technology owned by Seller and the consummation of the acquisition of
the Purchased Assets, the ownership of the Business by Buyer and the other
transactions contemplated hereby do not and will not conflict with, alter or
impair any such rights other than as would not be or cause a Material Adverse
Change, and (iii) except as set forth in Schedule 3.14(a)(iii), during the past
three years Seller has not received any written communication from any Person
other than Buyer asserting any ownership interest in any Assigned Intellectual
Property or Assigned Technology.
(b) Seller has not granted any license of any kind
relating to any Assigned Technology owned by Seller or Assigned Intellectual
Property owned by Seller or the marketing or distribution thereof nor has Seller
entered into any contract, judgment, indemnification, settlement, coexistence
agreement or other arrangement limiting its ability to exploit fully any of the
Assigned Technology owned by Seller or Assigned Intellectual Property owned by
Seller, except as set forth in Schedule 3.14(b). Seller is not bound by or a
party to any option, license or similar Contract relating to the Intellectual
Property of any other Person for the use of such Intellectual Property that is
necessary to the conduct of the Business and requires any payment, except as set
forth in Schedule 3.14(b) and except for so-called "shrink-wrap" license
agreements relating to computer software licensed in the ordinary course of
business. Except as set forth in Schedule 3.14(b), the conduct of the Business
as conducted on the date of the most recent of the Financial Statements and as
presently conducted, to the extent it relies on or utilizes Technology or
Intellectual Property, does not to the knowledge of Seller violate, conflict
with or infringe the Intellectual Property of any other Person. Except as set
forth in Schedule 3.14(b), (i) no claims are pending or, to the knowledge of
Seller, threatened against Seller by any Person with respect to the ownership,
validity, enforceability, effectiveness or use in the Business of any
Intellectual Property and (ii) during the past three years Seller has not
received any written communication alleging that Seller or any of its Affiliates
has in the conduct of the Business violated any rights relating to Intellectual
Property or Technology of any Person. To the knowledge of Seller, no Third Party
is infringing or otherwise violating any Assigned Technology owned by Seller or
Assigned Intellectual Property owned by Seller and the Seller has not sent to
any Third Party any written notices of infringement or other violation with
respect to Assigned Technology owned by Seller or Assigned Intellectual Property
owned by Seller.
(c) To the knowledge of Seller, no former or current
member of management or key personnel of the Business, including all Employees
and Former Employees, agents, consultants and independent contractors who have
contributed to or participated in the conception and development of Assigned
Technology or the Assigned Intellectual Property, has (i) any right, title or
interest, in whole or in part, in any of the Assigned Technology or Assigned
Intellectual Property or (ii) any claim against Seller in connection with such
Person's involvement in the conception and development of any such Assigned
Technology and, to the knowledge of Seller, no such claim has been asserted or
is threatened. To the knowledge of Seller, none of the current officers and
Employees of Seller has any patents issued or applications pending for any
device, process, design or invention of any kind now used in the operation of
the Business, which patents or applications have not been assigned to Seller.
Section 3.15 Inventory. Each item of Inventory included in the
Purchased Assets, whether reflected in the Financial Statements or subsequently
procured or produced, (i) is free of any material defect or deficiency other
than, in the aggregate for all such Inventory, defects and
26
deficiencies at levels consistent with past experience of the Business, (ii) is
in good, usable and, as to finished goods, marketable condition (subject, in the
case of raw materials and work-in-process, to the completion of the production
process), all on a basis consistent with past experience of the Business and
(iii) is properly stated in the Financial Statements (to the extent existing on
the date of the Financial Statements) and in the Assigned Records at the lower
of cost or market value, with adequate (as determined in accordance with U.S.
GAAP, applied on a basis that is consistent with the basis on which the
Financial Statements were prepared) obsolescence and defective product reserves,
all as determined in accordance with U.S. GAAP, applied on a basis that is
consistent with the basis on which the Financial Statements were prepared. The
quantities of each item of Inventory (whether raw materials, work-in-process or
finished goods) included in the Purchased Assets were procured or produced for
sale in the ordinary course of the Business and consistent with past practice
(giving effect to then current market conditions) and the volume of production
or purchases thereof and of orders therefor have been consistent with ordinary
and necessary production, purchasing and orders. The quantities, type and
quality of the Inventory included in the Purchased Assets is sufficient for the
conduct of the Business by Buyer after completion of the Closing substantially
in the same manner as conducted by Seller during similar periods in 2003. Since
the date of the Financial Statements there have not been any write-downs of the
value of, or establishment of any reserves against, any of the Inventory, except
for write-downs and reserves in the ordinary course of business and consistent
with past practice.
Section 3.16 Absence of Change or Event. Except as disclosed in
Schedule 3.16, since the Reference Balance Sheet Date the Business has been
carried on only in the ordinary and normal course consistent with past practice
and:
(a) there has been no Material Adverse Change;
(b) Seller has not mortgaged, pledged or subjected any of
the Purchased Assets to a lien, restriction or any other Encumbrance other than
in the ordinary course of the Business or Permitted Encumbrances;
(c) Seller has not sold, transferred, leased to others or
otherwise disposed of any of its material assets primarily used in the Business
(or committed to do any of the foregoing), or cancelled, waived, released or
otherwise compromised any material debt or claim, or any right of material value
relating to the Business, other than in the ordinary course of the Business;
(d) Seller has not instituted any material litigation,
action or proceeding before any Governmental Authority relating to the Business
or the Purchased Assets;
(e) Seller has not increased the compensation of any
officer, employee or agent of the Business, directly or indirectly, including by
means of any bonus, pension plan, profit sharing, deferred compensation,
savings, insurance, retirement or any other employee benefit plan, in any case
which would not be consistent with past practice;
27
(f) Seller has not materially increased promotional or
advertising expenditures except in the ordinary course of the Business or
otherwise materially changed its policies or practices with respect thereto; and
(g) Seller has not filed any amended Tax Returns, entered
into any closing agreement with respect to Taxes, settled any Tax claim or
assessment, surrendered any right to claim a refund of Taxes or obtained or
entered into any Tax ruling, agreement, Contract, understanding, arrangement or
plan, in each case, where such action would result in a Material Adverse Change.
Section 3.17 Compliance With Law; Permits.
(a) Except as disclosed in Schedule 3.17(a), the
operation of the Business as currently conducted is in compliance in all
material respects with Applicable Laws, including without limitation those
relating to occupational health and safety, other than those the violation of
which would not be material to the Business. The occupancies and uses of the
Facilities, as well as the development, construction, management, maintenance,
servicing and operation of the Facilities, are in compliance in all material
respects with all Applicable Laws, other than those the violation of which would
not be material to the Business. All utility installations and connections
required for the development, construction, maintenance, operation and servicing
of the Facilities have been effected, or performed and completed (as the case
may be), and all fees and charges therefor have been fully paid. Except as
disclosed in Schedule 3.17(a) Seller has not received written notice of any
violations, legal proceedings or Judgments (as to which Seller is a party or by
which Seller or any portion of a Facility is bound) relating to zoning, building
use and occupancy, traffic, fire, health, sanitation or other laws or
regulations against, or with respect to, the Facilities. This Section 3.17(a)
does not relate to matters with respect to (i) possession and compliance with
Permits, which are the subject of Section 3.17(b), (ii) environmental matters,
which are the subject of Section 3.18, (iii) Taxes, which are the subject of
Section 3.09, (iv) ERISA and other laws applicable to benefit plans, employment
and employment practices, which are the subject of Section 3.10, Section 3.11
and Section 3.12.
(b) Schedule 3.17(b) sets forth all material Permits that
are required for the operation of the Business and identifies those Permits that
are (which are listed in Schedule 3.17(b)(i)), and those Permits that are not
(which are listed in Schedule 3.17(b)(ii)), assignable to Buyer and the date of
expiration. Except as disclosed in Schedule 3.17(b), Seller has obtained all
material Permits that are required under all Applicable Laws for the operation
of the Business as currently conducted. Except as set forth in Schedule 3.17(b),
(i) all such Permits are validly held by Seller, and Seller is in compliance in
all material respects with all terms and conditions thereof, and (ii) during the
past year, Seller has not received written notice of any legal proceedings
relating to the revocation or modification of any such Permits. All Permits
which are held in the name of any employee, officer, director or stockholder of,
or otherwise on behalf of, Seller shall be deemed to be held by Seller for the
purpose of the representations and warranties contained in this Section 3.17(b).
This Section 3.17(b) does not relate to Environmental Permits, which are the
subject of Section 3.18(b).
(c) The electric power generation facility located at the
Bemidji Facility (the "Generation Facility") is a qualifying facility ("QF")
under Section 201 of the Public Utility
28
Regulatory Policies Act of 1978 and satisfies the criteria for qualifying
topping cycle cogeneration facilities set forth at 18 C.F.R. Section 292.205(a),
the ownership requirements for QFs set forth at 18 C.F.R. Section 292.206, and
the useful thermal energy output requirements for qualifying cogeneration
facilities set forth at 18 C.F.R. Section 292.202(h) and Federal Energy
Regulatory Commission ("FERC") interpretations of those requirements. The
Generation Facility has been certified to be a QF by FERC or has been
self-certified at FERC as a QF, and the current ownership and operation of the
Generation Facility conforms in all material respects with the facts that form
the basis of such certification; and the Generation Facility has been a QF at
all times since first generation of electric power.
Section 3.18 Environmental Matters.
(a) Except as disclosed in Schedule 3.18(a) or in the
environmental reports disclosed to Buyer and listed in Schedule 3.18(g), except
as would not be reasonably likely to be material to the Business, (i) Seller,
the Business and all of the Purchased Assets are and, to Seller's knowledge,
have at all times in the past been in compliance with all Environmental Laws,
including, but without limitation, all such laws relating to the handling and
storage of Hazardous Substances; (ii) Seller is not subject to any current
allegation from a Governmental Authority and is not in non-compliance with any
Environmental Laws in connection with the Purchased Assets or the Business;
(iii) Seller has not received from any Governmental Authority or other Persons
any outstanding notices of violation, defect or non-compliance under
Environmental Laws with respect to any of the Purchased Assets or the Business
and, to Seller's knowledge, no facts exist which could reasonably be expected to
give rise to such notice of violation, defect or non-compliance; and (iv) Seller
has not received any written communication that alleges any violation of, or
claim under, any Environmental Law, that has not been fully and finally resolved
through the appropriate judicial, administrative or other claims resolution
process and that alleges any violation of, or claim under, any Environmental
Law, or arising out of, based on or resulting from the presence or Release of
Hazardous Materials on the Real Property, in connection with the Purchased
Assets or the Business (including without limitation a written information
request regarding or claim that Seller is a potentially responsible party under
the Comprehensive Environmental Response, Compensation and Liability Act (Title
42 United States Code Section 9601), and to Seller's knowledge there are no
facts that could reasonably be expected to give rise to any such allegation or
claim.
(b) The Permits listed in Schedule 3.18(b)(i) (the
"Environmental Permits") are all the Permits or other concessions that have been
issued to Seller by any Governmental Authority under any and all Environmental
Laws and are required for or used in the production of OSB and electricity by
and at the Facilities and the operation of the Business as a going concern in
compliance with all Environmental Laws. Seller has provided Buyer true and
complete copies of all Environmental Permits. Except as disclosed in Schedule
3.18(a), each of the Environmental Permits is valid, subsisting and in good
standing and in full force and effect in accordance with its terms and is being
and has been complied with in all material respects, Seller is not in default or
breach of any of the Environmental Permits, and no proceeding is pending or, to
Seller's knowledge, threatened to revoke, modify or limit any of the
Environmental Permits. Except for any Environmental Permits for which assignment
or transfer to Buyer is prohibited, restricted or conditioned by law, and
subject to consents for transfer of Environmental Permits being obtained, none
of the Environmental Permits will become void or voidable or be in default
29
as a result of this Agreement or the completion of the transactions contemplated
in this Agreement.
(c) Except as disclosed in Schedule 3.18(c) or in the
environmental reports disclosed to Buyer and listed in Schedule 3.18(g), and
except for Hazardous Substances used in the ordinary course of operation of the
Business and Purchased Assets (including without limitation solvents,
pest-resistant chemicals and other chemicals and substances used in the
production of OSB and electricity), to the knowledge of Seller, (i) all of the
Purchased Assets (including in the case of the Real Property, the soil, subsoil,
bedrock, surface water and ground water) and all property adjoining the
Purchased Assets are free of material quantities of Hazardous Substances; and
(ii) no Hazardous Substances have been or are being Released on or from or
migrating through property adjoining the Purchased Assets that might migrate to
and materially affect the Purchased Assets or the carrying on of the Business as
a going concern.
(d) Except as disclosed in Schedule 3.18(d) or in the
environmental reports disclosed to Buyer and listed in Schedule 3.18(g), and
except in the ordinary course of operation of the Business and Purchased Assets,
neither Seller nor, to the knowledge of Seller, any Person authorized by Seller
to enter onto, use or occupy any of the Purchased Assets has used or is using
any of Purchased Assets to generate, manufacture, refine, treat, transport,
store, handle, dispose of, transfer, produce or process any Hazardous Substances
or as a landfill or other waste disposal site.
(e) Except as disclosed in Schedule 3.18(a)-(d) or in the
environmental reports disclosed to Buyer and listed in Schedule 3.18(g), to the
knowledge of Seller, (i) Seller has not Released or caused, authorized or
permitted the Release of any Hazardous Substance for which Buyer would
reasonably be expected to have any liability in connection with the Release or
any Remediation of the Release after acquiring the Purchased Assets and the
Business as a going concern, (ii) there is no threat of any such Release, and
(iii) no other Person has Released or caused, authorized or permitted the
Release of any Hazardous Substance with respect to which Buyer may be alleged to
have liability after acquiring the Purchased Assets and the Business as a going
concern. No Remediation of any Hazardous Substances has been or is being
conducted by any Person on or in connection with any of the Purchased Assets.
(f) Except as disclosed in Schedule 3.18(f), Seller has
materially complied with all requirements of Environmental Laws for filing data,
reports and notices and retaining documents and records in connection with the
Purchased Asset and the Business. Seller has provided all such data, reports,
notices, documents and records in Seller's possession to Buyer in connection
with the Purchased Assets and the Business.
(g) Seller has fully disclosed to Buyer true and complete
copies of all Third-Party and material internal environmental reports, site
assessments, audits, studies, evaluations, tests and records prepared within the
last five (5) years, which are in the possession of Seller, with respect to any
or all of the Purchased Assets and the Business, a complete and accurate list of
which is disclosed in Schedule 3.18(g). To the knowledge of Seller, Seller has
fully and accurately disclosed to Buyer all other facts and circumstances
relating to the environmental condition of any and all of the Purchased Assets.
Except as disclosed in Schedules 3.18(a)-(d) or in the environmental reports
disclosed to Buyer and listed in Schedule 3.18(g), Seller has no
30
knowledge of facts, conditions or circumstances that could reasonably be
expected to lead to responsibility or liability for Buyer under Environmental
Laws.
(h) Except as disclosed in Schedules 3.18(a)-(d) or in
the environmental reports disclosed to Buyer and listed in Schedule 3.18(g), to
the knowledge of Seller, no expenditure in excess of $25,000 is presently
required to be made in connection with the Purchased Assets or the Business as a
going concern in order to comply with any Environmental Laws or to obtain the
renewal of any Environmental Permit.
(i) Except as disclosed in Schedules 3.18(a)-(d) or in
the environmental reports disclosed to Buyer and listed in Schedule 3.18(g), to
the knowledge of Seller, there are no Pre-existing Environmental Liabilities.
Section 3.19 Contracts and Commitments.
