STOCK PURCHASE AGREEMENT
between
REPAP ENTERPRISES INC.
and
CONSOLIDATED PAPERS, INC.
Dated as of August 8, 1997
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1 Specific Definitions . . . . . . . . . . . . . . . . . . . . .
Section 1.2 Other Terms . . . . . . . . . . . . . . . . . . . . . . . . .
Section 1.3 Other Definitional Provisions . . . . . . . . . . . . . . . .
ARTICLE II
PURCHASE AND SALE OF SHARES
Section 2.1 Purchase and Sale of Shares . . . . . . . . . . . . . . . . .
Section 2.2 Closing; Delivery and Payment . . . . . . . . . . . . . . . .
Section 2.3 Adjustment to Purchase Price . . . . . . . . . . . . . . . . .
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF REPAP
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
ARTICLE V
TAX MATTERS
Section 5.1 Tax Sharing . . . . . . . . . . . . . . . . . . . . . . . . .
Section 5.2 Tax Indemnification . . . . . . . . . . . . . . . . . . . . .
Section 5.3 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . .
Section 5.4 Contest Provisions . . . . . . . . . . . . . . . . . . . . . .
Section 5.5 Information to Be Provided by Buyer . . . . . . . . . . . . .
Section 5.6 Information to Be Provided by Repap . . . . . . . . . . . . .
Section 5.7 Assistance and Cooperation . . . . . . . . . . . . . . . . . .
Section 5.8 Post-Closing Actions Which May Affect
Repap's Liability for Taxes . . . . . . . . . . . . . . . .
Section 5.9 Savings and Costs to Buyer Resulting from Adjustments to Tax
Returns for Periods Prior to Closing . . . . . . . . . . . . .
Section 5.10 Survival of Obligations . . . . . . . . . . . . . . . . . . . .
ARTICLE VI
CERTAIN COVENANTS AND AGREEMENTS
OF REPAP AND BUYER
Section 6.1 Access and Information . . . . . . . . . . . . . . . . . . . .
Section 6.2 Registrations, Filings and Consents . . . . . . . . . . . . .
Section 6.3 Operation of Business . . . . . . . . . . . . . . . . . . . .
Section 6.4 Continued Employment; Employee Benefit Plans . . . . . . . . .
Section 6.5 Retention of Books and Records . . . . . . . . . . . . . . . .
Section 6.6 Closing Date Financial Information . . . . . . . . . . . . . .
Section 6.7 Notification of Certain Matters . . . . . . . . . . . . . . .
Section 6.8 Non-Solicitation of Employees . . . . . . . . . . . . . . . .
Section 6.9 Further Assurances . . . . . . . . . . . . . . . . . . . . . .
Section 6.10 Stockholders Meeting . . . . . . . . . . . . . . . . . . . . .
Section 6.11 Certain Interests After Closing Date . . . . . . . . . . . . .
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.1 Conditions to Obligations of Buyer . . . . . . . . . . . . . .
Section 7.2 Conditions to Obligations of Repap . . . . . . . . . . . . . .
Section 7.3 Conditions to Obligations of Buyer and Repap . . . . . . . . .
ARTICLE VIII
TERMINATION
Section 8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . .
Section 8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . .
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
Section 9.1 Survival of Representations, Warranties, Covenants and
Agreements; Knowledge of Breach . . . . . . . . . . . . . . .
Section 9.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . .
Section 9.3 Method of Asserting Claims, etc. . . . . . . . . . . . . . . .
ARTICLE X
MISCELLANEOUS
Section 10.1 Amendment and Modification; Waiver . . . . . . . . . . . . . .
Section 10.2 Return of Information . . . . . . . . . . . . . . . . . . . .
Section 10.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 10.4 Public Disclosure . . . . . . . . . . . . . . . . . . . . . .
Section 10.5 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 10.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . .
Section 10.7 Fulfillment of Obligations . . . . . . . . . . . . . . . . . .
Section 10.8 Parties in Interest; No Third Party Beneficiaries . . . . . .
Section 10.9 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 10.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . .
Section 10.11 Section Headings . . . . . . . . . . . . . . . . . . . . . . .
Section 10.12 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 10.13 GOVERNING LAW; SUBMISSION TO
JURISDICTION; SELECTION OF FORUM . . . . . . . . . . . . . . .
Section 10.14 Severability . . . . . . . . . . . . . . . . . . . . . . . . .
ANNEXES
Representations of Repap Annex A . . . . . . . . . . . . . . .
Representations of Buyer Annex B . . . . . . . . . . . . . . .
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:
ARTICLE I.
DEFINITIONS
Section A. 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.
"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.
"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 B. 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 C. Other Definitional Provisions. 1. 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.
2. The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
3. The terms "dollars" and "$" shall mean United States Dollars.
ARTICLE II.
PURCHASE AND SALE OF SHARES
Section A. 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 B. Closing; Delivery and Payment. 1. 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."
2. On the Closing Date, Repap shall deliver to Buyer certificates
representing the Shares duly endorsed and in form for transfer to Buyer.
3. 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 C. Adjustment to Purchase Price. 1. The Purchase Price
shall be:
a. 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;
b. 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;
c. (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
d. 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 Buyer in writing (such agreement not to be unreasonably
withheld) (collectively, the "Capital Expenditures").
