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EXHIBIT 2.2
STOCK PURCHASE AGREEMENT
BETWEEN
REPAP ENTERPRISES INC.
AND
CONSOLIDATED PAPERS, INC.
DATED AS OF AUGUST 8, 1997
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
Section 1.1 Specific Definitions........................................ 2
Section 1.2 Other Terms................................................. 11
Section 1.3 Other Definitional Provisions............................... 11
ARTICLE II
PURCHASE AND SALE OF SHARES
Section 2.1 Purchase and Sale of Shares................................. 12
Section 2.2 Closing; Delivery and Payment............................... 12
Section 2.3 Adjustment to Purchase Price................................ 13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF REPAP
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
ARTICLE V
TAX MATTERS
Section 5.1 Tax Sharing................................................. 20
Section 5.2 Tax Indemnification......................................... 20
Section 5.3 Tax Returns................................................. 21
Section 5.4 Contest Provisions.......................................... 24
Section 5.5 Information to Be Provided by Buyer......................... 25
Section 5.6 Information to Be Provided by Repap......................... 26
Section 5.7 Assistance and Cooperation.................................. 26
Section 5.8 Post-Closing Actions Which May Affect Repap's Liability for 27
Taxes.......................................................
Section 5.9 Savings and Costs to Buyer Resulting from Adjustments to Tax 28
Returns for Periods Prior to Closing........................
Section 5.10 Survival of Obligations..................................... 31
ARTICLE VI
CERTAIN COVENANTS AND AGREEMENTS
OF REPAP AND BUYER
Section 6.1 Access and Information...................................... 31
Section 6.2 Registrations, Filings and Consents......................... 34
Section 6.3 Operation of Business....................................... 35
Section 6.4 Continued Employment; Employee Benefit Plans................ 41
Section 6.5 Retention of Books and Records.............................. 43
Section 6.6 Closing Date Financial Information.......................... 44
Section 6.7 Notification of Certain Matters............................. 44
Section 6.8 Non-Solicitation of Employees............................... 45
Section 6.9 Further Assurances.......................................... 46
Section 6.10 Stockholders Meeting........................................ 46
Section 6.11 Certain Interests After Closing Date........................ 46
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.1 Conditions to Obligations of Buyer.......................... 47
Section 7.2 Conditions to Obligations of Repap.......................... 50
Section 7.3 Conditions to Obligations of Buyer and Repap................ 51
ARTICLE VIII
TERMINATION
Section 8.1 Termination................................................. 52
Section 8.2 Effect of Termination....................................... 54
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ARTICLE IX
SURVIVAL AND INDEMNIFICATION
Section 9.1 Survival of Representations, Warranties, Covenants and 56
Agreements; Knowledge of Breach.............................
Section 9.2 Indemnification............................................. 58
Section 9.3 Method of Asserting Claims, etc............................. 60
ARTICLE X
MISCELLANEOUS
Section 10.1 Amendment and Modification; Waiver.......................... 63
Section 10.2 Return of Information....................................... 64
Section 10.3 Expenses.................................................... 64
Section 10.4 Public Disclosure........................................... 65
Section 10.5 Assignment.................................................. 65
Section 10.6 Entire Agreement............................................ 66
Section 10.7 Fulfillment of Obligations.................................. 66
Section 10.8 Parties in Interest; No Third Party Beneficiaries........... 66
Section 10.9 Schedules................................................... 66
Section 10.10 Counterparts................................................ 67
Section 10.11 Section Headings............................................ 67
Section 10.12 Notices..................................................... 67
Section 10.13 GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF 68
FORUM.......................................................
Section 10.14 Severability................................................ 70
ANNEXES
Representations of Repap Annex A.............................................. 72
Representations of Buyer Annex B.............................................. 93
SCHEDULES
STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of August 8, 1997,
between REPAP ENTERPRISES INC., a corporation incorporated under the laws of
Canada ("Repap"), and CONSOLIDATED PAPERS, INC., a Wisconsin corporation
("Buyer").
W I T N E S S E T H :
WHEREAS, Repap owns all of the issued and outstanding shares of capital
stock of Repap USA, Inc., a Wisconsin corporation ("Repap USA");
WHEREAS, Repap, Xxxxxx X. Xxxxx Management Ltd. ("GSP"), Skeena Cellulose,
Inc. ("Skeena") and Repap USA own all of the issued and outstanding capital
stock of Repap Wisconsin, Inc., a Wisconsin corporation ("Repap Wisconsin");
WHEREAS, Repap USA owns all of the issued and outstanding capital stock of
Repap Sales Corp., a New York corporation ("Repap Sales");
WHEREAS, Repap desires to sell and transfer to Buyer, and Buyer desires to
purchase from Repap, all of the issued and outstanding capital stock of Repap
USA (consisting of 1,395 shares of common stock, without par value (the "Common
Shares")), as more specifically provided herein;
WHEREAS, Repap will acquire from GSP, Skeena and Repap Sales prior to
Closing, all of the issued and outstanding shares of preferred stock of all
classes of Repap Wisconsin, consisting of 5,758.2 shares of Class I, no par
value, 103.65 shares of Class II, no par value, 539.94 shares of Class III, no
par value, and 483.25 shares of Class IV, no par value (collectively, the "Repap
Wisconsin Preferred Shares" and together with the Common Shares, the "Shares");
and
WHEREAS, Repap desires to sell and transfer to Buyer, and Buyer desires to
purchase from Repap, all of the Repap Wisconsin Preferred Shares, as more
specifically described herein;
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
contained herein, and subject to and on the terms and conditions herein set
forth, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.1 SPECIFIC DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings set forth or as referenced below:
"ACQUISITION AGREEMENT" shall have the meaning set forth in Section 8.2(d).
"ACQUISITION PROPOSAL" shall have the meaning set forth in Section 6.3(k).
"ACQUISITION TRANSACTION" shall have the meaning set forth in Section 8.2(d).
"AFFILIATE", as applied to any Person, means any other Person directly or
indirectly controlling, controlled by or under common control with that
Person.
"AGREEMENT" shall mean this Agreement and all Annexes and Schedules hereto.
"ANTITRUST DIVISION" shall mean the Antitrust Division of the United States
Department of Justice.
"BALANCE SHEET" shall have the meaning set forth in Section 3.6 of Annex A.
"BUSINESS" shall mean the manufacture, distribution and sale of coated paper by
Repap USA or any of its Subsidiaries from facilities located in Kimberly,
Wisconsin and regional US sales offices and distribution centers.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a day on
which banks in New York City, New York are authorized or obligated by law
or executive order to close.
"BUYER" shall have the meaning set forth in the Preamble.
"CAPITAL EXPENDITURES" shall have the meaning set forth in Section 2.3(a).
"CLAIM NOTICE" shall have the meaning set forth in Section 9.3.
"CLOSING" shall have the meaning set forth in Section 2.2(a).
"CLOSING DATE" shall have the meaning set forth in Section 2.2(a).
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMON SHARES" shall have the meaning set forth in the Preamble.
"COMPETITION ACT" shall mean the Competition Act (Canada).
"COMPETITION DIRECTOR" shall mean the Director of Investigation and Research
under the Competition Act.
"CONFIDENTIAL INFORMATION" shall have the meaning set forth in Section 6.1(d).
"CONFIDENTIALITY AGREEMENT" shall have the meaning set forth in Section 6.1(c).
"CONTINUING AFFILIATE" shall mean an Affiliate of Repap other than Repap USA and
the Subsidiaries.
"CONTROL" of a Person shall mean the power, direct or indirect, to direct or
cause the direction of the management and policies of such Person whether
by contract or otherwise; the terms "controlling" and "controlled" shall
have meanings correlative to the foregoing.
"DAMAGE THRESHOLD" shall have the meaning set forth in Section 9.1(a).
"DEBT" shall have the meaning set forth in Section 2.3(a).
"DEDUCTIBLE" shall have the meaning set forth in Section 9.1.
"DISCLOSURE DOCUMENTS" shall have the meaning set forth in Section 3.6 of Annex
A.
"EMPLOYEES" means all employees of Repap USA and the Subsidiaries who were
employed on the Closing Date.
"ENCUMBRANCES" shall have the meaning set forth in Section 3.2 of Annex A.
"ENVIRONMENTAL LAW" means any law, regulation, code, license, permit, order,
judgment, decree or injunction relating to the protection of the
environment (including air, water, soil and natural resources) or the use,
storage, handling, release or disposal of any hazardous or toxic substance
as in effect on the date hereof.
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"ERISA" shall have the meaning set forth in Section 3.12 of Annex A.
"ERISA AFFILIATE" shall have the meaning set forth in Section 3.12 of Annex A.
"ERISA AFFILIATE PLAN" shall have the meaning set forth in Section 3.12 of Annex
A.
"ERISA PLAN" shall have the meaning set forth in Section 3.12 of Annex A.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"FINANCIAL INFORMATION" shall have the meaning set forth in Section 3.6 of Annex
A.
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section 3.6 of Annex
A.
"FTC" shall mean the Federal Trade Commission.
"GAAP" shall mean U.S. generally accepted accounting principles consistently
applied.
"GSP" shall have the meaning set forth in the Preamble.
"HAZARDOUS SUBSTANCE" means any substance listed, defined, designated or
classified as hazardous, toxic or radioactive under any applicable
Environmental Law, including petroleum and any derivative or by-products
thereof.
"HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section 9.2.
"INDEMNIFYING PARTY" shall have the meaning set forth in Section 9.2.
"INTELLECTUAL PROPERTY" shall have the meaning set forth in Section 3.31 of
Annex A.
"INTERIM FINANCIAL INFORMATION" shall have the meaning set forth in Section 3.6
of Annex A.
"IRS" shall mean the United States Internal Revenue Service.
"KNOWLEDGE OF REPAP" shall mean the knowledge of each of Repap, Repap USA and
Repap Wisconsin.
"LIABILITIES" shall have the meaning set forth in Section 3.7 of Annex A.
"LISTED EMPLOYEES" shall have the meaning set forth in Section 6.4(c).
"LOSSES" shall have the meaning set forth in Section 9.2(a).
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the Business,
assets, financial condition or results of operations of Repap USA and the
Subsidiaries, taken as a whole.
"MAXIMUM AMOUNT" shall have the meaning set forth in Section 9.1.
"MULTIEMPLOYER PLAN" shall have the meaning set forth in Section 3.12 of Annex
A.
"NOTICE PERIOD" shall have the meaning set forth in Section 9.3.
"OFFER" shall have the meaning set forth in Section 8.2(d).
"PERMITTED ENCUMBRANCES" shall mean any mechanics', workmen's, repairmen's,
warehousemen's, carriers' or other like liens and encumbrances (i) arising
in the ordinary and usual course of business consistent with past practice
or being contested in good faith by appropriate proceedings, (ii) not in
excess of $100,000 in the aggregate, (iii) necessarily incurred in
connection with a repair or capital expense to continue operations or (iv)
as contemplated by this Agreement.
"PERSON" shall mean any individual, corporation, partnership, limited liability
company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, governmental or regulatory body or other
entity.
"PLAN" shall have the meaning set forth in Section 3.12 of Annex A.
"PRE-CLOSING TAX PERIOD" shall have the meaning set forth in Section 5.2(b).
"PURCHASE PRICE" shall have the meaning set forth in Section 2.1. "Repap" shall
have the meaning set forth in the Preamble.
"REPAP GROUP" shall mean any "affiliated group" (as defined in Section 1504(a)
of the Code without regard to the limitations contained in Section 1504(b)
of the Code) that includes Repap USA and its Subsidiaries.
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"REPAP SALES" shall have the meaning set forth in the Preamble.
"REPAP WISCONSIN" shall have the meaning set forth in the Preamble.
"REPAP WISCONSIN PREFERRED SHARES" shall have the meaning set forth in the
Preamble.
"REPAP USA" shall have the meaning set forth in the Preamble.
"REPORT" shall have the meaning set forth in Section 6.2(a).
"REQUISITE VOTE" shall mean the affirmative vote in favor of the transactions
contemplated by this Agreement by the requisite number of votes cast by
Repap shareholders entitled to vote thereon at a meeting, including any
adjournments thereof, convened pursuant to Section 6.10 of this Agreement.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SEVERANCE PLANS" shall have the meaning set forth in Section 6.4.
"SHARES" shall have the meaning set forth in the Preamble.
"SKEENA" shall have the meaning set forth in the Preamble.
"STANDBY LOAN AGREEMENT" shall mean the standby loan agreement made as of August
1, 1996 by and among Repap Enterprises Inc., as borrower, TD Capital Group
Limited, The Toronto-Dominion Bank and The Royal Bank of Canada, as
lenders, and TD Capital Group Limited, as agent, as amended, supplemented
or restated from time to time.
"STATEMENT OF CAPITAL EXPENDITURES" shall have the meaning set forth in Section
2.3(c).
"STATEMENT OF CONSOLIDATED NET WORKING CAPITAL" shall have the meaning set forth
in Section 2.3(c).
"STATEMENT OF DEBT" shall have the meaning set forth in Section 2.3(c).
"SUBSIDIAR[Y][IES]" shall have the meaning set forth in Section 3.3 of Annex A.
"TAX PACKAGE" shall have the meaning set forth in Section 5.5.
"TAX RETURNS" shall mean all federal, state, local or foreign tax returns, tax
reports, and declarations of estimated tax, including without limitation
consolidated federal income tax returns of Repap Group.
"TAXES" shall mean all federal, state, local or foreign income, gross receipts,
windfall or excess profits, severance, property, production, sales, use,
license, excise, franchise, employment, withholding or similar taxes,
together with any interest, additions or penalties with respect thereto
and any interest in respect of such additions or penalties.
"THIRD PARTY CLAIM NOTICE" shall have the meaning set forth in Section 9.3.
"WORKING CAPITAL" shall have the meaning set forth in Section 2.3.
"WWF" shall mean WWF Paper Corporation.
SECTION I.2 OTHER TERMS. Other terms may be defined elsewhere in the text of
this Agreement and, unless otherwise indicated, shall have such meaning
indicated throughout this Agreement.
SECTION I.3 OTHER DEFINITIONAL PROVISIONS.
(a) The words "hereof", "herein", and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as
a whole and not to any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States Dollars.
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ARTICLE II
PURCHASE AND SALE OF SHARES
Section II.1 PURCHASE AND SALE OF SHARES. Buyer agrees to purchase from Repap,
and Repap agrees to sell to Buyer, the Shares, for an aggregate purchase price
in cash of $227.4 million (the "Purchase Price"). The Purchase Price shall be
adjusted as set forth in Section 2.3.
Section II.2 CLOSING; DELIVERY AND PAYMENT.
(a) The closing (the "Closing") shall take place at the offices of
Xxxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at
10:00 A.M. local time, five business days following the latest to
occur of: (i) obtaining shareholder approval of the transactions
contemplated by this Agreement pursuant to Section 6.10, (ii) the
expiration of the waiting period under the HSR Act including any
extensions thereof, and (iii) the Competition Act Director or any
person authorized to exercise the powers and perform the duties of
the Competition Act Director shall have issued a certificate under
Section 102(l) of the Competition Act to the effect that she is
satisfied that she would not have sufficient grounds on which to
apply to the Competition Tribunal established pursuant to the
Competition Act under Section 92 of the Competition Act in respect of
the transactions contemplated by this Agreement or the appropriate
time period specified in Section 123 of the Competition Act shall
have expired or the Competition Act Director shall have indicated in
writing that she does not intend to take any action under Section 92
of the Competition Act whether before or after the completion of the
transactions contemplated by this Agreement, which could materially
interfere with or detrimentally affect the transactions contemplated
by this Agreement, or at such other time and place as the parties
hereto may mutually agree. The date on which the Closing occurs is
called the "Closing Date."