(a) Schedule 3.19 sets forth each Contract outstanding as
of the date hereof to which Seller is a party that primarily relates to the
Business or that binds or is required for or used in the production of OSB and
electricity by and at the Facilities and the Purchased Assets and the operation
of the Business as a going concern (other than any Contract required to be
disclosed in any other Schedule), and:
(i) is an employment agreement or employment
Contract other than "at will" arrangements;
(ii) is a collective bargaining agreement or
other Contract with any labor organization,
union or association;
(iii) contains a covenant not to compete (other
than pursuant to any radius restriction
contained in any lease, reciprocal easement
or development, construction, operating or
similar agreement) or other covenant of
Seller restricting the development,
manufacture, marketing or distribution of
the products and services of the Business;
(iv) is a Contract with any Person known to
Seller to be the beneficial owner of at
least 5% of the outstanding shares of common
stock of Seller or an Affiliate of Seller or
any current or former officer, director or
employee of Seller or any of its Affiliates
(other than employment agreements and "at
will" arrangements covered by clause (i)
above);
(v) is a lease, sublease or similar Contract
with any Person under which Seller is a
lessor or sublessor of, or makes available
for use to any Person, any Purchased Asset
or any portion thereof (including any
portion of the Facilities);
(vi) is a lease, sublease or similar Contract
with any Person under which Seller is lessee
of, or holds or uses, any machinery,
31
equipment, vehicle or other tangible
personal property owned by any Person that
has an aggregate future liability in excess
of $100,000 or is not terminable by Seller
by notice of not more than 60 days for a
cost of less than $50,000;
(vii) is a Contract (other than a purchase order)
for the future purchase of materials,
supplies or equipment that has an aggregate
future liability in excess of $100,000;
(viii) is a management, service, consulting or
other similar Contract that has an aggregate
future liability in excess of $50,000;
(ix) is a license, sublicense, option or other
Contract relating, in whole or in part, to
any Assigned Intellectual Property or any
Assigned Technology (other than with respect
to so-called "embedded technology" relating
to equipment purchased from Third-Party
manufacturers and so called "shrink-wrap"
license agreements relating to computer
software);
(x) is a Contract under which Seller has made
any advance, loan, extension of credit or
capital contribution to, or other investment
in, any Person other than extensions of
trade credit in the ordinary course of
business and advances made in the ordinary
course of business to employees of Seller;
(xi) is a Contract creating any Encumbrance upon
any Purchased Asset other than a Permitted
Encumbrance or an Encumbrance that will be
discharged on or prior to Closing;
(xii) is a power of attorney (other than a power
of attorney given in the ordinary course of
business with respect to routine tax
matters) that would be binding on Buyer or
to which any Purchased Asset or Assumed
Liability would be subject after the
Closing;
(xiii) is a confidentiality agreement (other than a
confidentiality agreement entered into in
the ordinary course of business);
(xiv) is a purchase order or a sales order entered
into other than in the ordinary course of
business;
(xv) is a Contract (A) for the sale of any
Purchased Asset (other than sales in the
ordinary course of business) or (B) granting
any preferential rights to purchase any
Purchased Asset (other than inventory in the
ordinary course of business);
(xvi) is a Contract with any Governmental
Authority;
32
(xvii) is a Contract for any joint venture,
partnership or similar arrangement;
(xviii) is a Contract providing for the services of
any dealer, distributor, sales
representative, franchisee or similar
representative; or
(xix) is a Contract (other than a purchase order
or a sales order) not required to be listed
on Schedule 3.19 pursuant to any other
clause of this Section 3.19 that involves
future payment or receipt of in excess of
$100,000 or future performance or receipt of
services or delivery or receipt of goods and
materials, in each case with an aggregate
value in excess of $100,000.
(b) Except as disclosed on Schedule 3.19:
(i) As of the date hereof, all Contracts listed
or required to be listed in Schedule 3.19(a)
(the "Material Assigned Contracts") are
valid, binding and in full force and effect
and are enforceable against Seller and, to
Seller's knowledge, the other party thereto,
in accordance with their respective terms,
except as the same may be limited by
bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the
enforcement of creditors' rights generally
and general equitable principles regardless
of whether such enforceability is considered
in a proceeding at law or in equity; and
(ii) Seller is not (with or without the lapse of
time or the giving of notice, or both) in
material breach or default in any respect
under any Material Assigned Contract and, to
the knowledge of Seller, no other party to
any Material Assigned Contract is (with or
without the lapse of time or the giving of
notice, or both) in material breach or
default in any respect thereunder. Seller
has not received any written notice of the
intention of any party to terminate any
Material Assigned Contract. Except as stated
to the contrary in Schedule 3.19, materially
complete and correct copies of all Material
Assigned Contracts listed in the Schedules,
together with all material modifications and
amendments thereto, have been made available
to Buyer.
(c) Schedule 3.19(c) lists a complete and accurate
description of all of the power supply contracts pursuant to which the Purchased
Assets and the Business are provided with the power required to operate the
Purchased Assets and the Business at normal production levels as historically
achieved by Seller at the Facilities. Other than pursuant to the power supply
contracts listed in Schedule 3.19(c), there are no other current sources of
power for the Purchased Assets or the Business. The power obtained pursuant to
the power supply contracts listed in Schedule 3.19(c) are sufficient for the
Purchased Assets, the production of OSB by and at the Facilities and the
operation of the Business as a going concern at the historical production
33
levels of the Facilities as previously carried on by Seller. Except as disclosed
in Schedule 3.19(c), there has not been any material disruption of power to any
of the Purchased Assets or the Business in the past twelve (12) months.
Section 3.20 Guarantees, Warranties and Power of Attorney. Except as
described in Schedule 3.20:
(a) Seller has not given any guarantee or warranty
relating to the Business in respect of the products sold or the services
provided by it, except warranties made in the ordinary course of the Business,
and in the form of Seller's standard written warranties, and except for
warranties implied by Applicable Law;
(b) Seller is not required to provide any letters of
credit, bonds or other financial security arrangements in connection with any
transactions with its suppliers or customers of the Business; and
(c) Seller has not given and is not bound by any power of
attorney with respect to any of the Purchased Assets or Assumed Liabilities or
the Business that will be binding on Buyer after the completion of the Closing.
Section 3.21 Insurance. A true and complete list and description of all
insurance policies maintained by Seller with respect to the Business and each of
the Purchased Assets is provided in Schedule 3.21. All such policies are in full
force and effect, all premiums due and payable thereon have been paid (other
than retroactive or retrospective premium adjustments that are not yet, but may
be, required to be paid with respect to any period ending prior to the time of
the Closing under comprehensive general liability and workmen's compensation
insurance policies), and no written or, to the knowledge of Seller, oral notice
of cancellation or termination has been received with respect to any such policy
which has not been replaced on substantially similar terms prior to the date of
the cancellation. Seller has not received (i) any refusal of coverage under any
policy described in Schedule 3.21, (ii) any written notice that any issuer of
any policy has filed for protection under applicable bankruptcy laws or is
otherwise in the process of liquidating or has been liquidated or (iii) any
written notice that the policies are no longer in full force or effect or that
the issuer of any such policy is no longer willing or able to perform its
obligations under the policy. To the knowledge of Seller, the Business has been
conducted in a manner so as to conform in all material respects to all material
applicable provisions of those insurance policies. Seller has made available to
Buyer the most recent insurance underwriter's reports with respect to the
Business. Schedule 3.21 sets out all of the details of any pending claims and
any previous claims under any insurance policies maintained by Seller on the
Purchased Assets or the Business or that were maintained by Seller during the
last five years. Except as set forth in Schedule 3.21, there are no requirements
or recommendations of any insurer of the Purchased Assets or the Business with
respect to any repair or modification to or any improvements of any of the
Purchased Assets or the Business.
Section 3.22 [Reserved.]
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Section 3.23 Suppliers, Customers and Sales Representatives.
(a) Except for the suppliers named in Schedule 3.23(a),
the Business has not purchased, from any single supplier, goods or services for
which the aggregate purchase price exceeds 5% of the total value of goods and
services purchased by the Business during its most recent full fiscal year. As
of the date hereof, except as set forth in Schedule 3.23(a), since the Reference
Balance Sheet Date there has not been and there is not expected to be (i) to the
knowledge of Seller, any material adverse change in the business relationship of
the Business with any supplier of merchandise named in Schedule 3.23(a) or (ii)
except for changes in volumes and prices in the ordinary course of business, any
material change in any material term (including credit terms) of the supply
agreements or related arrangements with any such supplier.
(b) Except for the customers named in Schedule 3.23(b),
the Business does not have any customer to whom it made more than 5% of its
sales during its most recent full fiscal year. As of the date hereof, except as
set forth in Schedule 3.23(b), since June 30, 2004 there has not been and there
is not expected to be (i) to the knowledge of Seller, any material adverse
change in the business relationship of the Business with any customer named in
Schedule 3.23(b), or (ii) except for changes in volumes and prices in the
ordinary course of business, any material change in any material term (including
credit terms) of the sales agreements or related agreements with any such
customer.
(c) Schedule 3.23(c) sets forth a list of each broker or
sales representative of the products of the Business that may not be terminated
within 60 days without payment in respect of termination and (i) indicates
whether such broker or sales representative has a written contract or oral
arrangement with the Business, (ii) contains a description of the terms of such
contract or oral arrangement with the Business with respect to territory,
exclusivity and the term of the contract or arrangement and (iii) indicates the
amount of notice, and any payments, required to terminate such brokerage or
sales representation arrangement with the Business. Neither Seller nor any of
its Affiliates has knowingly entered into any arrangements that would materially
adversely effect Buyer's ability to distribute or sell any products in any
jurisdiction.
Section 3.24 Product Warranties and Liabilities. Except as set forth in
Schedule 3.24, to the Seller's knowledge all OSB manufactured, shipped or sold
by Seller in connection with the Business has been in conformity with all
applicable contractual commitments and all express and implied warranties, and
there is no material liability (and, to the knowledge of Seller, there is no
basis for any present or future proceeding, hearing, investigation, charge,
complaint, claim or demand against it giving rise to any material liability) for
replacement or return or discounts for inferior quality thereof or other damages
in connection therewith. All liabilities for replacement or return or discounts
for inferior quality of any OSB manufactured, shipped or sold by Seller in
connection with the Business or other damages in connection therewith are
adequately reserved and properly stated on the Assigned Records in accordance
with U.S. GAAP, applied on a basis that is consistent with the basis on which
the Financial Statements were prepared. No OSB manufactured, shipped or sold by
Seller in connection with the Business is subject to any guaranty, warranty or
other indemnity beyond the applicable standard terms and conditions of sale or
beyond that implied or imposed by Applicable Law. Schedule 3.24 sets out a
complete and accurate list of Seller's standard terms and conditions of sale for
OSB sold by Seller in connection with the Business, true and complete copies of
which have been provided to Buyer by
35
Seller. Except as set forth in Schedule 3.24, there has been no recall ordered
by any Governmental Authority or, to the knowledge of Seller, threatened recall
or investigation by any Governmental Authority of any OSB manufactured, shipped
or sold by Seller in connection with the Business. For each of the fiscal years
ended December 31, 2001, December 31, 2002 and December 31, 2003 and the six
month period ended June 30, 2004, the settlement cost (net of salvage value)
arising out of the defective products OSB sold by Seller in connection with the
Business has not exceeded 1.0% of sales for that fiscal year or period.
Section 3.25 No Investments. There are no partnership interests, joint
venture interests or shares in the capital of any other Person currently held by
Seller that relate to or are required for the ownership of the Purchased Assets
and the operation of the Business as a going concern, and the Purchased Assets
do not include any partnership interest, joint venture interests or shares in
the capital of any other Person. Seller is not subject to any obligation or
requirement to provide funds to or make any investment in any Person by loan,
capital contribution or otherwise, in connection with the Business or the
Purchased Assets.
Section 3.26 Full Disclosure. This Agreement (including the Schedules
that form part of this Agreement) does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
contained in this Agreement not misleading.
Section 3.27 Propriety of Past Payments. To the knowledge of Seller,
none of Seller, any director, officer, employee or agent of Seller or any other
Person associated with or acting for or on behalf of Seller has, with respect to
the Business, directly or indirectly, made any illegal contribution, gift,
bribe, rebate, payoff, influence payment, kickback or other payment to any
Person, private or public, regardless of form, whether in money, property or
services, (i) to obtain favorable treatment for Seller in connection with the
Business, in securing business, (ii) to pay for favorable treatment for business
secured for Seller in connection with the Business, (iii) to obtain special
concessions, or for special concessions already obtained, for or in respect of
the Business or (iv) otherwise for the benefit of Seller in connection with the
Business, in violation of any Applicable Law. Neither Seller nor any current
director, officer, agent, employee of Seller or other Person acting on behalf of
Seller, has, with respect to the Business, accepted or received any unlawful
contribution, payment, gift, kickback, expenditure or other item of value.
Section 3.28 Not Insolvent. Seller is not insolvent and has not
committed an act of bankruptcy within the meaning of the United States Code
Title 11 (Bankruptcy Code) and to the knowledge of Seller no actions have been
taken to initiate proceedings for or in respect of the bankruptcy, insolvency,
liquidation, dissolution or winding up of Seller.
Section 3.29 Receivables. All of the Receivables reflected on the Final
Closing Statement will represent valid obligations arising from bona fide
transactions in the ordinary course of business, will be properly stated on the
Assigned Records in accordance with U.S. GAAP, and will have terms of payment
and age consistent with the historical practice of the Business. Except as set
forth in Schedule 3.29, since the Reference Balance Sheet Date there have not
been any write-offs as uncollectible of any of the Receivables, except for
write-offs in the ordinary course of business and consistent with past practice.
Seller has not received any written or, to the knowledge of Seller, any oral
notice or complaint regarding any products sold
36
or serviced for which any Receivables are currently due, other than notices and
complaints received in the ordinary course of business and of a quantity,
magnitude and type consistent with past experience of the Business.
Section 3.30 Seller's Knowledge. The phrase "Seller's knowledge," "to
the knowledge of Seller," and like phrases shall mean the actual knowledge of
any of the Persons listed on Schedule 3.30.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller, as of the date of this
Agreement and as of the Closing Date, as follows:
Section 4.01 Organization, Standing and Power. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of British
Columbia, Canada and has all corporate power and authority to carry on its
business as now being conducted and to own its properties and is duly licensed
or qualified and in good standing as a foreign corporation in each jurisdiction
in which it is required to be so licensed or so qualified, except where the
failure to be so licensed or so qualified would not materially affect Buyer's
ability to perform its obligation under this Agreement.
Section 4.02 Authority; Execution and Delivery; Enforceability. Buyer
has full corporate power and authority to enter into this Agreement and
Ancillary Agreements at Closing and to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance by Buyer of this
Agreement and the Ancillary Agreements at Closing have been duly authorized by
all requisite corporate action. This Agreement has been, and each of the
Ancillary Agreements will be as of the Closing Date, duly executed and delivered
by Buyer, and (assuming due execution and delivery by Seller) this Agreement
constitutes, and each of the Ancillary Agreements when executed and delivered
will constitute, a valid and binding obligation of Buyer, enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally or by general equitable principles.
Section 4.03 No Conflicts; Consents. Other than as would not be
reasonably likely to have a material adverse effect on Buyer's ability to
perform its obligations under this Agreement, the execution and delivery by
Buyer of this Agreement does not, and the execution and delivery by Buyer of
each Ancillary Agreement will not, and the consummation of the transactions
contemplated hereby and thereby and Buyer's compliance with the terms hereof and
thereof will not, conflict with, or result in any violation of or default (with
or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or to increased, additional, accelerated or guaranteed
rights or entitlements of any Person under, or result in the creation of any
Encumbrance upon any of the properties or assets of Buyer under, any provision
of (i) the certificate of amalgamation or articles or other organizational
documents of Buyer, (ii) any Contract material to the ability of Buyer to
consummate the transactions contemplated hereby or
37
by the Ancillary Agreements, to which Buyer is a party or by which any of its
properties or assets is bound or (iii) any Judgment or Applicable Law applicable
to Buyer or its properties or assets. No Consent of or registration, declaration
or filing with any Governmental Authority is required to be obtained or made by
or with respect to Buyer in connection with the execution, delivery and
performance of this Agreement or any Ancillary Agreement or the consummation of
the transactions contemplated hereby and thereby, other than (i) those set forth
on Schedule 4.03, (ii) those that may be required by reason of the terms or
nature of the Purchased Assets or the participation of Seller (as opposed to
those required solely by reason of the participation by Buyer as opposed to any
other Third Party, including any other Third Party organized outside, or
controlled by a Person organized outside, the United States) in the transactions
contemplated hereby and by the Ancillary Agreements and (iii) those that, if not
obtained or made by Buyer, such failure would not be reasonably likely to have a
material adverse effect on Buyer's ability to perform its obligations under this
Agreement.
