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Exhibit 10.33(ii)
PURCHASE AGREEMENT
by and among
GEORGIA-PACIFIC CORPORATION,
CERTAIN SUBSIDIARIES OF
GEORGIA-PACIFIC CORPORATION
and
DOMTAR INC.
dated as of
June 1, 2001
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TABLE OF CONTENTS
ARTICLE I Purchase and Sale of Acquired Assets; Assumption of Assumed
Liabilities; Purchase and Sale of Shares.................................................2
1.1 Transfer of Assets..............................................................................2
1.2 Excluded Assets.................................................................................5
1.3 Assumed Liabilities.............................................................................7
1.4 Purchase and Sale of Shares....................................................................10
1.5 Purchase Price; Allocation of Purchase Price...................................................10
ARTICLE II The Closing; Purchase Price Adjustments......................................................10
2.1 Closing Date...................................................................................10
2.2 Transactions to be Effected at the Closing.....................................................10
2.3 Purchase Price Adjustment......................................................................12
2.4 Accounts Receivable Reimbursement..............................................................14
ARTICLE III Representations and Warranties of Sellers...................................................14
3.1 Organization, Standing and Power...............................................................14
3.2 Authority......................................................................................14
3.3 No Conflicts...................................................................................15
3.4 Compliance with Applicable Laws................................................................15
3.5 Litigation; Decrees............................................................................16
3.6 Capitalization; Subsidiaries; Title to Shares; Title to Assets.................................16
3.7 Sufficiency of Acquired Assets.................................................................17
3.8 Financial Information..........................................................................18
3.9 Absence of Certain Changes.....................................................................18
3.10 No Undisclosed Liabilities.....................................................................20
3.11 Real Property..................................................................................20
3.12 Intellectual Property..........................................................................22
3.13 Insurance......................................................................................23
3.14 Contracts......................................................................................24
3.15 Employee Benefits and Related Matters..........................................................26
3.16 Environmental Matters..........................................................................28
3.17 Taxes..........................................................................................29
3.18 Labor Matters..................................................................................31
3.19 Brokers........................................................................................31
3.20 Affiliate Transactions.........................................................................32
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ARTICLE IV Representations and Warranties of Purchaser..................................................32
4.1 Organization, Standing and Power...............................................................32
4.2 Authority......................................................................................32
4.3 No Conflicts...................................................................................33
4.4 Financing Commitment...........................................................................33
4.5 Litigation 33
4.6 Investment Intent..............................................................................33
4.7 Accredited Investor; Investment Representations................................................34
4.8 Brokers........................................................................................34
ARTICLE V Covenants.....................................................................................34
5.1 Conduct of Carve Out Business..................................................................34
5.2 Access to Information..........................................................................36
5.3 Further Actions................................................................................36
5.4 Information Technology.........................................................................36
5.5 Pre-Closing Publicity and Related Matters......................................................42
5.6 Ancillary Documents............................................................................42
5.7 Proration of Certain Charges...................................................................43
5.8 Real Property..................................................................................43
5.9 Adverse Changes................................................................................44
5.10 Supplemental Disclosure........................................................................45
5.11 Tax Exempt Bond Financed Facilities............................................................45
5.12 Termination of Certain Arrangements............................................................46
5.13 Environmental Site Assessment..................................................................46
5.14 Audited and Interim Financial Statements.......................................................46
5.15 Monthly Financial Information..................................................................47
5.16 Transition Services............................................................................47
5.17 Information Regarding Financing................................................................47
5.18 FERC Assets....................................................................................47
5.19 Wisconsin Real Property Transfers..............................................................49
5.20 Return of Parent Information...................................................................49
5.21 Inventory......................................................................................50
5.22 Black Liquor...................................................................................50
5.23 Cluster Testing................................................................................50
5.24 Inventory Support..............................................................................50
ARTICLE VI Conditions Precedent.........................................................................50
6.1 Conditions to Each Party's Obligation..........................................................50
6.2 Conditions to Obligation of Purchaser..........................................................51
6.3 Conditions to Obligation of Sellers............................................................52
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ARTICLE VII Termination, Amendment and Waiver...........................................................53
7.1 Termination....................................................................................53
7.2 Amendments and Waivers.........................................................................54
ARTICLE VIII Indemnification............................................................................55
8.1 Indemnification by Parent......................................................................55
8.2 Indemnification by Purchaser...................................................................56
8.3 Limitations on Indemnity Obligation............................................................57
8.4 Procedures Relating to Third Party Claims (other than Pre-Closing Environmental Liabilities)...60
8.5 Procedures Relating to Pre-Closing Environmental Liabilities...................................61
8.6 Acknowledgment; Exclusive Remedies.............................................................62
ARTICLE IX Additional Agreements........................................................................62
9.1 Survival of Representations and Warranties, etc................................................62
9.2 Confidentiality................................................................................63
9.3 Expenses.......................................................................................63
9.4 Certain Information............................................................................64
9.5 Tax Matters....................................................................................64
9.6 Name Changes...................................................................................72
9.7 Use of Certain Information.....................................................................72
9.8 Woodland Landfill..............................................................................73
ARTICLE X General Provisions............................................................................73
10.1 Notices........................................................................................73
10.2 Severability...................................................................................74
10.3 Counterparts...................................................................................74
10.4 Entire Agreement; No Third Party Beneficiaries.................................................74
10.5 Attachments....................................................................................75
10.6 Governing Law, etc.............................................................................75
10.7 Assignment.....................................................................................76
10.8 Headings.......................................................................................76
ARTICLE XI Definitions..................................................................................76
11.1 Definitions....................................................................................76
11.2 Construction and Interpretation of Certain Terms and Phrases...................................90
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EXHIBIT A-1 ASSUMED ENVIRONMENTAL LIABILITIES
EXHIBIT A-2 EXCLUDED ENVIRONMENTAL LIABILITIES
EXHIBIT B WORKING CAPITAL PRINCIPLES
EXHIBIT C TERM SHEET FOR ACCOUNTS RECEIVABLE COLLECTION AND
REMITTANCE OF FUNDS
EXHIBIT D Form of IT SUPPORT SERVICES Agreement
EXHIBIT E Form OF HUMAN RESOURCES Agreement
EXHIBIT F FORMS OF TRADEMARK LICENSE AGREEMENTs
EXHIBIT G Form of SUPPLY AND DISTRIBUTION Agreement
EXHIBIT H Form of NON-COMPETITION Agreement
EXHIBIT I Form of PULP SUPPLY Agreement
EXHIBIT J FORMS OF FIBRE SUPPLY AGREEMENTS (ashdown and
woodland)
EXHIBIT K Form of Opinion of Counsel to Parent
EXHIBIT L FORM OF SHARED SERVICES AGREEMENT
EXHIBIT M Form of OPERATING Agreement
EXHIBIT N TERM SHEET FOR INTERIM SALES AGREEMENT
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PURCHASE AGREEMENT
This Purchase Agreement (this "Agreement") is made and entered into as of
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June 1, 2001, by and among Georgia-Pacific Corporation, a Georgia corporation
("Parent"), Nekoosa Papers Inc., a Wisconsin corporation ("NPI"),
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Georgia-Pacific Resins, Inc. ("G-P Resins"), a Delaware corporation, and Domtar
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Inc., a Canadian corporation ("Purchaser").
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PRELIMINARY STATEMENT
WHEREAS, Parent and G-P Resins own pulp and paper mill operations located
in and around Woodland, Maine and certain related assets that are used in the
conduct of the Carve Out Business (as such term and other capitalized terms used
herein without definition are defined in Article XI);
WHEREAS, NPI owns pulp and paper mill operations located in and around
Nekoosa, Wisconsin; Port Xxxxxxx, Wisconsin; and Ashdown, Arkansas and certain
related assets that are used in the conduct of the Carve Out Business;
WHEREAS, Parent owns all of the outstanding shares of St. Croix Water Power
Company, a Maine corporation, The Saint Croix Water Power Company, a New
Brunswick, Canada corporation, and The Xxxxxxx'x Falls Manufacturing Company
(Limited), a New Brunswick, Canada corporation (collectively, the "Transferred
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Subsidiaries"), which own certain real property and water rights relating to
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dams used in the Woodland, Maine operation;
WHEREAS, Parent and certain Subsidiaries of Parent make available to the
Xxxxx certain services and assets that are used in the conduct of the Carve Out
Business;
WHEREAS, Purchaser wishes (i) to acquire certain assets associated with the
Xxxxx (subject to the assumption of certain obligations and liabilities
specified herein) and to acquire the Shares and (ii) to receive certain
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services, licenses and rights pursuant to certain ancillary agreements under
which Parent and certain Subsidiaries of Parent will make available certain
services and assets used in the Carve Out Business for specified periods
following the Closing, all on the terms and conditions set forth herein; and
WHEREAS, Sellers are agreeable to such a transaction, on the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements herein contained, the parties, intending to be legally
bound, agree as follows:
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ARTICLE I
Purchase and Sale of Acquired Assets;
Assumption of Assumed Liabilities; Purchase and Sale of Shares
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1.1 Transfer of Assets.
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(a) Upon the terms and subject to the conditions of this Agreement, at the
Closing, for the consideration specified in Section 1.5, Parent, NPI and G-P
Resins, as applicable, will sell, assign, transfer, convey and deliver to
Purchaser, and Purchaser will purchase and acquire from Parent, all right, title
and interest of Parent, NPI and G-P Resins, as applicable, in and to the
properties, assets and rights of every nature, kind and description, tangible
and intangible (including goodwill), whether real, personal or mixed, whether
accrued, contingent or otherwise primarily relating to or used or held for use
in the operation of the Carve Out Business as of the date hereof and at any time
following the date hereof to the Closing Date, including all such property
acquired by Parent, NPI and G-P Resins, as applicable, between the date hereof
and the Closing Date, but excluding the Excluded Assets (collectively, the
"Acquired Assets"). It is agreed that the Acquired Assets shall include, without
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limitation, the following assets, in each case as they shall exist on the
Closing Date:
(i) the Real Property, including all buildings, improvements,
fixtures and all other appurtenances thereto (including the Port Xxxxxxx
chipping facility presently under construction, the Wisconsin Sand Pit, the
Maine Non-FERC Assets, the FERC Assets, the Nepco Lake Dam, and the Weirgor
Xxxxxxxx) and all other rights and benefits in and relating to real
property (including the Wisconsin Landfill Extension Option) together with
all right, title and interest therein (the "Premises");
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(ii) except for public utilities, all water treatment facilities,
together with all pipes and canals that are used to bring water to and
discharge water from the Premises and rights to water from the Wisconsin
River and Nepco Lake;
(iii) all Inventory of Parent and NPI (other than Excluded Inventory)
located at any Mill and any Inventory of Parent and NPI (including the
Inventory of the Weirgor Xxxxxxxx) that is not located at any Mill but is
allocable to the Xxxxx in a manner consistent with the practices utilized
in the preparation of the Audited Financial Statements;
(iv) all rights in products sold or leased by or on behalf of any
Mill to third parties (including, but not limited to, products hereafter
returned or repossessed and unpaid rights or rescission, replevin,
reclamation and rights to stoppage in transit), but in the case of returned
products only to the extent that any
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corresponding obligation to a third party in respect of such products
constitutes an Assumed Liability hereunder;
(v) all production orders that are allocated to the Xxxxx in
accordance with past practice, including customer orders for at least 4,000
tons of Woodland export pulp Inventory;
(vi) all machinery, equipment, furniture, vehicles, tools, dies,
molds, rolling stock, xxxxxxxxx railroads and related equipment, office
supplies and all other items of tangible personal property owned or leased
by Parent or NPI that are located at any Mill (or are in transit to or on
order on behalf of any Mill) or are used primarily by Other Employees (as
defined in the Human Resources Agreement) (other than fixtures) who accept
an offer of post-Closing employment that he or she receives from Purchaser
prior to the Closing or during the 30-day period following the Closing or
by Employees who work at any Mill (including, but not limited to, any of
the foregoing items purchased subject to any conditional sales or title
retention agreement in favor of any other Person);
(vii) any and all Computer Hardware and Computer Software which is
physically located and operated at any Mill (or is in transit to or on
order on behalf of any Mill) (collectively, the "Mill Technology"), and any
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and all Computer Hardware (and all Computer Software loaded thereon) that
(A) constitutes a personal computer (with peripherals) that is primarily
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used by any Other Employee who accepts an offer of post-Closing employment
that he or she receives from Purchaser prior to or during the 30 day period
following the Closing or (B) is portable (e.g., laptop computers, PDA's)
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and is used primarily by an Employee who works at any Mill;
(viii) the Purchaser IT Environment on the terms provided in Section
5.4;
(ix) to the extent their transfer is permitted under Applicable
Laws, all Governmental Approvals that are used primarily in the operation
of any Mill, including any pending applications therefor (the "Permits");
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(x) all Contracts relating primarily to the business activities of
any Mill (including all Contracts specifically identified on Section
3.14(a) of the Parent Disclosure Letter as being assigned to Purchaser
hereunder), including, without limitation, any right to receive payment for
products sold or services rendered pursuant to such Contracts (to the
extent they constitute receivables under clause (xi) below), any right to
receive goods and services pursuant to such Contracts, and any right to
assert claims and take other rightful actions in respect
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of post-closing breaches, defaults and other violations of such Contracts
(such Contracts, the "Mill Contracts");
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(xi) $120 million of trade accounts receivable (the "Transferred
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Accounts Receivable") for products shipped or services provided prior to
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the Closing Date, which receivables shall be specifically identified on a
schedule to be provided by Parent to Purchaser within 15 days after the
Closing Date;
(xii) all prepaid expenses and other current assets that are
attributable to any Mill and that will inure to the benefit of Purchaser
after the Closing;
(xiii) all books of account, financial and accounting records, files,
manuals, invoices, customer and supplier lists and other business records
related primarily to any Mill, including Transferring Employee records
(other than medical records) except to the extent required by Applicable
Law to be retained by Parent or its Affiliates (in which case copies (other
than of medical records) will be provided to Purchaser), including all
records and materials maintained at the headquarters of Parent or NPI,
catalogues, price lists, correspondence, mailing lists, distribution lists,
photographs, production data, sales and promotional materials and records,
purchasing materials and records, manufacturing and quality control records
and procedures, blueprints and research and development files;
(xiv) all patents, patent applications, trade secrets, confidential
know-how, formulae, processes, procedures, trademarks, service marks,
copyrights, trade names, service names, corporate signatures, logos and
other like proprietary rights specifically listed in Section 1.1(a)(xiv) of
the Parent Disclosure Letter, including rights to xxx for and remedies
against past, present and future infringements thereof, and rights of
priority and protection of interests therein under the laws of any
jurisdiction worldwide and all tangible embodiments thereof (the "Acquired
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Intellectual Property");
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(xv) Plan assets to the extent provided in the Human Resources
Agreement; and
(xvi) all assets specifically listed in Section 1.1(a)(xvi) of the
Purchaser Disclosure Letter.