(b) On the Closing Date, Repap shall deliver to Buyer certificates
representing the Shares duly endorsed and in form for transfer to
Buyer.
(c) On the Closing Date, Buyer shall pay or deliver to Repap the
Purchase Price in immediately available funds to an account
designated by Repap not less than two Business Days prior to the
Closing.
Section II.3 ADJUSTMENT TO PURCHASE PRICE.
(a) The Purchase Price shall be:
(i) increased by the amount, if any, by which $4.9 million exceeds
the amount of any final settlement paid by Repap Wisconsin prior
to the Closing Date to fully discharge its obligations to
Wisconsin Electric Power Company as described in Note 11 to the
Consolidated Financial Statements of Repap Wisconsin in the
Annual Report on Form 10-K for the fiscal year ended December
31, 1996, of Repap Wisconsin, which is attached as part of
Schedule 3.6 to this Agreement;
(ii) increased by the amount the Working Capital as of the Closing
Date exceeds $70.4 million, or decreased by the amount the
Working Capital as of the Closing Date is less than $70.4
million, as the case may be;
(iii) (A) if the outstanding long-term indebtedness plus the amount
of the liability under FASB 106 of Repap USA and its
Subsidiaries as of the Closing Date and calculated as set forth
on Schedule 2.3(a)(iii) (collectively, the "Debt") is less than
$454.6 million, increased by an amount equal to the difference
between $454.6 million and the Debt, or (B) if the Debt is
greater than $454.6 million, decreased by an amount equal to the
difference between the Debt and $454.6 million; and
(iv) increased by the amount of (A) capital expenditures incurred
and paid or accrued by Repap USA and the Subsidiaries from March
31, 1997 through the Closing Date and set forth on Schedule
2.3(a)(iv), (B) capital expenditures incurred and paid or
accrued by Repap USA and the Subsidiaries through the Closing
Date pursuant to Section 6.3(g) hereof and (C) capital
expenditures incurred and paid by Repap USA and the Subsidiaries
through the Closing Date other than as provided in subclause
(iv)(A) or (iv)(B) and agreed to by
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Buyer in writing (such agreement not to be unreasonably
withheld) (collectively, the "Capital Expenditures").
(b) As used in this Agreement, "Working Capital" means current assets
less current liabilities as reflected on the Statement of
Consolidated Net Working Capital plus the amount, if any, paid to the
Listed Employees prior to the Closing Date pursuant to Section
6.4(c). For purposes of such calculation, current assets shall be the
sum of cash, marketable securities, net accounts receivable
(including any affiliate accounts receivable), prepaid expenses and
net inventories of Repap USA and the Subsidiaries. Current
liabilities shall be the sum of obligations (including any affiliate
accounts payable), debts, prepayments and accruals whose liquidation
is reasonably expected to require the use of current assets or the
creation of current liabilities (including any affiliate accounts
payable) of Repap USA and the Subsidiaries but shall not include
accruals from January 1, 1997 through the Closing Date for Repap
Wisconsin's supplemental pension plan to the extent that Repap fully
funds such supplemental pension plan on or prior to Closing. All of
the foregoing calculations shall be made in conformity with GAAP.
(c) For purposes of this Agreement, "Statement of Consolidated Net
Working Capital" means the audited calculation of the Working Capital
of Repap USA and the Subsidiaries, on a consolidated basis, as of the
Closing Date from which the calculation of the adjustment to the
Purchase Price of the Shares will be made in accordance with Section
2.3(a)(i) hereof.
(d) Within sixty (60) days following the Closing Date, Repap shall
prepare and deliver to Buyer (i) the Statement of Consolidated Net
Working Capital, which shall be audited by Repap's auditors,
including a review and assessment of accounts receivable as of the
Closing Date, an inventory of work in process, pulp and raw
materials, and finished goods taken by Repap as of the Closing Date
and a review of the liabilities as of the Closing Date, each
determined in accordance with GAAP and performed in accordance with
procedures of Repap's auditors in the ordinary and usual course of
business consistent with past practice, (ii) a calculation of the
amount of Debt outstanding as of the Closing Date (the "Statement of
Debt") and (iii) a calculation of the amount of Capital Expenditures
from March 31, 1997 through the Closing Date (the "Statement of
Capital Expenditures").
During the preparation of the Statement of Consolidated Net Working
Capital, the Statement of Debt and the Statement of Capital
Expenditures and the period of any review or dispute as provided in
this Section 2.3, Buyer shall, and shall cause Repap USA and the
Subsidiaries to, (1) provide Repap and Repap's authorized
representatives with full access to the books, records, facilities
and employees of Repap USA and the Subsidiaries, and (2) cooperate
fully with Repap and Repap's authorized representatives, including
the provision on a timely basis of all necessary or useful
information. The taking of inventory may be observed by Buyer and
Buyer's auditors. To the extent possible, Repap will provide Buyer
with a preliminary draft of the Statement of Consolidated Net Working
Capital, the Statement of Debt and the Statement of Capital
Expenditures. Buyer and Repap will in good faith attempt to resolve
any disputes with respect to such calculation before the final
Statement of Consolidated Net Working Capital, Statement of Debt and
Statement of Capital Expenditures are rendered.
Buyer may review the Statement of Consolidated Net Working Capital,
Statement of Debt and Statement of Capital Expenditures and Repap
shall make available the work papers of Repap's auditors to Buyer and
its accountants and Buyer and its accountants may make inquiries of
representatives of Repap and its auditors. Buyer shall give written
notice to Repap of any objection to the Statement of Consolidated Net
Working Capital, Statement of Debt and Statement of Capital
Expenditures within thirty (30) days after Buyer's receipt thereof.
The notice shall specify in reasonable detail the items in the
Statement of Consolidated Net Working Capital, Statement of Debt and
Statement of Capital Expenditures to which Buyer objects and shall
provide a summary of Buyer's reasons for such objections.
Any dispute between Buyer and Repap with respect to the Statement of
Consolidated Net Working Capital, Statement of Debt and Statement of
Capital Expenditures which is not resolved within fifteen (15)
Business Days after receipt by Repap of the written notice from Buyer
shall be referred
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for decision to an independent accounting firm chosen from the "Big
Six" accounting firms who shall cause an audit partner who is not
engaged in providing services to Repap or Buyer or any of their
affiliates to decide the dispute within thirty (30) days of such
referral. The decision by the audit partner shall be final and
binding on Repap and Buyer. The cost of retaining the audit partner
with respect to resolving disputes as to the Statement of
Consolidated Net Working Capital, Statement of Debt and Statement of
Capital Expenditures shall be borne by Repap and Buyer equally.
(e) Following delivery of the Statement of Consolidated Net Working
Capital, Statement of Debt and Statement of Capital Expenditures, any
balance due to Repap or refund due to Buyer pursuant to the
adjustments set forth in Section 2.3(a) shall be paid within ten (10)
days of such delivery (unless there is an objection under Section
2.3(d), in which case the amount not in dispute shall be paid within
ten (10) days of such delivery, and the balance in dispute shall be
paid within ten (10) days of the resolution of such objection)
together with interest on such amount from the Closing Date at the 90
day LIBOR rate, in immediately available funds to an account
designated by Repap or Buyer, as the case may be, at least two
Business Days before the payment is due.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF REPAP
Repap represents and warrants to Buyer as of the date hereof and as of the
Closing Date (except that representations and warranties that are made as of a
specific date need be true only as of such date) as provided in Annex A hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Repap as of the date hereof and as of the
Closing Date (except that representations and warranties that are made as of a
specific date need be true only as of such date) as provided in Annex B hereto.
ARTICLE V
TAX MATTERS
Section V.1 TAX SHARING. Any and all tax sharing agreements and
arrangements shall be canceled as between Repap and the Continuing Affiliates,
on the one hand, and Repap USA and its Subsidiaries, on the other hand, and no
further payments shall be made by Repap USA or any of its Subsidiaries to Repap
or its Continuing Affiliates, or by Repap or its Continuing Affiliates to Repap
USA or its Subsidiaries, pursuant thereto.
Section V.2 TAX INDEMNIFICATION.
(a) Buyer and Repap agree that no election shall be made under Section
338(h)(10) of the Code or under any similar provisions of state or
foreign law with respect to the purchase of the Shares.
(b) Repap hereby agrees to indemnify Buyer and hold it harmless from (i)
all liability for Taxes imposed on Repap USA and its Subsidiaries for
any taxable year or period ending on or before the Closing Date and,
in the case of any taxable year or period beginning before and ending
after the Closing Date, the portion of such period ending on and
including the Closing Date (the "Pre-Closing Tax Period"), and (ii)
all liability for Taxes imposed on the Repap Group, other than Repap
USA and its Subsidiaries, except to the extent that, with respect to
either clause (i) or (ii), such Taxes are taken into account as a
liability on the Balance Sheet. Repap shall be entitled to all
refunds of such Taxes, except to the extent such Taxes are taken into
account on the Balance Sheet.
(c) Buyer hereby agrees to indemnify Repap and its Continuing Affiliates
and hold them harmless from all liability for Taxes imposed on Repap
USA and its Subsidiaries for any taxable year or period beginning
after the Closing Date and, in the case of any taxable year or period
beginning before and ending after the Closing Date, the portion of
such period beginning after the Closing Date.
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(d) Whenever it is necessary to determine liability for Taxes for a
portion of a taxable year or period beginning before and ending after
the Closing Date, the determination shall be made assuming that there
was a closing of the books at the close of the Closing Date, except
that Taxes (other than Taxes measured by net income or gains),
exemptions, allowances or deductions that are calculated on an annual
basis shall be apportioned on a time basis.
Section V.3 TAX RETURNS.
(a) Repap shall, based upon the Tax Package, prepare all Tax Returns
that are required to be filed by or with respect to Repap USA and its
Subsidiaries for taxable years or periods ending on or before the
Closing Date which have not been filed on or before the Closing Date.
Drafts of such Tax Returns in a form suitable for filing shall be
submitted to Buyer for review and approval not less than thirty (30)
days prior to their due date (including any extensions thereof).
Buyer shall notify Repap of any changes that it proposes to make to
such draft Tax Returns not less than twenty (20) days before filing
and shall discuss such changes with Repap prior to filing the Tax
Returns. Final decisions as to the form and content of such Tax
Returns shall be with Buyer, subject to the consent of Repap which
consent shall not be unreasonably withheld; provided, however, that
the usable net operating loss carryovers from periods ending on or
before September 30, 1996 reported on such Tax Returns will be
subject to the mutual agreement of Buyer and Repap. Buyer shall file
or cause to be filed when due all such Tax Returns. Repap shall pay
Buyer the Taxes for which Repap is liable pursuant to Section 5.2(b)
but which are payable with Tax Returns to be filed by Buyer pursuant
to the previous sentence within 10 days prior to the due date for the
filing of such Tax Returns.
(b) Buyer shall file or cause to be filed when due all Tax Returns that
are required to be filed by or with respect to Repap USA and its
Subsidiaries for taxable years or periods ending after the Closing
Date and shall remit any Taxes due in respect of such Tax Returns.
Repap shall pay Buyer the Taxes for which Repap is liable pursuant to
Section 5.2(b) but which are payable with Tax Returns to be filed by
Buyer pursuant to the previous sentence within 10 days prior to the
due date for the filing of such Tax Returns.
(c) In the event that the U.S. federal income tax return filed by Buyer
on behalf of Repap USA and Subsidiaries for the taxable period ending
on the Closing Date reports usable net operating loss carryovers
(excluding any net operating loss carryovers attributable to Nitec
Paper Corporation) from periods ending on or before September 30,
1996, of less than $114.1 million (without regard to whether such net
operating loss carryovers are used in such Tax Returns or any
subsequent Tax Returns) or in the event that such amount is reduced
upon audit by the IRS, Repap shall pay to Buyer an amount equal to
twenty-nine percent (29%) of the difference between $114.1 million
and the amount of such usable net operating loss carryovers
(excluding any net operating loss carryovers attributable to Nitec
Paper Corporation) reported on such return.
(d) In the event that the U.S. federal income tax return filed by Buyer
on behalf of Repap USA and the Subsidiaries for the taxable period
ending on the Closing Date reports usable net operating loss
carryovers (excluding any net operating loss carryovers attributable
to Nitec Paper Corporation) from periods ending on or before
September 30, 1996, of greater than $114.1 million (without regard to
whether such net operating loss carryovers are used in such Tax
Returns or any subsequent Tax Returns) or in the event that such
amount is increased upon audit by the IRS, Buyer shall pay to Repap
an amount equal to twenty-nine percent (29%) of the difference
between the amount of such usable net operating loss carryovers
(excluding any net operating loss carryovers attributable to Nitec
Paper Corporation) reported on such return and $114.1 million.
Section V.4 CONTEST PROVISIONS. Buyer shall promptly notify Repap in
writing upon receipt by Buyer or any of its Affiliates (including Repap USA or
any of its Affiliates) of notice of any pending or threatened federal, state,
local or foreign income or franchise tax examinations, inquiries or audits or
assessments which may materially affect the tax liabilities of Repap USA or its
Subsidiaries for which Repap may be required to indemnify Buyer pursuant to
Sections 5.2(b) or 5.9(c) (provided that failure to give this notice shall not
affect Buyer's right to indemnification hereunder unless such failure is
prejudicial to Repap), or which may affect any tax liability or refund claim of
Repap. Repap shall be entitled to participate at its expense in the defense of
any claims for Taxes or
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any other proposed adjustments which may be the subject of indemnification by
Repap pursuant to Section 5.2(b) or 5.9(c), and, with the written consent of
Buyer, at its sole expense, may assume the entire defense of such claims or
proposed adjustments. Notwithstanding the foregoing, Repap shall not be entitled
to settle, either administratively or after the commencement of litigation, any
claim for Taxes which would adversely affect the liability for Taxes of the
Buyer, Repap USA or its Subsidiaries for any period after the Closing Date to
any extent (including, but not limited to, the imposition of income tax
deficiencies, the reduction of asset basis or cost adjustments, the lengthening
of any amortization or depreciation periods, the denial of amortization or
depreciation deductions, or the reduction of loss or credit carry forwards)
without the prior written consent of Buyer. Such consent shall not be
unreasonably withheld.
Neither Buyer, Repap USA nor its Subsidiaries may agree to settle any
claim for Taxes or other proposed adjustments which may be the subject of
indemnification by Repap under Sections 5.2(b) or 5.9(c) without the prior
written consent of Repap, which consent shall not be unreasonably withheld.
Section V.5 INFORMATION TO BE PROVIDED BY BUYER. With respect to the taxable
year of Repap USA within which the Closing Date occurs, Buyer shall promptly
cause Repap USA to prepare and provide to Repap a package of tax information
materials (the "Tax Package"), which shall be completed in accordance with past
practice including past practice as to providing the information, schedules and
work papers and as to the method of computation of separate taxable income or
other relevant measure of income of Repap USA. Buyer shall cause the Tax Package
for the portion of the taxable period ending on the Closing Date to be delivered
to Repap within one hundred twenty (120) days after the Closing Date.
Section V.6 INFORMATION TO BE PROVIDED BY REPAP. At the Closing, Repap shall
provide to Buyer copies of all Tax Returns filed by or on behalf of Repap USA
and the Subsidiaries that are relevant for purposes of establishing the amount
of the net operating loss and credit carryovers of Repap USA and the
Subsidiaries for federal and Wisconsin income tax purposes as of the Closing
Date. In addition, at Closing, Repap shall provide to Buyer copies of all
workpapers used in the preparation of such Tax Returns.