Section 4.04 Financial Ability to Perform. Sufficient funds and credit
arrangements are available to Buyer as of the date hereof, and will be so
available to Buyer at the Closing, to enable Buyer to pay the Purchase Price and
all other amounts payable by it hereunder at the Closing and to pay any and all
amounts which may be payable pursuant to Section 1.03 and Section 1.06 at the
time therein provided.
ARTICLE V
COVENANTS
Section 5.01 Seller's Obligations Prior to Closing. Without in any way
limiting any other obligations of Seller under this Agreement, during the period
from the date of this Agreement to the Closing:
(a) Seller (x) shall conduct the Business only in the
ordinary and normal course and shall use commercially reasonable efforts to
preserve the Business and the Purchased Assets and the goodwill of suppliers,
customers and others having business relations with the Business consistent with
past practice and (y) shall not, without the prior written consent of Buyer,
enter into any transaction or refrain from doing any action that, if effected
before the date of this Agreement, would constitute a breach of any
representation and warranty of Seller contained in this Agreement (provided that
the failure of Seller to comply with this clause (y) shall in no event cause the
failure of the condition set forth in Section 6.01(b)). Without limiting the
foregoing Seller will not, without the prior written consent of Buyer (not to be
unreasonably withheld, conditioned or delayed):
(i) increase any compensation payable to any
Employees or make any other change in the
terms of employment of any of the Employees
not consistent with past practices;
(ii) except for cause, dismiss or transfer any
key senior management Employee and Seller
shall promptly notify Buyer of any such
dismissal or transfer;
38
(iii) create any further Encumbrances on any of
the Purchased Assets;
(iv) amend or agree to amend in a manner adverse
to the Business any of the Assigned
Contracts;
(v) enter into or amend any other Contracts for
the Business other than ordinary course
purchases from suppliers and sales to
customers of the Business;
(vi) amend or agree to amend any of the Assigned
Permits; or
(vii) assign, transfer, license, or abandon any
Assigned Intellectual Property or Assigned
Technology other than in the ordinary course
of business.
(b) Seller shall use all commercially reasonable efforts
to obtain, at or before the time of the Closing, at its expense, all of the
consents to assign the Assigned Contracts and Assigned Permits provided that
Seller shall not be required to pay or commit to pay any amount to any Person to
obtain any such consents;
(c) Seller shall pay and discharge its liabilities
relating to the Business and the Purchased Assets as they come due in the
ordinary course in accordance and consistent with its previous practice, except
those contested in good faith by Seller;
(d) until the earlier of the completion of the Closing or
any termination of this Agreement, Seller will deal exclusively with Buyer with
respect to the sale of the Business and the Purchased Assets, and Seller and its
directors, officers, employees, representatives and agents shall not, directly
or indirectly, solicit, encourage, or initiate any offer or proposal from, or
engage in any discussions or negotiations or enter into any agreement,
commitment or understanding or otherwise act jointly or in concert with, or
provide any information to, any Person or entity, other than Buyer and its
affiliates, employees, representatives and agents, concerning any transaction
involving the Business or the Purchased Assets;
(e) Seller shall use all commercially reasonable efforts
to obtain by the time of the Closing, at its expense, discharges of all
Encumbrances against the Purchased Assets that are not Permitted Encumbrances;
and
(f) between the date of this Agreement and the Closing,
Seller shall use reasonable efforts to consult in good faith on a regular and
frequent basis with the representatives of Buyer to report material operational
developments and the general status of ongoing operations pursuant to procedures
reasonably requested by Buyer or such representatives that do not unduly
interfere with Seller's operation of the Business.
Section 5.02 Access to Information, Due Diligence. Seller shall afford
to Buyer and its accountants, counsel, environmental consultants and other
representatives of any of the foregoing (such entities and representatives other
than Buyer being referred to as "Buyer's Representatives") reasonable and timely
access in a manner that does not unreasonably interfere with the normal
operations of the Business, during the period prior to the Closing, to all the
39
employees, managers, properties, books, contracts, commitments, information
systems, Tax returns and Records of the Business, and, during such period shall
furnish promptly to Buyer and Buyer's Representatives any information
(including, with respect to environmental matters, all relevant records, audits,
assessments, field notes, monitoring well data and other documents or
information in possession of Seller) concerning the Business, the Purchased
Assets or the Assumed Liabilities as Buyer (or any Buyer's Representative) may
reasonably request. Seller will permit Buyer and Buyer's Representatives to
conduct such studies as Buyer may reasonably request to establish the current
environmental status of the Business, the Purchased Assets and to assess Assumed
Liabilities arising from or related to Environmental Laws so long as such
surveys and studies do not materially interfere in the operation of the
Business.
Section 5.03 Confidentiality.
(a) Buyer acknowledges that the information being
provided to it in connection with the transactions contemplated hereby is
subject to the terms of a letter agreement dated June 4, 2004, between Buyer and
Seller (the "Confidentiality Agreement"), the terms of which are incorporated
herein by reference. Notwithstanding anything to the contrary herein or in the
Confidentiality Agreement, Buyer shall be permitted to use and disclose such
information to the extent necessary to make any filing or obtain any consent or
approval required in order to consummate the transactions contemplated hereby.
Effective upon the Closing, the Confidentiality Agreement (other than the
provisions contained therein with respect to the solicitation of Seller's
employees) shall terminate.
(b) (x) Seller shall keep confidential, and use
reasonable efforts to cause its Affiliates and each of their respective
officers, directors, employees and advisors to keep confidential, (i) all
information that is known by Seller to be confidential information regarding
Buyer, any of its Affiliates or any of its or their businesses being provided to
it in connection with the transactions contemplated hereby or by the Ancillary
Agreements and (ii) after the Closing all information relating to the Business,
the Purchased Assets or the Assumed Liabilities and (y) Buyer shall keep
confidential, and use reasonable efforts to cause its Affiliates and each of
their respective officers, directors, employees and advisors to keep
confidential all information that is contained in any Record constituting a
Purchased Asset that is known by Buyer to be confidential information relating
to any business of Seller or any of its Affiliates other than the Business and
not relating to the Business, except (in the case of each of clauses (x) and (y)
above) (A) as required by law or administrative process (to the extent so
required) (in which case the party required to disclose confidential information
shall promptly notify the other party and give the other party an opportunity to
oppose such disclosure) or by any securities exchange or applicable securities
laws, (B) as necessary to defend or prosecute any litigation or dispute, (C) as
permitted by the license granted in Section 5.12(b) below, (D) for information
that is publicly available on the Closing Date, or thereafter becomes publicly
available other than as a result of a breach of this Section 5.03(b), (E) with
respect to the obligations of Seller, (I) with respect to any Excluded Liability
or Excluded Assets or (II) as reasonably necessary in connection with any claim
of Seller hereunder against Buyer or any claim of Buyer hereunder against Seller
or Seller's pursuit of remedies against any Third Party with respect to any such
claim or (F) with respect to the obligation of Buyer, as reasonably necessary in
connection with any claim of Buyer hereunder against Seller or any claim of
Seller hereunder against Buyer or
40
Buyer's pursuit of remedies against any Third Party with respect to any such
claim. The covenant set forth in this Section 5.03(b) shall terminate three
years after the Closing Date.
(c) Each party providing any information in connection
with this Agreement is not waiving, and will not be deemed to have waived or
diminished, any of its attorney work product protections, attorney-client
privileges or similar protections and privileges as a result of disclosing such
information (including information related to pending or threatened litigation)
to the other party, regardless of whether such disclosing party has asserted, or
is or may be entitled to assert, such privileges and protections. The parties
(a) share a common legal and commercial interest in all of such information that
is subject to such privileges and protections; (b) may become joint defendants
in Legal Proceedings to which such information covered by such protections and
privileges relates; (c) intend that such privileges and protections remain
intact should any party become subject to any actual or threatened Legal
Proceeding to which such information covered by such protections and privileges
relates; and (d) intend that after the Closing the receiving party shall have
the right to assert such protections and privileges. No receiving party shall
admit, claim or contend, in Legal Proceedings involving either party or
otherwise, that any party disclosing such information waived any of its attorney
work-product protections, attorney-client privileges or similar protections and
privileges with respect to any information, documents or other material
disclosed to a party due to a disclosing party disclosing information (including
information related to pending or threatened litigation) to such receiving
party.
Section 5.04 Reasonable Best Efforts. Each party shall use its
reasonable best efforts to take or cause to be taken all actions or do or cause
to be done all things necessary, proper or advisable to fulfill the conditions
to Closing hereunder and to cause the Closing to occur as soon as practicable,
including taking all actions necessary to comply promptly with all legal
requirements that may be imposed on it or any of its Affiliates with respect to
the Closing and to cause all other conditions to be satisfied. Each of the
parties hereto will furnish to the other party hereto such necessary information
and reasonable assistance as such other party may reasonably request in
connection with its preparation of necessary filings or submissions to any
governmental agency. Buyer and Seller each agree (i) to file any Notification
and Report Forms and related material that may be required to be filed with the
Federal Trade Commission and the United States Department of Justice (the
"Department of Justice") under the HSR Act as promptly as practicable after the
date hereof, (ii) to use its reasonable best efforts to obtain an early
termination of the applicable waiting periods, and (iii) to make any further
filings pursuant thereto that may be necessary, proper, or advisable. For
purposes of this Section 5.04, the "reasonable best efforts" of Buyer shall
include (1) opposing any motion or action for a temporary, preliminary or
permanent injunction against or other prohibition of the Closing and (2)
entering into a consent decree, or other order or other agreement, or giving an
assurance, commitment or undertaking, containing Buyer's agreement to hold
separate and divest (pursuant to any terms as may be required by an Governmental
Authority) the business, products and assets of any product or service lines of
the Business or any other business, product line, service lines division or
subsidiary of Buyer or any Affiliate of Buyer and otherwise to take such other
action as may be required by any Governmental Authority, provided, however, that
neither the foregoing nor anything else in this Agreement shall require Buyer to
take any action or agree to take or not to take any action if the taking of any
such action or the agreement to take or not to take any such action would
reasonably be expected to have a material adverse effect on the
41
benefits (viewed as a whole) reasonably expected to be derived by Buyer from the
transactions contemplated hereby, including any action that would (x) involve a
change in or restriction on the business, products, assets or operations of the
Business, Buyer or any Affiliate of Buyer or (y) involve the disposition
(whether by way of sale, lease, license or otherwise), before or after the
Closing, of all or any portion of the business, products or assets of the
Business, Buyer or any Affiliate of Buyer.
Section 5.05 Expenses; Transfer Taxes. Whether or not the Closing takes
place, and except as otherwise specified in this Agreement, all costs and
expenses incurred in connection with this Agreement and the Ancillary Agreements
and the transactions contemplated hereby and thereby shall be paid by the party
incurring such expense. The following items shall be shared and paid by Buyer as
to 50% and by Seller as to 50%.
(a) All Transfer Taxes applicable to, or incurred in
connection with or attributable to, the conveyance and transfer from Seller to
Buyer of the Purchased Assets, including any filing or recording fees applicable
to such conveyance and transfer (including deeds and assignments covering any or
all of the Facilities). Each party shall use reasonable efforts to avail itself
of any available exemptions from any such Transfer Taxes or fees, and to
cooperate with the other party in providing any information and documentation
that may be necessary to obtain such exemptions.
(b) The costs of preparing the surveys covering any or
all of the Facilities, and Buyer shall select and supervise the surveyor.
(c) The cost of title insurance searches, reports,
commitments, policies and related documents covering any or all of the
Facilities.
(d) The closing fee charged by the title insurance
company.
(e) The filing fees with respect to the filing under the
HSR Act with respect to the transactions contemplated hereby.
Section 5.06 Brokers or Finders. Each of Buyer and Seller represent, as
to itself and its Affiliates, that no agent, broker, investment banker or other
firm or Person is or will be entitled to any broker's or finder's fee or any
other commission or similar fee in connection with any of the transactions
contemplated by this Agreement as a result of any actions by such party, except
(i) as to Buyer and its Affiliates, Deutsche Bank Securities, whose fees and
expenses will be paid by Buyer and (ii) as to Seller and its Affiliates,
Xxxxxxx, Xxxxx & Co., whose fees and expenses will be paid by Seller.
Section 5.07 Employee Matters.
(a) With respect to the group of Active Employees who are
not covered by the Extension (whether or not any such Active Employee is covered
by the Labor Agreement) on the Closing Date, Buyer shall offer employment
providing substantially comparable wages and benefits, in the aggregate, as
provided by Seller on the Closing Date (not including retiree health and life
insurance benefits, supplemental retirement benefits and equity-based incentive
compensation plans). Active Employees who accept such offers of employment are
referred to
42
herein as the "Continuing Employees". With respect to any Active Employees who
are covered by the Extension (if applicable), Buyer shall offer employment
consistent with the terms of the Extension. "Active Employees" means each
Business Employee who is actively at work as of the Closing Date. In addition,
each other Business Employee who, as of the Closing Date, is on vacation,
holiday or jury duty or on an approved leave of absence (including military
leave, bereavement leave, disability leave and workers compensation leave), and
who within the time frame specified in the Extension, if applicable, or, if not,
within the shorter of the period ending one year following the Closing Date or
the period ending seven days following such vacation, holiday, jury duty or
approved leave of absence, presents himself or herself to Buyer as ready,
willing and able (to Buyer's reasonable satisfaction) to commence the same
active employment with Buyer, shall be deemed to be an Active Employee as of the
time of such commencement. For the avoidance of doubt, "Active Employees"
excludes each employee of or with respect to the Business whose employment
rights have terminated under the Labor Agreement prior to or as of the Closing
Date.
(b) Up to the Closing Date Seller shall retain (i) sole
sponsorship of, and exclusive responsibility for all liabilities and obligations
under, arising out of, or relating to, each Benefit Plan, and (ii) sole
responsibility for all liabilities and obligations under, arising out of, or
relating to, the employment or termination of employment of each Active Employee
(including all liabilities and obligations arising from effects bargaining with
any union). Buyer shall reimburse Seller for any payments for severance or
separation pay made by Seller to any Active Employee who within 18 months after
the Closing Date is terminated by Buyer (other than for the type of conduct
defined as "cause" or "misconduct" in either Seller's Severance Program for
Executive Employees, as amended and restated as of December 1, 1999, or Seller's
Salaried Severance Benefits Plan, as amended through June 17, 2004, whichever is
applicable (together, the "Severance Programs")) or who voluntarily terminates
employment with Buyer for any of the reasons specified in Schedule 5.07(b) and
becomes entitled to receive benefits under any separation agreement listed on
Schedule 5.07(b) (collectively, the "Separation Agreements"); provided, however,
that the amount of such reimbursement shall be limited to the amount paid by
Seller to which the employee would have become entitled under the express
provisions of Section 3(a) of the respective Severance Program (without the
application of any provision in the Severance Programs giving Seller or a
committee the discretion to enhance the stated severance benefits), if Buyer
were a "Participating Company" as defined in the Severance Programs. Seller
shall cause each Continuing Employee to fully vest in respect of any benefits
accrued under the Seller 401(k) Plans and any Seller Pension Plans effective
immediately prior to the Closing Date.
(c) With respect to any "employee benefit plan" (as
defined in Section 3(3) of ERISA) maintained by Buyer, to the extent such plan
is made available to a Continuing Employee, solely for purposes of determining
eligibility to participate and vesting, service with Seller shall be treated as
service with Buyer with respect to such Continuing Employee. With respect to
Buyer Pension Plans, service with Seller which was used in determining the
Continuing Employee's accrued benefits under Seller Pension Plans shall be
treated as service with Buyer for purposes of determining the Continuing
Employees' accrued benefits under Buyer Pension Plans, as described in Section
5.07(f). A Continuing Employee's service with Seller shall be treated as service
with Buyer for purposes of Buyer's severance, vacation and other paid-time-off
policies that apply to such Continuing Employee.