(b) At the Closing, the Acquired Assets shall be transferred or otherwise
conveyed to Purchaser free and clear of all liabilities, obligations and Liens
excepting only Assumed Liabilities and Permitted Liens or, in the case of the
Real Property, free and clear of all Title Defects, excepting only the Permitted
Real Property Exceptions.
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(c) Notwithstanding anything to the contrary contained herein, but subject
to the provisions of Section 5.3(c) and the Ancillary Documents, to the extent
any Mill Contract, order, document, instrument or other asset that is intended
to be sold, assigned, transferred, conveyed or licensed to Purchaser hereunder
or any Ancillary Document requires the consent, approval, authorization, waiver,
permit, grant, franchise, concession or license of any Person (other than any
Seller) (any of the foregoing, a "Consent") in order to consummate the
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transactions contemplated hereby and by the Ancillary Documents (any such Mill
Contract, order, document, instrument or other asset, a "Restricted Asset"),
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this Agreement will not constitute an agreement to sell, assign, transfer,
convey or license such Restricted Asset if such action would constitute a breach
of the terms of, or limit the post-Closing use and enjoyment of such Restricted
Asset. In accordance with Section 5.3(c), Section 5.4 and the expense provisions
of Section 9.3, Parent shall take all commercially reasonable actions to obtain
such Consent from such Person. Subject to Section 6.2(e), if the Closing occurs
without obtaining any such Consent regarding a Restricted Asset, Parent and its
Affiliates will, in accordance with the expense provisions of Section 9.3, take
all commercially reasonable action requested by Purchaser to obtain such Consent
after the Closing or to otherwise transfer to Purchaser the benefit of such
Restricted Asset. Without limiting the obligations of Parent under Section 5.4,
in connection with seeking any Consent, Parent and its Affiliates (i) will not
-
agree to any modifications of rights in respect of the Restricted Asset that
would be adverse to Purchaser after the Closing, (ii) shall not be required to
--
agree to any restriction on the conduct of their respective businesses, and
(iii) shall not be required to make any payment that is unreasonable in relation
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to the applicable Contract or asset. This Section 1.1(c) shall not limit or
otherwise affect Parent's obligation to seek Consents in respect of Mill
Technology and the Purchaser IT Environment, which will be governed by Section
5.4.
1.2 Excluded Assets. Notwithstanding anything in this Agreement to the
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contrary, the following assets of Parent, NPI and G-P Resins (collectively, the
"Excluded Assets") shall be excluded from and shall not constitute any part of
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the Acquired Assets:
(i) all cash and cash equivalents on hand or in banks and all bank
accounts, including trust funds with the Maine Environmental Protection
Division;
(ii) (A) all rights of Parent or its Affiliates under this Agreement
-
and the agreements, instruments and - certificates delivered in connection
with this Agreement and the certificate of incorporation and bylaws of
Sellers, qualifications to conduct business, taxpayer and other
identification numbers, corporate seals, minute books, stock transfer
records and any other document relating to the organization, maintenance
and existence of each of Parent, NPI and G-P Resins as a corporation, (B)
-
such business - records as may be located at the Xxxxx and are listed on
Section 1.2(ii) of the Parent Disclosure Letter, (C) books,
-
5
records and other information relating primarily to production orders not
allocated - to the Xxxxx, (D) medical records of Employees and (E)
-
personnel records of Employees who are not - Transferring Employees;
(iii) all records prepared by Parent and its Affiliates in connection
with the sale of the Xxxxx to Purchaser, except as otherwise specified
herein;
(iv) all rights, claims and causes of action and rights of
reimbursement (A) relating to any of the Excluded Liabilities or the
-
Excluded Assets, including rights, claims and causes of action under
insurance policies relating thereto and to the Acquired Assets, (B)
-
specifically listed in Section 1.2(iv) of the Parent Disclosure Letter or
(C) arising after the Closing relating to the pre-Closing operations of the
-
Xxxxx;
(v) all deferred Tax assets and all rights to claims available to
or being pursued by Parent, NPI and G-P Resins and their respective
Affiliates for refunds of or credits against Taxes, investment Tax credits,
research credits and credits for prepayments of Taxes attributable to
Parent or any Affiliate of Parent (other than (A) any Tax refund accrued as
-
a current asset shown on the Closing Working Capital Statement as finally
determined in accordance with Section 2.3 and (B) any refund in respect of
-
any Transfer Tax to the extent such Transfer Tax is the responsibility of
Purchaser under Section 9.5(k) of this Agreement);
(vi) any consolidated, combined, unitary or separate company Tax
Return relating to Income Taxes that includes Parent or any Affiliate of
Parent and records and work papers used in preparation thereof;
(vii) except for the Acquired Intellectual Property, all patents,
patent applications, trade secrets, confidential know-how, formulae,
processes, procedures, trademarks, service marks, copyrights, trade names,
service names, corporate signatures, logos and other like proprietary
rights owned by Parent or any Affiliate of Parent, including, without
limitation, the Georgia-Pacific logo and corporate signature, the trade
names and trademarks "Georgia-Pacific", "G-P" and "Great Northern", the
"xxxxx.xxx" and "xx.xxx" domain names and any variation, alteration,
modification or derivative thereof;
(viii) except as otherwise set forth in the Human Resources Agreement,
any asset of any Plan, including, but not limited to, the right to receive
assets of any such Plan upon termination thereof;
(ix) all properties, assets and rights of Parent relating primarily
to (A) the sawmill operations located in the Town of Baileyville, Maine,
-
the oriented strand board operations located in the Town of Baileyville,
Maine, the
6
procurement yard adjacent thereto and certain expansion lands adjacent
thereto, the exact location of each of which shall be established prior to
the Closing Date by a survey to be prepared by Plisga & Day and shall be
subject to the reasonable approval of Purchaser and Sellers (together, the
"Excluded Woodland Facilities"), and (B) the procurement operations located
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at or adjacent to the Woodland Mill or the Ashdown Mill that are identified
in Section 1.2(ix) of the Parent Disclosure Letter;
(x) all rights of Parent or any of its Affiliates to any
reimbursements from any Governmental Entity for payments made in respect of
environmental remediation or condemnation prior to the Closing (except to
the extent reflected as a current asset on the Closing Working Capital
Statement);
(xi) any and all properties or assets not located at the Xxxxx that
are utilized by Parent or its Affiliates in providing the services that are
the subject of the Ancillary Documents or the services listed in Section
3.20(a) of the Parent Disclosure Letter, other than the Purchaser IT
Environment on the terms provided in Section 5.4(b);
(xii) the real property located at or near the Woodland Mill known as
the South Princeton Landfill, and the accompanying contiguous buffer zone,
situated in the Town of Princeton, Maine, the exact location of which shall
be established prior to the Closing Date by a survey to be prepared by
Plisga & Day and shall be subject to the reasonable approval of Purchaser
and Sellers;
(xiii) the Excluded Inventory;
(xiv) the Computer Hardware or Computer Software (and any associated
Contract) that is specifically listed in Section 1.2(xiv) of the Parent
Disclosure Letter; and
(xv) (A) all Contracts relating to benefit plans and arrangements
-
except to the extent provided in the Human Resources Agreement and (B) all
-
Contracts specifically identified on Section 3.14(a) of the Parent
Disclosure Letter as not being assigned to Purchaser hereunder.
1.3 Assumed Liabilities.
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(a) Subject to the terms and conditions set forth herein, at the Closing
Purchaser shall assume and undertake to pay, satisfy or discharge the following
liabilities, obligations and commitments (collectively, the "Assumed
Liabilities"):
(i) all liabilities, obligations and commitments that constitute
trade accounts payable allocated to the Xxxxx in a manner consistent with
the practices
7
utilized in the preparation of the Audited Financial Statements, and other
accrued liabilities recorded in the books and records of the Xxxxx;
(ii) all liabilities, obligations and commitments that arise after
the Closing under the Mill Contracts assigned to Purchaser at the Closing,
excluding liabilities for pre-Closing breaches except as otherwise provided
pursuant to Section 1.3(a)(iii) below;
(iii) all liabilities, obligations and commitments that it expressly
agrees to assume under the Human Resources Agreement, including accrued
vacation and related benefits to the extent assumed by Purchaser under the
Human Resources Agreement (the "Assumed Employee Liabilities");
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(iv) the litigation, proceedings and claims identified as items
IV(a)(ii), (iii), (iv), (v) and (vii) under the heading for "Woodland" in
Section 3.5 of the Parent Disclosure Letter (the "Assumed Litigation");
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(v) all Pre-Closing Environmental Liabilities relating to or
arising out of the matters for which Purchaser is identified as the
"Responsible Party" on Exhibit A-1 hereto (the "Assumed Purchaser
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Environmental Liabilities");
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(vi) all Pre-Closing Environmental Liabilities relating to or
arising out of the matters for which Parent is identified as the
"Responsible Party" on Exhibit A-1 hereto and all other Pre-Closing
Environmental Liabilities relating to or arising out of matters that are
not identified on Exhibit A-1 hereto (excluding Excluded Environmental
Liabilities and the Impaired Asset Liabilities) (the "Assumed Parent
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Environmental Liabilities");
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(vii) all liabilities, obligations or commitments (whether known or
unknown, contingent or otherwise) relating to or arising out of the
Impaired Assets (the "Impaired Asset Liabilities"); and
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(viii) any liabilities, obligations or commitments, excluding the
Excluded Liabilities, whether known or unknown, contingent or otherwise, to
the extent relating to or arising out of the operation of the Carve Out
Business or the ownership of the Acquired Assets prior to the Closing
(including any Transferred Subsidiary Pre-Closing Liability other than in
respect of Taxes) (other than those liabilities, obligations and
commitments included in clauses (i) - (vii) above)(collectively, the
"Assumed Pre-Closing Liabilities").
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(b) Except as expressly set forth in Section 1.3(a), Purchaser expressly
does not, and shall not, assume or be deemed to assume, under this Agreement or
otherwise by reason of the transactions contemplated hereby, any liabilities,
obligations or
8
commitments of Parent or any of its Affiliates of any nature whatsoever, whether
known or unknown, contingent or otherwise (collectively, the "Excluded
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Liabilities"). Without limiting the generality of the foregoing, and
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notwithstanding Section 1.3(a)(viii), the following shall constitute Excluded
Liabilities:
(i) any obligation or liability (including, without limitation, any
Pre-Closing Environmental Liability) in respect of the Excluded Assets;
(ii) any continuing liabilities of Parent or its Affiliates under
this Agreement or the Ancillary Documents or other instruments to be
delivered by Parent or its Affiliates at the Closing;
(iii) any legal, accounting, transactional, consultant, brokerage or
other expense relating to the negotiation and consummation of the
transactions contemplated hereby by or on behalf of Parent;
(iv) any deferred Tax Liability and any liability for (A) Taxes
-
imposed on, with respect to or relating to the Acquired Assets for any
Pre-Closing Tax Period or (B) Taxes of Parent or any of its Affiliates
-
(other than any liability in respect of any Transfer Tax to the extent such
Transfer Tax is the responsibility of Purchaser under Section 9.5(k) of
this Agreement);
(v) except as expressly provided otherwise in this Agreement or in
any Ancillary Document, any obligation or liability to Parent or any of its
Affiliates, including any post-Closing Date obligation or liability arising
from an Affiliated Party Transaction, other than trade accounts payable
arising in the ordinary course of business that are included in the Assumed
Liabilities;
(vi) any litigation, proceeding or claim (excluding the Assumed
Litigation and other claims and proceedings expressly assumed by Purchaser
under the Human Resources Agreement) that is pending or has been made or
asserted and of which Parent has received notice as of the Closing Date,
including without limitation any such litigation, proceeding or claim that
is set forth on Section 3.5, 3.11, 3.12, 3.15 or 3.18 of the Parent
Disclosure Letter (all such litigation, proceedings and claims described in
this clause (vi), the "Pending Litigation");
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(vii) all Pre-Closing Environmental Liabilities relating to or
arising out of the matters for which Parent is identified as the
"Responsible Party" on Exhibit A-2 hereto (the "Excluded Environmental
----------------------
Liabilities");
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(viii) all liabilities relating to or arising out of any breach prior
to the Closing of any Mill Contract other than as provided in the Human
Resources Agreement; and
(ix) all Pre-Closing Employee Liabilities other than Assumed
Employee Liabilities.
1.4 Purchase and Sale of Shares. Upon the terms and subject to the
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conditions of this Agreement, at the Closing, for the consideration specified in
Section 1.5, Parent will sell, transfer and deliver to Purchaser free and clear
of all Liens, and Purchaser will purchase, acquire and accept from Parent, the
Shares.
1.5 Purchase Price; Allocation of Purchase Price.
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(a) The aggregate purchase price for the Acquired Assets and the Shares
shall be $1,650,000,000 (the "Purchase Price"), payable in the manner described
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in Section 2.2(b)(i) and subject to adjustment as set forth in Section 2.3.
(b) Purchaser and Parent agree to allocate the Purchase Price between the
Shares and the Acquired Assets in accordance with Section 9.5(d)(i) of this
Agreement. Any adjustment to the Purchase Price pursuant to Section 2.3 or
otherwise shall be allocated to the Shares on the one hand or the Acquired
Assets on the other hand as determined in good faith by Purchaser.
ARTICLE II
The Closing; Purchase Price Adjustments
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2.1 Closing Date. The closing of the transactions contemplated by this
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Agreement (the "Closing") shall take place at the New York offices of Debevoise
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& Xxxxxxxx, at 10:00 a.m., local time, on (i) the second Business Day following
-
the last to be fulfilled or waived of the conditions set forth in Article VI
(other than those conditions which are only capable of being fulfilled as of
such date), or (ii) such other time, date or place as the parties hereto may
--
agree in writing. The date on which the Closing shall occur is herein referred
to as the "Closing Date".