Section V.7 ASSISTANCE AND COOPERATION. After the Closing Date, each of Repap
and Buyer shall:
(i) assist (and cause their respective affiliates to assist) the other
party in preparing any Tax Returns or reports which such other party
is responsible for preparing and filing in accordance with this
Article V;
(ii) cooperate fully in preparing for any examinations, inquiries or
audits of, or disputes with taxing authorities regarding, any Tax
Returns of Repap USA or its Subsidiaries or any tax refund claims
filed by Repap;
(iii) make available to the other and to any taxing authority as
reasonably requested all information, records and documents relating
to Taxes of Repap, Repap USA or its Subsidiaries;
(iv) provide timely notice to the other in writing of any pending or
threatened tax examinations, inquiries or audits or assessments of
Repap USA or its Subsidiaries for taxable periods for which the other
may have a liability under this Article V; and
(v) furnish the other with copies of all correspondence received from
any taxing authority in connection with any tax examination, inquiry
or audit or information request with respect to any such taxable
period referred to in subsection (iv).
Section V.8 POST-CLOSING ACTIONS WHICH MAY AFFECT REPAP'S LIABILITY FOR
TAXES. Except to the extent required by law, neither Buyer, Repap USA, its
Subsidiaries, nor their Affiliates shall, without the prior written consent of
Repap, which shall not be unreasonably withheld, (i) amend any Tax Return filed
by, or with respect to, Repap USA or any of its Subsidiaries for any taxable
period, or portion thereof, beginning before the Closing Date, or (ii) carryback
any net operating loss, capital loss, excess foreign tax credit or other similar
losses, deductions or credits derived with respect to any period beginning after
the Closing Date to any taxable year, or portion thereof, of Repap USA or any of
its Subsidiaries ending on or before the Closing Date. Such consent shall not be
unreasonably withheld and shall not be necessary to the extent that such amended
returns or carrybacks do not affect Repap's liability for Taxes.
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Section V.9 SAVINGS AND COSTS TO BUYER RESULTING FROM ADJUSTMENTS TO TAX
RETURNS FOR PERIODS PRIOR TO CLOSING.
(a) If, after the Closing, an adjustment required by a taxing authority
in any item reflected on a Tax Return of Repap USA or any of its
Subsidiaries relating to any taxable period, or portion thereof,
ending on or before the Closing Date results in a Tax benefit
(including any deduction, credit, net operating loss or similar loss
or deduction) becoming available to Buyer or any of its Affiliates
(including Repap USA and any of its Subsidiaries) with respect to any
taxable period beginning after the Closing, Buyer agrees to
recognize, and to cause its Affiliates to recognize, any such
adjustment on its or their Tax Returns and to claim to the fullest
extent possible all deductions and credits available as a result.
Buyer shall pay to Repap an amount equal to the estimated net
decrease in the Tax liability of Buyer and its Affiliates as a result
of the Tax benefit becoming available. The estimated net decrease in
the Tax liability of Buyer and its Affiliates shall be determined by
multiplying any increase in deductions, net operating losses or other
similar items by twenty-nine percent (29%) and any increase in
credits by zero percent (0%).
(b) If, after the Closing, an adjustment required by a taxing authority
in any item reflected on a Tax Return of Repap USA or any of its
Subsidiaries relating to any taxable period, or portion thereof,
ending after the Closing Date results in a Tax benefit (including any
deduction, credit, net operating loss or similar loss or deduction)
becoming available to Repap or any of its Continuing Affiliates with
respect to any taxable period, or portion thereof ending on or before
the Closing, Repap agrees to recognize, and to cause its Continuing
Affiliates to recognize, any such adjustment on its or their Tax
Returns and to claim to the fullest extent possible all deductions
and credits available as a result. Repap shall pay to Buyer an amount
equal to the net decrease in the Tax liability of Repap and its
Continuing Affiliates as a result of claiming any such deduction or
credit (as compared to the Taxes they otherwise would have paid) at
the time such decrease is realized (whether by paying less Taxes or
receiving a refund). For purposes of determining the amount of any
such decrease in Taxes paid, any deductions or credits otherwise
available to Repap or its Continuing Affiliates shall be deemed to be
used prior to the deductions or credits resulting from such
adjustment.
(c) If, after the Closing, an adjustment required by a taxing authority
in any item reflected on a Tax Return of Repap USA or any of its
Subsidiaries relating to any taxable period, or portion thereof,
ending on or before the Closing Date results in loss or reduction in
a Tax benefit (including the loss or reduction of any deduction,
credit, net operating loss, or similar loss or deduction) otherwise
available to Repap USA or any of its Subsidiaries or to Buyer or any
of its Affiliates with respect to any taxable period beginning after
the Closing, Repap shall pay to Buyer an amount equal to the
estimated net increase in the Tax liability of Buyer and its
Affiliates as a result of the loss or reduction of such Tax benefit
at the time such adjustment by the taxing authority becomes final.
The estimated net increase in the Tax liability of Buyer and its
Affiliates shall be determined by multiplying any loss or reduction
in deductions, net operating losses or other similar items by
twenty-nine percent (29%) and any loss or reduction in credits by
zero percent (0%).
Section V.10 SURVIVAL OF OBLIGATIONS. The obligations of the parties set
forth in this Article V shall be unconditional and absolute and shall remain in
effect without limitation as to time.
ARTICLE VI
CERTAIN COVENANTS AND AGREEMENTS OF REPAP AND BUYER
Section VI.1 ACCESS AND INFORMATION.
(a) Repap shall permit Buyer and its representatives after the date of
execution of this Agreement to have reasonable access, dur-ing
regular business hours and upon reasonable advance notice, to the
real property owned or leased by Repap USA and the Subsidiaries and
to the officers, key employees, customers, suppliers and parties to
material contracts of Repap USA and the Subsidiaries, subject to
Repap's reasonable rules and regulations, and shall furnish, or cause
to be furnished, to Buyer any financial and operating data and other
information that is available with respect to the Business and
properties of Repap USA and the Subsidiaries as may be reasonably
necessary for Buyer and Repap
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to obtain any third party action, consent or approval required
hereunder or as Buyer shall from time to time otherwise reasonably
request; provided that the foregoing shall not require Repap to
permit, prior to Closing, any inspection, or to disclose any
information, that (a) relates to its proprietary coating formulas and
its groundwood customers or (b) in its reasonable judgment would
result in the disclosure of any trade secrets of third parties or
violate any of Repap's, Repap USA's or any of the Subsidiaries'
obligations with respect to confidentiality if Repap shall have used
its reasonable best efforts to obtain the consent of such third party
to such inspection or disclosure.
(b) In the event of the termination of this Agreement, Buyer at its own
expense shall promptly deliver (without retaining any copies thereof)
to Repap, or (at Repap's option) confirm in writing to Repap that it
has destroyed all Confidential Information furnished to Buyer or its
representatives by Repap, Repap USA, the Subsidiaries or any of their
respective agents, employees or representatives as a result hereof or
in connection herewith, whether so obtained before or after the
execution hereof, and all analyses, compilations, forecasts, studies
or other documents prepared by Buyer or its representatives which
contain or reflect any such Confidential Information. Buyer shall at
all times prior to the Closing Date, and in the event of termination
of this Agreement, cause any Confidential Information so obtained to
be kept confidential and will not use, or permit the use of, such
information in its business or in any other manner or for any other
purpose except as contemplated hereby and except as required by law.
(c) All Confidential Information provided or obtained pursuant to clause
(a) above shall be held by Buyer in accordance with and subject to
the terms of the confidentiality agreement, dated September 24, 1996,
between Buyer and Repap (the "Confidentiality Agreement"). At
Closing, the Confidentiality Agreement shall terminate and shall be
of no further force and effect except as provided therein.
(d) As used in this Agreement, "Confidential Information" means
confidential business information regarding Repap, Repap USA or the
Subsidiaries, including customer lists and files, prices and costs,
Business and financial records, information relating to personnel
contracts and offices and positions held, stock ownership,
liabilities, litigation and the terms of this Agreement and any
written analysis or other document reflecting such information that
such party prepares. However, "Confidential Information" shall not
include:
(i) any information already in the possession of Buyer prior to
September 24, 1996, or information available to Buyer from
public records or from other sources in accordance with law;
(ii) any information that is in the public domain or subsequently
enters the public domain otherwise than through disclosure by
Buyer or any of Buyer's representatives;
(iii) any information that is capable of being independently
developed by or on behalf of Buyer without reference to the
Confidential Information; or
(iv) any information that is acquired from a third party not known
by Buyer after reasonable inquiry to be providing such
information in breach of a confidentiality obligation to Repap,
Repap USA or the Subsidiaries.
(e) Repap agrees that, at Closing, Repap will assign to Buyer all rights
of Repap in connection with the Confidential Information of Repap USA
and the Subsidiaries and will deliver to Buyer copies of any written
agreements and documents relating thereto.
Section VI.2 REGISTRATIONS, FILINGS AND CONSENTS. Repap and Buyer will
cooperate and use their respective reasonable best efforts to fulfill the
conditions precedent to the other party's obligations hereunder, including but
not limited to, securing as promptly as practicable all consents, approvals,
waivers and authorizations required, necessary or desirable in connection with
the transactions contemplated hereby. Buyer and Repap will promptly file
documentary materials required by the HSR Act, the Competition Act,
Environmental Laws and each of the other items listed in Section 3.4 of Annex A
and Section 4.2 of Annex B and promptly file any additional information
requested as soon as practicable after receipt of request thereof; provided that
each party shall duly file with the FTC and the Antitrust Division the
notification and report form (the "Report") required under the HSR Act, or an
application for an advanced ruling certificate or a comparable report required
under the Competition Act with respect to the sale and purchase of the Shares no
later than three Business Days after the date hereof.
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Section VI.3 OPERATION OF BUSINESS. During the period commencing on the
date hereof and continuing until the Closing Date, unless Buyer shall otherwise
agree in writing (such agreement not to be unreasonably withheld) or as
otherwise expressly contemplated or permitted by this Agreement, Repap agrees
that it will cause:
(a) Repap USA and the Subsidiaries to carry on their Businesses in the
regular and ordinary course (in substantially the same manner as
heretofore conducted) and use their best efforts to preserve intact
their Businesses, organizations, employees, customers, suppliers and
goodwill;
(b) Repap USA and the Subsidiaries not to subdivide, consolidate,
redeem, purchase or otherwise acquire or reclassify any of their
outstanding shares of any class of capital stock, declare any
dividends on or make other distributions (whether in cash, stock or
property or any combination thereof) in respect of their shares of
any class of capital stock;
(c) Repap USA and the Subsidiaries not to amend their articles or
by-laws or similar organizational documents;
(d) Repap USA and the Subsidiaries not to issue, authorize or propose or
commit to the issuance of (whether through the issuance or granting
of options, warrants, commitments, subscriptions, rights to purchase
or otherwise), or, directly or indirectly, through an Affiliate or
otherwise, purchase or propose the purchase of, any shares in their
capital of any class or securities convertible into or exchangeable
for, or rights, warrants or options to acquire, any such shares or
other convertible or exchangeable securities;
(e) Repap USA and the Subsidiaries not to merge or consolidate with or
into any other Person;
(f) Repap USA and the Subsidiaries not to sell, lease, transfer,
mortgage, hypothecate or otherwise dispose of any of their assets or
properties, real, personal or mixed, moveable or immoveable, that are
material, individually or in the aggregate, to the Business, assets,
financial condition or results of operations of Repap USA and the
Subsidiaries or Buyer and its subsidiaries, as the case may be, taken
as a whole;
(g) Repap USA and the Subsidiaries not to (i) incur indebtedness for
money borrowed in excess of $250,000, or assume, guarantee, endorse
or otherwise become liable or responsible for the obligations of any
other Person in excess of such amount, or issue or sell any debt
securities (it being understood that such prohibition shall not
otherwise prevent or hinder the drawing of funds pursuant to lease
arrangements or credit facilities established and available as of the
date hereof); (ii) approve any new capital expenditures in excess of
$100,000 individually and $1,000,000 in the aggregate except for
those listed on Schedule 2.3(a)(iv); (iii) dispose of or incur,
create or assume any Encumbrance on any individual capital asset of
Repap USA or the Subsidiaries if the greater of the book value and
the fair market value of such capital asset exceeds $250,000 other
than Permitted Encumbrances; and (iv) enter into a contract,
agreement, commitment or arrangement with respect to any of the
foregoing;
(h) Repap USA and the Subsidiaries to grant to any officer of Repap USA
or the Subsidiaries any increase in compensation or in severance or
termination pay, or enter into new or amend existing agreements
respecting employment (including benefits) with any officer or
employee of Repap USA or the Subsidiaries, except as may be required
under employment or termination agreements in effect on the date
hereof or as may be required by law;
(i) Repap USA and the Subsidiaries to maintain inventories of raw
materials and finished goods at current levels, except for sales and
purchases in the ordinary course of business, and maintain the
properties of the Business in good repair, order and condition,
reasonable wear and tear excepted;
(j) Repap USA and the Subsidiaries not to amend or terminate any
material agreement;
(k) Repap USA and the Subsidiaries not take any action to seek,
encourage, solicit or support any inquiry, proposal, expression of
interest or offer from any other Person or entity with respect to an
acquisition, combination or similar transaction involving the Shares,
any Subsidiary, the Businesses of Repap USA and the Subsidiaries or
substantially all of the assets or securities related thereto (any
such inquiry, proposal, expression of interest or offer being
hereinafter referred to as an "Acquisition Proposal"), and Repap will
promptly inform Buyer of the existence of any such Acquisition
Proposal
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and shall not without the written consent of Buyer furnish any
information to or participate in any discussions or negotiations with
any other Person or entity regarding the same; provided, however,
that nothing contained in this Agreement shall prevent Repap or its
Subsidiaries from (A) providing information in response to a request
therefor in connection with an Acquisition Proposal by any such
Person or entity if the Board of Directors receives from such Person
or entity so requesting such information an executed confidentiality
agreement on terms substantially similar to those contained in the
Confidentiality Agreement; (B) engaging in any negotiations or
discussions with respect to an Acquisition Proposal with any such
Person or entity; or (C) terminating this Agreement in the context of
a competing Acquisition Proposal if and only to the extent that, in
each such case referred to in clause (A), (B) or (C) above, the Board
of Directors of Repap determines in good faith after consultation
with outside legal counsel that such action is necessary in order for
its directors to comply with their respective fiduciary duties under
applicable law;
(l) Repap USA or its Subsidiaries not to enter or agree to enter into
any agreement, except as otherwise set forth in this Agreement,
pursuant to which Repap or any Subsidiary would be obligated to
expend, or entitled to receive, more than $100,000 in any 12 month
period or which Repap USA or its Subsidiaries, upon cancellation by
Repap USA or the Subsidiaries upon less than three (3) months'
notice, are required to incur or fund additional expenditures,
penalties or increased costs;
(m) Repap USA and the Subsidiaries not to renew or enter into any leases
for sales offices; and
(n) Repap USA and the Subsidiaries to enter into any transaction or
perform any act which might interfere or be inconsistent with the
successful completion of the transactions contemplated by this
Agreement or which would render inaccurate any of the representations
and warranties set forth herein if such representations and
warranties were made at a date subsequent to such transaction or act
and all references to the date hereof were to such later date.
From the date hereof through the Closing, Repap shall confer on a regular
and frequent basis with one or more designated representatives of Buyer to
report material operational matters and the general status of ongoing operations
of the Businesses of Repap USA and the Subsidiaries.