43
(d) Pursuant to the Transition Services Agreement to be
entered into by Buyer and Seller as of the Closing Date, Seller shall continue
to cover the Continuing Employees under Seller's welfare benefit plans through
December 31, 2004 or such earlier date as Buyer shall elect (with reasonable
notice to Seller), and Buyer shall reimburse Seller for its actual costs for
providing such coverage. Buyer shall cover the Continuing Employees under its
own welfare benefit plans beginning January 1, 2005 or such earlier date as
Buyer shall elect (with reasonable notice to Seller). Buyer shall waive, or
cause to be waived, any pre-existing condition limitation under any welfare
benefit plan maintained by Buyer in which Continuing Employees (and their
eligible dependents) will be eligible to participate, to the extent that such
pre-existing condition was waived in Seller's comparable plan. In addition, with
respect to Continuing Employees, any obligation arising under the Consolidated
Omnibus Reconciliation Act (COBRA) on or after the Closing Date and on or prior
to December 31, 2004, or such earlier date as Buyer shall elect (with reasonable
notice to Seller) is deemed the obligation of the Seller, but the actual costs
to Seller of fulfilling such obligation shall be reimbursed to Seller by the
Buyer.
(e) Within a reasonable time following the Closing Date,
Buyer shall designate or establish one or more defined contribution plans to
receive, at a Continuing Employee's option in accordance with Applicable Law, a
transfer of any vested account balances of the Continuing Employees maintained
under Seller 401(k) Plans. As soon as reasonably possible after the requirements
set forth in the preceding sentence are satisfied, and after Buyer is reasonably
satisfied (consistent with the regulations promulgated under Section 401(a)(31)
of the Code) that the applicable Seller 401(k) Plan meets the requirements for
qualification under Section 401(a) of the Code, Seller shall cause the portion
of the Seller 401(k) Plans representing the vested account balances of the
Continuing Employees who elected such transfer to be transferred or spun off to
the plan(s) designated or established by Buyer pursuant to the first sentence of
this paragraph. Seller and Buyer shall take all steps necessary or required to
carry out the plan-to-plan transfer contemplated by this paragraph, including
but not limited to, providing any advance notice to participants and
beneficiaries of the Seller 401(k) Plans and filing any advance notices required
by any federal laws, including the Internal Revenue Code and the regulations
issued thereunder. Buyer shall take any and all steps necessary to maintain the
qualified status of any plan(s) designated or maintained pursuant to this
paragraph.
(f) As of the Closing Date, each Continuing Employee
shall cease to accrue benefits under the Potlatch Corporation Salaried
Employees' Retirement Plan or the Potlatch Corporation Hourly Employees'
Retirement Plan, as applicable (each a "Seller Pension Plan" and collectively,
the "Seller Pension Plans"), and shall be treated as having terminated
employment with Seller and its Affiliates as of such date for all purposes under
such plans. Within a reasonable time after the Closing Date and effective as of
the Closing Date, Buyer shall establish a pension plan or plans which are
substantially comparable to the Seller Pension Plans ("Buyer Pension Plans"). In
accordance with Section 5.07(c), with respect to Continuing Employees who were
on the Closing Date participants under a Seller Pension Plan, the Buyer Pension
Plans will recognize service with Seller as service with Buyer for purposes of
determining eligibility and vesting and accrued benefits. The retirement
benefits accrued and payable under the Buyer Pension Plans shall be offset by
retirement benefits scheduled to be paid under the Seller Pension Plans in
effect at the time of Closing. This offset shall be performed with respect to
each Continuing Employee who becomes a participant under any Buyer Pension Plan
by subtracting B from A, where B is such Continuing Employee's accrued benefit
under the
44
Seller Pension Plan at the time of Closing converted (using the actuarial
factors set forth in Seller Pension Plans at the time of Closing) to a single
life annuity payable at age 65, and A is such Continuing Employee's accrued
benefit under the applicable Buyer Pension Plan payable as a single life annuity
payable at age 65. As soon as reasonably practicable after the time of Closing,
Seller shall certify to Buyer the accrued retirement benefit of each such
Continuing Employee expressed as a single life annuity payable at age 65 and the
periods of service considered for eligibility, vesting and accrued benefit
purposes under the applicable Seller Pension Plan at the time of Closing.
Continuing Employees shall be entitled to receive their vested accrued benefits
under the applicable Seller Pension Plan at the time and in the manner
prescribed in the plan document for such plan. Seller shall retain all liability
and responsibility for the payment of benefits under the Seller Pension Plans.
To the extent any Continuing Employee is entitled to receive a lump sum
distribution of his or her accrued benefit under a Seller Pension Plan, Buyer
agrees to cause a Buyer 401(k) Plan to accept a "direct rollover" contribution
of such lump sum distribution (in the form of cash) if such rollover is elected
in accordance with Applicable Law by such Continuing Employee, provided that
Seller is reasonably satisfied (consistent with the regulations promulgated
under Section 401(a)(31) of the Code) that the applicable Buyer 401(k) Plan
meets the requirements for qualification under Section 401(a) of the Code and
Buyer is reasonably satisfied (consistent with the regulations promulgated under
Section 401(a)(31) of the Code) that the applicable Seller Pension Plan meets
the requirements for qualification under Section 401(a) of the Code.
(g) Without limiting the generality of Section 5.07(b),
with respect to each Continuing Employee who, as of the Closing Date, was a
salaried employee of the Seller prior to July 1, 1988 and who has satisfied the
eligibility requirements (including as to age and service) to receive retiree
health insurance benefits from Seller under a Benefit Plan or otherwise (a
"Retiree Medical Eligible Employee"), Seller shall retain the sole liability and
obligation to provide retiree health insurance benefits to each such Continuing
Employee under the terms of the applicable retiree health insurance program, as
made available to employees of Seller generally from time to time. With respect
to each Continuing Employee, who, as of the Closing Date, was a salaried
employee of the Seller, and who has satisfied the eligibility requirements
(including age and service) to receive retiree life insurance benefits from
Seller under a Benefit Plan or otherwise (a "Retiree Life Eligible Employee"),
Seller shall retain the sole liability and obligation to provide retiree life
insurance benefits to each such Continuing Employee under the terms of the
applicable retiree life insurance program as made available to employees of
Seller generally from time to time. With respect to Continuing Employees (other
than Retiree Medical and Life Eligible Employees), Buyer shall provide retiree
health and life insurance benefits to such employees to the extent such
employees satisfy the eligibility requirements to receive such benefits under
Buyer's retiree health and life insurance program (if any), as made available to
Buyer's United States employees generally from time to time.
(h) Seller shall use commercially reasonable efforts to
obtain an extension of the Labor Agreement with PACE for a duration satisfactory
to Buyer, to take effect on and following the Closing, on substantially the same
terms as the Labor Agreement, which terms shall be subject to the approval of
the Buyer (the "Extension"); provided, however, that (i) the Extension must
provide for (a) the replacement of the 401(k) plan described in Article 19.01(G)
of the Labor Agreement with a 401(k) plan of the Buyer (with employer
contributions to be made in cash rather than stock of Seller) and the
replacement of the pension plan described in
45
Article 19.03(F) and Appendix #B of the Labor Agreement with a pension plan of
the Buyer; and (b) the replacement of the medical insurance plan, sickness and
accident benefit plan, life and AD&D insurance plan, dental plan, life insurance
plan for spouses and weekly sickness and accident indemnity plan described in
Articles 19.01 (A)-(F) and 19.03 (A)-(E) of the Labor Agreement with similar
plans of Buyer that provide substantially comparable benefits in the aggregate
on a going-forward basis to employees covered by the Labor Agreement; (ii) that
Seller shall keep Buyer informed as to the status of, and will consult with
Buyer as to the strategy for, all such negotiations pursuant to this Section
5.07(h); and (iii) that Seller shall act consistently with this Section 5.07(h)
and any obligation under Applicable Law, and, unless prohibited by law, shall
not enter into the Extension without the prior approval of Buyer. Provided that
Seller is able to enter into the Extension prior to the Closing, under all of
the terms and conditions outlined in this Section 5.07(h), Buyer shall also
enter into the Extension and shall assume the Labor Agreement with the Extension
upon the Closing.
(i) Nothing contained in this Section 5.07 or elsewhere
in this Agreement shall be construed to prevent the termination by Buyer of
employment of any Continuing Employee or any change by Buyer in the employee
benefits available to any Continuing Employee.
Section 5.08 Post-Closing Cooperation.
(a) Buyer and Seller shall cooperate with each other, and
shall cause their officers, employees, agents, auditors and representatives to
cooperate with each other after the Closing to ensure the orderly transition of
the Business from Seller to Buyer and to minimize any disruption to the Business
and the other businesses of Seller and Buyer that might result from the
transactions contemplated hereby. After the Closing, upon reasonable notice,
Buyer and Seller shall furnish or cause to be furnished to each other and their
employees, counsel, auditors and representatives access (including the ability
to make copies), during normal business hours, to such information and
assistance relating to the Business (to the extent within the control of such
party or any of its Affiliates) as is contained in any Record, or is reasonably
necessary for (i) financial reporting, Tax and accounting matters and (ii)
defense or prosecution of litigation and disputes.
(b) After the Closing, upon reasonable written notice,
Buyer and Seller shall furnish or cause to be furnished to each other, as
promptly as practicable, such information and assistance (to the extent within
the control of such party) relating to the Purchased Assets (including, access
to books and records) as is reasonably necessary for compliance with accounting
and reporting requirements, filing of all Tax returns, and making of any
election related to Taxes, the preparation for any audit by any Taxing
Authority, and the prosecution or defense of any claim, suit or proceeding
related to any Tax return. Seller and Buyer shall cooperate with each other in
the conduct of any audit or other proceeding relating to Taxes involving the
Business or the Purchased Assets. In the event that Seller or Buyer shall after
the Closing take any position in any Tax return, or reach any settlement or
agreement relating to Taxes on audit, which is in any manner inconsistent with
any position taken by Seller in any Tax filing, settlement or agreement made by
Seller prior to the Closing and such inconsistent position (i) might require the
payment by Buyer or Seller of more Tax than would have been required to be paid
had such position not been taken or such settlement or agreement not been
reached,
46
(ii) affects the determination of useful life, basis or method of depreciation,
amortization or accounting of any of the Purchased Assets or any of the
properties, assets or rights of Buyer or (iii) might accelerate the time at
which any Tax must be paid by Buyer or Seller, then Buyer or Seller, as the case
may be, shall provide timely and reasonable notice to the other party hereto of
such position.
(c) Each of Buyer and Seller will retain all Records and
other documents pertaining to the Business in existence on the Closing Date for
a period of seven years following the Closing. No such Records or other
documents shall be destroyed or disposed of by any retaining party at any time
without first advising the other party in writing and giving such party a
reasonable opportunity to obtain possession thereof for the purposes permitted
by this Section 5.08(c).
(d) Each party shall reimburse the other for reasonable
out-of-pocket costs and expenses incurred in assisting the other pursuant to
this Section 5.08. Neither party shall be required by this Section 5.08(d) to
take any action that would unreasonably interfere with the conduct of its
business or unreasonably disrupt its normal operations (or, in the case of
Buyer, the Business). Any information relating to the Business received by
Seller pursuant to this Section 5.08 shall be subject to Section 5.03.
(e) Buyer shall file any Tax Returns (excluding income
Tax Returns) required to be filed with respect to the Purchased Assets and the
Business that are due after the Closing Date for any Straddle Period. Buyer
shall deliver to Seller (i) copies of any such Tax Returns due after the Closing
Date for any Straddle Period and (ii) a statement setting forth Seller's pro
rata portion of the Tax due with respect to such Tax Returns as determined
pursuant to Section 1.07, for comment and approval not later than sixty (60)
days before such Tax Returns are due. If, within twenty (20) days after the
receipt of such Tax Returns, Seller notifies Buyer in writing that Seller
disagrees with the Tax Return or statement, then Buyer and Seller shall attempt
in good faith to resolve their disagreement within twenty (20) days following
Seller's notification to Buyer of such disagreement. If Buyer and Seller are
unable to resolve their disagreement within fifteen (15) days following any such
notification by Seller, the dispute shall be submitted to the Disputes Auditor
for resolution within twenty (20) days of such submission. The cost of such
independent accounting firm to resolve any such dispute shall be borne equally
by Seller and Buyer. Seller shall pay to Buyer the amount reflected on the
statement at least three (3) days prior to the due date of such payment except
where the amount is subject to dispute as provided above.
(f) Not later than thirty (30) days after the Closing
Date, Seller shall deliver to Buyer (i) copies of any Tax Returns filed with
respect to the Purchased Assets and the Business that were due on or before the
Closing Date for any Straddle Period and (ii) a statement setting forth Buyer's
pro rata portion of the Tax due with respect to such Tax Returns as determined
pursuant to Section 1.07. If, within twenty (20) days after the receipt of such
Tax Returns, Buyer notifies Seller in writing that Buyer disagrees with a Tax
Return or statement, then Buyer and Seller shall attempt in good faith to
resolve their disagreement within twenty (20) days following Buyer's
notification to Seller of such disagreement. If Buyer and Seller are unable to
resolve their disagreement within fifteen (15) days following any such
notification by Buyer, the dispute shall be submitted to the Dispute Auditor for
resolution within twenty (20) days of such
47
submission. The cost of such independent accounting firm to resolve any such
dispute shall be borne equally by Seller and Buyer. Buyer shall pay to Seller
the amount reflected on the statement at least three (3) days prior to the due
date of such payment except where the amount is subject to dispute as provided
above.
Section 5.09 Publicity. No public release or announcement concerning
the transactions contemplated hereby shall be issued by any party without the
prior written consent of the other party (which consent shall not be
unreasonably withheld), except as such release or announcement may be required
by law or the rules or regulations of any United States or foreign securities
exchange, in which case the party required to make the release or announcement
shall allow the other party reasonable time to comment on such release or
announcement in advance of such issuance. In addition, neither Buyer nor Seller
shall make any general communication to suppliers, lenders, creditors,
distributors, employees, customers or others having business or financial
relationships with the Business pertaining to this Agreement and the
transactions contemplated hereby, without the prior written approval of the
other party.
Section 5.10 Assigned Records. Buyer recognizes that certain Assigned
Records may contain incidental information relating primarily to subsidiaries or
divisions of Seller other than the Business and that Seller may retain copies of
the relevant portions thereof. Seller agrees that it will, and will cause its
Affiliates to, provide Buyer at Closing with copies of any portions of Records
that are Excluded Assets relating to the Business and, if any such Records are
discovered after Closing, promptly upon such discovery.
Section 5.11 Bulk Transfer Laws. Buyer hereby waives compliance by
Seller with the provisions of any so-called "bulk transfer law" or "bulk sales
law" of any jurisdiction in connection with the sale of the Purchased Assets to
Buyer.
Section 5.12 Names Following Closing.
(a) Buyer acknowledges and agrees that the Potlatch Name
is and shall remain the property of Seller or its Affiliates and that nothing in
this Agreement shall transfer or shall operate as an agreement to transfer any
right, title or interest in the Potlatch Name to Buyer. Subject to Section
5.12(b) below, Seller is not granting Buyer a license to use the Potlatch Name
after the Closing.
(b) As soon as reasonably practicable (and in any event
within two months) after the Closing Date, Buyer shall cease to use any written
materials that are publicly distributed as of the Closing Date, including
without limitation, labels, packing materials, letterhead, advertising materials
and forms, which include the word "Potlatch"; provided, however, that Buyer may,
without modification, use inventory, product literature and sales literature
(but not including any product warranty, letterhead, business cards, invoices or
the like) in existence as of the Closing Date until the earlier of the
exhaustion of such materials or the date that is six months from the Closing
Date.
(c) Immediately following the Closing, Seller shall cease
all use of the names, trade names and trademarks set forth on Schedule 5.12(c)
or any name that is confusingly similar
48
to or includes any such names, and none of Seller or any of its Affiliates shall
thereafter use those names, or combinations or variations thereof, or names
confusingly similar thereto.