------------
2.2 Transactions to be Effected at the Closing.
------------------------------------------
(a) Sellers shall deliver or cause to be delivered to Purchaser the
following:
(i) such appropriately executed special or limited warranty deeds
in local customary form, bills of sale, assignments, affidavits of title
and other instruments of transfer as shall be necessary or appropriate for
the sale, assignment, transfer, conveyance and delivery as contemplated by
this Agreement
10
of the Acquired Assets (it being understood that any such document shall
not provide for any representations or warranties that are not otherwise
expressly provided for in this Agreement), provided that the transfer
--------
documents for the FERC Assets and the Nepco Lake Dam, respectively, shall
be held in escrow pursuant to an escrow arrangement reasonably satisfactory
to Purchaser and Parent pending FERC's approval of the transfer of the FERC
Licenses and any necessary compliance with Chapter 31 of the Wisconsin
Statutes as contemplated by Section 5.18;
(ii) the stock certificate or certificates representing all of the
Shares, duly endorsed in blank or accompanied by stock powers duly executed
in blank;
(iii) a duly executed copy of each of the Ancillary Documents to
which Parent or an affiliate of Parent is a party; and
(iv) such other instruments or documents, the delivery of which is a
condition to Closing or which may be reasonably requested by Purchaser
prior to the Closing Date or as may be necessary to effect the Closing in
accordance with this Agreement (it being understood that any such other
instrument or document shall not provide for any representations or
warranties or any obligations or liabilities that are not otherwise
expressly provided for in this Agreement).
(b) Purchaser shall deliver or cause to be delivered to Sellers, as the
case may be, the following:
(i) by wire transfer to the accounts designated in writing by
Parent at least five days prior to the Closing, immediately available U.S.
funds in an aggregate amount equal to the Purchase Price;
(ii) such appropriately executed assumption agreements and other
instruments of assumption providing for Purchaser's assumption of the
Assumed Liabilities as contemplated by this Agreement (it being understood
that any such document shall not provide for any representations or
warranties that are not otherwise expressly provided for in this
Agreement);
(iii) a duly executed copy of each of the Ancillary Documents to
which Purchaser is a party; and
(iv) such other instruments or documents, the delivery of which is a
condition to Closing or which may be reasonably requested prior to the
Closing Date by Parent or as may be necessary to effect the Closing in
accordance with this Agreement (it being understood that any such other
instrument or document shall not provide for any representations or
warranties or any obligations or liabilities that are not otherwise
expressly provided for in this Agreement).
11
2.3 Purchase Price Adjustment.
-------------------------
(a) Within 60 days following the Closing Date, Parent will prepare and
deliver or cause to be prepared and delivered to Purchaser, a working capital
statement for the Acquired Assets and the Assumed Liabilities as of the close of
business on the Closing Date (the "Closing Working Capital Statement"), audited
---------------------------------
by Xxxxxx Xxxxxxxx, independent accountants for Parent, setting forth an
itemized calculation of the current assets included in the Acquired Assets or
owned by the Transferred Subsidiaries as of the Closing Date and the current
liabilities included in the Assumed Liabilities (including for this purpose
liabilities of the Transferred Subsidiaries for Taxes (other than Combined
Income Taxes)). The excess of such current assets over such current liabilities,
as reflected on the Working Capital Statement, will be referred to herein as the
"Closing Working Capital". The Closing Working Capital Statement shall be
-----------------------
prepared in accordance with U.S. GAAP and on a basis consistent with the U.S.
GAAP principles, procedures and elections used in the Financial Statements, as
modified by the principles, procedures and elections set forth in Exhibit B
hereto (the "Working Capital Principles"). Notwithstanding the foregoing, (i)
--------------------------
the amount of the trade accounts receivable for the purposes of determining the
Closing Working Capital shall be $120,000,000 and (ii) the Closing Working
Capital Statement will not reflect any accrual for additional matching
contributions within the meaning of the applicable Parent 401(k) Plan.
(b) Following the receipt by Purchaser of the Closing Working Capital
Statement, Purchaser and its advisors and accountants shall have 45 days to
review the Closing Working Capital Statement. Purchaser shall have full access
to all information used by Parent in preparing the Closing Working Capital
Statement, including the books and records and the work papers of Parent's
accountants (subject to the reviewing party executing any customary access
letters required by Parent's accountants). The Closing Working Capital Statement
will become final and binding upon the parties on the 45th day following
delivery thereof, unless Purchaser delivers a written notice (the "Dispute
-------
Notice") to Parent prior to such date which specifies in reasonable detail the
------
amount by which and the reasons why Purchaser thinks the current assets or
current liabilities reflected on the Closing Working Capital Statement either
contain mathematical errors or were not prepared in accordance with Section
2.3(a).
(c) If Purchaser delivers a Dispute Notice in accordance with Section
2.3(b), then the parties shall, during the 30-day period beginning on the
receipt by Parent of the Dispute Notice (the "Review Period"), seek in good
-------------
faith to resolve in writing any differences which they may have with respect to
the matters specified in the Dispute Notice. If Purchaser and Parent are unable
to resolve all of the objections of Purchaser within such 30-day period, then
Purchaser and Parent shall submit such unresolved objections to the Washington,
D.C. office of Deloitte & Touche LLP (the "Third Party Accountants"). Purchaser
-----------------------
and Parent shall use reasonable efforts to cause the Third Party Accountants to
render a final, binding decision resolving the matters in dispute within 60
12
days following the submission of such matter to the Third Party Accountants. The
determination of the Third Party Accountants will be final and binding on Parent
and Purchaser and judgment may be entered upon the determination of the Third
Party Accountants in any court having jurisdiction over the party against which
such determination is to be enforced. The fees, costs and expenses of the Third
Party Accountants (i) shall be borne by Purchaser in the proportion that the
-
aggregate dollar amount of all such disputed items so submitted that are
unsuccessfully disputed by Purchaser (as finally determined by the Third Party
Accountants) bears to the aggregate dollar amount of such items so submitted and
(ii) shall be borne by Parent in the proportion that the aggregate dollar amount
--
of such disputed items so submitted that are successfully disputed by Purchaser
(as finally determined by the Third Party Accountants) bears to the aggregate
dollar amount of all such items so submitted.
(d) Within 10 days after the first to occur of (i) the Closing Working
-
Capital Statement becoming final pursuant to Section 2.3(b) or (ii) the parties
--
reaching agreement pursuant to Section 2.3(c) or (iii) the Third Party
---
Accountants rendering their decision pursuant to Section 2.3(c), a final
adjustment to the Purchase Price will be made as follows:
(A) if it is determined that the Closing Working Capital is equal
to $200,000,000, then no adjustment will be made to the Purchase
Price;
(B) if it is determined that the Closing Working Capital is less
than $200,000,000, then the Purchase Price will be reduced by an
amount equal to the difference between $200,000,000 and the Closing
Working Capital, and Parent will pay to Purchaser, by wire transfer of
immediately available funds, an amount equal to such difference, plus
interest at LIBOR plus 150 basis points on such amount from the
Closing Date through the date of payment; or
(C) if it is determined that the Closing Working Capital is more
than $200,000,000, then the Purchase Price will be increased by an
amount equal to the excess of the Closing Working Capital over
$200,000,000, and Purchaser will pay to Parent, by wire transfer of
immediately available funds, an amount equal to such excess, plus
interest at LIBOR plus 150 basis points on such amount from the
Closing Date through the date of payment.
(e) Purchaser Indemnitees' rights to indemnification pursuant to Article
VIII (and any limitations on such rights) shall not be deemed to limit,
supersede or otherwise affect Purchaser's right to a full adjustment of the
Purchase Price pursuant to this Section 2.3, provided that Purchaser shall not
--------
be entitled to be indemnified under Article VIII for
13
a Loss if, and to the extent that, such Loss has been reflected in the final
calculation of Closing Working Capital.
2.4 Accounts Receivable Reimbursement. The collection and reimbursement of
---------------------------------
the Transferred Accounts Receivable shall be performed in accordance with the
terms set forth in Exhibit C.
---------
ARTICLE III
Representations and Warranties of Sellers
-----------------------------------------
As of the date hereof and as of the Closing Date, Sellers, jointly and
severally, represent and warrant to Purchaser as follows:
3.1 Organization, Standing and Power.
--------------------------------
(a) Each Seller and each Transferred Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation and has the requisite corporate power and authority to own, lease
and operate its properties and assets, to carry on its operations (including the
Carve Out Business) as now being conducted, to execute and deliver this
Agreement and each of the Ancillary Documents to which it is or will be a party,
to perform fully its obligations under this Agreement and the Ancillary
Documents, and to consummate the transactions contemplated hereby and thereby.
(b) Each Seller and each Transferred Subsidiary is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the operation of its portion of the Carve Out Business or the character of the
properties owned, leased or operated by it in connection with its portion of the
Carve Out Business makes such qualification or licensing necessary, except for
any such failure to be qualified or licensed that, individually and in the
aggregate, has not had and would not reasonably be expected to have a Material
Adverse Effect.
(c) Each Seller and each Transferred Subsidiary has made available to
Purchaser complete and correct copies of its certificate of incorporation and
by-laws or other organizational documents, in each case, as amended and in
effect on the date hereof. No Seller or Transferred Subsidiary is in violation
of any of the provisions of its certificate of incorporation or by-laws or other
organizational documents.
3.2 Authority. The execution and delivery of this Agreement and the
---------
Ancillary Documents and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action on the
part of each Seller. This Agreement and the Human Resources Agreement have each
been duly executed and delivered by each Seller which is a party thereto and
each constitutes its legal, valid and binding obligation, enforceable against
each of them in accordance with their terms.
14
Each Ancillary Document to be entered into by a Seller at the Closing will be
duly executed and delivered by such Seller, and when so executed and delivered
will constitute, the legal, valid and binding obligation of such Person
enforceable against such Person in accordance with its terms.
3.3 No Conflicts.
------------
(a) The execution, delivery and performance of this Agreement and the
Ancillary Documents by each Seller and the consummation by each Seller of the
transactions contemplated hereby and thereby do not and will not, conflict with,
or result in any violation of or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a material benefit under, or result in
the creation of any Lien (other than a Permitted Lien) upon any asset
constituting a part of the Carve Out Business under (i) the certificate of
-
incorporation or bylaws (or comparable organizational documents) of such Seller,
(ii) subject to the filings and other matters referred to in the following
--
paragraph (b), any law, judgment, order, decree, statute, ordinance, rule or
regulation applicable to Parent or any of its Affiliates, or (iii) other than as
---
set forth in Section 3.3(a) of Parent Disclosure Letter, any Contract to which
Parent or any of its Affiliates is a party or by which any of the assets
constituting a part of the Carve Out Business are bound or affected, except in
the case of clause (ii) and clause (iii), for any such conflict, violation,
default, or other consequence that, individually or in the aggregate, has not
and would not reasonably be expected to have a Material Adverse Effect.
(b) No Governmental Approval is required to be obtained or made by Parent
or any of its Affiliates in connection with the execution and delivery of this
Agreement and the Ancillary Documents or the consummation of the transactions
contemplated hereby and thereby by Seller, except for (i) compliance with and
-
filings under the HSR Act and any other applicable pre-merger notification law,
whether U.S. or foreign, (ii) the Governmental Approvals set forth in Section
--
3.3(b) of the Parent Disclosure Letter, and (iii) those the failure of which to
---
obtain or make, individually or in the aggregate, would not materially impair
the ability of a Seller to perform its obligations under this Agreement or
materially impair Purchaser's use of the Acquired Assets or operation of the
Transferred Subsidiaries immediately following the Closing.
3.4 Compliance with Applicable Laws.
-------------------------------
(a) Except as set forth in Section 3.4(a) of the Parent Disclosure Letter,
Parent and its Affiliates have complied with all Applicable Laws with respect to
the Carve Out Business and the Acquired Assets, except where such failure to so
comply, individually or in the aggregate, has not had and would not reasonably
be expected to have a Material Adverse Effect. Except as set forth in Section
3.4(a) of the Parent Disclosure Letter, since January 1, 1996, neither Parent
nor any of its Affiliates has received any written
15
notice from a Governmental Entity alleging any material non-compliance relating
to the Carve Out Business or the Acquired Assets under any such Applicable Law,
except for any alleged non-compliance that, if substantiated, individually and
in the aggregate, has not had and would not reasonably be expected to have a
Material Adverse Effect. This Section 3.4(a) does not apply to employee benefits
matters for which Section 3.15 is applicable, Environmental Laws for which
Section 3.16 is applicable, Tax matters for which Section 3.17 is applicable or
labor matters for which Section 3.18 is applicable.
(b) Section 3.4(b) of the Parent Disclosure Letter sets forth all consents,
approvals, authorizations, waivers, permits, grants, franchises, concessions,
agreements, licenses, exemptions or orders of, registrations, certificates,
declarations or filings with, or reports or notices to, any Governmental Entity
(collectively, "Governmental Approvals") necessary for, or otherwise material
----------------------
to, the use and operation of the Acquired Assets and the assets of the
Transferred Subsidiaries. Except as set forth in Section 3.4(b) of the Parent
Disclosure Letter, all such Governmental Approvals have been duly obtained and
are in full force and effect, and each of Parent and its Affiliates, as the case
may be, are in compliance with each of such Governmental Approvals held by it
with respect to the Acquired Assets and the assets of the Transferred
Subsidiaries, except for any failure to obtain or comply with a Governmental
Approval that, individually or in the aggregate, has not had and would not
reasonably be expected to have a Material Adverse Effect.
3.5 Litigation; Decrees. Except as set forth in Section 3.5 of the Parent
-------------------
Disclosure Letter (and except for any lawsuit, action or proceeding brought
after the date of this Agreement by any Person seeking to delay or prevent, or
otherwise challenging, the transactions contemplated hereby), there is no
lawsuit, action or proceeding pending, or, to the Knowledge of Parent,
threatened, against any of Parent or any of its Affiliates by any Person or
asserted by any of them against any Person that relates to the Carve Out
Business or the Acquired Assets, except for any such matter that, if resolved in
a manner adverse to Parent and its Affiliates, would not, individually or in the
aggregate reasonably be expected to have a Material Adverse Effect. None of
Parent or any of its Affiliates is in default under any material judgment,
order, injunction or decree of any Governmental Entity or arbitrator entered
against any such party that relates to the Carve Out Business or the Acquired
Assets. This Section 3.5 does not apply to Intellectual Property matters for
which Section 3.12 is applicable or labor matters for which Section 3.18 is
applicable.
3.6 Capitalization; Subsidiaries; Title to Shares; Title to Assets.
--------------------------------------------------------------
(a) The authorized capital stock and the outstanding shares of capital
stock (collectively, the "Shares") of each of the Transferred Subsidiaries is
------
set forth in Section 3.6(a) of the Parent Disclosure Letter, and there are no
other classes of stock authorized or issued. All of the Shares are duly and
validly authorized, issued and outstanding and are fully paid and
non-assessable, and owned beneficially and of record by Parent, as set
16
forth in Section 3.6(a) of the Parent Disclosure Letter. There are no shares of
capital stock of any Transferred Subsidiary held as treasury shares. There are
no preemptive rights existing with respect to the capital stock of any
Transferred Subsidiary and none of the Shares were issued in violation of any
preemptive rights. There are no outstanding warrants, options, rights, calls or
other commitments of any nature relating to the capital stock of any Transferred
Subsidiary, and there are no outstanding securities or debt obligations of any
Transferred Subsidiary convertible into or exchangeable for shares of capital
stock of any Transferred Subsidiary. There are no agreements, commitments,
restrictions or arrangements relating to ownership (including, without
limitation, repurchase or redemption), voting or receipt of dividends or
distributions in respect of any shares of any Transferred Subsidiary's capital
stock.