2. 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.
3. 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.
4. 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 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.
5. 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 A. 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 B. Tax Indemnification. 1. 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.
2. 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.
3. 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.
4. 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 C. Tax Returns. 1. 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.
2. 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.
3. 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.
4. 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 D. 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 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 E. 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 F. 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 G. Assistance and Cooperation. After the Closing Date,
each of Repap and Buyer shall:
a. 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;
b. 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;
c. 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;
d. 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
e. 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 H. 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.
Section I. Savings and Costs to Buyer Resulting from Adjustments
to Tax Returns for Periods Prior to Closing. 1. 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%).
2. 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.
3. 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 J. 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 A. Access and Information. 1. Repap shall permit Buyer
and its representatives after the date of execution of this Agreement to have
reasonable access, during 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 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.
2. 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.
3. 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.
4. 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:
a. 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;
b. 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;
c. any information that is capable of being independently
developed by or on behalf of Buyer without reference to the
Confidential Information; or
d. 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.
5. 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 B. 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.
Section C. 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:
1. 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;
2. 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;
3. Repap USA and the Subsidiaries not to amend their articles or
by-laws or similar organizational documents;
4. 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;
5. Repap USA and the Subsidiaries not to merge or consolidate with
or into any other Person;
6. 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;
7. 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;
8. 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;
9. 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;
10. Repap USA and the Subsidiaries not to amend or terminate any
material agreement;
11. 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 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;
12. 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;
13. Repap USA and the Subsidiaries not to renew or enter into any
leases for sales offices; and
14. 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 D. Continued Employment; Employee Benefit Plans. 1.
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.
2. 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 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.
3. 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.
4. 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 E. 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 appro-
priate officer of Repap in writing detailing the contents thereof and giving
Repap at least 30 days to obtain possession thereof.
Section F. 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 G. 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 H. 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 I. 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 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 J. 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 K. 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 A. 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:
1. 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) repre-
sentations 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 be-
half of Repap by its President or any of its Vice Presidents and its
Secretary or any of its Assistant Secretaries.
2. 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.
3. 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.
4. Repap shall acquire from GSP and Skeena prior to Closing, all
of the Repap Wisconsin Preferred Shares.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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 B. 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:
1. 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.
2. 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 C. 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:
1. 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.
2. 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.
3. The agreements set forth in Schedule 7.1(f) shall have been
entered into and be in full force and effect.
4. The transactions contemplated by this Agreement shall have been
duly approved by the Requisite Vote of the shareholders of Repap.
5. 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.
ARTICLE VIII.
TERMINATION
Section A. Termination. This Agreement may be terminated at any
time prior to the Closing:
1. by agreement of Buyer and Repap;
2. 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;
3. 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;
4. 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;
5. 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;
6. 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;
7. by Buyer if Repap's Board of Directors fails to recommend that
such stockholders approve the sale of the Shares to Buyer; or
8. by Repap, as set forth in Section 6.3(k).
Section B. Effect of Termination. 1. 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.
2. 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.
3. 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.
4. 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 A. Survival of Representations, Warranties, Covenants and
Agreements; Knowledge of Breach. 1. 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.
2. 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 B. Indemnification. 1. 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 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.
2. Repap releases and waives any right of indemnity and
contribution from Repap USA and the Subsidiaries.
3. 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 C. 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 applica-
ble). 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 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 A. 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 B. 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 C. 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 D. 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 E. 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 F. 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 G. 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 H. 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.
Section I. 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 J. 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 K. 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 L. 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):
1. 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 M. 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 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 N. 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.
Section O. 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:
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 outstanding 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 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 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, 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 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 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 with-
held 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 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 transactions 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.
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.
(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 ter-
minate, 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 appurtenances 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 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.
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.
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.
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.
SCHEDULES TO
STOCK PURCHASE AGREEMENT
SCHEDULE
2.3 Debt and Capital Expenditures
3.1 Incorporation and Qualification
3.2 Capitalization
3.3 Subsidiaries
3.4 Authority; Filings, Consents and Approvals
3.5 Absence of Changes
3.6 Financial Statements; Disclosure Documents
3.7 Absence of Undisclosed Liabilities
3.8 No Conflict
3.9 Compliance
3.10 Litigation
3.11 Labor and Employment Relations
3.12 Benefit Plans
3.13 Property
3.14 Tax Matters
3.15 Contracts
3.16 Licenses, etc.
3.17 Environmental Matters
3.18 Brokers and Finders
3.19 Books and Records
3.20 Transactions with Affiliates
3.21 Inventory
3.22 Insurance
3.23 Customers and Suppliers
3.24 Real Estate
3.25 Plant and Equipment
3.26 Bank Accounts
3.27 Accounts Receivable
3.28 Motor Vehicles
3.29 Product Warranty
3.30 Intellectual Property
3.31 No Other Representations or Warranties
4.1 Incorporation and Qualification
4.2 Authority; Filings, Consents and Approvals
4.3 No Conflict
4.4 Brokers and Finders
4.5 Financial Capability
4.6 Securities Act
4.7 No Other Representations or Warranties
7.1 Opinions of Counsel for Repap
7.2 Opinion of XxXxxxxxx, Will & Xxxxx, counsel to the Buyer