Section 5.13 Insurance. Seller shall use commercially reasonable
efforts to maintain its current insurance coverage under each insurance policy
maintained by Seller with respect to the Business (including business
interruption insurance or insurance otherwise covering loss of profits) or
covering any Purchased Asset until the Closing Date. Buyer acknowledges that
after the Closing Date Seller shall have no responsibility for obtaining or
maintaining any insurance relating to the Business, whether relating to or
arising out of occurrences prior to, at or subsequent to the Closing.
Section 5.14 Title and Survey. Seller agrees that it will provide all
assistance to Buyer as Buyer may reasonably request in connection with the
issuance to Buyer of the title insurance policies described in Section 6.01(e)
(such assistance to include the furnishing of affidavits to remove the standard
title exceptions) and the surveys in connection therewith, provided that any
out-of-pocket costs incurred by Seller in connection with such assistance are
reimbursed by Buyer.
Section 5.15 Compliance with Plant Closing Laws.
(a) Seller shall be responsible for complying with the
WARN Act with respect to any employee employed in connection with the Business,
other than a Continuing Employee, who suffers an "employment loss" (as that term
is defined under the WARN Act) or a separation from employment or a reduction in
hours of employment that with the passage of time reasonably can be expected to
constitute an "employment loss" (hereinafter, "Affected Employees") prior to and
through the Closing Date. Seller shall provide Buyer with periodic reports (not
less than bi-weekly) between the date hereof and the Closing Date, listing all
individuals who, within 90 days preceding such report, became Affected Employees
and shall describe with respect to each such Affected Employee the date on which
such individual became an Affected Employee, the individual's date of hire and
regularly scheduled hours over the preceding six months, the Affected Employee's
last job title, department and job assignment, and the reason for such
employment loss.
(b) Buyer shall be responsible for complying with the
WARN Act with respect to the Continuing Employees following the Closing Date.
(c) During the past three years Seller has not
effectuated or experienced with respect to the Purchased Assets or the Business:
(i) a "plant closing" or a "business closing" (as defined in the WARN Act or any
other Applicable Law) affecting any site of employment or one or more facilities
or operating units within any site of employment or facility of Seller; (ii) a
"mass layoff" (as defined in the WARN Act or any other Applicable Law) affecting
any site of employment or facility of Seller, nor has Seller been affected by
any transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any other Applicable Law that would affect
Buyer after the Closing or (iii) any similar action under the WARN Act requiring
notice to employees in the event of an employment loss or layoff.
Section 5.16 Governmental Communications. Each of Seller and Buyer
shall:
49
(a) promptly notify the other party of any written
communication to it from any Governmental Authority with respect to this
Agreement or the transactions contemplated by this Agreement and, subject to
Applicable Law, if practicable, permit the other party to review in advance any
proposed written communication to any such Governmental Authority in response
thereto and incorporate the other party's reasonable comments provided within
two Business Days of that review;
(b) not agree to participate in any substantive meeting
or discussion with any such Government Authority in respect of any filing,
investigation or inquiry concerning this Agreement or the transactions
contemplated in this Agreement unless it consults with the other party in
advance and, to the extent permitted by that Government Authority, gives the
other party the opportunity to attend; and
(c) furnish the other party with copies of all
correspondence, filing and written communications between them and their
Affiliates and their respective representatives on one hand, and any such
Governmental Authority or its respective staff on the other hand, with respect
to this Agreement and the transactions contemplated in this Agreement.
Section 5.17 Insurance. Buyer acknowledges that (a) all of the
insurance policies maintained by the Seller prior to the Closing Date will be
terminated with respect to the Business effective as of the Closing Date and (b)
upon such termination, the Business will cease to be covered under such policies
and Buyer will have to obtain replacement coverage (including coverage as the
Buyer deems appropriate for the Purchased Assets, the operation of the Business
and the satisfaction of the Assumed Liabilities). To the extent the Seller
receives any proceeds from claims against insurance policies covering the
Purchased Assets (the "Insurance Claims Proceeds") following the Closing, Seller
shall promptly remit such Insurance Claim Proceeds to Buyer.
Section 5.18 Surveys. Between the date of this Agreement and the
Closing, Buyer may obtain such surveys of the Real Property (the "Buyer's
Surveys") and, upon reasonable prior notice, Seller shall afford to Buyer, and
all surveyors acting on Buyer's behalf such access during normal business hours
to the Facilities relating to the Real Property as is reasonably required and
does not unreasonably disrupt normal business operations to permit such
surveyors to conduct surveys and prepare the Buyer's Surveys for purposes of
obtaining title insurance as Buyer shall reasonably request. Buyer shall
promptly provide Seller with a copy of the Buyer's Surveys. Buyer shall maintain
or cause each of its agents to maintain insurance reasonably acceptable to
Seller (and shall deliver evidence of same to Seller) prior to entering onto the
Facilities in connection with such surveys.
Section 5.19 IRB Financings.
(a) Seller shall, at the sole cost of Seller, cause all
Encumbrances on the Purchased Assets arising from the IRBs to be terminated on
or prior to the Closing.
(b) Seller acknowledges and agrees that Buyer shall not
be subject to, or responsible for complying with, or have any liability in
respect of, any restrictions, limitations,
50
covenants or obligations imposed on Seller in connection with any IRBs or with
respect to the operation or use of any Purchased Asset related thereto.
Section 5.20 Minnesota Power Agreement. So long as Buyer is purchasing
electric power for the Grand Rapids Facility under the Amended and Restated
Electric Service Agreement between Seller and Minnesota Power, dated May 30,
2003 (the "Minnesota Power Agreement"), for any month in which payment is
required with respect to the "Brainerd Demand Obligation" under Section 5 of the
Minnesota Power Agreement, Seller shall reimburse Buyer for such payments made
by Buyer. If for any month in which Seller is not entitled to be billed under
the Large Power Service Schedule under Section 6 of the Minnesota Power
Agreement, Seller will reimburse Buyer for the difference between the cost
actually incurred for the purchase of electric power under the Large Light &
Power Service Schedule (as discounted in the manner provided in the Minnesota
Power Agreement) and the amount which Buyer would have paid under the Large
Power Service Schedule (the "Excess Rate Payment"); provided, however, that the
amount payable for the Excess Rate Payment shall in no event exceed $10,000 in
any month. Buyer shall submit invoices to Seller for any reimbursement requested
under this Section 5.20, with such evidence of payment by Buyer, invoices from
Minnesota Power and such other supporting documentation as is reasonably
requested by Seller.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01 Conditions to Obligations of Buyer. The obligation of
Buyer to complete the Closing is subject to the performance or fulfillment of
the following conditions, which are for the exclusive benefit of Buyer:
(a) Representations and Warranties. Disregarding any
Material Adverse Change or materiality qualifiers contained therein, the
representations and warranties of Seller made hereunder shall be true and
correct in all respects at and as of the Closing Date, with the same force and
effect as though made at and as of the Closing Date, except for changes
permitted or contemplated by this Agreement and except to the extent that any
representation or warranty is made as of a specified date, in which case such
representation or warranty shall be true and correct in all respects as of such
date; provided, however, that the failure of any representation or warranty to
be true and correct at any time shall not constitute a failure of the condition
contained in this Section 6.01(a) if such failure both alone and in conjunction
with all such failures would not constitute a Material Adverse Change.
(b) Performance of Obligations of Seller. Seller shall
have performed and complied in all respects with all of its material
undertakings and agreements required by this Agreement to be performed or
complied with by it prior to or at the Closing.
(c) Seller Certificate. Buyer shall have been furnished
with a certificate of a senior officer of Seller (in his or her representative
and not personal capacity), dated the Closing Date, certifying that the
conditions contained in Section 6.01(a) and Section 6.01(b) have been fulfilled.
51
(d) HSR Act. Either:
(i) the Federal Trade Commission or the
Department of Justice under the HSR Act will
have advised the parties that early
termination has been granted; or
(ii) the applicable waiting period under the HSR
Act will have expired.
(e) Title Policy. Buyer shall have received an original
title policy of title insurance with respect to each Real Property, in
substantially the form of Exhibit D.
(f) Transition Services Agreement. Seller shall have
executed and delivered to Buyer the Transition Services Agreement.
(g) OSB Log Supply Agreement. Seller shall have executed
and delivered to Buyer the OSB Log Supply Agreement.
(h) No Injunctions, Restraints or Prohibitions. No
temporary restraining order, preliminary or permanent injunction or other order
issued by any Governmental Authority or other legal restraint or prohibition
under any Applicable Laws preventing the consummation of the transactions
contemplated by this Agreement or the ability of Buyer to own the Purchased
Assets and carry on the Business as a going concern shall be in effect;
provided, however, that Buyer shall have used its best efforts to prevent the
entry of any such injunction or other order and to appeal as promptly as
possible any such injunction or other order that may be entered.
(i) Material Adverse Change. There shall not have been
any Material Adverse Change since the Reference Balance Sheet Date.
(j) Absence of Proceedings. There shall not be any Legal
Proceeding pending or threatened in writing by any Governmental Authority (i)
challenging or seeking to restrain or prohibit the consummation of the
transactions contemplated hereby, or (ii) imposing or seeking to impose a change
in or restriction on the Business or the Purchased Assets that would reasonably
be expected to have a material adverse effect on the benefits (viewed as a
whole) reasonably expected to be derived by the Buyer from the consummation of
the transactions contemplated hereby.
(k) Other Documents. Seller shall have furnished to Buyer
the documents referred to in Section 2.02(a).
Section 6.02 Conditions to Obligation of Seller. The obligation of
Seller to complete the Closing is subject to the performance or fulfillment of
the following conditions, which are for the exclusive benefit of Seller:
(a) Representations and Warranties. Disregarding any
materiality qualifiers contained therein, the representations and warranties of
Buyer made hereunder shall be true and correct in all respects at and as of the
Closing Date, with the same force and effect as though made at and as of the
Closing Date, except for changes permitted or contemplated by this Agreement and
except to the extent that any representation or warranty is made as of a
specified
52
date, in which case such representation or warranty shall be true and correct in
all respects as of such date; provided, however, that the failure of a
representation or warranty to be true and correct at any time shall not
constitute a failure of the condition contained in this Section 6.02(a) if such
failure both alone and in conjunction with all such failures would not have a
material adverse effect on Buyer's ability to perform its obligations under this
Agreement.
(b) Performance of Obligations of Buyer. Buyer shall have
performed and complied in all respects with all of its material undertakings and
agreements required by this Agreement to be performed or complied with by it
prior to or at the Closing.
(c) Buyer Certificate. Seller shall have been furnished
with a certificate of a senior officer of Buyer (in his or her representative
and not personal capacity), dated the Closing Date, certifying that the
conditions contained in Section 6.02(a) and Section 6.02(b) have been fulfilled.
(d) HSR Act. Either:
(i) the Federal Trade Commission or the
Department of Justice under the HSR Act will
have advised the parties that early
termination has been granted; or
(ii) the applicable waiting period under the HSR
Act will have expired.
(e) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any Governmental Authority or other legal restraint or prohibition under any
Applicable Laws preventing the consummation of the transactions contemplated by
this Agreement shall be in effect; provided, however, that Seller shall have
used its best efforts to prevent the entry of any such injunction or other order
and to appeal as promptly as possible any such injunction or other order that
may be entered.
(f) Absence of Proceedings. There shall not be any Legal
Proceeding pending or threatened in writing by any Governmental Authority
challenging or seeking to restrain or prohibit the consummation of the
transactions contemplated hereby that would reasonably be expected to have a
material adverse effect on Seller's ability to consummate the transactions
contemplated hereby.
(g) Other Documents. Buyer shall have furnished to Seller
the documents referred to in Section 2.02(b).
ARTICLE VII
INDEMNIFICATION
Section 7.01 Indemnification by Seller. Subject to the other provisions
of this Article VII, Seller agrees to indemnify and save harmless Buyer from and
against all Losses suffered or incurred by Buyer as a result of or arising
directly or indirectly out of or in connection with:
53
(a) any breach by Seller of or any inaccuracy of any
representation or warranty of Seller contained in this Agreement;
(b) any breach or non-performance by Seller of any
covenant to be performed by Seller that is contained in this Agreement;
(c) the Excluded Liabilities; and
(d) noncompliance by the Seller with the provisions of
any so-called "bulk transfer law" or "bulk sales law."
Section 7.02 Indemnification by Buyer. Subject to the other provisions
of this Article VII, Buyer agrees to indemnify and save harmless Seller from and
against all Losses suffered or incurred by Seller as a result of or arising
directly or indirectly out of or in connection with:
(a) any breach by Buyer of or any inaccuracy of any
representation or warranty contained in this Agreement;
(b) any breach or non-performance by Buyer of any
covenant to be performed by Buyer that is contained in this Agreement;
(c) any failure by Buyer to comply with the terms and
conditions of the Labor Agreement after the Closing;
(d) the Assumed Liabilities; and
(e) the operation of the Business subsequent to the
Closing.
Section 7.03 Notice of Claim. If a party becomes aware of any Claim in
respect of which indemnity may be sought pursuant to this Agreement, the
Indemnified Party shall give written notice of the Claim to the Indemnifying
Party. The notice shall specify whether the Claim is a Third-Party Claim or
whether the Claim is a Direct Claim, and shall also specify with reasonable
particularity (to the extent that the information is available) the factual
basis for the Claim and the amount of the Claim, if known.
Section 7.04 Direct Claims. With respect to any Claim for
indemnification pursuant to this Agreement that is not a Third-Party Claim (a
"Direct Claim"), following receipt of notice from the Indemnified Party of the
Claim in accordance with Section 7.03, the Indemnifying Party shall have thirty
days to make any investigation of the Claim as the Indemnifying Party considers
necessary or desirable. For the purpose of that investigation, the Indemnified
Party shall make available to the Indemnifying Party the information relied upon
by the Indemnified Party to substantiate the Claim, together with all other
information as the Indemnifying Party may reasonably request. If both parties
agree at or before the expiration of that thirty day period (or any mutually
agreed upon extension of that thirty day period) to the validity and amount of
the Claim, the Indemnifying Party shall immediately pay to the Indemnified Party
the full agreed upon amount of the Claim during such period. If the Indemnifying
Party does not agree in
54
writing to the validity and amount of the Claim, then the Indemnified Party may
pursue any remedies available to it subject to the terms of this Agreement.
Section 7.05 Third-Party Claims. With respect to any Third-Party Claim,
the Indemnifying Party shall have the right, at its expense, to assume control
of the negotiation, settlement or defense of the Claim and, in the event that
the Indemnifying Party assumes control of the defense, the Indemnifying Party
shall not be liable to the Indemnified Party for any fees of any other counsel
or other expenses in connection with the defense of such Third-Party Claim. If
the Indemnifying Party elects to assume control of the negotiation, settlement
or defense of the Claim, the Indemnified Party shall have the right to monitor
and participate in the negotiation, settlement or defense of that Third-Party
Claim and to retain counsel to act on its behalf, and the fees and disbursements
of that counsel shall be paid by the Indemnified Party. If the Indemnifying
Party, having elected to assume control of the negotiation, settlement or
defense of the Claim, fails to defend the Third-Party Claim within a reasonable
time, the Indemnified Party shall be entitled to assume control of the
negotiation, settlement or defense of the Claim. If any Third-Party Claim is of
a nature that the Indemnified Party is required by Applicable Law to make a
payment to any Third Party with respect to the Third-Party Claim before the
completion of settlement negotiations or related Legal Proceedings, the
Indemnified Party may make that payment and the Indemnifying Party shall,
forthwith after demand by the Indemnified Party, reimburse the Indemnified Party
for that payment unless the Indemnified Party is not entitled to indemnification
under this Agreement and subject to the limitations set forth in Section 7.13.
If the amount of any liability of the Indemnified Party under the Third-Party
Claim in respect of which that payment was made, as described in the preceding
sentence, is finally determined to be less than the amount that was paid by the
Indemnifying Party to the Indemnified Party, the Indemnified Party shall,
forthwith after receipt of the difference from the Third Party, pay the amount
of the difference to the Indemnifying Party.