(b) No Transferred Subsidiary has any Subsidiaries, or owns any shares of
capital stock or other securities of, or interest in, any other Person, or is
obligated to make any capital contribution to or other investment in any other
Person. From the time that Parent acquired the Transferred Subsidiaries, they
have not employed any employees and have not engaged in any material business
activities other than the ownership of the dams used in the operation of the
Woodland Mill, the production of electric power for supply to the Woodland Mill
and other operations of Parent and activities related thereto.
(c) Except as set forth in Section 3.6(c) of the Parent Disclosure Letter,
each of Parent, NPI and G-P Resins, as the case may be, has good and valid title
to, or has legally sufficient rights to use, the Acquired Assets, in each case
free and clear of all Liens, except for Permitted Liens. This Section 3.6(c)
does not apply to Real Property, for which Section 3.11 is applicable.
3.7 Sufficiency of Acquired Assets.
------------------------------
(a) Other than the Excluded Assets, the assets owned by the Transferred
Subsidiaries and the Acquired Assets, together with the services, licenses and
rights to be provided pursuant to the Ancillary Documents and the services
referenced on Section 3.7(a) of the Parent Disclosure Letter, comprise all
assets and services used in and necessary for the conduct of the Carve Out
Business since January 1, 2000 and as of the Closing Date.
(b) The Acquired Assets and the assets of the Transferred Subsidiaries are
in all material respects adequate for the purposes for which such assets are
currently used or are held for use, and are in reasonably good repair and
operating condition (subject to normal wear and tear). To the Knowledge of
Parent, there are no facts or conditions affecting any material tangible
Acquired Assets which would, individually or in the aggregate, reasonably be
expected to materially interfere with the use, occupancy or operation thereof as
currently used, occupied or operated, or their adequacy for such use.
17
3.8 Financial Information. True and complete copies of (i) the unaudited
--------------------- -
balance sheets of the Carve Out Business as of January 1, 2000 and December 30,
2000, and the related unaudited statements of income, Parent's investment and
cash flow for each of the three years in the three-year period ended December
30, 2000, together with all related notes thereto (the "Year-End Financial
------------------
Statements"), and (ii) the unaudited balance sheet of the Carve Out Business as
---------- --
of March 31, 2001, and the related unaudited statements of income, Parent's
investment and cash flow for the three months ended March 31, 2001, together
with all related notes thereto (the "Interim Financial Statements" and together
----------------------------
with the Year-End Financial Statements, the "Financial Statements"), have been
--------------------
delivered by Parent to Purchaser. The Year-End Financial Statements, the Interim
Financial Statements, and, when delivered in accordance with Section 5.14, the
Audited Financial Statements (x) were (and, in the case of the Audited Financial
-
Statements, shall have been) prepared in accordance with the books of account
and other financial records of Parent and its Affiliates, (y) present fairly, in
-
all material respects, the consolidated financial condition and results of
operations of the Carve Out Business, as of the dates thereof or for the periods
covered thereby, as the case may be, and (z) have been (and, in the case of the
-
Audited Financial Statements, shall have been prepared) in accordance with U.S.
GAAP applied on a consistent basis from period to period, except as otherwise
stated in the Financial Statements (including the notes thereto) or in the
letter dated the date hereof delivered by Parent to Purchaser (the "Side
----
Letter"). Upon Purchaser's receipt of the Audited Financial Statements delivered
------
in accordance with Section 5.14(a), all references in this Article III to the
"Financial Statements" shall be deemed to refer to the Audited Financial
Statements and the Interim Financial Statements instead of the Year-End
Financial Statements and the Interim Financial Statements delivered prior to the
date hereof. Notwithstanding the foregoing provisions of this Section 3.8, the
Weirgor Xxxxxxxx and related Inventory and assets are not reflected in the
Year-End Financial Statements but such properties and assets will be reflected
in the Audited Financial Statements.
3.9 Absence of Certain Changes. Except as set forth on Section 3.9 of the
--------------------------
Parent Disclosure Letter, since December 30, 2000, (i) the Carve Out Business
-
has been conducted in the ordinary course and (ii) neither Parent nor any of its
--
Affiliates (solely in connection with the Carve Out Business) has:
(a) suffered any Material Adverse Effect;
(b) made any change in method of accounting or accounting practice, other
than such changes required by U.S. GAAP;
(c) sold, transferred, leased, subleased, licensed or otherwise disposed
of any properties or assets, real, personal or mixed (including, without
limitation, leasehold interests and intangible property), other than the sale of
Inventory and other sales of non-material assets in each case in the ordinary
course consistent with past practice;
18
(d) solely with respect to any Transferred Subsidiary, issued or sold any
capital stock, notes, bonds or other securities, or any option, warrant or other
right to acquire the same;
(e) solely with respect to any Transferred Subsidiary redeemed any of the
capital stock or declared, made or paid any dividends or distributions to the
holders of capital stock or otherwise;
(f) solely with respect to any Transferred Subsidiary amended or restated
its certificate of incorporation or bylaws;
(g) amended, terminated, cancelled or compromised any material claims of
or waived any other rights of substantial value to the Carve Out Business;
(h) made any express or deemed election or settled or compromised any
material liability with respect to Taxes other than in the ordinary course of
business consistent with past practice;
(i) failed to pay any creditor of the Carve Out Business any material
amount owed to such creditor when due (other than in connection with any good
faith commercial disputes relating to monies owed, services rendered or product
warranties or guarantees);
(j) mortgaged, pledged or subjected to Lien (other than Permitted Liens),
any Acquired Asset or asset of any Transferred Subsidiary;
(k) received any notice of termination of any Contract or suffered any
damage, destruction or loss (whether or not covered by insurance) which, in
either case, individually or in the aggregate, has had, or would reasonably be
expected to have or result in, a Material Adverse Effect;
(l) made any change in the rate of compensation, commission, bonus or
other direct or indirect remuneration payable, or paid or agreed or orally
promised to pay, conditionally or otherwise, any bonus, incentive, retention or
other compensation, retirement, welfare, fringe or severance benefit or vacation
pay, to or in respect of any, officer, Employee, salesman, distributor, broker
or agent of Parent or any of its Affiliates relating to the Carve Out Business,
or entered into or amended any employment, severance or similar Contract with
any such Person, except (A) in the ordinary course and consistent with past
-
practice, (B) as may be required to satisfy contractual obligations existing as
-
of the date hereof (a full and complete description of which is provided in
Section 3.9(l) of the Parent Disclosure Letter), (C) as set forth in the Human
-
Resources Agreement, or (D) to satisfy the requirements of Applicable Law,
-
unless any such action has the effect of reducing the aggregate liabilities of
Parent and its Affiliates with respect
19
to any such payments, benefits, agreements or arrangements, in each case to the
extent such Person is participating in the conduct of the Carve Out Business;
(m) had any actual or, to the Knowledge of Parent, threatened employee
strikes, work stoppages, slowdowns or lockouts, or had any materially adverse
change in its relations with its employees, agents, customers or suppliers
(taking each group as a whole);
(n) suffered any material or recurring power shortages at any of the
Xxxxx;
(o) instituted, settled or agreed to settle any litigation, action or
proceeding before any Governmental Entity relating to the Carve Out Business or
the Acquired Assets, other than in the ordinary course of business but in no
event for an amount in excess of $250,000;
(p) failed to maintain Inventory levels in the ordinary course of business
consistent with past practice or made any purchase commitment other than in the
ordinary course of business consistent with past practice;
(q) changed its methods and guidelines for allocating pulp or paper
production orders among any of its xxxxx; or
(r) agreed, whether in writing or otherwise, to take any of the actions
specified in this Section 3.9, except as expressly contemplated by this
Agreement and the Ancillary Documents.
3.10 No Undisclosed Liabilities. There are no liabilities arising out of or
--------------------------
relating to the Carve Out Business or the Acquired Assets, whether known or
unknown, absolute, accrued, contingent or otherwise and whether due or to become
due, except (i) as set forth in Section 3.10 of the Parent Disclosure Letter,
-
(ii) as and to the extent disclosed or reserved against in the audited balance
--
sheet as of December 30, 2000 included in the Financial Statements (including
the notes thereto) and (iii) for liabilities and obligations that (A) were
--- -
incurred after the date of such balance sheet in the ordinary course of business
consistent with past practice and (B) individually and in the aggregate have not
-
had or resulted in, and would not reasonably be expected to have or result in, a
Material Adverse Effect.
3.11 Real Property.
-------------
(a) Fee Properties. One of the Sellers or the Transferred Subsidiaries is
--------------
or prior to the Closing will be the owner of good, marketable and insurable fee
title to the land described in Section 3.11(a) of the Parent Disclosure Letter
and to all buildings, structures and other improvements (which term, as used in
this Agreement, shall include fixtures constituting real property) located
thereon (collectively, "Owned Real Property")
-------------------
20
free and clear of all Title Defects except for the Permitted Real Property
Exceptions. The Owned Real Property constitutes all of the real property owned
by Parent or any of its Affiliates on the date hereof that primarily relates to
or is used in or held for use in connection with the Carve Out Business.
(b) [Intentionally Omitted].
-----------------------
(c) Leased Properties. Section 3.11(c) of the Parent Disclosure Letter is a
-----------------
true and complete (except with respect to easements) list of all Contracts under
which Parent or any of its Affiliates uses or occupies or has the right to use
or occupy, now or in the future, any real property that primarily relates to or
is used in or held for use in connection with the Carve Out Business (such
Contracts, the "Real Property Leases", the land, buildings, and other
--------------------
improvements covered by the Real Property Leases being herein called the "Leased
------
Real Property"). Except for the Permitted Real Property Exceptions, Parent or
-------------
one of its Affiliates, as the case may be, have good and valid title to the
leasehold estates under, and good and valid interest in, each Real Property
Lease free and clear of all Title Defects. Except for the Permitted Real
Property Exceptions, there is no underlying mortgage, deed of trust, lease,
grant of term or other estate or interest affecting any Leased Real Property
which is superior to the interest of Parent or of its Affiliates as tenant under
the applicable Real Property Lease and the Real Property Leases will not be
subordinate to any future mortgage, deed of trust, lease, grant of term or other
estate affecting the Leased Real Property.
(d) Entire Premises. All of the land, buildings, structures and other
---------------
improvements which primarily relate to or are used in or are held for use
primarily in connection with the Carve Out Business are included in the Owned
Real Property and the Leased Real Property. The Owned Real Property and the
Leased Real Property are hereinafter collectively referred to as the "Real
----
Property".
--------
(e) No Options. Except as set forth in Section 3.11(e) of the Parent
----------
Disclosure Letter (all of which exceptions are Permitted Real Property
Exceptions), neither Parent nor any of its Affiliates owns, holds or is
obligated under or a party to, any option, right of first refusal or other
contractual right to purchase, acquire, sell or dispose of the Real Property or
any portion thereof or interest therein.
(f) Real Property Permits. All material certificates of occupancy, permits,
---------------------
licenses, franchises, approvals and authorizations (collectively, the "Real
----
Property Permits") of all Governmental Entities having jurisdiction over the
----------------
Real Property (other than with respect to the environmental matters described in
Section 3.16 and other than any required State of Wisconsin or Federal permit
required for the pipeline running under the Wisconsin River from Nepco Lake to
the Port Xxxxxxx Mill) required to have been issued to Seller or Transferred
Subsidiaries to enable the Real Property to be lawfully occupied and used for
all of the purposes for which they are currently occupied and used
21
have been lawfully issued and are, as of the date hereof, in full force and
effect. Neither Parent nor any of its Affiliates has received or been informed
by a third party of the receipt by it of any notice from any Governmental Entity
having jurisdiction over the Real Property threatening a suspension, revocation,
modification or cancellation of any Real Property Permit and, to Parent's
Knowledge, there is no basis for the issuance of any such notice or the taking
of any such action.
(g) Condemnation. Except as set forth in Section 3.11(g) of the Parent
------------
Disclosure Letter, none of the Sellers or Transferred Subsidiaries has received
notice or has Knowledge of any pending, threatened or contemplated condemnation
proceeding affecting the Real Property or any part thereof or of any sale or
other disposition of the Real Property or any portion thereof in lieu of
condemnation.
(h) Real Property Taxes. Except for Permitted Real Property Exceptions,
-------------------
each of the parcels included in the Real Property is assessed for real estate
tax purposes as a wholly independent tax lot, separate from any adjoining land
or improvements not constituting a part of such parcel.
(i) Survey. Except for Permitted Real Property Exceptions, there are
------
neither any encroachments upon any of the parcels comprising each of the
Woodland Mill and each NPI Mill nor any other facts or conditions affecting any
such parcel that an accurate survey or careful physical inspection thereof would
reveal. Except for Permitted Real Property Exceptions, no portion of any
improvement located on the Real Property encroaches upon any property not
included within the Real Property or upon the area of any easement affecting the
Real Property.
3.12 Intellectual Property.
---------------------
(a) Owned Intellectual Property. All Intellectual Property owned by Parent
---------------------------
or any of its Affiliates and used or held for use in the conduct of the Carve
Out Business, including the Acquired Intellectual Property (collectively, the
"Owned Intellectual Property") is listed in Section 3.12(a) of the Parent
---------------------------
Disclosure Letter if it is (i) material to the conduct of the Carve Out Business
-
and (ii) constitutes an issued patent or pending patent application, a trademark
--
registration, pending trademark application or common-law trademark, a
registered copyright or a registered domain name. With respect to any registered
or issued patents, copyrights or trademarks, or any pending applications
therefor that are listed on Section 3.12(a) of the Parent Disclosure Letter,
such list indicates the jurisdiction in which they were issued or registered or
await issuance or registration, registration or application, as the case may be,
and any registration or identification number assigned thereto. All due and owed
maintenance fees and renewal filings with respect to each such registration,
issuance and application have been paid or filed, as the case may be, except
where the failure to make the payment of such fees or such filings would not,
individually or in the aggregate, reasonably be expected to have a
22
Material Adverse Effect. Except as disclosed in Section 3.12(a) of the Parent
Disclosure Letter or as set forth in a Listed Contract, neither Parent nor any
of its Affiliates has granted any license or assigned any rights to a third
party with respect to any Acquired Intellectual Property and has not granted any
license or assigned any rights with respect to any Owned Intellectual Property
that will be inconsistent with the rights granted under the License Agreement.