Repap shall promptly notify Buyer of any material change in the financial
condition, results of operations, properties or Businesses of Repap USA or any
Subsidiary or prospects of the Businesses of Repap USA and the Subsidiaries, and
shall keep Buyer fully informed of such events and permit Buyer's
representatives to participate in all discussions relating thereto.
Section VI.4 CONTINUED EMPLOYMENT; EMPLOYEE BENEFIT PLANS.
(a) Buyer shall cause Repap USA and the Subsidiaries to, maintain for a
period of at least one year after the Closing Date the Plans
disclosed on Schedule 3.12 as in effect for the Employees on the
Closing Date, provided that, at Closing, each and every Plan subject
to the funding requirements of Section 412 of the Code has assets
sufficient to cover the applicable Plan liabilities for active,
former and retired employees, on a fully funded basis as actuarially
determined using the actuarial assumptions in effect for the Plan
year including the Closing Date; provided further, however, that,
notwithstanding the foregoing, the Severance Plans maintained by
Repap USA or any of the Subsidiaries as of the Closing Date shall
remain in effect without any modification adverse to the participants
thereunder for at least one year after the Closing Date, and any
employee whose employment is terminated and who is otherwise eligible
for severance benefits pursuant to the Severance Plans shall be
entitled to severance benefits based upon base pay and employment
position at levels at least equal to those applicable as of the
Closing Date (other than on account of any reduction in position
voluntarily agreed to in writing by any such employee). For purposes
of this Agreement, the "Severance Plans" shall mean the severance
plans of Repap USA and the Subsidiaries designated in writing by
Repap and consented to by Buyer, which consent shall not be
unreasonably withheld.
(b) Repap agrees that, prior to Closing, it will be solely liable for
obligations to the Employees under any benefit plans not maintained
by Repap USA or a Subsidiary. Effective as of the Closing Date, (i)
the Employees shall cease to participate in the employee benefit
plans of Repap or any of its Affiliates
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other than Repap USA or a Subsidiary and (ii) Repap shall cause the
Employees to be fully vested in their accounts under any such benefit
plan.
(c) Repap agrees that, prior to Closing, it will cause Repap USA and the
Subsidiaries, as applicable, to terminate certain employees as
provided by Buyer to Repap prior to Closing (the "Listed Employees");
provided, however, that Buyer acknowledges that Repap USA and the
Subsidiaries remain liable for any amounts paid to the Listed
Employees pursuant to such termination under the Severance Plans,
except for Listed Employees who, following such termination, are
employed by Repap or any Affiliate of Repap.
Buyer agrees that it shall indemnify, defend and hold harmless the Repap
Indemnified Parties from and against any Losses imposed upon the Repap
Indemnified Parties directly or indirectly relating to or arising out of the
termination of employment of the Listed Employees in violation of law,
including, but not limited to, wrongful discharge, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment
Act, ERISA, the Worker Adjustment and Retraining Notification Act (each as
amended from time to time) or similar federal, state or local laws.
(d) The Employees shall be given credit for all service with Repap,
Repap USA or any of its Subsidiaries (or service credited by Repap,
Repap USA or any of its Subsidiaries) for purposes of eligibility,
vesting and the satisfaction of any waiting periods (but not for
purposes of benefit accruals) under any employee benefit plan or
arrangement of Buyer in which they participate following the Closing
Date.
Section VI.5 RETENTION OF BOOKS AND RECORDS. Buyer shall cause Repap USA
and the Subsidiaries to retain, until all applicable tax statutes of limitations
(including periods of waiver) have expired, all books, records and other
documents pertaining to Repap USA and the Subsidiaries in existence on the
Closing Date for a period of at least five (5) years from the date hereof and to
make the same available after the Closing Date for inspection and copying by
Repap or its agents at Repap's expense, during regular business hours and upon
reasonable request and upon reasonable advance notice. After the expiration of
such period, no such books and records shall be destroyed by Buyer without first
advising the tax director or other appropriate officer of Repap in writing
detailing the contents thereof and giving Repap at least 30 days to obtain
possession thereof.
Section VI.6 CLOSING DATE FINANCIAL INFORMATION. For a period of one
year from and after the Closing Date, to the extent reasonably necessary for
Repap or its Continuing Affiliates to prepare consolidated financial statements
or any governmental permits, licenses or required filings and to comply with
reporting obligations in respect thereof, upon the written request of Repap,
Repap USA and the Subsidiaries will provide, and Buyer shall use its best
efforts to cause Repap USA and the Subsidiaries to provide, to Repap and its
accountants within 20 Business Days of such request with such computer support,
access to employees and Buyer's accountants and financial information of Repap
USA or the Subsidiaries as of the Closing Date as Repap may reasonably request.
Section VI.7 NOTIFICATION OF CERTAIN MATTERS. Until the Closing Date,
each of Buyer and Repap shall promptly notify the other if any of the
representations and warranties made by it and contained in this Agreement ceases
to be true, accurate and complete in any material respect and of any failure to
comply in any material respect with any of its obligations under this Agreement.
Notification of any breach of representation or warranty or failure to comply
with any obligations shall not constitute or be deemed a waiver of any of the
conditions set forth in Article VII or prejudice the rights of the parties
pursuant to Article VII hereof not to consummate the transactions contemplated
by this Agreement.
Section VI.8 NON-SOLICITATION OF EMPLOYEES. Repap agrees that, for a
period of one (1) year following the Closing Date, neither Repap nor any
Continuing Affiliate shall solicit the employment of any Person, other than as
agreed by the parties, it knows to be an employee of Repap USA or any of its
Subsidiaries or employ any Person it knows to be such an employee (other than
any hourly worker or any Employee who serves in a clerical function) without the
prior written consent of Buyer; provided, however, that (i) general
solicitations of employment published in a journal, newspaper or other
publication of general circulation and not specifically directed towards such
employees shall not be deemed to constitute solicitation for purposes of this
Section 6.8 and (ii) Repap, its Continuing Affiliates and representatives shall
not be prohibited from employing any such person who contacts them on his or her
own initiative and without any solicitation by Repap, its Continuing Affiliates
and representatives.
Section VI.9 FURTHER ASSURANCES. At any time after the Closing Date,
Repap and Buyer shall promptly, and Buyer shall cause Repap USA or any
Subsidiary promptly to, execute, acknowledge and deliver any other
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assurances or documents reasonably requested by Buyer or Repap, as the case may
be, and necessary for Buyer or Repap, as the case may be, to satisfy its
obligations hereunder or obtain the benefits contemplated hereby.
Section VI.10 STOCKHOLDERS MEETING. Repap shall take, in accordance with
its certificate of incorporation and by-laws, all action necessary to convene a
meeting of holders of shares of Common Stock of Repap as promptly as practicable
after the date hereof to consider and vote upon the approval of the transactions
contemplated by this Agreement. Subject to fiduciary obligations under
applicable law, the Board of Directors of Repap shall recommend such approval
and shall take all lawful action to solicit such approval.
Section VI.11 CERTAIN INTERESTS AFTER CLOSING DATE. Buyer shall cause
Repap Sales to continue to do business with WWF at a volume consistent with past
practice on Buyer's standard terms and conditions with its customers for a
period of two years beginning on the Closing Date. Buyer shall give Repap and
WWF at least six months prior written notice of its intent to terminate such
relationship; provided, however, that no such notice shall be given prior to
eighteen (18) months following the Closing Date; and, provided further, that
such relationship may be immediately terminated if WWF fails to comply with any
of its payment obligations to Repap Sales.
ARTICLE VII
CONDITIONS TO CLOSING
Section VII.1 CONDITIONS TO OBLIGATIONS OF BUYER. The obligation of
Buyer to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction or waiver by Buyer in writing on or prior to the
Closing Date of each of the following conditions:
(a) Each of the representations and warranties of Repap contained in
this Agreement which refers to a Material Adverse Effect or otherwise
makes reference to a concept of materiality shall be true when made
and as of the Closing Date, and each of the other representations and
warranties of Repap contained in this Agreement shall be true and
correct when made and as of the Closing Date, with the same effect as
though such representations and warranties had been made on and as of
the Closing Date (except (i) representations and warranties that are
made as of a specific date need be true, or true in all material
respects, as the case may be, only as of such date and (ii) as
expressly permitted by this Agreement to be changed between the date
of this Agreement and the Closing Date); each of the covenants and
agreements of Repap to be performed on or prior to the Closing Date
shall have been duly performed; and Buyer shall have received at the
Closing certificates to that effect dated as of the Closing Date and
executed on behalf of Repap by its President or any of its Vice
Presidents and its Secretary or any of its Assistant Secretaries.
(b) Buyer shall have received from Repap: (i) an opinion of Stikeman
Elliott, Canadian outside counsel to Repap, dated as of the Closing
Date, substantially in the form set forth in Schedule 7.1(b) hereof,
(ii) an opinion of Xxxxx & Xxxxxxx, U.S. outside counsel to Repap,
dated as of the Closing Date, in a form mutually acceptable to Repap
and Buyer and (iii) an opinion of Xxxxxxxx & Xxxxxxxx, U.S. outside
counsel to Repap, dated as of the Closing Date, in a form mutually
acceptable to Repap and Buyer.
(c) Repap shall have delivered to Buyer resignations of all directors of
Repap USA and the Subsidiaries and all officers of Repap USA and the
Subsidiaries.
(d) Repap shall acquire from GSP and Skeena prior to Closing, all of the
Repap Wisconsin Preferred Shares.
(e) Repap USA shall not (i) hold any interest in WWF, (ii) hold any
investment in the preferred stock of Repap; (iii) hold any investment
in the preferred stock of Skeena; and (iv) hold any interest in any
of Nitec Paper Corp., Nitec International Sales Corp. and
Nitec/Midtec Sales Inc.
(f) Except for a $4.5 million net receivable from Repap New Brunswick
Inc., which shall be paid to Repap Sales in 12 monthly installments
of equal amounts over one year with the first such installment
payable on the Closing Date, neither Repap USA nor any Subsidiary
shall have any outstanding accounts receivable from, or accounts
payable to, Repap or any Repap Affiliate, and Repap USA and the
Subsidiaries shall have terminated all agreements and arrangements
with Repap and the Repap Affiliates except as specifically provided
herein and except as set forth in Schedule 7.1(f) hereto.
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(g) Repap shall have caused the pledge to TD Capital Group Limited to be
released with respect to the capital stock of Repap USA and the
Subsidiaries.
(h) Buyer shall have received an affidavit of an officer of Repap sworn
to under penalties of perjury and dated the Closing Date, in form and
substance satisfactory to counsel for Buyer, that, as of that date,
an interest in Repap USA does not constitute a "U.S. real property
interest" within the meaning of Section 897 of the Internal Revenue
Code.
(i) Xxxxxx X. Xxxxx shall have entered into an agreement with Buyer to
vote his shares of common stock of Repap at the meeting of
stockholders of Repap contemplated in Section 6.10 to approve the
transactions contemplated by this Agreement.
Section VII.2 CONDITIONS TO OBLIGATIONS OF REPAP. The obligation of
Repap to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction or waiver by Repap in writing on or prior to the
Closing Date of each of the following conditions:
(a) Each of the representations and warranties of Buyer contained in
this Agreement qualified by a concept of materiality shall be true
when made and as of the Closing Date, and each of the other
representations and warranties of Buyer contained in this Agreement
shall be true and correct when made and as of the Closing Date, with
the same effect as though such representations and warranties had
been made on and as of the Closing Date (except (i) representations
and warranties that are made as of a specific date need be true, or
true in all material respects, as the case may be, only as of such
date and (ii) as expressly permitted by this Agreement to change
between the date of this Agreement and the Closing Date); each of the
covenants and agreements of Buyer to be performed on or prior to the
Closing Date shall have been duly performed; and Repap shall have
received at the Closing certificates to that effect dated as of the
Closing Date and executed on behalf of Buyer by its President or any
of its Vice Presidents and its Secretary or any of its Assistant
Secretaries.
(b) Repap shall have received from XxXxxxxxx, Will & Xxxxx, as counsel
for Buyer, an opinion, dated as of the Closing Date, in a form mutually
acceptable to Repap and Buyer.
Section VII.3 CONDITIONS TO OBLIGATIONS OF BUYER AND REPAP. The
obligations of the parties to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction or waiver by both parties on or
prior to the Closing Date of the following conditions:
(a) Each party shall have duly filed with the FTC and the Antitrust
Division the Report required under the HSR Act with respect to the
sale and purchase of the Shares and the waiting period required by
the HSR Act, and any extensions thereof obtained by request or other
action of the FTC and/or the Antitrust Division shall have expired or
been earlier terminated by the FTC and the Antitrust Division.
(b) No court or governmental authority of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation or non-appealable judgment, decree, injunction or
other order which is in effect on the Closing Date and prohibits the
consummation of the Closing.
(c) The agreements set forth in Schedule 7.1(f) shall have been entered
into and be in full force and effect.
(d) The transactions contemplated by this Agreement shall have been duly
approved by the Requisite Vote of the shareholders of Repap.
(e) The Competition Act Director or any person authorized to exercise
the powers and perform the duties of the Competition Act Director
shall have issued a certificate under section 102(l) of the
Competition Act to the effect that she is satisfied that she would
not have sufficient grounds on which to apply to the Competition
Tribunal established pursuant to the Competition Act under Section 92
of the Competition Act in respect of the transactions contemplated by
this Agreement or the appropriate time period specified in Section
123 of the Competition Act shall have expired or the Competition Act
Director shall have indicated in writing that she does not intend to
take any action under Section 92 of the Competition Act whether
before or after the completion of the transactions contemplated by
this Agreement.
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ARTICLE VIII
TERMINATION
Section VIII.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing:
(a) by agreement of Buyer and Repap;
(b) by either Buyer or Repap, by giving written notice of such
termination to the other party, if (x) any condition to the
terminating party's obligations hereunder has not been satisfied or
waived and (y) the Closing shall not have occurred on or prior to the
later of (i) September 30, 1997 and (ii) the expiration of the
waiting period under the HSR Act including any extensions thereof;
provided that the terminating party is not in material breach of its
obligations under this Agreement;
(c) by either Buyer or Repap, by giving written notice of such
termination to the other party, if (x) each condition thereto shall
have been satisfied or waived and (y) the Closing shall not have
occurred on or prior to the later of (i) September 30, 1997 and (ii)
the expiration of the waiting period under the HSR Act including any
extensions thereof; provided that the terminating party is not in
material breach of its obligations under this Agreement;
(d) by either Buyer or Repap if there shall be in effect any law or
regulation that prohibits the consummation of the Closing or if
consummation of the Closing would violate any non-appealable final
order, decree or judgment of any court or governmental body having
competent jurisdiction;
(e) by Repap if the Closing shall not have occurred on or prior to 10
Business Days following the satisfaction of all the conditions to
Closing set forth in Sections 7.1 and 7.3 hereof as a result of any
action or inaction by Buyer;
(f) by Buyer if the Closing shall not have occurred on or prior to 10
Business Days following the satisfaction of all the conditions to
Closing set forth in Sections 7.2 and 7.3 hereof as a result of any
action or inaction by Repap;
(g) by Buyer if Repap's Board of Directors fails to recommend that such
stockholders approve the sale of the Shares to Buyer; or
(h) by Repap, as set forth in Section 6.3(k).
Section VIII.2 EFFECT OF TERMINATION.
(a) In the event of the termination of this Agreement in accordance with
Section 8.1 hereof, this Agreement shall thereafter become void and
have no effect, and no party hereto shall have any liability to the
other party hereto or their respective Affiliates, directors,
officers or employees, except for the obligations of the parties
hereto contained in this Section 8.2 and in Sections 6.1(b), 6.1(c),
10.2 and 10.4 hereof, and except that nothing herein will relieve any
party from liability for any breach of this Agreement prior to such
termination.