Section 7.06 Settlement of Third-Party Claims. If the Indemnifying
Party fails to assume control of the defense of any Third-Party Claim, the
Indemnified Party shall have the exclusive right to contest, settle or pay the
amount claimed, but the Indemnifying Party will not be bound by any settlement
effected without its consent. If the Indemnifying Party does assume control of
the defense of any Third-Party Claim, the Indemnifying Party shall not settle
any Third-Party Claim without the written consent of the Indemnified Party
unless the settlement includes a full release in favour of the Indemnified
Party.
Section 7.07 Co-operation. The Indemnified Party and the Indemnifying
Party shall co-operate fully with each other with respect to Third-Party Claims,
and shall keep each other fully advised with respect to Third-Party Claims
(including supplying copies of all relevant documentation promptly as it becomes
available).
Section 7.08 INDEMNIFICATION IN CASE OF STRICT LIABILITY OR INDEMNITEE
NEGLIGENCE. THE INDEMNIFICATION PROVISIONS IN THIS ARTICLE VII SHALL BE
ENFORCEABLE REGARDLESS OF WHETHER THE LIABILITY IS BASED UPON PAST, PRESENT OR
FUTURE ACTS, CLAIMS OR LEGAL REQUIREMENTS (INCLUDING ANY PAST, PRESENT OR FUTURE
BULK SALES LAW, ENVIRONMENTAL LAW, FRAUDULENT TRANSFER ACT, OCCUPATIONAL SAFETY
AND HEALTH LAW OR PRODUCTS LIABILITY, SECURITIES OR OTHER APPLICABLE
55
LAW) AND REGARDLESS OF WHETHER ANY PERSON (INCLUDING THE INDEMNIFYING PARTY)
ALLEGES OR PROVES THE SOLE, CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE
OF THE INDEMNIFIED PARTY OR THE SOLE OR CONCURRENT STRICT LIABILITY IMPOSED UPON
THE INDEMNIFIED PARTY.
Section 7.09 Tax Benefits. The amount of any Loss otherwise recoverable
by an Indemnified Party under this Article VII shall be reduced to the extent of
any Tax benefits actually realized by as a result of the matters giving rise to
the Indemnified Party's Claim. Any indemnification obligation by Buyer or Seller
pursuant to this Agreement shall be increased by the relevant After Tax Amount.
For purposes of this Agreement, "After Tax Amount" means any additional amount
necessary to reflect the actual Tax consequences of the receipt or accrual of
such indemnification payment (including the payment of an additional amount or
amounts hereunder).
Section 7.10 Insurance Benefits. If any matter giving rise to a Claim
of indemnification pursuant to this Article VII by an Indemnified Party is
covered by any insurance policy or policies, then the Indemnified Party shall
use reasonable efforts to pursue the Claim and obtain compensation from its
insurer or insurers under those insurance policy or policies. If and when the
compensation is actually received from those insurers for the matters giving
rise to the Claim of indemnification hereunder, the Indemnified Party shall
reduce the Claim against the Indemnifying Party to the extent of its insurance
recovery (minus reasonable expenses incurred in pursuing the Claim with its
insurer) or, if payment has already been made by the Indemnifying Party on the
Claim of indemnification hereunder, then the Indemnified Party shall remit the
insurance recovery (minus reasonable expenses incurred in pursuing the Claim
with its insurer), up to the amount of the payment, to the Indemnifying Party.
Section 7.11 Subrogation. In the event any Indemnifying Party has paid
a Claim asserted by any Indemnified Party under this Agreement, and the
Indemnified Party possesses any Claim against a Third Party in respect of the
Claim previously paid, then the Indemnifying Party shall be fully subrogated to
the rights of the Indemnified Party in respect of the Claim against the Third
Party, and the Indemnified Party shall take all reasonable action requested by
the Indemnifying Party to enable the Indemnifying Party to enforce the Claim
against that Third Party.
Section 7.12 Tax Effect of Indemnification Payments. All indemnity
payments made by Seller or Buyer pursuant to this Agreement shall be treated for
all Tax purposes as adjustments to the Purchase Price paid with respect to the
Purchased Assets.
Section 7.13 Limitations on Liability.
(a) No Losses arising out of a particular breach of any
representation or warranty hereunder on the part of Buyer or Seller, as the case
may be, that would otherwise be indemnified under Section 7.01(a) or Section
7.02(a), as the case may be, shall be recoverable by an Indemnified Party
pursuant to the provisions of this Article VII, and no claim therefor shall be
asserted for any purpose hereunder (and, for the avoidance of doubt, no such
Losses shall be counted towards the Indemnity Basket), unless the amount of such
Losses (together with Losses
56
arising out of any substantially related claims) exceeds $25,000, in which case
the entire amount of such Losses shall be recoverable pursuant to the provisions
of this Article VII;
(b) No Losses arising out of a particular breach of any
representation or warranty hereunder on the part of Buyer or Seller, as the case
may be, that would otherwise be indemnified under Section 7.01(a) or Section
7.02(a), as the case may be, shall be recoverable by an Indemnified Party
pursuant to the provisions of this Article VII until the amount of such party's
Losses equals or exceeds $4,000,000 (the "Indemnity Basket") in the aggregate
upon which the entire amount of such Losses shall be recoverable pursuant to the
provisions of this Article VII, including the amount of the Indemnity Basket.
(c) The aggregate amount of Losses arising out of all
breaches of any representations or warranties on the part of Buyer or Seller, as
the case may be, recoverable by Buyer and Seller, respectively, pursuant to the
provisions of Section 7.01(a) or Section 7.02(a), as the case may be, shall be
limited to $60,000,000, respectively, except any Loss relating to breaches of
Section 3.06(b) and Section 3.07(b) for which the limit will be the Purchase
Price.
(d) Recovery by Buyer or Seller shall in no event include
any incidental damages or loss of profit whatsoever (except to the extent Buyer
or Seller is liable for such damages to any other Person), and, if the Closing
shall not have occurred, shall be limited to actual out-of-pocket expenses.
Section 7.14 Sole Remedy. The provisions of this Article VII shall
provide the sole and exclusive remedy with respect to any and all Losses arising
from the matters referred to in Section 7.01 or Section 7.02, as the case may
be, or otherwise under or in connection with the Purchased Assets, the Business,
this Agreement or the transactions contemplated hereby. Nothing in this Section
7.14 shall limit or restrict the ability or right of any party hereto to seek
injunctive or other equitable relief for any breach or alleged breach of this
Agreement or any provision hereof.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Section 8.01 Survival of Representations and Warranties. The
representations and warranties contained in this Agreement shall survive the
Closing solely for purposes of Article VII as follows:
(a) in the case of a claim in respect of a representation
and warranty, other than those relating to title to the Purchased Assets, Taxes,
employee or environmental matters or a claim based on intentional
misrepresentation or fraud, until the end of the second anniversary of the
Closing Date;
(b) in the case of a claim in respect of the
representations and warranties relating to Taxes under Section 3.09, other than
a claim in respect of a misrepresentation made or fraud committed in filing a
Tax return or supplying information for the purposes of any Applicable Law
relating to Tax matters, until the end of the first anniversary after the date
on
57
which the last applicable limitation period (including extensions) under any
Applicable Law relating to that Tax matter expires with respect to any taxation
year that is relevant in determining any liability with respect to that Tax
matter;
(c) in the case of a claim in respect of a representation
and warranty relating to environmental matters under Section 3.18, until the end
of the fifth anniversary of the Closing Date; and
(d) in the case of a claim in respect of a representation
and warranty in Section 3.06(b) or Section 3.07(b) relating to title to the
Purchased Assets and in the case of a claim based on intentional
misrepresentation or fraud, there shall be no time limit within which such a
claim shall be made;
Section 8.02 Survival of Covenants. Any provision of this Agreement
that is capable of being performed after, but that has not been performed at or
before, the time of the Closing and all covenants of the parties contained in
this Agreement (including, without limitation, the indemnity covenants) or in
any agreement or other document delivered or given pursuant to or in connection
with this Agreement shall survive the Closing and shall continue in full force
and effect in accordance with their terms.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Waiver. No amendment or waiver of any provision of this
Agreement shall be binding on either party unless consented to in writing by
that party. The failure of any of the parties to enforce at any time any of the
provisions of this Agreement or any Ancillary Agreement shall in no way be
construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any Ancillary Agreement or any part of this
Agreement or any Ancillary Agreement or the right of any party thereafter to
enforce each and every such provision. No waiver of any breach or non-compliance
of any provision of this Agreement or any Ancillary Agreement shall constitute a
waiver of any breach or non-compliance of any other provision of this Agreement
or any Ancillary Agreement nor shall any waiver constitute a continuing waiver
unless otherwise expressly provided in the waiver.
Section 9.02 Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent by facsimile or sent, postage prepaid, by overnight or express
courier service and shall be deemed given when so delivered by hand or
facsimile, or if sent by overnight or express courier service, three Business
Days after being sent, as follows:
58
(a) if to Buyer, to:
Xxxxxxxxx Lumber Co. Ltd.
Xxxxx 0000 Xxxxxxx 0
X.X. Xxx 00000
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X 0X0
Attention: Chief Operating Officer
Fax No. (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxx Xxxxxx
Xxxxx 0000, X.X. Xxx 000
Xxxxxxx, Xxxxxxx
Xxxxxx M5K 1J5
Attention: Xxxxxxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(b) if to Seller, to:
Potlatch Corporation
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx
Xxxxxx Xxxxxx of America 99201
Attention: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Pillsbury Winthrop LLP
00 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
Section 9.03 Definitions.
(a) For purposes of this Agreement:
59
"Affiliate" of any Person means another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person.
"Ancillary Agreements" means the Transition Services Agreement, the OSB
Log Supply Agreement, Easement Agreement, Hog Fuel Supply Agreement, the License
Agreements and the Option Agreement.
"Applicable Law" means any and all federal, provincial, state,
municipal, local and other laws, statutes, regulations, by-laws, zoning
requirements, treaties, codes, judgments and decrees and all applicable
requirements, directives, rules, consents, licenses, permits, approvals,
authorizations, order, policies of and decisions rendered by any Governmental
Authority or determination of a court of other competent authority, including
without limitation, all Environmental Laws, having the force of law over or
otherwise applicable to or binding upon any Person, property, asset, transaction
or event.
"Assignment and Assumption Agreement" means the assignment and
assumption agreement substantially in the form attached hereto as Exhibit E.
"Benchmark Working Capital" means U.S.$39,010,335.
"Xxxx of Sale" means the xxxx of sale substantially in the form
attached hereto as Exhibit F.
"Business" means the ownership and operation of the Facilities and the
sale of OSB products manufactured at the Facilities, including the liabilities
incurred in connection therewith that are expressly assumed hereunder but
excluding all Intellectual Property and proprietary information not currently
being used or held for use in the production of specialty OSB products.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized to close.
"Claim" means any claim, proceeding, demand, action, suit, cause of
action or other similar matter.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Contracts" means all contracts, leases, licenses, indentures,
agreements, purchase orders, commitments and all other legally binding
arrangements, whether oral or written.
"Current Assets" means the Receivables net of reserves for cash
discounts and bad debt allowances, plus the inventory and Prepaid Expenses of
the Business as of the first instance in time (Central Time) on the Closing
Date, calculated in accordance with U.S. GAAP applied in a manner consistent
with the Reference Balance Sheet, it being understood that the following assets
are not included in the term Current Assets: (i) xxxxx cash, (ii) sales tax
refunds.
"Current Liabilities" means only the current liabilities for accounts
payable, accounts payable payroll deductions, accrued payroll taxes, accrued
vacation, accrued holiday, accrued property taxes and accrued association dues
of the Business as of the first instance in time
60
(Central Time) on the Closing Date, calculated in accordance with U.S. GAAP
applied in a manner consistent with the Reference Balance Sheet.
"Deed" means a special warranty deed with covenant against Seller's
acts, in proper form for recordation in accordance with Applicable Law,
sufficient to vest in Buyer good and valid legal and beneficial title in, and
fee simple ownership of, the Real Property, duly executed and acknowledged, and
shall have affixed thereto, at Seller's sole cost and expense, any requisite
surtax, documentary tax stamps, and or transfer tax in proper amount,
substantially in the form attached hereto as Exhibit G.
"Disputes Auditor" means Ernst & Young LLP or any other nationally
recognized accounting firm acceptable to Buyer and Seller (or any successor of
that firm, if applicable).
"Easement Agreement" means the easement agreement for fire pond access
and pipe and electrical equipment substantially in the form of Exhibit H;
"Employees" means all employees of Seller who are employed in the
Business immediately prior to Closing.
"Encumbrances" means mortgages, liens, security interests, charges,
easements, leases, subleases, covenants, rights of way, options, claims,
restrictions or encumbrances of any kind.
"Environmental Laws" means any and all Applicable Laws relating in full
or in part to the protection and preservation of the environment, pollution,
health, safety, natural resources or the management, manufacture, processing,
use, treatment, storage, disposal, discharge, destruction, packaging, labeling,
transport, handling, Release, threatened Release, exposure or Remediation of any
"Hazardous Substance";
"ERISA" means the United States Employee Retirement Income Security Act
of 1974, as amended from time to time;
"Financial Statements" means the financial statements of Seller
relating to the Business for the fiscal years ended December 31, 2001, 2002 and
2003 and for the interim six month periods ended June 30, 2003 and June 30,
2004.
"Former Employees" means all former employees of Seller in the Business
who are not employed in the Business immediately prior to the Closing.
"Governmental Authority" means any applicable domestic or foreign
government, including any federal, provincial, state, regional, territorial,
district, local, municipal or other government, and any governmental ministry,
agency or department, tribunal, board, commission, bureau, crown corporation,
court of law, arbitrator or other authority exercising or purporting to exercise
executive, legislative, judicial, regulatory or administrative functions of, or
pertaining to, government, as well as any arbitrator, arbitration tribunal or
other tribunal or any quasi-governmental or private body exercising any
regulatory, expropriation or taxing authority under or for the account of any of
the foregoing.
61
"Hazardous Substance" means all explosive or radioactive materials or
substances, hazardous or toxic substances, wastes or chemicals, petroleum
(including crude oil or any fraction thereof) and all other materials or
chemicals, in each case to the extent, regulated pursuant to any Environmental
Law.
"Hog Fuel Supply Agreement" means the agreement for sale of hog fuel
from the Seller's sawmill in Bemidji to Buyer substantially in the form of
Exhibit J;
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Indemnified Party" means a party seeking indemnification from the
other party under Article VII.
"Indemnifying Party" means a party from whom indemnification is sought
by the other party under Article VII.
"IRS" means the United States Internal Revenue Service and, to the
extent relevant, the United States Department of the Treasury.
"Labor Agreement" means that certain Agreement, dated October 15, 2002,
between Potlatch Corporation and PACE.
"Leased Personal Property" means the personal property that is leased
by or to Seller under the terms of the personal property leases described in
Schedule 3.06(a).
"Legal Proceeding" means any litigation, action, suit, prosecution,
investigation or hearing, commenced, brought, conducted or heard by or before
any Governmental Authority or arbitrator, arbitration proceeding or other notice
or proceeding (zoning or otherwise), any judgment, order or decree with
continuing legal effect and includes any appeal or review and any application
for appeal or review.
"License Agreements" means the Antifungal Technology License Agreement
in the form of Exhibit K and the LuminOx Patent License Agreement substantially
in the form of Exhibit L;
"Losses" means, in respect of any matter, all losses, damages,
liabilities, deficiencies, assessments, judgments, costs and expenses
(including, without limitation, all reasonable legal and other professional fees
and disbursements, interest, penalties and amounts paid in settlement) arising
as a consequence of that matter.
"Material Adverse Change" means any material adverse effect on or
material adverse change to the Purchased Assets (taken as a whole) or the
operations, financial condition or results of operations of the Business;
provided, however, that the following shall not be considered a Material Adverse
Change: (i) changes, events, inaccuracies, circumstances and effects that are
caused by (x) economic or business conditions in the United States generally,
(y) conditions affecting the industry in which the Business competes as a whole,
or (z) military action or any act of terrorism; (ii) any adverse change
attributable to the public announcement or
62
the pendency of this Agreement and (iii) matters to the extent involving an
Excluded Asset or an Excluded Liability.