Except as listed in Section 3.12(a) of the Parent Disclosure Letter, there are
no present or future royalty or other payment obligations arising from the use
of the Acquired Intellectual Property.
(b) Licensed Intellectual Property. Section 3.12(b) of the Parent
------------------------------
Disclosure Letter sets forth a complete and correct list of all Contracts (other
than shrink-wrap licenses for off-the-shelf commercially available Computer
Software) pursuant to which a Person permits Parent or any of its Affiliates to
use any Intellectual Property that is material to the conduct of the Carve Out
Business (collectively, the "Intellectual Property Licenses"). To the Knowledge
-------------------------------
of Parent, none of the Intellectual Property Licenses is subject to any
outstanding order, ruling, decree, judgment or stipulation by or with any
Governmental Authority.
(c) Infringement. Except as disclosed in Section 3.12(c) of the Parent
------------
Disclosure Letter, the conduct of the Carve Out Business does not infringe or
otherwise conflict with any rights of any Person in respect of any Intellectual
Property, except for any infringement or conflict that, together with any other
such conflict or infringement, has not had and would not reasonably be expected
to have, a Material Adverse Effect. Except as disclosed in Section 3.12(c) of
the Parent Disclosure Letter, no claim or demand of any Person has been made nor
is there any proceeding that is pending, or to Parent's Knowledge, threatened,
nor, to Parent's Knowledge, is there a reasonable basis therefor, which (i)
-
challenges the rights of Parent or any of its Affiliates in respect of any Owned
Intellectual Property or Intellectual Property License or (ii) asserts that
--
Parent or any of its Affiliates is infringing any Person's Intellectual Property
rights in the conduct of the Carve Out Business or is required to pay any
royalty, license fee, charge or other amount with regard to its use of any
Intellectual Property in the conduct of the Carve Out Business. There is no
material contractual restriction or limitation pursuant to any orders, decisions
or decrees of any Governmental Authority on the right of Parent and its
Affiliates to use the names and marks that constitute Acquired Intellectual
Property in the conduct of the Carve Out Business. To the Knowledge of Parent,
no Acquired Intellectual Property is being infringed by any other Person, other
than any infringement that, together with any other such infringement, has not
had and would not reasonably be expected to have, a Material Adverse Effect.
3.13 Insurance. Section 3.13 of the Parent Disclosure Letter contains a
---------
complete and correct list and summary description of all insurance policies
maintained by or with respect to the Carve Out Business or the Acquired Assets.
Such policies are in full force and effect, and all premiums due thereon have
been paid. Parent, NPI, G-P Resins and
23
the Transferred Subsidiaries have complied in all material respects with the
terms and provisions of such policies. Neither Parent nor any of its Affiliates
has received or been informed by a third party of the receipt by it of any
notice from any insurance company or fire rating and other similar board or
organization having jurisdiction over the Real Property threatening a
suspension, revocation, modification or cancellation of any insurance policies
maintained by or with respect to the Real Property and, to Parent's Knowledge,
there is no basis for the issuance of any such notice or the taking of any such
action in each case that would reasonably be expected to have a Material Adverse
Effect.
3.14 Contracts.
---------
(a) Except for any Contract listed in Sections 3.11(c), 3.12(b), 3.14(a)
or 3.15 of the Parent Disclosure Letter or in a schedule to the Human Resources
Agreement (collectively, "Listed Contracts"), no Acquired Asset or asset of the
----------------
Transferred Subsidiaries is bound or affected by, and none of any Transferred
Subsidiary, Parent or any of its other Affiliates (solely in connection with the
Carve Out Business) is a party to or bound by, any Contract that is:
(i) a Contract for the employment of any Person with an annual base
salary in excess of $100,000 or any consulting agreement with any Person
involving annual payments in excess of $100,000;
(ii) a collective bargaining agreement or any other material
Contract with any labor union;
(iii) a written agreement for the supply of power to any of the
Xxxxx;
(iv) other than letters of credit obtained in the ordinary course of
business, an indenture, note, loan or credit agreement or other Contract
relating to the borrowing of money or to the direct or indirect guarantee
or assumption of the obligations of any other Person for borrowed money in
excess of $100,000, including any arrangement which has the economic effect
although not the legal form of such a guarantee;
(v) a mortgage, pledge, security agreement, deed of trust or other
document granting any Liens (including Liens upon properties acquired under
conditional sales, capital lease or other title retention or security
devices) on any of the Acquired Assets or any assets of a Transferred
Subsidiary, other than Permitted Liens;
(vi) a power of attorney (other than powers of attorney given in the
ordinary course of business);
24
(vii) a covenant not to compete or similar agreement prohibiting or
materially restricting the ability of any Transferred Subsidiary or any
Person operating the Carve Out Business from conducting or engaging in any
business or operating in any geographical area, other than (A) any
-
distribution (including independent sales representative) agreement listed
on Section 3.14(a) of the Parent Disclosure Letter or (B) any supplier or
-
customer agreement relating to non-disclosure of confidential information
of the supplier or customer party thereto;
(viii) a Computer Hardware or Computer Software maintenance or
outsourcing agreement relating to information technology systems used in
the Carve Out Business;
(ix) a lease or similar agreement under which (A) Parent or any of
-
its Affiliates is lessee of, or holds or uses, any machinery, equipment,
vehicle or other tangible personal property owned by any third Person for
an annual payment in excess of $200,000 or (B) Parent or any of its
-
Affiliates is a lessor of, or makes available for use by any third Person,
any tangible personal property owned (including ownership for Tax purposes)
by Parent or such Affiliate having a fair market value in excess of
$200,000;
(x) other than any of the following entered into in the ordinary
course of business between the date of this Agreement and the Closing Date,
a Contract (including purchase orders) involving an obligation to purchase
products or services for payment by Parent or one of its Affiliates of more
than $500,000 annually (unless terminable by Parent or such Affiliate, as
the case may be, without payment or penalty of not more than $100,000 upon
no more than 90 days' notice);
(xi) a joint venture, partnership or similar Contract involving a
sharing of profits or expenses (including but not limited to a joint
research and development or joint marketing Contract);
(xii) a stock purchase agreement, asset purchase agreement or other
acquisition or divestiture agreement, including, but not limited to, any
agreement relating to the acquisition, sale, lease or disposal of any
material asset constituting part of the Carve Out Business or Acquired
Assets or assets of any Transferred Subsidiary (other than sales of
inventory in the ordinary course of business) or involving continuing
indemnity or other obligations; or
(xiii) a Contract not otherwise identified above that is material to
the Carve Out Business, taken as a whole.
25
All Listed Contracts that constitute Mill Contracts are indicated as such
in the Parent Disclosure Letter.
(b) Except as disclosed in Section 3.14(b) of the Parent Disclosure
Letter or in a schedule to the Human Resources Agreement, (i) each material
-
Listed Contract is in full force and effect and enforceable against each party
thereto in accordance with its terms (except as enforceability may be limited by
bankruptcy, insolvency or other laws affecting the enforcement of creditors'
rights generally, and except that the availability of the remedy of specific
performances or other equitable relief is subject to the discretion of the court
before which any proceeding therefor may be brought), (ii) neither Parent nor
--
any of its Affiliates is (with or without the lapse of time or the giving of
notice, or both) in breach or default in any material respect under any material
Listed Contract, (iii) to the Knowledge of Parent, as of the date of this
---
Agreement, none of the other parties to any such material Listed Contract is
(with or without the lapse of time or the giving of notice, or both) in breach
or default in any material respect thereunder, and (iv) neither Parent nor any
--
to terminate any material Listed Contract.Complete and correct copies of all
Listed Contracts, including all amendmentsand supplements thereto (and a
complete and correct description of all oralListed Contracts), have been made
available by Parent to Purchaser at the Millsor at the data room maintained by
Parent at its Atlanta headquarters.
3.15 Employee Benefits and Related Matters.
-------------------------------------
(a) Employee Benefit Plans.
----------------------
(i) Section 3.15(a)(i) of the Parent Disclosure Letter sets forth a
true and complete list of each Plan. Section 3.15(a)(i) of the Parent
Disclosure Letter separately identifies each Plan that is sponsored or
maintained by NPI (a "NPI Stand-Alone Plan").
--------------------
(ii) With respect to each such Plan, Parent has provided or made
available to Purchaser complete and correct copies of: all Plans; all trust
agreements, insurance contracts or other funding arrangements, if any; the
most recent actuarial and trust reports, if applicable; the most recent
Forms 5500 and all schedules thereto, if applicable; the most recent IRS
determination letter, if applicable; current summary plan descriptions; all
material communications received from or sent to the IRS, the Pension
Benefit Guaranty Corporation or the Department of Labor (including a
written description of any material oral communication to the extent
relevant to the administration of Purchaser's employee benefit plans to be
established as set forth in the Human Resources Agreement, such information
to be provided from time to time prior to Closing); an actuarial study of
any post-employment life or medical benefits provided under any such Plan,
if any; statements or other communications regarding withdrawal
26
or other multiemployer plan liabilities, if any; and all amendments and
modifications to any such document.
(iii) Except as set forth in Section 3.15(a)(iii) of the Parent
Disclosure Letter or as expressly provided for in the Human Resources
Agreement, neither Parent nor any Affiliate of Parent has communicated to
any Employee any intention or commitment to modify any Plan or to establish
or implement any other employee or retiree benefit or compensation
arrangement.
(b) Qualification. Each Plan intended to be qualified under section 401(a)
-------------
of the Code, and the trust (if any) forming a part thereof, has received a
favorable determination letter from the IRS as to its qualification under the
Code and to the effect that each such trust is exempt from taxation under
section 501(a) of the Code, and to the Knowledge of the Parent nothing has
occurred since the date of such determination letter that could adversely affect
such qualification or tax-exempt status.
(c) Compliance; Liability.
---------------------
(i) Except as set forth in Section 3.15(c)(i) of the Parent
Disclosure Letter, no Plan is subject to section 412 of the Code or section
302 or 302 or Title IV of ERISA.
(ii) Except as set forth in Section 3.15(c)(ii) of the Parent
Disclosure Letter, no material liability has been or is expected to be
incurred by Parent or any Affiliate of Parent or the Carve Out Business
(either directly or indirectly, including as a result of an indemnification
obligation) under or pursuant to Title I or IV of ERISA or the penalty,
excise tax or joint and several liability provisions of the Code relating
to employee benefit plans that could, following the Closing, become or
remain a liability of the Carve Out Business or become a liability of
Purchaser or any of its Affiliates or of any employee benefit plan
established or contributed to by Purchaser and, to the Knowledge of Parent,
no event, transaction or condition has occurred or exists that could result
in any such liability to the Carve Out Business or, following the Closing,
Purchaser.
(iii) Except as set forth in Section 3.15(c)(iii) of the Parent
Disclosure Letter, each of the Plans has been operated and administered in
all material respects in compliance with all Applicable Laws, except for
any failure so to comply that, individually or together with all other such
failures, (A) has not and - will not result in a material liability or
-
obligation on the part of the Carve Out Business, or, following the
Closing, Purchaser or any of its Affiliates, and (B) has not had or
-
resulted in, and will - not have or result in, a Material Adverse Effect.
Except as set forth in Section 3.15(c)(iii) of the Parent Disclosure
Letter, there are no material pending or, to the Knowledge of Parent,
threatened claims by or on
27
behalf of any of the Plans, by any Employee or otherwise involving any such
Plan or the assets of any Plan (other than routine claims for benefits).
(iv) Except as set forth in Section 3.15(c)(iv) of the Parent
disclosure Letter, no condition exists and no event has occurred with
respect to any Plan that is a "multiemployer plan" within the meaning of
section 4001(a)(3) of ERISA (a "Multiemployer Plan") that presents a
------------------
material risk of a complete or partial withdrawal under subtitle E of Title
IV of ERISA. To the Knowledge of Parent, no Multiemployer Plan is in
"reorganization" or "insolvent."
(v) All contributions required to have been made by Parent or any
Affiliate of Parent to any Plan under the terms of any such Plan or
pursuant to any applicable collective bargaining agreement or applicable
law have been made within the time prescribed by any such Plan, agreement
or Applicable Law.
(vi) No Employee is or may become entitled to post-employment
benefits of any kind by reason of employment in the Carve Out Business,
including, without limitation, death or medical benefits (whether or not
insured), other than (A) coverage provided pursuant to the terms of any
-
Plan specifically identified as providing such coverage in Section
3.15(c)(vi) of the Parent Disclosure Letter or mandated by section 4980B of
the Code, or (B) retirement benefits payable under any Plan qualified under
-
section 401(a) of the Code.
(vii) Except as otherwise expressly set forth in the Human Resources
Agreement, the consummation of the transactions contemplated by this
Agreement or the Ancillary Documents will not result in an increase in the
amount of compensation or benefits or the acceleration of the vesting or
timing of payment of any compensation or benefits payable to or in respect
of any Employee.
3.16 Environmental Matters. Except as disclosed in Section 3.16 of the
---------------------
Parent Disclosure Letter:
(a) Parent and its Affiliates are in material compliance with all
applicable Environmental Laws pertaining to the Real Property and the Carve Out
Business. No material violation by Parent or any of its Affiliates is being
alleged or, to the Knowledge of Parent, threatened, of any applicable
Environmental Law relating to the Real Property or the Carve Out Business or
with respect to any off-site disposal location.
(b) Parent and its Affiliates are in possession of, and in material
compliance with, all Governmental Authorizations relating to the Real Property
and the Carve Out Business that are required pursuant to applicable
Environmental Laws ("Environmental
-------------
28
Permits"). A list of each Environmental Permit relating to the Carve Out
-------
Business or to the Real Property is contained on Section 3.16(b) of the Parent
Disclosure Letter.
(c) With respect to the Carve Out Business, except as has not had and would
not reasonably be expected to have a Material Adverse Effect, neither Parent nor
any of its Affiliates, nor to Parent's Knowledge, any other Person has caused or
taken any action that will result in any liability or obligation on the part of
Parent or any of its Affiliates relating to (i) the environmental conditions on,
-
under, or about the Real Property or any off-site disposal location, including
without limitation, the air, soil and groundwater conditions, or (ii) the past
--
or present use, management, handling, transport, treatment, generation, storage,
disposal, discharge, emission, Release or threatened Release of any Materials of
Environmental Concern at the Real Property or any off-site disposal location.
(d) There are no material Environmental Claims pending, or to the Knowledge
of Parent, threatened, relating to the Real Property or the Carve Out Business,
and to the Knowledge of Parent, there are no facts, circumstances, conditions or
occurrences that could reasonably form the basis of any material Environmental
Claim, including with respect to any off-site disposal location used by the
Carve Out Business.
(e) No material work, repair, construction or capital expenditure is
required or planned within the next two years in respect of the Real Property or
the Carve Out Business pursuant to, or to comply with, any Environmental Law,
nor has Parent or any of its Affiliates received notice of any such requirement.