(b) In the event that either (A) Repap's Board of Directors fails to
recommend that such stockholders approve the sale of the Shares to
Buyer and this Agreement is terminated pursuant to Section 8.1, or
(B) this Agreement is terminated pursuant to Section 8.1, and at any
time prior to September 30, 1998, Repap, Repap USA or any Affiliate
thereof enters into an agreement, agreement in principle, letter of
intent or similar understanding with respect to, or consummates, an
Acquisition Proposal, then Repap, Repap USA and Repap Sales shall
promptly (but in no event later than five days after the date of such
termination or the occurrence of such event as the case may be) pay,
on a joint and several basis, to Buyer a termination fee of $25.0
million payable by wire transfer of same day funds.
(c) In addition to (b) above, in the event that the approval of the
stockholders of Repap shall not have been obtained prior to September
30, 1997 and Buyer shall have terminated this Agreement pursuant to
Section 8.1, then Repap, Repap USA and Repap Sales shall pay, on a
joint and several basis, to Buyer on the business day following such
termination, a fee of $10.0 million payable by wire transfer of same
day funds. In the event that Buyer thereafter acquires the Business
from Repap on terms substantially similar to those contained herein
prior to September 30, 1998, the price paid by Buyer shall be
increased by the $10.0 million received by Buyer pursuant to this
section.
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(d) In no event shall Repap, Repap USA and Repap Sales be required to
pay, in the aggregate, more than $35.0 million pursuant to Sections
8.2(b) and (c) to this Agreement.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
Section IX.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS; KNOWLEDGE OF BREACH.
(a) Notwithstanding any otherwise applicable statute of limitations, the
representations and warranties included or provided for herein shall
survive the Closing until two (2) years after the Closing Date;
provided, however, that any representation, warranty, covenant or
agreement contained in Sections 3.14 and 3.18 of Annex A hereto,
Sections 4.4 and 4.6 of Annex B hereto, and Article V hereof shall
survive the Closing until the expiration of the applicable statute of
limitations (including any waivers or extensions thereof) with
respect to such matters; provided further, that no limitation shall
apply to claims alleging fraud on the part of a party hereto. The
covenants and other agreements contained in this Agreement shall
survive the Closing until the date or dates specified therein or the
expiration of the applicable statute of limitations (including any
waivers or extensions thereof) with respect to such matters,
whichever is later. Except with respect to the representations,
warranties, covenants and agreements contained in Sections 3.18 and
4.4 and Article V hereof, in no event shall Buyer be liable to Repap
or Repap be liable to Buyer, as the case may be, for any breach of
the representations, warranties, covenants and agreements included or
provided for herein or in any schedule or certificate or other
document delivered pursuant to this Agreement, unless and until all
claims for which damages are recoverable hereunder by Buyer or Repap,
as the case may be, exceed $1,000,000 (the "Deductible"), in which
case Buyer or Repap, as the case may be, shall be entitled to recover
on the amount of such claims in excess of the Deductible; provided,
however, that the maximum liability of Buyer or Repap, as the case
may be, for claims and damages shall be $75,000,000 (assuming an
aggregate of $76,000,000 of indemnifiable claims) (the "Maximum
Amount"); provided, further, that exclusively for purposes of this
Article IX, in determining whether there is a breach of, or action or
state of facts inconsistent with, any representation or warranty, the
terms "material", "materiality" and "Material Adverse Effect", when
applied to such representation and warranty, shall mean damages in
excess of $150,000 (the "Damage Threshold") for each individual
proven claim (or group of claims arising from the same event,
condition or course of conduct) for which indemnification is being
sought (whether or not such claim is being made against the
Deductible). For this purpose, if the relevant representation and
warranty contains a material, materiality or Material Adverse Effect
standard in the aggregate, the Damage Threshold shall similarly apply
in the aggregate.
(b) No party hereto shall be deemed to have breached any representation,
warranty, covenant or agreement if (i) such party shall have notified
the other parties hereto in writing, at least five days prior to the
Closing Date, of the breach of, or inaccuracy in, or of any facts or
circumstances constituting or resulting in the breach of or
inaccuracy in, such representation, warranty, covenant or agreement,
specifically referring to the provisions of this Agreement so
breached or rendered inaccurate, and (ii) such other party has
permitted the Closing to occur and, for purposes of this Agreement,
is thereby deemed to have waived such breach or inaccuracy; provided,
however, that a disclosure pursuant to this Section 9.1(b) shall not
prejudice the rights of the parties pursuant to Article VII hereof
not to consummate the transactions contemplated by this Agreement.
Section IX.2 INDEMNIFICATION.
(a) For a period commencing on the Closing Date and ending, as the case
may be, upon the expiration of the periods specified in Section
9.1(a) hereof, Repap on the one hand, or Buyer, on the other hand
(the "Indemnifying Party"), shall, subject to the limitations set
forth in Sections 9.1(a) and 9.1(b) hereof, indemnify respectively
Buyer, on the one hand, or Repap, on the other hand, as the case may
be (the "Indemnified Party"), against and in respect of all losses,
damages, liabilities, costs and expenses (including reasonable
attorneys' fees and expenses incurred in investigating, preparing or
defending any claims covered hereby) (collectively, "Losses")
sustained or incurred arising out of
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any breaches of the Indemnifying Party's representations, warranties,
covenants and agreements set forth in this Agreement (other than
representations, warranties, covenants and agreements set forth in
Article V, as to which the indemnification provisions set forth in
Article V shall govern). Any payments pursuant to this Section 9.2 or
Article V shall be treated as an adjustment to the Purchase Price for
all Tax purposes.
(b) Repap releases and waives any right of indemnity and contribution
from Repap USA and the Subsidiaries.
(c) The indemnity provided herein as it relates to this Agreement and
the transactions contemplated by this Agreement shall be the sole and
exclusive remedy of the parties hereto, their Affiliates, successors
and assigns with respect to any and all claims for losses, damages,
liabilities, costs and expenses sustained or incurred arising out of
this Agreement and the transactions contemplated by this Agreement,
except for the right of the parties hereto to seek specific
performance of the obligations set forth in Article II and Sections
6.4 and 6.8 of this Agreement and, except for any other remedies
available to Repap or Buyer, as the case may be, based upon fraud.
Section IX.3 METHOD OF ASSERTING CLAIMS, ETC. All claims for
indemnification by any Indemnified Party hereunder shall be asserted and
resolved as set forth in this Section 9.3 except for claims pursuant to Article
V hereof (as to which the provisions of Article V shall be applicable). In the
event that any written claim or demand for which an Indemnifying Party would be
liable to any Indemnified Party hereunder is asserted against or sought to be
collected from any Indemnified Party by a third party, such Indemnified Party
shall promptly, but in no event more than 30 Business Days following such
Indemnified Party's actual receipt of such claim or demand, notify the
Indemnifying Party of such claim or demand and the amount or the estimated
amount thereof to the extent then feasible (which estimate shall not in any
manner prejudice the right of the Indemnified Party to indemnification to the
fullest extent provided hereunder) (the "Third Party Claim Notice") and in the
event that an Indemnified Party shall assert a claim for indemnity under this
Article IX, not including a third party claim, the Indemnified Party shall
notify the Indemnifying Party promptly following its discovery of the facts or
circumstances giving rise thereto (together with a Third Party Claim Notice, a
"Claim Notice"); provided, that no such notice need be provided to an
Indemnifying Party if the Deductible has not been exceeded and will not be
exceeded by such claim or demand; and provided, further, that the failure to
notify on the part of the Indemnified Party in the manner set forth herein shall
not foreclose any rights otherwise available to such Indemnified Party
hereunder, except to the extent that the Indemnifying Party is prejudiced by
such failure to notify. The Indemnifying Party shall have 30 days from the
personal delivery or mailing of the Third Party Claim Notice (except that such a
period shall be decreased to a time 10 days before a scheduled appearance date
in a litigated matter) (the "Notice Period") to notify the Indemnified Party (i)
whether or not the Indemnifying Party disputes the liability of the Indemnifying
Party to the Indemnified Party hereunder with respect to such claim or demand
and (ii) whether or not it desires to defend the Indemnified Party against such
claim or demand, which it shall not be entitled to do until the Deductible is
exceeded. All costs and expenses incurred by the Indemnifying Party in defending
such claim or demand shall be a liability of, and shall be paid by, the
Indemnifying Party; provided, however, that the amount of such costs and
expenses incurred by the Indemnifying Party shall be separate and apart from,
and shall not be included in, the Maximum Amount. In the event that the
Indemnifying Party notifies the Indemnified Party within the Notice Period that
it desires to defend the Indemnified Party against such claim or demand, which
it shall not be entitled to do until the Deductible is exceeded and except as
hereinafter provided, the Indemnifying Party shall have the right to defend the
Indemnified Party by appropriate proceedings and by counsel reasonably
acceptable to the Indemnified Party. If any Indemnified Party desires to
participate in, but not control, any such defense or settlement it may do so at
its sole cost and expense. The Indemnified Party shall not settle a claim or
demand without the consent of the Indemnifying Party. The Indemnifying Party
shall not, without the prior written consent of the Indemnified Party, settle,
compromise or offer to settle or compromise any such claim or demand on a basis
which would result in the imposition of a consent order, injunction or decree
which would restrict the future activity or conduct of, or which would otherwise
have a material adverse effect on, the Indemnified Party or any subsidiary or
Affiliate thereof. If the Indemnifying Party elects not to defend the
Indemnified Party against such claim or demand, whether by not giving the
Indemnified Party timely notice as provided above or otherwise, then the amount
of any such claim or demand, or, if the same be contested by the Indemnified
Party, then that portion of any such claim or demand as to which such defense is
unsuccessful (and all reasonable costs and expenses pertaining to such defense)
shall be the liability of the Indemnifying Party hereunder, subject to the
limitations set forth in Section 9.1 hereof. To the extent the
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Indemnifying Party shall control or participate in the defense or settlement of
any third party claim or demand, the Indemnified Party will give to the
Indemnifying Party and its counsel reasonable access to all business records and
other documents relevant to such defense or settlement, and shall permit them to
consult with the employees and counsel of the Indemnified Party. The Indemnified
Party shall use its best efforts in the defense of all such claims, and in
connection therewith shall be entitled to reimbursement by the Indemnifying
Party of expenses directly related to efforts undertaken at the specific request
of the Indemnifying Party.
ARTICLE X
MISCELLANEOUS
Section X.1 AMENDMENT AND MODIFICATION; WAIVER. This Agreement may only
be amended or modified in writing, signed by Repap and Buyer, at any time prior
to the Closing with respect to any of the terms contained herein. At any time
prior to the Closing either Repap or Buyer may (i) extend the time for the
performance of any of the obligations or other acts of the other party hereto,
(ii) waive any inaccuracies in the representations and warranties of the other
party contained herein or in any document delivered pursuant hereto, and (iii)
waive compliance with any of the agreements or conditions of the other party
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid if set forth in an instrument in writing
signed by the party granting such extension or waiver.
Section X.2 RETURN OF INFORMATION. If for any reason whatsoever the sale
and purchase of the Shares pursuant to this Agreement is not consummated, Buyer
shall promptly return to Repap or Repap USA all books, records and documents of
Repap, Repap USA or any Subsidiary (including all copies, if any, thereof)
furnished by Repap, Repap USA, any Subsidiary or any of their respective agents,
employees or representatives, and shall not use or disclose the Confidential
Information contained in such books, records or documents for any purpose or
make such Confidential Information available to any other entity or person.
Section X.3 EXPENSES. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated by this Agreement are
consummated, the parties shall bear their own respective expenses (including,
but not limited to, all compensation and expenses of counsel, financial
advisors, consultants, actuaries and independent accountants) incurred in
connection with this Agreement and the transactions contemplated hereby.
Section X.4 PUBLIC DISCLOSURE. Each of the parties to this Agreement
hereby agrees with the other parties hereto that, except as may be required to
comply with the requirements of applicable law or the rules and regulations of
the stock exchanges upon which the securities of the parties or their Affiliates
are listed, no press release or similar public announcement or communication
will be made or caused to be made concerning the execution or performance of
this Agreement unless specifically approved in advance by all parties hereto;
provided, however, that to the extent that either party to this Agreement is
required by law or the rules and regulations of any stock exchange upon which
the securities of one of the parties or its Affiliates is listed to make such a
public disclosure, such public disclosure shall only be made after prior
consultation with the other party to this Agreement.
Section X.5 ASSIGNMENT. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written consent of
the other party hereto.
Section X.6 ENTIRE AGREEMENT. This Agreement (including all Annexes and
Schedules hereto) contains the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, oral or written, with respect to such matters, except for the
Confidentiality Agreement which will remain in full force and effect for the
term provided for therein.
Section X.7 FULFILLMENT OF OBLIGATIONS. Any obligation of any party to
any other party under this Agreement, which obligation is performed, satisfied
or fulfilled by an Affiliate of such party, shall be deemed to have been
performed, satisfied or fulfilled by such party.
Section X.8 PARTIES IN INTEREST; NO THIRD PARTY BENEFICIARIES. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer upon any Person other than
Buyer, Repap, or their successors or permitted assigns, any rights or remedies
under or by reason of this Agreement.
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Section X.9 SCHEDULES. The inclusion of any matter in any schedule to
this Agreement shall be deemed to be an inclusion for all purposes of this
Agreement, including each representation and warranty to which it may relate,
but inclusion therein shall expressly not be deemed to constitute an admission
by Repap, or otherwise imply, that any such matter is material or creates a
measure for materiality for the purposes of this Agreement; provided, however,
that any disclosure made in the Disclosure Documents shall not be deemed to be
an inclusion in a schedule except as specifically stated.
Section X.10 COUNTERPARTS. This Agreement and any amendments hereto may
be executed in one or more counterparts, each of which shall be deemed to be an
original by the parties executing such counterpart, but all of which shall be
considered one and the same instrument.
Section X.11 SECTION HEADINGS. The section and paragraph headings and
table of contents contained in this Agreement are for reference purposes only
and shall not in any way affect the meaning or interpretation of this Agreement.
Section X.12 NOTICES. All notices hereunder shall be deemed given if in
writing and delivered personally, by express delivery service or sent by
facsimile (confirmation requested), to the parties at the following addresses
(or at such other addresses as shall be specified by like notice):
(a) if to Repap, to:
Repap Enterprises Inc.
0000 Xxxx-Xxxxxxxx Xxxx. Xxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxx
X0X 0X0 Xxxxxx
Attention: Xxxxx X. XxXxxxx, Esq.
Vice President and General Counsel
Fax: (000) 000-0000
With a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
(b) if to Buyer, to: Consolidated Papers, Inc.
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
General Counsel and Secretary
Fax: (000) 000-0000
With a copy to:
XxXxxxxxx, Will & Xxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Xx., P.C.
Fax: (000) 000-0000
Any notice given by delivery shall be effective when received. Any notice
given by facsimile shall be effective when the appropriate facsimile answerback
is received.