"Non-Union Employees" means all employees of Seller (whether salaried
or hourly) employed in the Business immediately prior to the Closing Date who
are not subject to a collective bargaining agreement.
"Option Agreement" means that certain option to purchase real property
substantially in the form of Exhibit I.
"OSB" means oriented strandboard and value added products currently
manufactured by Seller derived from oriented strandboard.
"OSB Log Supply Agreement" means a long term agreement for the supply
of logs from Seller to Buyer substantially in the form of Exhibit M.
"Owned Personal Property" means:
(i) all other machinery, equipment, office
equipment, fixtures, furniture, furnishings,
parts, tools, supplies and accessories, and
all other fixed assets immobilized by nature
or by destination, that are located on or at
the Facilities at the time of the Closing or
if not located on or at the Facilities at
the time of the Closing that are primarily
used or primarily held for use in or in
connection with the Business;
(ii) all trucks, cars and other vehicles and all
rolling stock (excluding rail cars) located
on or at the Facilities at the time of the
Closing or if not located on or at the
Facilities at the time of the Closing that
are primarily used or primarily held for use
in or in connection with the Business; and
(iii) all computer and telephone hardware and
applications software, automatic machinery,
servers and network equipment and
connections, program documentation, tapes,
manuals, forms, guides and other material
with respect thereto, including, without
limitation, all documentation relating
thereto and the latest revisions of all
related object and source codes therefor
located on or at the Facilities at the time
of the Closing or if not located on or at
the Facilities at the time of the Closing
that are primarily used or primarily held
for use in or in connection with the
Business;
"PACE" means The Paper, Allied Industrial, Chemical and Energy Workers
International Union, Local 1095.
"PBGC" means the Pension Benefit Guaranty Corporation.
63
"Permits" means any certificates, licenses, permits, registrations,
water rights, authorizations, applications, notices, filings, exemptions and
approvals issued or granted to, or made by, Seller by or to Governmental
Authorities.
"Permitted Encumbrances" means (i) such Encumbrances as are set forth
in Schedule 3.06(b) or reflected on the Reference Balance Sheet (except to the
extent Schedule 3.06(b) specifies that any such Encumbrance shall be discharged
prior to Closing), (ii) mechanics', carriers', workmen's, repairmen's or other
like encumbrances arising or incurred in the ordinary course of business,
encumbrances arising under original purchase price conditional sales contracts,
personal property leases and equipment leases with third parties entered into in
the ordinary course of business and liens for Taxes that are not due and payable
or being contested in good faith by Seller by appropriate proceedings (provided
that, in the case of such a contest, adequate reserves with respect thereto are
maintained in the financial statements), (iii) other imperfections of title or
encumbrances, if any, that individually or in the aggregate, do not materially
impair the continued use and operation of the assets to which they relate in the
conduct of the Business as presently conducted, (iv) Encumbrances such as do not
constitute a Material Adverse Change, (v) Encumbrances such as are set forth in
Exhibit D, (vi) leases, subleases and similar agreements set forth in Schedule
3.18, (vii) easements, covenants, rights-of-way and other similar restrictions,
each of which is of record, (viii) any conditions that may be shown by a
current, accurate survey or physical inspection of any Business Property made
prior to Closing which would not individually or in the aggregate materially and
adversely affect the operation of the Applicable Facility and (ix) (A) zoning,
building and other similar ordinances and governmental regulations, (B)
Encumbrances that have been placed by any developer, landlord or other third
party on property over which Seller has easement rights and subordination or
similar agreements relating thereto and (C) unrecorded easements, covenants,
rights-of-way and other similar restrictions which, in the case of (A), (B) or
(C), do not, individually or in the aggregate materially and adversely affect
the use or operation of the Applicable Facility, materially diminish the value
of the Real Property or require remedy by Buyer for the effective operation of
any part of the Facilities or materially adversely affect the operation of the
Applicable Facility.
"Person" means any individual, firm, corporation, partnership, limited
partnership, limited liability partnership, company, limited liability company,
trust, joint venture, association, Governmental Authority or other entity.
"Potlatch Liabilities" means the Current Liabilities shown on the Final
Closing Statement but excluding accrued property taxes and accrued association
dues.
"Potlatch Name" shall mean the business name, brand name, trade name,
trademark, service xxxx and domain name "Potlatch Corporation," any business
name, brand name, trade name trademark service xxxx and domain name that
includes the word "Potlatch," any portion thereof, any and all other derivatives
thereof and the Potlatch Corporation logo.
"Pre-existing Environmental Liabilities" means any and all liabilities,
obligations and commitments arising out of or relating to the state or condition
of any of the Purchased Assets or the operation of the Business for any period
of time before the time of the Closing under any and all Environmental Laws as
they exist at the time of the Closing including, without limitation,
64
liabilities arising out of the Release or disposal of Hazardous Substances or
the matters disclosed in Schedules 3.18(a), 3.18(b), 3.18(c), 3.18(d) and
3.18(g) and liabilities of third parties under Environmental Laws assumed by
Seller by contract or by operation of law.
"Prepaid Expenses" means all credits, prepaid expenses, deferred
charges, advance payments, security deposits and prepaid items to the extent
primarily relating to or primarily arising out of the Business or primarily
relating to an Assumed Liability;
"Reference Balance Sheet" means the balance sheet of Seller relating to
the Business as of June 30, 2004.
"Reference Balance Sheet Date" means June 30, 2004.
"Release" has the meaning prescribed in any Environmental Law and
includes, without limitation, any release, spill, leak, pumping, pouring,
emission, emptying, discharge, injection, escape, leaching, emanation,
migration, disposal, dumping, deposit, spraying, dispersal, burial, abandonment,
incineration, seepage and placement, whether in, into, onto, or through the
environment (including ambient air, surface water, groundwater, soils, sediments
of any surface water body, land surface or subsurface strata or otherwise).
"Remediation" has the meaning prescribed in any Environmental Law and
includes the investigation, removal or decontamination of equipment, buildings,
other structures or appurtenances, land or water as a result of or in connection
with the presence of any Hazardous Substances.
"Shared Contracts" means any Contract under which the Business and at
least one other division of Seller purchases, goods or services on a joint basis
or otherwise have rights or obligations set forth in Schedule 1.01(a)(viii).
"Straddle Period" means any taxable year or period beginning on or
before the Closing Date and ending after the Closing Date.
"Tax Returns" means any report, return, declaration or other
information filing required to be supplied to a Governmental Authority in
connection with any Taxes, including all declarations of estimated Taxes, claims
for refund, exhibits, schedules and amendments thereto.
"Taxes" means any and all (i) present and future taxes, surtaxes,
duties, levies, imposts, rates, fees, assessments, tariffs, withholdings, dues
and other charges of any nature imposed by any Governmental Authority, including
income, capital, capital gains, franchise, withholding, consumption, sales, use,
ad valorem, receipts, transfer, goods and services, value-added, profits,
excise, customs, anti-dumping, countervail, net worth, stamp, documentary,
registration, franchise, license, payroll, employment, severance, disability,
health, education, business, school, property (including assessments, fees or
other charges based on the use or ownership of real property), local
improvement, development, social services, social security, environmental,
education development, alternative minimum, occupation, net proceeds, fuel,
excess profits, interest equalization, disability, severance, recapture and
other taxes, surtaxes, duties, levies, imposts, rates, fees, assessments,
tariffs, withholdings, dues and charges, together with all fines, interest,
penalties and additions on or in respect of, or in lieu of or for non-collection
of, those
65
taxes, surtaxes, duties, levies, imposts, rates, fees, assessments, tariffs,
withholdings, dues and other charges, (ii) liability for the payment of any and
all amounts of the type described in clause (i) as a result of being a member of
an affiliated, consolidated, combined, unitary or aggregate group, and (iii)
liability for the payment of any amounts as a result of an express or implied
obligation to indemnify any other Person with respect to the payment of any
amounts of the type described in clause (i) or (ii).
"Third Party" means a Person that is not a party to this Agreement.
"Third-Party Claim" means a Claim by a Third Party.
"Transfer Taxes" means all transfer Taxes (excluding Taxes measured by
net income), including without limitation, sales, use, excise (including excise
Taxes on petroleum, products of petroleum, petrochemicals and other taxable
substances), stock, stamp, documentary, filing, land transfer, recording,
permit, license, authorization and similar Taxes, filing fees and similar
charges.
"Transition Services Agreement" shall mean a transition services
agreement to be agreed upon by Seller and Buyer prior to the Closing which shall
address the matters identified in Exhibit N and such other matters as Buyer and
Seller shall agree.
"Union Employees" means all employees of Seller employed in the
Business immediately prior to the Closing Date and subject to a collective
bargaining agreement.
"U.S. GAAP" means United States Generally Accepted Accounting
Principles as historically applied by Seller with respect to the Business.
"WARN Act" means The United States Workers' Adjustment and Retaining
Notification Act of 1988, or any similar state or local law requiring notice to
employees in the event of a closing or layoff.
(b) The following terms have the meanings set forth in
the Sections set forth below:
Term Section
----------------------- -----------------
Active Employees Section 5.07(a)
Adjusted Purchase Price Section 1.06(e)
Affected Employees Section 5.15(a)
Affiliate Section 9.03(a)(i)
After Tax Amount Section 7.09
Agreement Preamble
Ancillary Agreements Section 9.03(a)
Applicable Law Section 9.03(a)
Assigned Contracts Section 1.01(a)(viii)
Assigned Intellectual Property Section 1.01(a)(v)
Assigned Permits Section 1.01(a)(vii)
Assigned Records Section 1.01(a)(xi)
Assigned Technology Section 1.01(a)(vi)
66
Assignment and Assumption Agreement Section 9.03(a)
Assumed Liabilities Section 1.02(a)
Audit Reimbursement Agreement Section 9.06
Base Purchase Price Section 1.02(a)
Benchmark Working Capital Section 9.03(a)
Benefit Plans Section 3.10(a)
Xxxx of Sale Section 9.03(a)
Business Section 9.03(a)
Business Day Section 9.03(a)
Business Employee Section 3.10(a)
Buyer Preamble
Buyer Pension Plan(s) Section 5.07(f)
Buyer's Representatives Section 5.02
Buyer's Surveys Section 5.18
Claim Section 9.03(a)
Closing Section 2.01
Closing Date Section 2.01
Closing Payment Section 1.03
COBRA Section 5.07(d)
Code Section 9.03(a)
Confidentiality Agreement Section 5.03(a)
Consent Section 3.03
Continuing Employees Section 5.07(a)
Contracts Section 9.03(a)
Current Assets Section 9.03(a)
Current Liabilities Section 9.03(a)
Deed Section 9.03(a)
Department of Justice Section 5.04
Direct Claim Section 7.04
Dispute Notice Section 1.06(b)
Disputes Auditor Section 9.03(a)
Easement Agreement Section 9.03(a)
Employee(s) Section 9.03(a)
Encumbrances Section 9.03(a)
Environmental Laws Section 9.03(a)
Environmental Permits Section 3.18(b)(i)
ERISA Section 9.03(a)
ERISA Affiliate Section 3.10(a)
Excess Rate Payment Section 5.20
Excluded Assets Section 1.01(b)
Excluded Liabilities Section 1.02(d)
Extension Section 5.07(h)
Facilities Section 1.01(a)(i)
FERC Section 3.17(c)
Final Closing Statement Section 1.06(d)
Financial Statements Section 9.03(a)
67
Former Employees Section 9.03(a)
Generation Facility Section 3.17(c)
Governmental Authority Section 9.03(a)
Hazardous Substance Section 9.03(a)
Hog Fuel Supply Agreement Section 9.03(a)
HSR Act Section 9.03(a)
Indemnified Party Section 9.03(a)
Indemnifying Party Section 9.03(a)
Indemnity Basket Section 7.13(b)
Insurance Claim Proceeds Section 5.17
Intellectual Property Section 1.01(a)(v)
Inventory Section 1.01(a)(ii)
IRBs Section 3.08
IRS Section 9.03(a)
Judgment Section 3.03
Labor Agreement Section 9.03(a)
Legal Proceeding Section 9.03(a)
License Agreements Section 9.03(a)
Losses Section 9.03(a)
Material Adverse Change Section 9.03(a)
Material Assigned Contracts Section 3.19(b)(i)
Minnesota Power Agreement Section 5.20
Net Working Capital Section 1.06(a)
Non-OSB Portion Section 1.02(c)
Non-Union Employees Section 9.03(a)
Option Agreement Section 9.03(a)
OSB Section 9.03(a)
OSB Log Supply Agreement Section 9.03(a)
OSB Portion Section 1.02(c)
Owned Personal Property Section 9.03(a)
PACE Section 9.03(a)
Permits Section 9.03(a)
Permitted Encumbrances Section 9.03(a)
Person Section 9.03(a)
Personal Property Section 1.01(a)(iii)(vi)
Potlatch Liabilities Section 9.03(a)
Potlatch Name Section 9.03(a)
Pre-existing Environmental Liabilities Section 9.03(a)
Preliminary Closing Statement Section 1.06(a)
Prepaid Expenses Section 9.03(a)
Purchase Price Section 1.02(a)
Purchased Assets Section 1.01(a)
QF Section 3.17(c)
Real Property Section 1.01(a)(i)
Records Section 1.01(a)(xi)
Receivables Section 1.01(a)(iii)
68
Reference Balance Sheet Section 9.03(a)
Reference Balance Sheet Date Section 9.03(a)
Release Section 9.03(a)
Remediation Section 9.03(a)
Retiree Life Eligible Employee Section 5.07(g)
Retiree Medical Eligible Employee Section 5.07(g)
Seller Preamble
Seller Pension Plan(s) Section 5.07(f)
Separation Agreements Section 5.07(b)
Severance Programs Section 5.07(b)
Shared Contracts Section 9.03(a)
Straddle Period Section 9.03(a)
Tax and Taxes Section 9.03(a)
Tax Returns Section 9.03(a)
Technology Section 1.01(a)(vi)
Termination Date Section 2.03(b)
Third Party Section 9.03(a)
Third-Party Claims Section 9.03(a)
Third-Party Consents Section 9.03(a)
Transfer Taxes Section 9.03(a)
Transition Services Agreement Section 9.03(a)
U.S. GAAP Section 9.03(a)
Union Employees Section 9.03(a)
WARN Act Section 9.03(a)
Section 9.04 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Applicable
Law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced,
such term or other provision will be interpreted so as to best accomplish the
intent of the parties within the limits of Applicable Law.
Section 9.05 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
Section 9.06 Entire Agreement. This Agreement, the letter agreement
between the Buyer and Seller related to the reimbursement by Buyer for the fees
of KPMG related to the preparation of the Financial Statements (the "Audit
Reimbursement Agreement") and the Ancillary Agreements, contains the entire
understanding of the parties hereto with respect to the subject matter contained
herein and therein, supersedes and cancels all prior agreements, negotiations,
correspondence, undertakings and communications of the parties, oral or written,
respecting such subject matter. There are no restrictions, promises,
representations, warranties, agreements or undertakings of any party hereto with
respect to the transactions under this Agreement, the Audit Reimbursement
Agreement and the Ancillary Agreements, other than those set forth herein or
made hereunder.
69
Section 9.07 Amendments. This Agreement may be amended only by a
written instrument executed by the parties or their respective successors or
assigns.
Section 9.08 Successors in Interest; No Third-Party Beneficiaries;
Assignment. This Agreement shall inure to the benefit of and be binding upon
Seller and Buyer and their respective successors or assigns. Except as provided
in or contemplated by Article VII (which shall confer upon the Persons referred
to therein for whose benefit it is intended the right to enforce such Article),
nothing in this Agreement, express or implied, is intended to confer upon any
Person not a party to this Agreement any rights or remedies under or by reason
of this Agreement. Except with the written consent of the other party, no
assignment of this Agreement or any rights or obligations hereunder, by
operation of law or otherwise, may be made by any party, other than to an
Affiliate of such party (but no such assignment shall relieve the assigning
party of its obligations hereunder). Notwithstanding the foregoing, so long as
any such Affiliate agrees in writing to be bound by the applicable terms of this
Agreement, Buyer may (i) assign any or all of its rights and interests hereunder
to one or more of its Affiliates, and (ii) designate one or more of its
Affiliates to perform its obligations hereunder (and in such case Buyer
nonetheless shall remain directly and primarily responsible for the performance
of all of its obligations hereunder).