(f) The Parent and its Affiliates have made available to Purchaser all
material environmental site assessments, compliance audits, investigation or
remediation studies, notices of violation and allegations of noncompliance or
liability in its possession, custody or control relating to the Real Property or
the Carve Out Business or any off-site disposal location.
3.17 Taxes. Except as set forth in Section 3.17 of the Parent Disclosure
-----
Letter:
(a) (i) None of the assets of the Transferred Subsidiaries or the Acquired
-
Assets is "tax exempt use property" within the meaning of Section 168(h) of the
Code, (ii) no liens for material Taxes have been filed with respect to the
--
assets of any of the Transferred Subsidiaries or the Acquired Assets, and (iii)
---
no material claims for Taxes payable by any of the Transferred Subsidiaries have
been asserted or raised and, to the Knowledge of Parent, no circumstances exist
to form the basis for asserting or raising such claims.
(b) There have been properly completed and filed on a timely basis and in
correct form all material Tax Returns required to be filed by (or on behalf of)
the
29
Transferred Subsidiaries or with respect to the Acquired Assets required to be
filed on or prior to the Closing Date, and the foregoing Tax Returns are true,
complete and correct in all material respects.
(c) All material Taxes required to be paid by (or on behalf of) the
Transferred Subsidiaries or imposed with respect to the Acquired Assets which
were due and payable on or prior to the Closing Date have been duly and timely
paid or reserved for in accordance with GAAP, and all applicable material Tax
laws have been complied with on or prior to the Closing Date.
(d) There is no audit, examination, investigation, appeal, litigation or
other proceeding currently pending with respect to Taxes payable by any of the
Transferred Subsidiaries or relating to the Acquired Assets which could
reasonably be expected to result in a material Tax liability.
(e) All material Taxes required by law to be withheld or collected by (or
on behalf of) the Transferred Subsidiaries or with respect to the Acquired
Assets have been duly withheld or collected and have been timely paid over to
the proper Taxing authorities.
(f) (i) None of the Transferred Subsidiaries is a party to or bound by or
-
has an obligation under any Tax sharing, allocation, indemnification or similar
agreement and (ii) none of the Transferred Subsidiaries is or has been a member
--
of any consolidated, combined or unitary group for purposes of filing Tax
Returns or paying Taxes and would be held liable for Taxes of any Person (other
than Parent and its Affiliates) under Treasury Regulation Section 1.1502-6 or
any similar provision of state, local or foreign law or as a transferee or
successor, by contract, or otherwise.
(g) Neither Parent nor any of the Transferred Subsidiaries is a party to
any joint venture, partnership, or other arrangement which relates to the Carve
Out Business.
(h) No written document or comparable consent extending or waiving, or
having the effect of extending or waiving, the application of the statute of
limitations with respect to any Taxes payable by any of the Transferred
Subsidiaries or relating to the Acquired Assets is currently outstanding,
pending or otherwise in effect with the IRS or any other taxing authority, and
no written power of attorney with respect to any such Taxes has been filed or
entered into with any taxing authority.
(i) Section 3.17(i) of the Parent Disclosure Letter contains a list of
states, territories and jurisdictions in which material income, franchise,
sales, use, employment or payroll Tax Returns with respect to the Transferred
Subsidiaries or the Acquired Assets were filed for the past three years and
true, complete and correct copies of all such Tax Returns filed within the past
three years have been made available to Purchaser.
30
(j) There are no outstanding adjustments for Tax purposes applicable to any
of the Transferred Subsidiaries as a result of changes in methods of accounting.
(k) Purchaser will not have a carryover basis in the Acquired Assets under
Section 1.338-8 of the Treasury Regulations.
(l) Neither any of the Transferred Subsidiaries nor any Person on behalf of
any of the Transferred Subsidiaries has entered into or will enter into any
agreement or consent pursuant to Section 341(f) of the Code.
(m) Each of the Transferred Canadian Subsidiaries (i) is classified as a
-
corporation for U.S. federal income - tax purposes and (ii) is not a corporation
--
for which an election described in Section 1504(d) of the Code has -- been made.
3.18 Labor Matters. Except as set forth in Section 3.18 of the Parent
-------------
Disclosure Letter:
(a) Section 3.18(a) of the Parent Disclosure Letter sets forth a list of
each Other Employee (as defined in the Human Resources Agreement).
(b) As of the date hereof, there are no strikes or lockouts or material
work stoppages or slowdowns pending or, to the Knowledge of Parent, threatened
against or involving employees of the Xxxxx or the Acquired Assets.
(c) As of the date hereof, there are no formal or informal complaints,
charges, claims or grievances against Parent or one of its Affiliates pending
or, to the Knowledge of Parent, threatened to be brought or filed with any
Governmental Entity, arbitrator or court based on or arising out of the
employment by Parent or one of its Affiliates of any employee of the Xxxxx,
except for those which, individually or in the aggregate, has not had and would
not reasonably be expected to have a Material Adverse Effect.
(d) Parent and each of its Affiliates is in compliance with all laws,
regulations, rules and orders of all Governmental Entities relating to the
employment of labor at the Xxxxx or relating to the Transferring Employees,
including all such laws, regulations, rules and orders relating to wages, hours,
collective bargaining, discrimination, civil rights, safety and health, worker
notification requirements, immigration, workers' compensation, layoffs, and the
collection and payment of withholding Taxes and similar Taxes, except where the
failure to be in compliance, individually or in the aggregate, has not had and
would not reasonably be expected to have a Material Adverse Effect.
3.19 Brokers. Except as disclosed in Section 3.19 of the Parent Disclosure
-------
Letter, no finder, broker, agent or other intermediary is entitled to any fee or
commission or other payment from Parent or its Affiliates in connection with
this Agreement or the transactions contemplated hereby.
31
3.20 Affiliate Transactions.
----------------------
(a) Section 3.20(a) of the Parent Disclosure Letter lists all material
services, and technology provided by or through Parent or any of its Affiliates
in the conduct of the Carve Out Business to NPI, G-P Resins or any Transferred
Subsidiary or to the operations conducted at the Xxxxx.
(b) Section 3.20(b) of the Parent Disclosure Letter sets forth a complete
and correct list of (i) any transfers of personnel between Parent or any of its
-
Affiliates, on the one hand, and any of the Xxxxx, on the other hand from and
after January 1, 2000 and (ii) to the extent not described in Section 3.20(a),
--
all Contracts between Parent or any of its Affiliates, on the one hand, and any
of the Xxxxx, on the other hand, in effect from and after January 1, 2000 (all
of the foregoing transactions described in Sections 3.20(a) and 3.20(b),
collectively, "Affiliated Party Transactions").
-----------------------------
ARTICLE IV
Representations and Warranties of Purchaser
-------------------------------------------
As of the date hereof and as of the Closing Date, Purchaser hereby
represents and warrants to Parent as follows:
4.1 Organization, Standing and Power.
--------------------------------
(a) Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has the
requisite corporate power and authority to carry on its business as now being
conducted, to execute and deliver this Agreement and each of the Ancillary
Documents to which it is or will be a party, to perform fully its obligations
under this Agreement and the Ancillary Documents, and to consummate the
transactions contemplated hereby and thereby.
(b) Purchaser is not in violation of any of the provisions of its
certificate of incorporation or by-laws.
4.2 Authority. The execution and delivery of this Agreement and the
---------
Ancillary Documents and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action on the
part of Purchaser. This Agreement and the Human Resources Agreement have been
duly executed and delivered by Purchaser and each constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
Each Ancillary Document to be entered into by Purchaser will be duly executed
and delivered at the Closing and when so executed and delivered will constitute,
its legal, valid and binding obligation, enforceable against it in accordance
with its terms.
32
4.3 No Conflicts.
------------
(a) The execution, delivery and performance of this Agreement and the
Ancillary Documents by Purchaser, and the consummation by Purchaser of the
transactions contemplated hereby and thereby do not and will not conflict with,
or result in any violation of or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a material benefit under, or result in
the creation of any Lien (other than a Permitted Lien) upon any of Purchaser's
assets under, any provision of (i) the certificate of incorporation or bylaws of
-
Purchaser, (ii) subject to the filings and other matters referred to in the
--
following paragraph (b), any law, judgment, order, decree, statute, ordinance,
rule or regulation applicable to Purchaser, or (iii) other than as set forth in
---
Section 4.3(a) of the Purchaser Disclosure Letter, any Contract to which
Purchaser is a party or by which any of Purchaser's assets are bound or
affected, except in the case of clause (ii) and clause (iii), for any such
conflict, violation, default or other consequence that would not, individually
or in the aggregate, reasonably be expected to materially impair the ability of
Purchaser to perform its obligations under this Agreement.
(b) No Governmental Approval is required to be obtained or made by
Purchaser in connection with the execution and delivery of this Agreement and
the Ancillary Documents or the consummation of the transactions contemplated
hereby and thereby, except for (i) compliance with and filings under the HSR Act
-
and any other applicable pre-merger notification law, whether U.S. or foreign,
and (ii) those the failure of which to obtain or make, individually or in the
--
aggregate, would not materially impair the ability of Purchaser to perform its
obligations under this Agreement.
4.4 Financing Commitment. Purchaser has delivered to Parent a true and
--------------------
correct copy of the commitment letter, dated June 1, 2001, obtained by Purchaser
in respect of the debt financing of the transactions contemplated by this
Agreement (the "Financing Commitment"). Assuming that the financing contemplated
--------------------
by the Financing Commitment is consummated in accordance with the terms thereof,
the funds to be obtained thereunder by Purchaser, together with other funds of
Purchaser, will provide sufficient funds to pay the Purchase Price. As of the
date hereof, the Financing Commitment is in full force and effect to the extent
of the terms thereof.
4.5 Litigation. As of the date hereof, there is no claim, action, suit
----------
proceeding or governmental investigation pending or, to the Knowledge of
Purchaser, threatened against Purchaser, by or before any Governmental Entity
which would materially impair the ability of Purchaser to perform, or prohibit
Purchaser from performing, its obligations under this Agreement.
4.6 Investment Intent. Purchaser is acquiring the Shares solely for
-----------------
investment for its own account and not with the view to, or for resale in
connection with, any
33
distribution thereof. Purchaser understands that the Shares have not been
registered under the Securities Act or any state or foreign securities laws by
reason of specified exemptions therefrom that depend upon, among other things,
the bonafide nature of its investment intent as expressed herein and as
--------
explicitly acknowledged hereby and that under such laws and applicable
regulations such securities may not be resold without registration under the
Securities Act or under applicable state or foreign law unless an applicable
exemption from registration is available.
4.7 Accredited Investor; Investment Representations. Purchaser is an
-----------------------------------------------
"accredited investor" within the meaning of Rule 501 of Regulation D under the
Securities Act. Purchaser, by reason of its business and financial experience in
business, has such knowledge, sophistication and experience in business and
financial matters as to be capable of evaluating the merits and risks of the
purchase of the Shares, is able to bear the economic risk of such investment in
the Transferred Subsidiaries, and is able to afford a complete loss of such
investment.
4.8 Brokers. Except as disclosed in Section 4.8 of the Purchaser Disclosure
-------
Letter, no finder, broker, agent or other intermediary is entitled to any fee or
commission or other payment from Purchaser or its Affiliates in connection with
this Agreement or the transactions contemplated hereby.
ARTICLE V
Covenants
---------
5.1 Conduct of Carve Out Business. During the period from the date of this
-----------------------------
Agreement to and including the Closing Date, except as otherwise required by
this Agreement or any Ancillary Document or as set forth on Section 5.1 of the
Parent Disclosure Letter:
(a) Each of Sellers will, and will cause its Affiliates to (except with the
prior written consent of Purchaser, such consent not to be unreasonably withheld
or delayed):
(i) inform Purchaser promptly of the occurrence of any event of which
Parent obtains Knowledge which occurs prior to the Closing and which has
had or would, based on the Knowledge of Parent at the time, reasonably be
expected to have a Material Adverse Effect;
(ii) maintain, preserve and insure the Acquired Assets in the ordinary
course of business and consistent with past practice;
(iii) pay accounts payable and other obligations of the Carve Out
Business in the ordinary course of business consistent with prior practice
and maintain current practices with respect to the collection of accounts
receivable of the Carve Out Business;
34
(iv) perform in the ordinary cause of business and in all material
respects all of its obligations under all Contracts and other orders,
documents and instruments relating to or affecting the Carve Out Business,
and comply in all material respects with all Applicable Laws with respect
to the Carve Out Business or the Acquired Assets;
(v) conduct all Tax affairs relating to the Transferred Subsidiaries
and the Acquired Assets in good faith, in the ordinary course of business
and in substantially the same manner as such affairs would have been
conducted if this Agreement had not been entered into; and
(vi) otherwise carry on the Carve Out Business in the ordinary course
of business, in substantially the same manner as heretofore conducted,
including preserving intact the present business organization, keeping
available the services of the significant employees and sales agents, and
preserving their respective relationships with material customers,
suppliers, distributors and others having business dealings with Parent,
NPI, G-P Resins or any of their Affiliates relating to the Carve Out
Business.
(b) Each of Sellers will not and will cause its Affiliates not to (without
the prior written consent of Purchaser, such consent not to be unreasonably
withheld or delayed):
(i) make any capital expenditure on or lease any item of capital
equipment for use in the Carve Out Business in excess of $500,000, in the
case of any such capital expenditure or lease, or $5,000,000 in the case of
all such capital expenditures and leases, in each case other than pursuant
to the capital expenditure budget for the Xxxxx for 2001 that has been
provided to Purchaser;
(ii) modify any Listed Contract or enter into or assume any Contract
that would constitute a Listed Contract if it existed on the date hereof or
that involves an expenditure of more than $1,000,000 per annum (or a series
of related Contracts involving aggregate expenditures of more than $10
million) or that is not cancelable without penalty on less than 90 days'
notice or enter into or permit any material amendment, supplement, waiver
or other modification in respect thereof, other than in the ordinary course
of business and consistent with past practices;
(iii) grant (or commit to grant) any options, stock appreciation
rights, performance share awards or any other equity based awards to any
Employee;
(iv) sell, transfer or dispose of any of the Shares;
35
(v) make any material change in the selling, distribution, pricing,
advertising or collection practices for the Carve Out Business, including,
but not limited to, any special effort or program to sell or consign
products to customers or to discount, factor or collect sooner than normal
any accounts receivable;
(vi) purchase, order or otherwise acquire Inventory for the Carve Out
Business from any unit or Affiliate of Parent in excess of the reasonably
forecast requirements of the Carve Out Business;
(vii) make any bid for product to be shipped after the Closing that
involves more than (i) 1,000 tons of copy paper, (ii) 200 tons of opaque
- --
paper or (iii) 500 tons of offset paper, unless (in each case) the price
---
quoted is at least 5% lower than the average transaction price in the two
weeks preceding such bid;
(viii) commit or agree to do any of the foregoing; or
(ix) intentionally take or fail to take any action that would cause
any of the representations and warranties set forth in Section 3.9 (other
than clauses (a), (k), (m) or (n) thereof) to be untrue at any time prior
to the Closing.