Section X.13 GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF
FORUM. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF WISCONSIN WITHOUT REFERENCE TO THE CHOICE OF LAW
PRINCIPLES THEREOF. EACH PARTY HERETO AGREES THAT IT SHALL BRING ANY ACTION OR
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PROCEEDING IN RESPECT OF ANY CLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT
OR THE TRANSACTIONS CONTAINED IN OR CONTEMPLATED BY THIS AGREEMENT, WHETHER IN
TORT OR CONTRACT OR AT LAW OR IN EQUITY, EXCLUSIVELY IN THE UNITED STATES
DISTRICT COURT FOR THE EASTERN DISTRICT OF WISCONSIN (THE "CHOSEN COURT") AND
(I) IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE CHOSEN COURT, (II)
WAIVES ANY OBJECTION TO LAYING VENUE IN ANY SUCH ACTION OR PROCEEDING IN THE
CHOSEN COURT, (III) WAIVES ANY OBJECTION THAT THE CHOSEN COURT IS AN
INCONVENIENT FORUM OR DOES NOT HAVE JURISDICTION OVER ANY PARTY HERETO AND (IV)
AGREES THAT SERVICE OF PROCESS UPON SUCH PARTY IN ANY SUCH ACTION OR PROCEEDING
SHALL BE EFFECTIVE IF NOTICE IS GIVEN IN ACCORDANCE WITH SECTION 10.12 OF THIS
AGREEMENT. REPAP IRREVOCABLY DESIGNATES F&L CORP. AS ITS AGENT AND
ATTORNEY-IN-FACT FOR THE ACCEPTANCE OF SERVICE OF PROCESS AND MAKING AN
APPEARANCE ON ITS BEHALF IN ANY SUCH CLAIM OR PROCEEDING AND TAKING ALL SUCH
ACTS AS MAY BE NECESSARY OR APPROPRIATE IN ORDER TO CONFER JURISDICTION OVER IT
UPON THE CHOSEN COURT AND REPAP STIPULATES THAT SUCH CONSENT AND APPOINTMENT IS
IRREVOCABLE AND COUPLED WITH AN INTEREST.
Section X.14 SEVERABILITY. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or entity
or any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other persons, entities or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
IN WITNESS WHEREOF, this Agreement has been signed on behalf of each of
the parties hereto as of the date first written above.
REPAP ENTERPRISES INC.
By:
Name:
Title:
By:
Name:
Title:
CONSOLIDATED PAPERS, INC.
By:
Name:
Title:
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ANNEX A
3.1 INCORPORATION AND QUALIFICATION
Repap is a corporation duly incorporated and validly subsisting under the
laws of Canada. Each of Repap USA and the Subsidiaries has been duly
incorporated, is validly existing and is in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its Business
as now being conducted and is duly registered, licensed or qualified to carry on
business in each jurisdiction in which the nature of the Business as now being
conducted by it or the property owned or leased by it makes such registration,
licensing or qualification necessary, unless the failure to be so registered or
qualified would not have a Material Adverse Effect. Schedule 3.1 sets forth each
state or other jurisdiction in which each of Repap USA and the Subsidiaries is
licensed or qualified to do business. Repap has delivered to Buyer an accurate,
correct and complete copy of its charter and by-laws and each agreement, trust,
proxy or other arrangement among its stockholders.
3.2 CAPITALIZATION
(a) The authorized capital stock of Repap USA consists of 9,000 shares
of common stock, without par value, of which the Shares are the only
issued and outstanding shares of capital stock of Repap USA. The
Shares are duly authorized, validly issued, fully paid and
non-assessable and are owned of record and beneficially by Repap.
Repap has good and valid title to the Shares and, upon consummation
of the transactions contemplated in this Agreement, shall have
transferred such title to the Shares to Buyer pursuant to the terms
of this Agreement, free and clear of any liens, charges, pledges,
security interests, adverse claims or other encumbrances including,
but not limited to, the pledge to TD Capital Group Limited made
pursuant to the Standby Loan Agreement which will be released prior
to Closing (collectively, "Encumbrances"). There are not now, and at
the Closing Date there will not be, any outstanding options, warrants
or rights to purchase or acquire, or securities convertible into or
exchangeable for, any shares in the share capital of Repap USA and
there are no contracts, commitments, agreements, understandings,
arrangements, restrictions, warrants, preemptive rights, or
outstanding subscription, convertible or exchangeable security, other
than the Standby Loan Agreement, which require Repap USA to issue,
sell or deliver any shares of its capital stock.
(b) The authorized capital stock of Repap Wisconsin consists of 300
shares of common stock, without par value, of which 105 shares of
common stock are issued and outstanding (the "Repap Wisconsin Common
Shares"), and 8,700 shares of preferred stock of which the Repap
Wisconsin Preferred Shares are the only shares of preferred stock
issued and outstanding. The Repap Wisconsin Common Shares and the
Repap Wisconsin Preferred Shares shall be referred to collectively as
the "Wisconsin Shares." The Wisconsin Shares are the only shares of
capital stock of Repap Wisconsin issued and outstanding. The
Wisconsin Shares are duly authorized, validly issued, fully paid and
non-assessable and, at Closing, will be owned of record and
beneficially by Repap or Repap USA. At Closing, Repap and Repap USA,
collectively, will have good and valid title to all the Wisconsin
Shares free and clear of all Encumbrances, including, but not limited
to, the pledge to TD Capital Group Limited made pursuant to the
Standby Loan Agreement which will be released prior to Closing. There
are not now, and at the Closing Date there will not be, any
outstanding options, warrants or rights to purchase or acquire, or
securities convertible into or exchangeable for, any shares in the
share capital of Repap Wisconsin and there are no contracts,
commitments, agreements, understandings, arrangements, restrictions,
warrants, preemptive rights, or out-standing subscription,
convertible or exchangeable security, other than the Standby Loan
Agreement, which require Repap Wisconsin to issue, sell or deliver
any shares of its capital stock.
As of the date hereof, Repap Wisconsin has outstanding $250 million in aggregate
principal amount of 9 1/4% First Priority Senior Secured Notes Due 2002 (the
"First Priority Notes") and $150 million in aggregate principal amount of 9 7/8%
Second Priority Senior Secured Notes Due 2006 (the "Second Priority Notes," and
together with the First Priority Notes, the "Priority Notes"), $23 million of
which Second Priority Notes were held by Repap Wisconsin.
(c) The authorized capital stock of Repap Sales consists of 200 shares
of common stock, without par value, of which 200 shares (the "Sales
Shares") are issued and outstanding. The Sales Shares are the
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only shares of capital stock of Repap Sales issued and outstanding.
The Sales Shares are duly authorized, validly issued, fully paid and
non-assessable and are owned of record and beneficially by Repap USA.
Repap USA has good and valid title to the Sales Shares free and clear
of all Encumbrances, except for the pledge to Ferrostaal AG which
will be released prior to Closing. There are not now, and at the
Closing Date there will not be, any outstanding options, warrants or
rights to purchase or acquire, or securities convertible into or
exchangeable for, any shares in the share capital of Repap Sales and
there are no contracts, commitments, agreements, understandings,
arrangements, restrictions, warrants, preemptive rights, or
outstanding subscription, convertible or exchangeable security, other
than the Standby Loan Agreement, which require Repap Sales to issue,
sell or deliver any shares of its capital stock.
3.3 SUBSIDIARIES
Except for Repap Sales and Repap Wisconsin (each a "Subsidiary," and,
collectively, the "Subsidiaries"), there is no corporation, association, limited
liability company, partnership, joint venture or other entity which is
controlled directly or indirectly by Repap USA or which Repap USA or any of the
Subsidiaries owns any stock or has any equity investment or other interest in
(other than WWF). At the Closing Date, the shares of capital stock of each
Subsidiary will be owned 100% by Repap USA (except for those Repap Wisconsin
Preferred Shares owned by Repap) free and clear of all Encumbrances, other than
such Encumbrances on the shares of the Subsidiaries referred to in the Standby
Loan Agreement or in favor of Ferrostaal AG, or such restrictions on transfer as
are contained in the constituting documents of the Subsidiaries; all such
capital stock is duly authorized, validly issued, fully paid and nonassessable
and such shares are the only shares of capital stock of such Subsidiaries issued
and outstanding. There are not now, and at the Closing Date there will not be,
any outstanding subscriptions, options, warrants, calls, commitments or
agreements calling for, or any preemptive rights in respect of, the issuance of
any shares in the capital of the Subsidiaries.
3.4 AUTHORITY; FILINGS, CONSENTS AND APPROVALS
Repap has the corporate power and authority to enter into this Agreement
and, subject to the receipt of the approvals, consents and authorizations
contemplated in this Agreement, to carry out the transactions contemplated
hereby. This Agreement has been, and the documents to be delivered at Closing
will be, duly authorized, executed and delivered by Repap and constitutes a
legal, valid and binding obligation of Repap, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles, and no other proceedings on
the part of Repap are necessary to authorize this Agreement and the consummation
of the transactions contemplated hereby.
Except as set forth in Schedule 3.4 or as required by the HSR Act, the
execution, delivery and performance of this Agreement will not require Repap,
Repap USA or any of the Subsidiaries to obtain any consent, waiver,
authorization or approval of, or make any filing with or give notice to, any
Person, except for such consents, waivers, authorizations or approvals which the
failure to obtain would not be reasonably likely to have a Material Adverse
Effect or would not prohibit or materially delay Repap's ability to perform its
obligations under this Agreement.
3.5 ABSENCE OF CHANGES
Except for the transactions contemplated hereby or as set forth in the
Financial Statements or Disclosure Documents or on Schedule 3.5, since June 30,
1997, (i) there has not been any material change in the financial condition,
assets, liabilities, personnel or Business of Repap USA or any Subsidiary, or in
their relationships with suppliers, customers, distributors, lenders, lessors or
others, except changes in the ordinary course of business, (ii) Repap USA and
the Subsidiaries have not declared or paid any dividends or made any
distribution of their properties or assets to shareholders, and (iii) Repap USA
and the Subsidiaries have not entered into any agreement to dispose of any of
their assets or incurred any indebtedness other than in the ordinary course of
business.
3.6 FINANCIAL STATEMENTS; DISCLOSURE DOCUMENTS
Attached hereto as Schedule 3.6(a) is a copy of (a) the unaudited
consolidated balance sheet of Repap USA and the Subsidiaries as of December 31,
1996 and the consolidated statements of operations, stockholder's equity and
cash flows for the fiscal years ended December 31, 1995 and December 31, 1996
(collectively, with the
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notes thereto, the "Financial Information") and (b) a copy of the unaudited
consolidated balance sheet (the "Balance Sheet") of Repap USA and the
Subsidiaries as of June 30, 1997 and the related consolidated statements of
operations, stockholder's equity and cash flows for the six months then ended
(collectively, with the notes thereto, the "Interim Financial Information"). The
Financial Information and the Interim Financial Information (together, the
"Financial Statements") have been prepared in accordance with GAAP (except as
may be noted therein) and present fairly, in all material respects, the
consolidated financial position of Repap USA and the Subsidiaries as of December
31, 1996 and June 30, 1997, respectively, and the consolidated statements of
operations, stockholder's equity and cash flows of Repap USA and its
Subsidiaries for the fiscal years ended December 31, 1995 and December 31, 1996
and the six months ended June 30, 1997, respectively, subject, in the case of
the Interim Financial Information, to normal year-end adjustments.
Repap Wisconsin has filed all required documents with the SEC since
February 2, 1994. As of their respective dates, Repap Wisconsin's Annual Report
on Form 10-K for the fiscal year ended December 31, 1996, and Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 1997 (the "Disclosure
Documents") complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and, at the respective
times they were filed, none of the Disclosure Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements (including, in each case, any notes there) of Repap Wisconsin
included in the Disclosure Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
GAAP (except, in the case of the unaudited statements, as permitted by Form 10-Q
of the SEC) applied on a consistent basis during the periods involved (except as
may be indicated therein or in the notes thereto) and fairly presented in all
material respects the financial position of Repap Wisconsin as at the respective
dates thereof and the results of its operations and its cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments described therein).
Except as disclosed in the Disclosure Documents or as required by GAAP, each of
Repap USA and Repap Wisconsin has not, since December 31, 1996, made any change
in the accounting practices or policies applied in the preparation of financial
statements.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES
Except as reflected in the Financial Statements of Repap USA and except as
set forth in the Disclosure Documents, neither Repap USA nor any of the
Subsidiaries has any liabilities or obligations of any nature, whether absolute
or contingent, accrued or unaccrued, liquidated or unliquidated, due or to
become due, including any liability for Taxes (collectively, "Liabilities"),
which, either individually or in the aggregate, are material to Repap USA and
the Subsidiaries taken as a whole, in excess of the Liabilities reflected or
reserved against in the Financial Statements, except those incurred in the
ordinary course of business and consistent with past practice since December 31,
1996.
3.8 NO CONFLICT
Subject to the receipt of the regulatory approvals referred to in this
Agreement or the approvals set forth on Schedule 3.4 and Schedule 3.8, the
execution and delivery of this Agreement by Repap does not, and the performance
of this Agreement by Repap and the consummation by it of the transactions
contemplated by this Agreement shall not:
(a) conflict with or violate the articles or by-laws or equivalent
organizational documents of Repap, Repap USA or any of the
Subsidiaries;
(b) conflict with or violate any law, rule, regulation, permit, order,
judgment or decree applicable to Repap, Repap USA or any of the
Subsidiaries or by which any of their respective properties is bound
or affected, the conflict with which or violation of which would have
a Material Adverse Effect or would prohibit or materially delay
Repap's ability to perform its obligations under this Agreement; or
(c) result in any breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration
or cancellation of, or result in the creation of an Encumbrance on
any of the properties or assets of Repap, Repap USA or any of the
Subsidiaries pursuant to, any note, bond, mortgage, indenture,
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contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Repap, Repap USA or any of the
Subsidiaries is a party or by which Repap, Repap USA or any of the
Subsidiaries or any of their respective properties is bound or
affected, which, in any such case, would have a Material Adverse
Effect or would prohibit or materially delay Repap's ability to
perform its obligations under this Agreement.
3.9 COMPLIANCE
Except as disclosed in the Disclosure Documents or as otherwise disclosed
herein and in Schedule 3.9 and except for any conflicts, defaults or violations
which would not, individually or in the aggregate (taking into account the
impact of any cross-defaults), have a Material Adverse Effect, neither Repap USA
nor any of the Subsidiaries is in conflict with, or in default (including
cross-defaults) or violation of, (i) its articles or by-laws or equivalent
organizational documents, (ii) any law, rule, regulation, order, permit,
judgment or decree applicable to Repap USA or any of the Subsidiaries or by
which any one of their respective properties is bound or affected or (iii) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Repap USA or any of the
Subsidiaries is a party or by which Repap USA or any of the Subsidiaries or any
of their respective properties is bound or affected.
3.10 LITIGATION
Except as disclosed in the Disclosure Documents or Schedule 3.10, there
are no claims, actions, proceedings, suits, investigations or reviews pending
or, to the Knowledge of Repap, threatened in writing against Repap USA or any of
the Subsidiaries or any of their properties before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign, that, individually or in the aggregate, would have a Material Adverse
Effect. As at the date hereof, neither Repap USA nor any of the Subsidiaries nor
any of their properties is subject to any judgment, order or decree which has or
will have a Material Adverse Effect, except as disclosed in the Disclosure
Documents or Schedule 3.10.
3.11 LABOR AND EMPLOYMENT RELATIONS
Except as disclosed in the Disclosure Documents or in writing by Repap,
neither Repap USA nor any of the Subsidiaries is a party to any written
agreement or arrangement providing for severance or termination payments or any
compensation in excess of $25,000 to any director, officer or employee as a
result of the transactions contemplated by this Agreement or any written
employment agreement with any of its directors, officers and employees. Except
as disclosed in writing by Repap, neither Repap USA nor any Subsidiary is a
party to or bound by any material labor agreement or collective bargaining
agreement respecting its employees, nor is there pending, or to the Knowledge of
Repap threatened, any strike, walkout or other work stoppage or any union
organizing effort by or respecting the employees.