Section 9.09 Governing Law. This Agreement shall be governed by, and
construed, interpreted and enforced in accordance with, the law of the State of
New York without reference to choice of law principles, including all matters of
construction, validity and performance, or conflict of laws under the laws of
the State of New York.
Section 9.10 Jurisdiction; Waiver of Jury Trial. Each of Seller and
Buyer hereby irrevocably and unconditionally submits to the exclusive
jurisdiction of the state and federal courts located in the State of New York,
New York County for any actions, suits, or proceedings arising out of or
relating to this Agreement and the transactions contemplated hereby (and each of
Seller and Buyer agrees not to commence any action, suit or proceeding relating
thereto except in such courts), and further agrees that service of any process,
summons, notice or document by U.S. registered mail to its address set forth
above shall be effective service of process of any action, suit or proceeding
brought against Seller or Buyer in any such court. Each of Seller and Buyer
hereby irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby, in such state or federal courts as aforesaid
and hereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum. EACH PARTY
HERETO IRREVOCABLY AND ABSOLUTELY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY
DISPUTE IN CONNECTION WITH, ARISING UNDER OR RELATING TO THIS AGREEMENT, ANY
ANCILLARY AGREEMENT OR ANY MATTERS CONTEMPLATED HEREBY OR THEREBY, AND AGREES TO
TAKE ANY AND ALL ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH WAIVER.
Section 9.11 Schedules. Any information disclosed pursuant to any
Schedule hereto shall be deemed to be disclosed to Buyer for all purposes of
this Agreement. Neither the specification of any Dollar amount or any item or
matter in any provision of this Agreement nor the inclusion of any specific item
or matter in any Schedule hereto is intended to imply that such amount, or
higher or lower amounts, or the item or matter so specified or included, or
other items
70
or matters, are or are not material, and no party shall use the fact of the
specification of any such amount or the specification or inclusion of any such
item or matter in any dispute or controversy between the parties as to whether
any item or matter is or is not material for purposes of this Agreement. Neither
the specification of any item or matter in any provision of this Agreement nor
the inclusion of any specific item or matter in any Schedule hereto is intended
to imply that such item or matter, or other items or matters, are or are not in
the ordinary course of business, and no party shall use the fact of the
specification or the inclusion of any such item or matter in any dispute or
controversy between the parties as to whether any item or matter is or is not in
the ordinary course of business for purposes of this Agreement. Seller may, from
time to time prior to or at the Closing, by notice in accordance with the terms
of this Agreement, supplement or amend any Schedule hereto, including one or
more supplements or amendments to correct any matter which would constitute a
breach of any representation, warranty, covenant or obligation contained herein.
No such supplemental or amended Schedule shall be deemed to cure any breach for
purposes of the conditions set forth in Section 6.02(a). If, however, the
Closing occurs, any such supplement and amendment will be effective to cure and
correct for all other purposes any inaccuracy in or breach of any representation
or warranty which would have existed if Seller had not made such supplement or
amendment, and all references to any Schedule hereto which is supplemented or
amended as provided in this Section 9.11 shall for all purposes after the
Closing be deemed to be a reference to such Schedule as so supplemented or
amended.
Section 9.12 Disclaimer of Warranties. Seller makes no representations
or warranties with respect to any projections, forecasts or forward-looking
statements made available to Buyer. There is no assurance that any projected or
forecasted results will be achieved. EXCEPT TO THE EXTENT OF THE EXPRESS
REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE III, SELLER IS SELLING THE
ASSETS ON AN "AS IS, WHERE IS" BASIS AND DISCLAIMS ALL OTHER WARRANTIES,
REPRESENTATIONS AND GUARANTEES, WHETHER EXPRESS OR IMPLIED. SELLER MAKES NO
REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE AND NO IMPLIED WARRANTIES WHATSOEVER. WITHOUT LIMITING THE FOREGOING,
AND EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE III, SELLER DISCLAIMS ANY WARRANTY
OF TITLE OR NON-INFRINGEMENT AND ANY WARRANTY ARISING BY INDUSTRY CUSTOM OR
COURSE OF DEALING. BUYER ACKNOWLEDGES AND AGREES THAT IT IS NOT RELYING ON ANY
REPRESENTATIONS OR WARRANTIES, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
CONTAINED IN ARTICLE III. Buyer acknowledges and agrees that none of Seller, its
Affiliates, any of their respective representatives or any other Person has made
any representation or warranty, express or implied, as to the accuracy or
completeness of any memoranda, charts, summaries, schedules or other information
that is not included in this Agreement or the Schedules hereto heretofore made
available by Seller, its Affiliates or their respective representatives to
Buyer, any of its Affiliates or their respective representatives, and none of
Seller, its Affiliates, any of their respective representatives or any other
Person will have or be subject to any liability to Buyer, any of its Affiliates
or their respective representatives resulting from the distribution of any such
information to, or the use of any such information by, Buyer, any of its
Affiliates or any of their respective representatives.
71
Section 9.13 Interpretation.
(a) Unless the context otherwise requires, (i) all
references made in this Agreement to a Section, Schedule or an Exhibit are to a
Section, Schedule or an Exhibit of or to this Agreement, (ii) each term defined
in this Agreement has the meaning ascribed to it, (iii) "or" is disjunctive but
not necessarily exclusive and (iv) words in the singular include the plural and
vice versa. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
72
(b) In the event of an ambiguity or question of intent or
interpretation, this Agreement shall be construed as if drafted jointly by the
parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the extent to which any such party or its
counsel participated in the drafting of any provision hereof or by virtue of the
extent to which any such provision is inconsistent with any prior draft hereof.
Section 9.14 Currency. All dollar amounts in this Agreement are
expressed in currency of the United States of America.
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset Purchase
Agreement, all as of the date first written above.
POTLATCH CORPORATION
By: /s/ X. Xxxxxxxxx Xxxxxx
------------------------------------
Name: X. Xxxxxxxxx Xxxxxx
------------------------------------
Title: Chairman & C.E.O.
------------------------------------
XXXXXXXXX LUMBER CO. LTD.
By: /s/ Xxxxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxxxxx
------------------------------------
Title: Executive Vice-President
------------------------------------
TABLE OF CONTENTS
Page
----
ARTICLE I PURCHASE AND SALE OF ASSETS.............................................................................1
Section 1.01 Purchase and Sale of Assets............................................................1
Section 1.02 Purchase Price.........................................................................5
Section 1.03 Payment of Purchase Price..............................................................8
Section 1.04 Allocation of Purchase Price...........................................................8
Section 1.05 Further Assurances.....................................................................9
Section 1.06 Post Closing Adjustment................................................................9
Section 1.07 Proration of Taxes....................................................................11
ARTICLE II CLOSING; TERMINATION..................................................................................11
Section 2.01 Closing Date..........................................................................11
Section 2.02 Instruments of Conveyance, Transfer, Assumption, Etc..................................12
Section 2.03 Termination...........................................................................14
Section 2.04 Post-Closing Receipts and Invoices....................................................15
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER.............................................................16
Section 3.01 Organization, Standing and Power......................................................16
Section 3.02 Authority; Enforceability.............................................................16
Section 3.03 No Conflict; Consents.................................................................16
Section 3.04 Financial Statements; Undisclosed Liabilities.........................................17
Section 3.05 Litigation............................................................................17
Section 3.06 Personal Property.....................................................................18
Section 3.07 Real Property.........................................................................18
Section 3.08 IRB Financing.........................................................................21
Section 3.09 Tax Matters...........................................................................21
Section 3.10 Employee Benefits Matters.............................................................21
Section 3.11 Collective Agreements.................................................................23
Section 3.12 Employees.............................................................................24
Section 3.13 Sufficiency of Assets.................................................................25
Section 3.14 Intellectual Property.................................................................26
Section 3.15 Inventory.............................................................................27
Section 3.16 Absence of Change or Event............................................................28
Section 3.17 Compliance With Law; Permits..........................................................29
Section 3.18 Environmental Matters.................................................................30
Section 3.19 Contracts and Commitments.............................................................32
Section 3.20 Guarantees, Warranties and Power of Attorney..........................................35
Section 3.21 Insurance.............................................................................35
Section 3.22 [Reserved.]...........................................................................35
Section 3.23 Suppliers, Customers and Sales Representatives........................................36
Section 3.24 Product Warranties and Liabilities....................................................36
Section 3.25 No Investments........................................................................37
Section 3.26 Full Disclosure.......................................................................37
Section 3.27 Propriety of Past Payments............................................................37
Section 3.28 Not Insolvent.........................................................................37
Section 3.29 Receivables...........................................................................38
i
Section 3.30 Seller's Knowledge....................................................................38
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER...............................................................38
Section 4.01 Organization, Standing and Power......................................................38
Section 4.02 Authority; Execution and Delivery; Enforceability.....................................38
Section 4.03 No Conflicts; Consents................................................................39
Section 4.04 Financial Ability to Perform..........................................................39
ARTICLE V COVENANTS..............................................................................................39
Section 5.01 Seller's Obligations Prior to Closing.................................................39
Section 5.02 Access to Information, Due Diligence..................................................41
Section 5.03 Confidentiality.......................................................................41
Section 5.04 Reasonable Best Efforts...............................................................42
Section 5.05 Expenses; Transfer Taxes..............................................................43
Section 5.06 Brokers or Finders....................................................................44
Section 5.07 Employee Matters......................................................................44
Section 5.08 Post-Closing Cooperation..............................................................47
Section 5.09 Publicity.............................................................................49
Section 5.10 Assigned Records......................................................................49
Section 5.11 Bulk Transfer Laws....................................................................50
Section 5.12 Names Following Closing...............................................................50
Section 5.13 Insurance.............................................................................50
Section 5.14 Title and Survey......................................................................50
Section 5.15 Compliance with Plant Closing Laws....................................................51
Section 5.16 Governmental Communications...........................................................51
Section 5.17 Insurance.............................................................................52
Section 5.18 Surveys...............................................................................52
Section 5.19 IRB Financings........................................................................52
Section 5.20 Minnesota Power Agreement.............................................................52
ARTICLE VI CONDITIONS PRECEDENT..................................................................................53
Section 6.01 Conditions to Obligations of Buyer....................................................53
Section 6.02 Conditions to Obligation of Seller....................................................54
ARTICLE VII INDEMNIFICATION......................................................................................55
Section 7.01 Indemnification by Seller.............................................................55
Section 7.02 Indemnification by Buyer..............................................................56
Section 7.03 Notice of Claim.......................................................................56
Section 7.04 Direct Claims.........................................................................56
Section 7.05 Third-Party Claims....................................................................57
Section 7.06 Settlement of Third-Party Claims......................................................57
Section 7.07 Co-operation..........................................................................57
Section 7.08 INDEMNIFICATION IN CASE OF STRICT LIABILITY OR INDEMNITEE NEGLIGENCE..................57
Section 7.09 Tax Benefits..........................................................................58
Section 7.10 Insurance Benefits....................................................................58
Section 7.11 Subrogation...........................................................................58
Section 7.12 Tax Effect of Indemnification Payments................................................58
Section 7.13 Limitations on Liability..............................................................59
Section 7.14 Sole Remedy...........................................................................59
ii
ARTICLE VIII SURVIVAL OF REPRESENTATIONS AND WARRANTIES..........................................................59
Section 8.01 Survival of Representations and Warranties............................................59
Section 8.02 Survival of Covenants.................................................................60
ARTICLE IX MISCELLANEOUS.........................................................................................60
Section 9.01 Waiver................................................................................60
Section 9.02 Notices...............................................................................61
Section 9.03 Definitions...........................................................................62
Section 9.04 Severability..........................................................................71
Section 9.05 Counterparts..........................................................................71
Section 9.06 Entire Agreement......................................................................72
Section 9.07 Amendments............................................................................72
Section 9.08 Successors in Interest; No Third-Party Beneficiaries; Assignment......................72
Section 9.09 Governing Law.........................................................................72
Section 9.10 Jurisdiction; Waiver of Jury Trial....................................................72
Section 9.11 Schedules.............................................................................73
Section 9.12 Disclaimer of Warranties..............................................................74
Section 9.13 Interpretation........................................................................74
Section 9.14 Currency...............................................................................1
EXHIBITS
Exhibit A Opinion of Seller's General or Associate General Counsel
Exhibit B Opinion of Seller's outside counsel
Exhibit C Opinion of Buyer's outside counsel
Exhibit D Title Policy
Exhibit E Assignment and Assumption Agreement
Exhibit F Xxxx of Sale
Exhibit G Deed
Exhibit H Easement Agreement
Exhibit I Option Agreement
Exhibit J Hog Fuel Agreement
Exhibit K Antifungal Technology License Agreement
Exhibit L LuminOx Patent License Agreement
Exhibit M OSB Log Supply Agreement
Exhibit N Transition Services Agreement Term Sheet
iii
SCHEDULES
Schedule 1.01(a)(v) Intellectual Property
Schedule 1.01(a)(viii) Assigned Contracts
Schedule 1.01(b)(i) Excluded Assets
Schedule 1.02(a)(v) Specified Liabilities, Obligations and Commitments of Seller
Schedule 1.02(d)(vii) Excluded Intellectual Property Infringement Liabilities
Schedule 1.04 Allocation of Purchase Price
Schedule 3.03 Consents
Schedule 3.04 Financial Statements; Undisclosed Liabilities
Schedule 3.05 Litigation
Schedule 3.06(a) Personal Property
Schedule 3.07(a) Real Property
Schedule 3.07(c) Rights of Ingress and Egress
Schedule 3.07(d) Improvements
Schedule 3.07(f) Outstanding Accounts Due for Services; Entitlements to Liens on Real Property
Schedule 3.07(i) Improvements Requested by Governmental Authority
Schedule 3.07(m) Minnesota Department of Health Well Disclosure Certificates
Schedule 3.10(a) Employee Benefit Plans
Schedule 3.10(b) Compliance with Applicable Laws
Schedule 3.10(g) List of Pension Plans
Schedule 3.11(a) Collective Agreements
Schedule 3.11(b) Labor Union Certification Petitions
Schedule 3.11(c) Labor Union Organizing Activities
Schedule 3.11(d) Personnel Policies
Schedule 3.11(f) Employee Claims
Schedule 3.11(g) Pending Grievances
Schedule 3.12 Termination Compensation of the Employees or Former Employees
Schedule 3.12(a) Identification of Employees
Schedule 3.12(b) Employment Compliance
Schedule 3.13 Sufficiency of Assets
Schedule 3.14(a) Intellectual Property
Schedule 3.14(a)(iii) Third-Party Claims of Ownership in Intellectual Property
Schedule 3.14(b) Alleged Intellectual Property Infringement
Schedule 3.17(a) Compliance with Laws, Permits
Schedule 3.17(b) Permits
Schedule 3.18(a) Compliance with Environmental Laws
Schedule 3.18(b) Environmental Permits
Schedule 3.18(c) Hazardous Substances
Schedule 3.18(d) Use of Purchased Assets
Schedule 3.18(f) Reports and Records under Environmental Laws
Schedule 3.18(g) Environmental Disclosures
Schedule 3.18(i) Pre-existing Environmental Liabilities
Schedule 3.19 Contracts and Commitments
Schedule 3.19(c) Power Supply Contracts
Schedule 3.20 Guarantees, Warranties, Power of Attorney and Discounts
Schedule 3.21 Insurance
Schedule 3.22 [Reserved]
iv
Schedule 3.23(a) Suppliers
Schedule 3.23(b) Customers
Schedule 3.23(c) Sales Representatives
Schedule 3.24 Product Warranties and Liabilities
Schedule 3.29 Receivables
Schedule 3.30 Seller, Persons
Schedule 4.03 Buyer's Representations and Warranties
Schedule 5.07(b) Separation Agreements
Schedule 5.12(c) Names, Trade Names and Trademarks
v