5.2 Access to Information. Each of Sellers shall afford to Purchaser and
---------------------
its representatives reasonable access during normal business hours and upon
reasonable prior notice during the period prior to the Closing to all the
properties, books, Contracts, commitments and records relating to the Carve Out
Business and during such period shall furnish promptly to Purchaser any
information concerning the Carve Out Business as Purchaser may reasonably
request; provided, however, that no Seller is under any obligation to disclose
-------- -------
to Purchaser (i) any information the disclosure of which is restricted by
-
Contract or Applicable Law except in strict compliance with such Contract or
Applicable Law, (ii) any information as to which the attorney-client privilege
--
is available, until a mutually satisfactory agreement has been executed by
Purchaser and Parent or one of its Affiliates, as the case may be, (iii)
---
Employee medical records or (iv) personnel records of Employees who are not
--
Transferring Employees. Purchaser acknowledges that any information being
provided to it or its representatives by Sellers pursuant to or in connection
with this Agreement is subject to the terms of the Confidentiality Agreement,
which terms are incorporated herein by reference.
5.3 Further Actions.
---------------
(a) Subject to the terms and conditions herein provided, each of the
parties hereto agrees to use its reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective as promptly as practicable (with a
target Closing of July 31, 2001) the transactions contemplated by this Agreement
and the Ancillary Documents and to
36
cooperate with the other parties hereto in connection with the foregoing,
including using its reasonable efforts to (i) make all required regulatory
-
filings and applications and obtain all Governmental Approvals, (ii) defend all
--
lawsuits or other legal proceedings and contest and resist any action
challenging this Agreement or the consummation of the transactions contemplated
hereby (iii) cause to be lifted or rescinded any injunction or restraining order
---
or other order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby. Without limiting the generality of the
foregoing, each of the parties hereto agrees to take any and all of the
following actions to the extent commercially reasonable and necessary to obtain
the approval of any Governmental Entity with jurisdiction over the enforcement
of any Applicable Laws regarding the transactions contemplated by this
Agreement: entering into negotiations; promptly providing information;
substantially complying with any second request for information pursuant to the
HSR Act; making proposals; or entering into and performing mutually satisfactory
agreements or submitting to judicial or administrative orders.
(b) Parent and Purchaser will consult and cooperate with one another, and
consider in good faith the views of one another, in connection with any
analyses, appearances, presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or on behalf of any party hereto in connection
with proceedings under or relating to the HSR Act or any other federal, state or
foreign antitrust or fair trade law. Notwithstanding anything to the contrary in
this Section 5.3, in connection with any such proceedings, neither Parent nor
Purchaser shall be required (i) to take any action that would reasonably be
-
expected to substantially impair the overall benefits expected, as of the date
hereof, to be realized from the consummation of the transactions contemplated by
this Agreement, or (ii) to agree to any restriction on the conduct of its
--
business, to make any material monetary expenditure, to commence or be a
plaintiff in any litigation or to offer or to grant any material accommodation
(financial or otherwise) to any third Person, including, without limitation, to
offer for sale of any part of the Acquired Assets or any of the other business
or assets of Parent, NPI, G-P Resins, Purchaser or their Affiliates to any
Person.
(c) Parent, as promptly as practicable, will use all reasonable efforts to
obtain, or cause to be obtained, all Consents of any Persons in connection with
any Restricted Asset or otherwise that are needed in connection with the
execution and delivery of this Agreement and the Ancillary Documents and the
consummation of the transactions contemplated hereby and thereby.
(d) Each of the parties hereto will, and will cause any of its Affiliates
to, coordinate and cooperate with the other parties in exchanging such
information and supplying such assistance as may be reasonably requested by such
party in connection with the filings and other actions contemplated by this
Section 5.3.
37
(e) The parties acknowledge that certain Listed Contracts do not constitute
Mill Contracts because they do not primarily relate to the business activities
at the Xxxxx, yet the rights available under such Listed Contracts are important
to the post-Closing operations of Purchaser as well as Parent. Therefore, each
of the parties hereto will and will cause each of its Affiliates to use
commercially reasonable efforts to obtain prior to the Closing from the
counterparty to each Listed Contract set forth in Section 5.3(e) of the
Purchaser Disclosure Letter (each, a "Multi-Mill Contract" and collectively, the
-------------------
"Multi-Mill Contracts") (i) a new separate Contract with Purchaser for the
-------------------- -
portion of the goods or services purchased from or supplied to the Carve Out
Business under such Multi-Mill Contract and (ii) a new separate Contract with
--
Parent or its Affiliate for the portion of the goods or services purchased from
or supplied to the continuing business of Parent and its Affiliates, in each
case upon terms and conditions (taking into account the apportionment of the
goods and services supplied or sold between Purchaser and Parent) substantially
similar to the existing Multi-Mill Contract or otherwise reasonably satisfactory
to Purchaser or Parent, as applicable.
5.4 Information Technology.
----------------------
(a) Creation and Establishment of the Purchaser IT Environment. Parent and
----------------------------------------------------------
its Affiliates will take all actions reasonably necessary to create and
establish for the benefit of Purchaser prior to the Closing Date an information
technology environment having the same functionality in all material respects as
the information technology environment used by Parent and its Affiliates in the
conduct of the Carve Out Business, including Computer Hardware (with the same
hardware platforms, adequately sized but not necessarily the same model number),
Computer Software (with databases and current and historical data (subject to
such redaction as (x) may be required by Applicable Law or (y) may be necessary
- -
to remove information (i) that relates to operations of Parent, other than the
Carve Out Business, or (ii) that relates to the business activities of Parent
and its Affiliates that are the subject of the Supply and Distribution Agreement
or the Fiber Supply Agreement) and customer service call center (such
environment, excluding the Mill Technology, the "Purchaser IT Environment").
------------------------
Parent shall support the Purchaser IT Environment to the extent set forth in the
IT Support Services Agreement. Except as provided in Sections 5.4(b) and 5.4(c)
below, the hardware platforms constituting part of the Purchaser IT Environment
shall be physically separate from, but connected to a common Direct Access
Storage Device frame with, the hardware platforms of Parent. It is anticipated
that the SAP (other than any HR Software), Manugistics, Indus and TOPS
components of the Purchaser IT Environment (each such software being described
in greater detail in the IT Support Services Agreement) will each be located on
separate hardware platforms. Purchaser shall become the owner of the hardware
platforms that are part of the Purchaser IT Environment (other than the hardware
platforms associated with the Support Services described in Category A and
Category D (except to the extent related to local area network hardware
purchased by
38
Parent for Purchaser under the IT Support Services Agreement)) when the
platforms are no longer being maintained under IT Support Services Agreement.
(b) Software Resident on Parent's Platform. Subject to the terms of this
--------------------------------------
Section 5.4(b), Purchaser agrees that the Infinium Software (as defined in the
IT Support Services Agreement) and the HR Software, which constitute part of the
Purchaser IT Environment, will each be operated on a separate logical partition
on Parent's hardware platforms rather than on a physically separate platform. In
the case of the Infinium Software, such operation on Parent's hardware platform
will be subject to Purchaser's reasonable satisfaction prior to the Closing that
adequate security procedures will be implemented to protect the confidentiality
of all information relating to Purchaser's business and operations. The Infinium
Software and the HR Software will remain on Parent's platforms until (A) in the
-
case of the Infinium Software, the 18 month anniversary of the Closing Date and
(B) in the case of the HR Software, until the end of the Initial Term and any
-
Extended Term (as defined in the Human Resources Agreement). Parent will assist
Purchaser, at Purchaser's expense, in migrating data associated with the
Infinium Software to a platform to be designated by Parent no later than the 18
month anniversary of the Closing. Parent will transfer ownership of the human
resources portion of the Purchaser IT Environment (including the HR Software and
related data) to Purchaser no later than the end of the Initial Term and any
Extended Term under the Human Resources Agreement.
(c) Mainframe Applications. The parties agree that the applications used in
----------------------
the Carve Out Business and currently operated on any mainframe maintained by IBM
Corporation will remain on such mainframe following the Closing Date, and Parent
agrees to operate such software (or have IBM operate such software) for
Purchaser to the extent set forth in the IT Support Services Agreement. Such
applications will constitute part of the Purchaser IT Environment; provided,
--------
however, that Purchaser acknowledges that at no time will Parent be obligated to
-------
create a separate mainframe environment for Purchaser. Subject to the foregoing,
the mainframe applications will be assigned to Parent as provided in Section
5.4(f), and, following expiration of the services period under the IT Support
Services Agreement relating to such applications, Purchaser will have the right
to require Parent to reasonably assist Purchaser in migrating the data relating
to such applications to another platform or mainframe, it being understood that
the costs of migrating such data and obtaining such other platform or mainframe
will be borne by Purchaser. At the request of Parent, Purchaser will license
back to Parent on a non-exclusive basis the right to continue using the assigned
mainframe applications.
(d) Rights in Purchaser IT Environment and Mill Technology. As of the
------------------------------------------------------
Closing, Purchaser shall have a valid ownership, lease, license or use right
with respect to all elements of the Purchaser IT Environment, on terms
substantially similar to those applicable to Parent prior to the Closing. Prior
to the Closing, Parent will cause to be assigned (to the extent G-P can retain
its license and all of its rights thereunder for its
39
business other than the Carve Out Business) or sublicensed to Purchaser, in
whole or in part, all Intellectual Property Licenses and other Contracts for
Computer Hardware or Computer Software (other than Contracts for maintenance and
service, which will remain entirely with Parent) that are part of the Purchaser
IT Environment or the Mill Technology that can be so assigned or sublicensed
without Consent by their terms.
Any assignment or sublicense by Parent to Purchaser in accordance with
this Section 5.4 or Section 6.2(l) shall be for the full term of Parent's rights
in respect of the assigned or sublicensed technology, shall not be subject to
any unreasonable or material limitations that are not binding upon Parent under
its underlying Contract relating to such technology (other than Contracts for
maintenance and service, which will remain entirely with Parent), shall only
extend Purchaser the right to operate such technology in the operations acquired
under this Agreement, and shall not be affected by any termination or loss of
Parent's rights prior to the scheduled expiration of the underlying Contract.
Whether or not a Consent is required, if any underlying Contract provides that
any such assignment or sublicense is contingent on Purchaser's agreement in
writing to be bound by the existing terms applicable to Parent's usage of
technology to be sublicensed or assigned (to the extent they apply to
Purchaser's usage of such technology), and if Purchaser is provided with a
complete copy of the underlying Contract, then Purchaser's failure to agree in
writing to such existing terms shall relieve Parent of its obligation to assign
or sublicense such technology (or bear a portion of the cost of any Consent) to
the assignment or sublicense of such technology.
(e) Consents. In the case of any Intellectual Property Licenses and other
--------
Contracts for Computer Hardware or Computer Software (other than Contracts for
maintenance and service) that are part of the Purchaser IT Environment or the
Mill Technology and that cannot be assigned or sublicensed without Consent by
their terms, Parent will, prior to and after the Closing, reasonably cooperate
with and provide assistance to Purchaser in identifying and obtaining the
necessary Consents. It is understood that Parent is not obligated to assist in
obtaining (or to bear a portion of the cost of) any Consent to the extent that
such Consent would extend Purchaser the right to operate such technology in
operations other than those acquired through the transactions contemplated by
this Agreement.
(f) Parent Developed IT. Parent hereby conveys, as of the Closing Date, a
-------------------
limited, non-exclusive, non-transferable, non-assignable (except for an
assignment permitted under Section 10.7), royalty-free, perpetual right and
license to use and modify (other than during the applicable service period in
the IT Support Services Agreement), for the operations of the Carve Out Business
only, any G-P developed Computer Software that is in production and used in the
Carve Out Business as of the Closing Date, including TOPS and Forms Plus. Such
license shall not permit Purchaser to use such software other than in the Carve
Out Business or to sell, sublicense or otherwise assign any such software
(except for an assignment permitted under Section 10.7). The parties
40
acknowledge and agree that e-TOPS is not currently in production at Parent, but
that if such Computer Software is fully implemented by Parent during the term of
the IT Support Services Agreement, it will be provided to Purchaser under the
terms of this subsection (f).
(g) Cost Suite. The parties acknowledge and agree that the Cost Suite
----------
Computer Software that is part of the Purchaser IT Environment, as more
specifically described in Schedule 1 to the IT Support Services Agreement (the
"Cost Suite"), cannot be migrated to another platform without programming
----------
efforts, the results of which are uncertain. Accordingly, the parties agree to
work together in good faith to create a solution (whether by way of migrating
such software to another platform, or agreeing in good faith on an alternative
software solution) as soon as reasonably possible to provide Purchaser with
substantially similar functionality to the Cost Suite. The parties agree to work
together to attempt to implement a software solution prior to the Closing Date.
If such software solution is not obtained by the Closing Date, Parent agrees to
provide Purchaser at the Closing with a manual profitability reporting system to
generate information substantially similar to that which is obtainable through
Cost Suite.
(h) Joint Efforts. The Purchaser IT Environment shall be created and
-------------
established through the efforts of both parties and by each party's designation
of personnel who will have the authority to make decisions on behalf of such
party. Each party agrees to respond to information requests from the other in a
timely manner in order to ensure that the Purchaser IT Environment will be
operational and functional prior to the Closing Date. Each party will have the
right to review and discuss with the other from time to time the activities
undertaken (including testing activities) to ensure that the Purchaser IT
Environment will be operational and will have the functionality contemplated by
this Agreement as of the Closing Date and as of the date of delivery to
Purchaser of the human resources portion of the Purchaser IT Environment. Parent
will reasonably cooperate with Purchaser's chosen vendor for outsourced IT
Services for the migration of the Purchaser IT Environment following the
expiration of the support services provided by Parent, it being understood that
Parent will not be required to incur any out-of-pocket expenses in connection
therewith.
(i) Expenses. Unless otherwise provided in this Section 5.4, the actual
--------
out-of-pocket expenses of Parent or Purchaser paid in connection with the
actions contemplated by this Section 5.4 shall be allocated between Parent and
Purchaser as provided in this subsection.