Except as disclosed in writing by Repap, Repap does not have any pending
complaint filed with the National Labor Relations Board or any other
governmental agency alleging unfair labor practices, human rights violations,
employment discrimination charges, or the like against Repap USA or any of the
Subsidiaries which would have a Material Adverse Effect and, to the Knowledge of
Repap, there are no existing facts which might result in any such complaint or
charge. Each of Repap USA and each Subsidiary has complied in all material
respects with all laws, rules and regulations relating to the employment of
labor, including provisions related to wages, hours, equal opportunity,
occupational health and safety, collective bargaining and the payment of social
security and other employment taxes. There are no controversies pending or, to
the Knowledge of Repap, threatened, involving any group of employees, except
individual grievances under any collective bargaining agreement which, in the
aggregate, are not material.
3.12 BENEFIT PLANS
(a) Except as disclosed in Schedule 3.12, (i) there are no pension,
retirement, profit sharing, bonus, savings, deferred compensation,
stock option, purchase or appreciation, group insurance or other
employee benefit plans, programs or arrangements or fringe benefits
maintained or contributed to by Repap USA or any of the Subsidiaries
(each such plan, program or arrangement, a "Plan"), (ii) there are no
actions, claims, or other proceedings pending or, to the Knowledge of
Repap, threatened with respect to the Plans, (iii) no promise or
commitment to increase benefits under the
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Plans has been made except as required by law, (iv) no event has
occurred which could subject any person or fund to any tax or penalty
in connection with the Plans, where the effect of such action or
failure to comply under (ii) through (iv) above would, individually
or in the aggregate, have a Material Adverse Effect. Repap has
provided Buyer with complete and accurate copies of all the Plans.
(b) Except as disclosed in the Disclosure Documents or in Schedule 3.12,
none of the Plans is subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). With respect to each Plan
that is subject to ERISA (an "ERISA Plan") and, to the extent
specified, any ERISA Affiliate Plan (i) if such ERISA Plan is
intended to be qualified under Section 401(a) of the Code, such ERISA
Plan has been determined by the IRS to be so qualified or a
determination letter request will be filed for such Plan within the
remedial amendment period for such Plan; (ii) such ERISA Plan has
complied (in form and in operation) in all material respects with
ERISA, and all other applicable laws; (iii) no accumulated funding
deficiency, as defined in Section 302 of ERISA and Section 412 of the
Code, whether or not waived, exists with respect to such Plan or any
ERISA Affiliate Plan; (iv) with respect to each single employer ERISA
Plan and ERISA Affiliate Plan subject to Title IV of ERISA, as of the
last day of the most recent plan year ended prior to the date hereof,
the actuarially determined present value of all "benefit liabilities"
(as defined under Section 4001(a)(16) of ERISA) under such Plan,
determined on the basis of the actuarial assumptions in effect for
such plan year, did not exceed the then current value of the assets
of such Plan; and (v) none of Repap USA, the Subsidiaries or any
ERISA Affiliate has incurred or expects to incur any liability to the
United States Pension Benefit Guaranty Corporation or any withdrawal
liability under Title IV of ERISA with respect to any "Multiemployer
Plan" (as defined below), where the effect of such event, condition,
action or failure to act under (i) through (v) above would be
reasonably expected to have a Material Adverse Effect. Except as
disclosed in the Disclosure Documents or in Schedule 3.12, neither
Repap USA nor any Subsidiary maintains or contributes to any employee
welfare benefit plan (as defined in Section 3(1) of ERISA) which is
subject to ERISA and which provides medical benefits to employees
after termination of employment other than as required by Section 601
of ERISA or other applicable law.
(c) Neither Repap, Repap USA nor any ERISA Affiliate maintains or
contributes to any defined benefit pension plan subject to the
funding requirements of Section 412 of the Code, or covered under
Section 4021(a) of ERISA.
For purposes of the preceding paragraphs, "ERISA Affiliate" means (a) any
corporation which is a member of the same controlled group of corporations,
within the meaning of Section 414(b) of the Code, as Repap USA or any of the
Subsidiaries, or (b) any partnership or trade or business (whether or not
incorporated) under common control, within the meaning of Section 414(c) of the
Code, with Repap USA or any of the Subsidiaries; and "Multiemployer Plan" means
any Plan that is a "multiemployer plan" (as defined in Section 4001(a)(3) of
ERISA). "ERISA Affiliate Plan" means any single employer plan subject to Title
IV or Section 302 of ERISA maintained or contributed to by an ERISA Affiliate.
3.13 PROPERTY
Each of Repap USA and the Subsidiaries has good title to all of its
respective properties and assets (real and personal, tangible and intangible,
including leasehold interests) including all the properties and assets reflected
in the balance sheets forming part of the Financial Statements of Repap USA,
except as indicated in the notes thereto, together with all additions thereto
and less all dispositions thereof in the ordinary course of its businesses, in
each case subject to no Encumbrance except for Permitted Encumbrances and as is
reflected in the balance sheets forming part of the Financial Statements of
Repap USA, except where the failure to have such title, individually or in the
aggregate, would not be reasonably likely to have a Material Adverse Effect. To
the Knowledge of Repap, it is not aware of any need to make any material changes
or modifications to any equipment necessary to enable the Business to continue
as it has in the past.
3.14 TAX MATTERS
Except as reflected in the Financial Statements or Disclosure Documents or
as would not be reasonably likely to have a Material Adverse Effect, (i) to the
Knowledge of Repap, all Tax Returns required to be filed prior to
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the Closing Date with respect to Repap USA and the Subsidiaries have been duly
filed, (ii) to the Knowledge of Repap, all such Returns are correct and
complete, (iii) all Taxes shown to be due on such Tax Returns have been paid in
full, (iv) no deficiencies for any Taxes with respect to such Tax Returns have
been asserted, (v) to the Knowledge of Repap, no other Taxes are payable by
Repap USA and the Subsidiaries with respect to items or periods covered by such
Tax Returns (whether or not shown or reportable on such Tax Returns), (vi) no
waivers of statutes of limitation have been given or requested with respect to
any Taxes with respect to such Tax Returns, (vii) there are no audits in
process, pending or threatened with respect to such Tax Returns, (viii) to the
Knowledge of Repap, Repap USA and the Subsidiaries have withheld and paid over
all Taxes required to have been withheld and paid over, and complied with all
information reporting and backup withholding requirements, and (ix) there are no
liens on any of the assets of Repap USA with respect to Taxes, other than liens
for Taxes not yet due and payable or for Taxes that are contesting in good faith
through appropriate proceedings and for which appropriate reserves have been
established.
3.15 CONTRACTS
Except as set forth in the Disclosure Documents or the Financial
Statements or Schedule 3.15 and except for contracts entered into by Buyer or
caused by Buyer to be entered into by Repap USA or any Subsidiary in connection
with this Agreement and the transactions contemplated hereby, neither Repap USA
nor any Subsidiary is a party to, or bound by, any contract of any kind which is
to be performed or as to which Repap USA or any Subsidiary may have any right or
obligation after the Closing Date other than contracts (i) which have been
entered into in the ordinary and usual course of business consistent with past
practice and (ii) pursuant to which Repap USA or the Subsidiary, as the case may
be, is or would be obligated to expend, or entitled to receive, less than
$250,000 in any 12-month period or which is subject to cancellation by Repap USA
or the Subsidiary, as the case may be, upon less than three (3) months' notice,
without incurring any expenditure and without penalty or increased cost. All
contracts to which Repap USA or any Subsidiary is a party constitute valid and
binding obligations of Repap USA or any Subsidiary, as the case may be,
enforceable against Repap USA or any Subsidiary, as the case may be, in
accordance with their respective terms (subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles) and in full force and effect, except for such contracts the
invalidity or unenforceability of which alone or in the aggregate would not be
reasonably likely to have a Material Adverse Effect. Except as set forth in
Schedule 3.9, there is not any pending or, to the Knowledge of Repap, threatened
cancellation, existing default, or event under any such contract which, after
notice or lapse of time, or both, would constitute a default, except for such
pending or threatened cancellations, existing defaults or events which, alone or
in the aggregate, would not be reasonably likely to have a Material Adverse
Effect.
3.16 LICENSES, ETC.
Repap USA and each Subsidiary owns, possesses, or has obtained and is in
compliance with, all governmental licenses, permits, certificates, consents,
orders, grants and other authorizations (the "Licenses and Permits") necessary
to conduct its Businesses as now conducted, the failure to own, possess, obtain
or be in compliance with which would have a Material Adverse Effect, all of
which are listed on Schedule 3.16. The Licenses and Permits are valid and in
full force and effect and there are not pending, or, to the Knowledge of Repap,
threatened, any proceedings which could result in the termination, revocation,
limitation or impairment of any License or Permit. No violations have been
recorded in respect of any Licenses and Permits, and to the Knowledge of Repap
there is no meritorious basis for any such recordation.
3.17 ENVIRONMENTAL MATTERS
Except as disclosed in the Disclosure Documents or in Schedule 3.17, or as
would not have a Material Adverse Effect, each of Repap USA and the
Subsidiaries: (i) is in substantial compliance with applicable Environmental
Laws; (ii) has not received any written notices from any governmental entity
alleging the violation of, or any claim or liability under, any applicable
Environmental Law; (iii) is not the subject of any court order, administrative
order or decree arising under any Environmental Law; (iv) has obtained all
environmental permits which are required in order to carry on their respective
Businesses and operations as presently conducted under all applicable
Environmental Laws, where noncompliance or failure to obtain the same would
have, individually or in the aggregate, a Material Adverse Effect; (v) is not a
subject to any compliance schedules or other limitations in such environmental
permits, other than permit expiration dates, which will become effective in the
future and which
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will restrict or prevent operation of the Businesses as presently conducted; and
(vi) has not to the best Knowledge of Repap spilled, released, disposed of or
discharged any hazardous substances onto property currently or previously owned
by Repap USA or the Subsidiaries which spill, release, disposal or discharge has
not been previously remediated to the extent required under the applicable
Environmental Laws. Neither Repap USA nor the Subsidiaries has at any time given
any written undertakings with respect to remedying any breach of Environmental
Laws which have not been duly performed in accordance with the terms of such
undertakings, which breach would have a Material Adverse Effect. Except as
disclosed in the Disclosure Documents or in Schedule 3.17, to the best of
Knowledge of Repap no condition or environmental contamination exists on the
property owned by Repap USA or the Subsidiaries which would cause or require
Repap USA or its Subsidiaries to investigate and/or take remedial actions under
any applicable Environmental Laws to address such conditions of contamination.
Schedule 3.17(a) sets forth all treatment, storage or disposal facilities
utilized by Repap USA or the Subsidiaries for the treatment, storage or disposal
of any hazardous substances generated by the operations or activities of Repap
USA or the Subsidiaries.
3.18 BROKERS AND FINDERS
Other than Xxxxxx, Read & Co. Inc. and TD Securities Inc., Repap, Repap
USA and the Subsidiaries have not employed any broker, finder, consultant or
intermediary in connection with the transactions contemplated by this Agreement
who would be entitled to a broker's, finder's or similar fee or commission in
connection therewith or upon the consummation thereof, or if the Closing does
not occur. Repap agrees to bear all costs it incurs, including fees and expenses
of Xxxxxx, Read & Co. Inc. and TD Securities Inc., in connection with the
transactions contemplated by this Agreement unless otherwise expressly provided
herein and Repap USA and the Subsidiaries shall not have any liability with
respect to Xxxxxx, Read & Co. Inc. and TD Securities Inc.
3.19 BOOKS AND RECORDS
The corporate records and minute books of Repap USA and the Subsidiaries
have been and are maintained in all material respects in accordance with
applicable laws.
3.20 TRANSACTIONS WITH AFFILIATES
Since December 31, 1996, there has not been any dividend or other
distribution of assets by Repap USA or any Subsidiary. Except as set forth in
Schedule 3.20, no Repap Affiliate:
(a) owns, directly or indirectly, any debt, equity or other interest or
investment in any corporation, association or other entity which is a
competitor, lessor, lessee, customer, supplier, distribution sales
agent or advertiser of Repap USA or any Subsidiary;
(b) has any cause of action or other claim whatsoever against or owes
any material amount to, or is owed any material amount by, Repap USA
or any Subsidiary, except for accrued vacation pay, employee benefits
and similar matters and except for those claims arising from existing
contracts in the ordinary course of business;
(c) has any interest in or owns any property or right used in the
conduct of the Businesses of Repap USA or any of the Subsidiaries
except for those interests arising in the ordinary course of
business;
(d) has lent or advanced any money to, or borrowed any money from, or
guaranteed or otherwise become liable for any indebtedness or other
obligations of, or acquired any capital stock, obligations or
securities of, any Subsidiary except for such transactions arising in
the ordinary course of business;
(e) is a party to any contract, lease, agreement, arrangement or
commitment used in the Business except for such transactions arising
in the ordinary course of business; or
(f) received from or furnished to the Business any goods or services
(with or without consideration) since December 31, 1996 except for
such trans-actions arising in the ordinary course of business.
The term "Repap Affiliate" shall mean any officer, director or stockholder
of Repap, or any of the Repap USA Group or any corporation (other than WWF),
partnership, trust or other entity in which Repap, or any of the Repap USA Group
or any such officer, director or stockholder has a five percent (5%) or greater
interest or is a director, officer, partner or trustee. The term Repap Affiliate
shall also include any entity which controls, or is controlled by, or is under
common control with any of the individuals or entities described in the
preceding sentence.
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3.21 INVENTORY
All inventories reflected on the Financial Statements are, and on the
Statement of Consolidated Net Working Capital will be, in all material respects,
(a) properly valued at the lower of cost or market value on a first-in,
first-out basis (or, in the case of work-in-process and finished goods, on an
average cost basis) in accordance with GAAP; (b) of good and merchantable
quality and contain no material amounts, except for job-lot that are produced in
the ordinary course of business, that are not salable and usable for the
purposes intended in the ordinary course of business and meet the current
standards and specifications of the Businesses of Repap USA and the
Subsidiaries; (c) in conformity with warranties customarily given to purchasers
of like products; and (d) at levels adequate and not excessive in relation to
the circumstances of the Businesses of Repap USA and the Subsidiaries and in
accordance with past inventory stocking practices. All inventories disposed of
subsequent to December 31, 1996, except for such dispositions that do not have a
material effect on Repap USA, have been disposed of only in the ordinary course
of business and at prices and under terms that are normal and consistent with
past practice.
3.22 INSURANCE
Schedule 3.22 sets forth an accurate, correct and complete list and
summary description (including the name of the insurer, coverage, premium and
expiration date) of all binders, policies of insurance, sell insurance programs
or fidelity bonds ("Insurance") maintained by Repap USA or a Subsidiary or in
which Repap USA or a Subsidiary is a named insured. All Insurance has been
issued by financially sound insurance companies under valid and enforceable
policies or binders for the benefit of Repap USA or a Subsidiary, and all such
policies or binders are in such types and in full force and effect and are in
amounts and for risks, casualties and contingencies customarily insured against
by enterprises in operations similar to the Businesses of Repap USA and the
Subsidiaries. There are no pending or asserted claims against any Insurance as
to which any insurer has denied liability, and there are no claims under any
Insurance that have been disallowed or improperly filed. Schedule 3.22 sets
forth the claims experience for the last two full fiscal years and the interim
period through the date hereof with respect to Repap USA and the Subsidiaries
(both insured and self-insured). No notice of cancellation or nonrenewal with
respect to, or material increase of premium for, any insurance has been received
by Repap USA or any Subsidiary. Repap has no Knowledge of any facts or the
occurrence of any event which (i) reasonably might form the basis of any claim
against Repap USA or any Subsidiary relating to the conduct or operations of
their Business and which will materially increase the insurance premiums payable
under any insurance or (ii) otherwise will materially increase the insurance
premiums payable under any insurance.
3.23 CUSTOMERS AND SUPPLIERS
(a) All sales contracts and orders with customers and suppliers were
entered into by or on behalf of Repap USA or any Subsidiary and were
entered into in the ordinary course of business for usual quantities
and at normal prices. Schedule 3.23 sets forth an accurate, correct
and complete list of the ten largest customers and ten largest
suppliers of Repap USA and of each Subsidiary, determined on the
basis of revenues from items sold (with respect to customers) or
costs of items purchased (with respect to suppliers) for each of the
fiscal year ended December 31, 1996 and the six-month period ended
June 30, 1997. To the Knowledge of Repap, no customer or supplier
will cease to do business with Repap USA or any Subsidiary after, or
as a result of, the consummation of any transactions contemplated
hereby or that any customer or supplier is threatened with bankruptcy
or insolvency in any manner that will reasonably likely have a
Material Adverse Effect. Neither Repap, Repap USA nor any of the
Subsidiaries knows of any fact, condition or event which would
adversely affect its relationship with any customer or supplier in
any manner that will reasonably likely have a Material Adverse
Effect. Since December 31, 1996, there has been no cancellation of
backlogged orders in material excess of the average rate of
cancellation prior to such date.
(b) Neither Repap USA, any Subsidiary, nor any of their officers or
employees, has, directly or indirectly, given or agreed to give any
rebate, gift or similar benefit to any supplier, customer,
distributor, broker, governmental employee or other Person, who was,
is or may be in a position to help or hinder the Business (or assist
in connection with any actual or proposed transaction) which could
subject Repap USA or any Subsidiary or Buyer to any damage or penalty
in any civil, criminal or governmental litigation or proceeding or
which would have a Material Adverse Effect.
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(c) Except as set forth on Schedule 3.23, (i) no Person within the last
twelve months has threatened in writing to cancel or otherwise
terminate, or to the Knowledge of Repap has threatened orally to
cancel or otherwise terminate, the relationship of such Person with
Repap USA and each Subsidiary in any manner that will reasonably
likely have a Material Adverse Effect, and (ii) no Person during the
last twelve months has decreased materially or threatened in writing
to decrease or limit materially, or, to the Knowledge of Repap,
intends to decrease or limit materially, its supplies to Repap USA or
any Subsidiary or its purchase of Repap USA's or any Subsidiary's
products or services. Except as set forth on Schedule 3.23, there is
no material purchase commitment which provides that any supplier will
be the exclusive supplier of Repap USA or any Subsidiary. There is no
material purchase commitment requiring Repap USA or any Subsidiary to
purchase the entire output of a supplier.
3.24 REAL ESTATE
(a) Schedule 3.24 sets forth an accurate legal description of all real
estate owned by Repap USA or any Subsidiary or for which Repap USA or
any Subsidiary has contracted to become the owner (the "Owned Real
Estate"), including identification of the current owner of fee simple
title thereto. The party identified as the owner on Schedule 3.24 is
the legal and equitable owner of good and marketable title in fee
simple absolute to such Owned Real Estate, including the building,
structures, spurtracks (as set forth on Schedule 3.24) and
improvements situated thereon and appartenances thereto, in each case
free and clear of all tenancies and other possessory interests,
security interests, conditional sale or other title retention
agreements, liens, encumbrances, mortgages, pledges, assessments,
easements, rights of way, covenants, restrictions, reservations,
options, rights of first refusal, defects in title, encroachments and
other burdens, except as disclosed on Schedule 3.24. Except as
disclosed on Schedule 3.24, Repap USA and the Subsidiaries are in
possession of the Owned Real Estate. All contracts, agreements,
options and undertakings affecting the Owned Real Estate are set
forth in Schedule 3.24 and are legally valid and binding and in full
force and effect, and, to the Knowledge of Repap, there are no
defaults, offsets, counterclaims or defenses thereunder, and neither
Repap USA nor any Subsidiary has received any notice that any
default, offset, counterclaim or defenses thereunder exists. Repap
has delivered or made available to Buyer correct and complete copies
of all such contracts, agreements, options and undertakings, as well
as copies of title commitments dated no less than one month prior to
the date hereof.
(b) Schedule 3.24 sets forth an accurate, correct and complete list of
all real estate leased, subleased or occupied by Repap USA or any
Subsidiary (such interests are the "Leased Real Estate" and,
collectively with the Owned Real Estate, are the "Real Estate"),
including identification of the lease or sublease (each a "Real
Estate Lease") and the parties thereto and list of contracts,
agreements, leases, subleases, options and commitments, oral or
written, affecting such Leased Real Estate or any interest therein to
which Repap USA or any Subsidiary is a party or by which any of its
interest in the Leased Real Estate is bound. Repap USA or any
Subsidiary has been in peaceable possession of the Leased Real Estate
since the commencement of the original term of such Real Estate
Lease. Repap has delivered to Buyer correct and complete copies of
each Real Estate Lease.
(c) To the Knowledge of Repap, no Real Estate is located within a flood
or lakeshore erosion hazard zone for which flood insurance is now
required under the National Flood Insurance Program. Neither the
whole nor any portion of any Real Estate has been condemned,
requisitioned or otherwise taken by any public authority, and no
notice of any such condemnation, requisition or taking has been
received. To the Knowledge of Repap, no such condemnation,
requisition or taking is threatened or contemplated. Repap has no
Knowledge of any public improvements which may result in any material
special assessments against or otherwise affect the Real Estate in
any material way.
(d) To the Knowledge of Repap, except as set forth on Schedule 3.17 or
3.24, the Real Estate is in material compliance with all applicable
zoning, building, health, fire, water, use or similar statutes,
codes, ordinances, laws, rules or regulations. To the Knowledge of
Repap, the zoning of each parcel of Real Estate permits the existing
improvements and the continuation following consummation of the
transaction contemplated hereby of the Business of Repap USA and the
Subsidiaries as presently conducted thereon. Repap USA and the
Subsidiaries have all certificates of occupancy and
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authorizations required to utilize the Real Estate. To the Knowledge
of Repap, Repap USA and the Subsidiaries have all easements and
rights necessary to conduct their Businesses, including easements for
all utilities, services, roadway, railway and other means of ingress
and egress. To the Knowledge of Repap, Repap USA and the Subsidiaries
hold such rights to off-site facilities as are necessary to ensure
compliance in all material respects with all zoning, building,
health, fire, water, use or similar statutes, codes, ordinances,
laws, rules or regulations and all such rights, to the extent held by
Repap, shall be conveyed as directed by Buyer at Closing. Except as
disclosed on Schedule 3.24, to the Knowledge of Repap, no fact or
condition exists which would result in the termination or impairment
of access to the Real Estate or discontinuation of sewer, water,
electric, gas, telephone, waste disposal or other utilities or
services in any manner that will reasonably likely have a Material
Adverse Effect. Except as disclosed on Schedule 3.24, to the
Knowledge of Repap, the facilities servicing the Real Estate are in
material compliance with all codes, laws, rules and regulations.
(e) Repap has delivered or made available to Buyer accurate, correct and
complete copies of all existing title insurance policies, title
reports, surveys and environmental audits and similar reports, if
any, with respect to each parcel of Real Estate.
3.25 PLANT AND EQUIPMENT
To the best Knowledge of Repap, all plant, structures and equipment
currently being used in the conduct of its operations are free from material
structural or mechanical deficiencies.
3.26 BANK ACCOUNTS
Schedule 3.26 sets forth a true and complete list of all banks in which
Repap USA and the Subsidiaries have an account, safe deposit box, lock box or
line of credit, and the names and titles of all persons authorized to draw
thereon or to have access thereto, and a summary description of the use thereof.
3.27 ACCOUNTS RECEIVABLE
Schedule 3.27 sets forth an accurate, correct and complete aging of all
outstanding accounts and notes receivable of each of Repap USA and the
Subsidiaries as of December 31, 1996. All outstanding accounts and notes
receivable reflected on the Financial Statements are due and valid claims
against account debtors for goods or services delivered or rendered and subject
to no defenses, offsets or counterclaims other than in the ordinary course of
business. All receivables arose in the ordinary course of business. No
receivables are subject to prior assignment, claim, lien or security interest.
The books and records of Repap USA and the Subsidiaries reflect amounts taken as
a reserve against noncollection of accounts receivable, which reserve has been
established in accordance with normal accounting policies consistently
maintained and there is no reason to believe that such reserve will not be
adequate for its purpose. As of the Closing Date, neither Repap USA nor any
Subsidiary will have incurred any liabilities to customers for discounts,
returns, promotional allowances or otherwise, except those granted in the
ordinary course of business and reflected on the Statement of Consolidated Net
Working Capital.
3.28 MOTOR VEHICLES
Schedule 3.28 sets forth an accurate and complete list of all motor
vehicles used in the Business of Repap USA and the Subsidiaries, whether owned
or leased. All such vehicles are (i) properly licensed and registered in
accordance with applicable law; (ii) insured as set forth on Schedule 3.28;
(iii) in good operating condition and repair (reasonable wear and tear
excepted); and (iv) not subject to any lien or other encumbrance, except as set
forth on Schedule 3.28.
3.29 PRODUCT WARRANTY
The books and records of Repap USA and of the Subsidiaries reflect amounts
taken as a reserve against claims and allowances for product warranties, which
reserve has been established in accordance with normal accounting policies and
there is no reason for Repap or Repap USA to believe that such reserve will not
be adequate for its purpose. As of the Closing Date, none of Repap USA or the
Subsidiaries will have incurred any unpaid liabilities to customers for such
claims and allowances, except those granted in the ordinary course of business.
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3.30 INTELLECTUAL PROPERTY
Repap has furnished to Buyer an accurate list, as set forth in Schedule
3.30, of all patents, utility patents and design patents and registrations
therefor, trademarks, trade names, trademark rights and trademark registrations,
copyrights and licenses, owned or used by Repap USA, the Subsidiaries and their
Businesses. All of the foregoing, together with all technical documentation
reflecting engineering and production data, plans, specifications, drawings,
technology, know how, trade secrets, software (whether owned or licensed),
manufacturing processes and all documentary evidence thereof relating to, are
hereafter referred collectively as the "Intellectual Property". The Intellectual
Property constitutes in all material respects all such assets, properties and
rights which are used in or necessary for the conduct of Businesses of Repap USA
and the Subsidiaries. To the Knowledge of Repap, no one is infringing upon any
rights of Repap USA or any Subsidiary, with respect to any of the Intellectual
Property. To the Knowledge of Repap, neither Repap USA nor any Subsidiary is
infringing on or otherwise acting adversely to the rights of any Person under,
or in respect to, any patents, patent rights, copyrights, licenses, trademarks,
trade names or trademark rights owned by any Person or Persons, and there is no
claim or action pending or threatened with respect thereto. Except as set forth
in Schedule 3.30, there are no royalty, commission or similar arrangements, and
no licenses, sublicenses or agreements pertaining to any of the Intellectual
Property.
3.31 NO OTHER REPRESENTATIONS OR WARRANTIES
Except for the representations and warranties contained in this Annex A,
neither Repap, Repap USA, the Subsidiaries nor any other Person makes any other
express or implied representation or warranty on behalf of Repap, Repap USA or
the Subsidiaries.
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ANNEX B
4.1 INCORPORATION AND QUALIFICATION
Buyer has been duly incorporated, is validly existing and is in good
standing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and is duly registered,
licensed or qualified to carry on business in each jurisdiction in which the
nature of the business as now being conducted by it or the property owned or
leased by it makes such registration, licensing or qualification necessary,
unless the failure to be so registered or qualified would not have a Material
Adverse Effect on the business, assets, financial condition or results of
operations of Buyer and its subsidiaries, taken as a whole.
4.2 AUTHORITY; FILINGS, CONSENTS AND APPROVALS
Buyer has the corporate power and authority to enter into this Agreement
and, subject to the receipt of the approvals, consents and authorizations
contemplated in this Agreement, to carry out the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered by Buyer
and constitutes a legal, valid and binding obligation of Buyer, enforceable in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles, and
no other proceedings on the part of Buyer are necessary to authorize this
Agreement and the consummation of the transactions contemplated hereby.
Except as set forth in Schedule 4.2 or as required by the HSR Act or the
filing of appropriate notices with the relevant stock exchanges, material change
reports and press releases, the execution, delivery and performance of this
Agreement will not require Buyer or any of its subsidiaries to obtain any
consent, waiver, authorization or approval of, or make any filing with or give
notice to, any Person, except for such consents, waivers, authorizations or
approvals which the failure to obtain would not be reasonably likely to have a
material adverse effect on the business, assets, financial condition or results
of operations of Buyer and its subsidiaries, taken as a whole.
4.3 NO CONFLICT
Subject to the receipt of the regulatory approvals referred to in this
Agreement or disclosed in writing to Repap, the execution and delivery of this
Agreement by Buyer does not, and the performance of this Agreement by Buyer and
the consummation by it of the transactions contemplated by this Agreement shall
not:
(a) conflict with or violate the articles or by-laws or equivalent
organizational documents of Buyer;
(b) conflict with or violate any law, rule, regulation, permit, order,
judgment or decree applicable to Buyer or its subsidiaries or by
which any of their respective properties is bound or affected, the
conflict with which or violation of which would have a material
adverse effect on the business, assets, financial condition or
results of operations of Buyer and its subsidiaries taken as a whole
or would prohibit or materially delay Buyer's ability to perform its
obligations under this Agreement; or
(c) result in any breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration
or cancellation of, or result in the creation of an Encumbrance on
any of the properties or assets of Buyer or any of its subsidiaries
pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which Buyer or any of its subsidiaries is a party or by
which Buyer or any of its subsidiaries or any of their respective
properties is bound or affected, which, in any such case, would have
a material adverse effect on the business, assets, financial
condition or results of operations of Buyer and its subsidiaries
taken as a whole or would prohibit or materially delay Buyer's
ability to perform its obligations under this Agreement.
4.4 BROKERS AND FINDERS
Other than Xxxxxxx Xxxxx Inc., Buyer has not employed any broker, finder,
consultant or intermediary in connection with the transactions contemplated by
this Agreement who would be entitled to a broker's, finder's or similar fee or
commission in connection therewith or upon the consummation thereof, or if the
Closing does not occur. Buyer agrees to bear all costs it incurs, including fees
and expenses of Xxxxxxx Xxxxx Inc., in connection with the transactions
contemplated by this Agreement unless otherwise expressly provided herein.
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4.5 FINANCIAL CAPABILITY
On the Closing Date, Buyer will have sufficient funds to purchase the
Shares on the terms and conditions contemplated by this Agreement.
4.6 SECURITIES ACT
Buyer is acquiring the Shares solely for the purpose of investment and not
with a view to, or for sale in connection with, any distribution thereof in
violation of the Securities Act. Buyer acknowledges that the Shares are not
registered under the Securities Act or any applicable state securities law, and
that such Shares may not be transferred or sold except pursuant to the
registration provisions of such Securities Act or pursuant to an applicable
exemption therefrom and pursuant to state securities laws and regulations as
applicable.
4.7 NO OTHER REPRESENTATIONS OR WARRANTIES
Except for the representations and warranties contained in this Annex B,
neither Buyer nor any other Person makes any other express or implied
representation or warranty on behalf of Buyer.
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