(A) Set-Up Costs. The costs of creating and establishing the Purchaser
------------
IT Environment (including delivery of the hardware platforms as provided in
the last sentence of Section 5.4(a)) shall be borne one-half by Parent and
one-half by Purchaser, provided that Purchaser shall not be required to pay
--------
an aggregate of more than $3,000,000 in respect of such costs (with the
excess borne solely by
41
Parent). All payments to third parties in connection with creating and
establishing the Purchaser IT Environment will be made by Parent, and
Purchaser will reimburse Parent for its reasonably documented share of such
costs in six equal monthly installments beginning as of the first calendar
month following the Closing.
(B) Consent Costs. The costs of obtaining any Consent referred to in
-------------
Section 5.4(e) shall be borne one-half by Parent and one-half by Purchaser,
except that the costs of obtaining Consents in connection with the
assignments and consents described in Section 6.2(l) shall be borne solely
by Parent. All payments to third parties in connection with obtaining such
Consents will be made by Parent to the extent payable prior to or as of the
Closing Date and by Purchaser to the extent payable after the Closing Date,
and, in each case, the party making such payment will promptly be
reimbursed by the other party hereto for its reasonably documented share of
such costs.
5.5 Pre-Closing Publicity and Related Matters.
-----------------------------------------
(a) From the date of this Agreement through the Closing, no party hereto
shall issue or cause the publication of any press release or other public
disclosure with respect to the transactions contemplated by this Agreement
without the consent of the other parties hereto, which consent shall not be
unreasonably withheld, except as such release or disclosure may be required by
law or the rules or regulations of a national securities exchange in the United
States or Canada, in which case the party required to make the release or
announcement shall allow the other parties reasonable time to comment on such
release or announcement in advance of its issuance.
(b) From the date hereof through the Closing, Sellers will not, directly or
indirectly, through any other party or otherwise: (i) engage in any negotiations
-
with or provide any information to any third party with respect to the Carve Out
Business in connection with a potential acquisition, sale or similar transaction
(including by way of any merger, joint venture or otherwise) involving the Carve
Out Business or any material assets used in the Carve Out Business; or (ii)
--
solicit, facilitate or entertain any proposal relating to an acquisition, sale
or similar transaction (including by way of any merger, joint venture or
otherwise) involving the Carve Out Business or any material assets used in the
Carve Out Business.
5.6 Ancillary Documents. At the Closing, Parent and Purchaser or their
-------------------
respective affiliates shall enter into (a) an IT Support Services Agreement,
-
substantially in the form of Exhibit D, (b) Trademark License Agreements,
--------- -
substantially in the form of Exhibit F, (c) a Supply and Distribution Agreement,
--------- -
substantially in the form of Exhibit G, (d) a Non-Competition Agreement,
--------- -
substantially in the form of Exhibit H, (e) a Pulp Supply Agreement,
--------- -
substantially in the form of Exhibit I, (f) a Fibre Supply
--------- -
42
Agreement, substantially in the form of Exhibit J, (g) a Shared Services
--------- -
Agreement, substantially in the form of Exhibit L (which is subject to further
---------
good faith negotiation), (h) an Operating Agreement, substantially in the form
of Exhibit M and (i) an Interim Sales Agreement, on substantially the terms set
--------- -
forth in Exhibit N.
---------
5.7 Proration of Certain Charges. To the extent scheduled to be incurred
----------------------------
(in the ordinary course of business consistent with past practice) over a period
beginning before the Closing Date and ending after the Closing Date, the
following charges and payments shall be prorated on a per diem basis and
apportioned between Parent and its affiliates, on the one hand, and Purchaser,
on the other, as of the Closing Date: utility charges, prepaid items, license
and permit fees, and similar charges (but not including Taxes other than real
and personal property taxes (including all state, county, city, town, school,
fire district, garbage district and other special taxes, and also including any
special assessments or conditional levies)) imposed with respect to the Carve
Out Business. Parent and its Affiliates shall be liable for (and shall reimburse
Purchaser to the extent Purchaser shall have paid) that portion of such charges
relating to, or arising in respect of, periods on or prior to the Closing Date,
and Purchaser shall be liable for (and shall reimburse Parent and its Affiliates
to the extent Parent or its Affiliates shall have paid) that portion of such
charges relating to, or arising in respect of, periods after the Closing Date;
provided, however, that Parent and its Affiliates shall not be liable for any
-------- -------
portion of such charges to the extent reflected as a Current Liability on the
Closing Working Capital Statement.
5.8 Real Property.
-------------
(a) Parent and Purchaser, at Purchaser's sole cost and expense, have
ordered current surveys of certain portions of the Real Property that will be
prepared in accordance with the provisions of Section 6.2(e) (collectively, the
"Surveys"). Parent and Purchaser, at Parent's sole cost and expense, have
-------
ordered title searches and commitments for extended coverage 1992 form of
American Land Title Association owner's policies of title insurance in each case
with liability in an amount designated by Purchaser and issued by First American
Title Insurance Company of New York (the "Title Company") for the Real Property
-------------
(collectively, the "Title Commitments") together with true and complete copies
-----------------
of all instruments identified therein as giving rise to any defects or
exceptions to title to such Real Property. Within ten Business Days following
the delivery of the Surveys and the Title Commitments to Purchaser, Purchaser
shall advise Parent in writing of any Title Defects to such Real Property shown
in such Title Commitments and Surveys, other than Permitted Real Property
Exceptions shown in such Title Commitments and Surveys, and subject to which
Purchaser is unwilling to accept title (such Title Defects are hereinafter
collectively referred to as "Title Objections"). Failure of Purchaser to provide
----------------
such written notice within such 10-day period shall be deemed an election by
Purchaser to waive any Title Defects shown in such Title Commitments and Surveys
and to accept such title to such Real Property indicated in the
43
Title Commitments without any reduction in the Purchase Price or right to claim
under Article VIII with respect to such Title Defects. Parent shall remove or
discharge ("cure") each Title Objection that is a monetary lien created by
----
Parent or one of its Affiliates, regardless of cost. Parent may, in its sole
discretion, elect to cure one or more other Title Objections, in which case
Parent shall provide Purchaser with notice of such election within ten Business
Days after Parent's receipt of Purchaser's notice of Title Objections. Parent,
in its sole discretion, may extend the Closing Date one or more times for up to
90 days in the aggregate in order to cure Title Objections. If Parent does not
notify Purchaser that it has elected to cure any Title Objections within such
10-day period, then Parent shall be deemed to have elected not to cure any Title
Objections. If Parent is unwilling or unable to cure any Title Objection in
accordance with the terms of this Agreement then Purchaser may, at its option,
(i) accept title to the Real Property subject to any such Title Objections and
-
proceed with the Closing of the transactions contemplated by this Agreement
without any reduction in the Purchase Price, preserving, however, all of
Purchaser's rights under Article VIII hereof for any breach of Parent's
representations or warranties relating to such Title Objections and to any other
Title Defect (other than Permitted Real Property Exceptions) not shown on such
Title Commitments or Surveys or (ii) terminate this Agreement by giving written
--
notice to Parent by the Closing Date, in which event the parties hereto shall
have no further obligations or liabilities to each other except as otherwise
provided herein.
(b) Parent shall use its commercially efforts to obtain prior to the
Closing a written waiver in form and substance satisfactory to Purchaser of that
certain right of first offer to purchase certain property (the "Option
------
Property") presently leased to Bulls Eye Country Club, a Wisconsin corporation
--------
("BECC"). Such written waiver shall be executed by BECC and shall waive BECC's
----
right to purchase the Option Property under paragraph 13 of that certain
Restated and Amended Lease Agreement, dated as of May 28, 1999, by and between
NPI and BECC, a Short Form of which is recorded in Volume 940, Page 339 in the
Office of the Register of Deeds, Wood County, Wisconsin.
5.9 Adverse Changes. If prior to the Closing, any asset constituting a
---------------
material part of the Carve Out Business is impaired by reason of physical damage
caused by fire, earthquake, accident or other act of God and such impairment
would reasonably be expected to have a Material Adverse Effect, Purchaser may,
within five days after Purchaser is notified by Parent of such damage elect
either to (a) proceed with the Closing, at which time Parent shall have the
-
option of (i) assigning to Purchaser at the Closing Parent's or its Affiliates'
-
rights under insurance policies to receive any insurance proceeds due Parent or
its Affiliates as a result of such damage or (ii) retaining the right to receive
--
such insurance proceeds and giving Purchaser a credit at Closing for any amount
Parent or its Affiliates is entitled to receive under its insurance policies by
reason of such damage (it being understood and agreed that Purchaser shall
assume responsibility for any required repairs, and Purchaser shall receive a
credit at Closing for any deductible, or coinsured amount under said insurance
policies), or (b) terminate this
-
44
Agreement by giving written notice to Parent within five Business Days of the
date on which Parent notifies Purchaser of the damage, in which event the
parties hereto shall have no further obligations or liabilities to each other
except as otherwise provided herein.
5.10 Supplemental Disclosure. Parent or Purchaser may at any time, or from
-----------------------
time to time after the date hereof, but not later than three Business Days prior
to the Closing Date (other than with respect to the disclosure of any event
referred to in Section 5.9), supplement or amend the Parent Disclosure Letter or
the Purchaser Disclosure Letter, as the case may be, with respect to any matter
arising after the date hereof which if existing or occurring at the date hereof
would have been required to be set forth or described in such a Disclosure
Letter, provided that Parent shall not be entitled under this Section 5.10 to
--------
supplement or amend the Parent Disclosure Letter with information as to a matter
arising prior to the date hereof which was required to have been disclosed
herein. No supplement or amendment to such Disclosure Letter shall have any
effect for the purpose of determining the satisfaction of the conditions to the
obligation of the other parties under Article VI, but any matter arising after
the date hereof and disclosed in an amended or supplemented Disclosure Letter
pursuant to this Section 5.10 shall not form the basis for any claim for
indemnification pursuant to Section 8.1(i) or 8.2(i) if the transactions
contemplated hereby are consummated. Each of the representations and warranties
made herein shall be deemed repeated at the Closing, subject to such changes
thereto as shall have been made in accordance with this Section 5.10.
5.11 Tax Exempt Bond Financed Facilities.
------------------------------------
(a) Parent intends for certain tax exempt bonds issued by Parent and its
Affiliates that are related to the Acquired Assets to remain outstanding
following the Closing Date and has provided a complete list of such bonds (the
"IDBs") to the Purchaser in Section 5.11(a) of the Parent Disclosure Letter, and
----
has made available to Purchaser a complete copy of each agreement relating to
the IDBs. Purchaser is willing to take certain action as specified in this
Section with respect to Acquired Assets financed with the proceeds of the IDBs.
(b) At least 10 days prior to the Closing Date Parent shall provide
Purchaser with a detailed list specifying the items of the Acquired Assets (the
"IDB Assets") financed with the proceeds of the IDBs, the use of which may
----------
affect the continued qualification of IDBs as tax exempt bonds under the Code.
Such list shall identify each specific material asset and its location.
(c) Following the Closing Date, Purchaser shall use reasonable commercial
efforts to continue to use the IDB Assets in a manner substantially consistent
with their current use and shall use reasonable commercial efforts to provide
the Parent with written notice at least 30 days prior to terminating such use of
such IDB Asset. Purchaser's
45
obligation hereunder shall continue with respect to an IDB Asset only so long as
the related IDBs are outstanding and otherwise qualify for tax exempt status
under the Code, and Parent shall give Purchaser immediate notice of the
redemption of any IDBs and of any other circumstance that would relieve the
Purchaser of its obligations hereunder.
(d) Purchaser's only obligation under this Section 5.11 is to use and
provide notices with respect to the IDB Assets in accordance with its
undertaking in Section 5.11(c). Purchaser has no obligation with respect to the
IDBs, to any issuer, governmental authority, bond counsel or other obligor with
respect to any IDB or to any holder of an IDB, and Purchaser shall not be liable
to Parent or any other person with respect to the tax exempt status of the IDBs.
5.12 Termination of Certain Arrangements. Prior to the Closing, Parent
-----------------------------------
shall terminate all sale-leaseback arrangements between Parent and any of its
Affiliates as set forth in Section 5.12 of the Parent Disclosure Letter without
any obligation or liability to any Transferred Subsidiary or Purchaser and each
Transferred Subsidiary or Purchaser shall, as of the Closing, own all assets
that were the subject of such arrangements. All other Affiliate Transactions
(except as otherwise provided in Section 1.1) will be terminated prior to the
Closing without liability or obligation to Purchaser. Purchaser shall receive
documents evidencing the foregoing.
5.13 Environmental Site Assessment. Prior to the Closing Date, Purchaser
-----------------------------
shall have the right to prepare, or cause to be prepared, a Phase I
environmental site assessment and compliance evaluation of the Real Property or
the Carve Out Business (the "Environmental Site Assessment"), which shall
-----------------------------
include physical inspections, review of all relevant records and review of
relevant governmental agency records. Parent and NPI shall provide Purchaser and
its agents with reasonable access to the facility in order to prepare and
complete the Environmental Site Assessment.
5.14 Audited and Interim Financial Statements.
----------------------------------------
(a) As soon as practicable following the date hereof, but no later than
June 25, 2001, Parent shall deliver to Purchaser an unqualified audit report of
Xxxxxx Xxxxxxxx on the Year-End Financial Statements, together with financial
statements that incorporate any revisions made to the Year-End Financial
Statement in connection with the audit and any changes referred to in the Side
Letter (the financial statements on which Xxxxxx Xxxxxxxx renders such report,
incorporating any changes to the Year-End Financial Statements, the "Audited
-------
Financial Statements"). As soon as such material is available, but no later than
--------------------
the time of delivery of the Audited Financial Statements, Purchaser and its
accountants shall be given full access to all information used by Parent in
preparing the Audited Financial Statements, including the books and records and
the work papers of Xxxxxx Xxxxxxxx (subject to the reviewing party executing any
customary access letters required by Xxxxxx Xxxxxxxx).
46
(b) As soon as practicable following June 30, 2001, whether before or
following the Closing but no later than August 15, 2001, Parent shall deliver
the unaudited balance sheets of the Carve Out Business as of June 30, 2001 and
June 30, 2000, and the related unaudited statements of income, Parent's
investment and cash flow for the three months ended June 30, 2001 and June 30,
2000, together with all related notes and schedules thereto (the "June 2001
---------
Interim Financial Statements"), which will be prepared in accordance with U.S.
----------------------------
GAAP on a basis consistent with the Audited Financial Statements and will
include a review by Xxxxxx Xxxxxxxx.
5.15 Monthly Financial Information. Within 15 days after the date hereof,
-----------------------------
Parent will deliver a complete and correct copy of the monthly management
reports for each of the Xxxxx prepared in the ordinary course of business
consistent with past practice (the "Monthly Management Reports") for the
--------------------------
one-month period ending April 30, 2001. Within 15 days after the end of each
monthly period after the date hereof until the earlier of the Closing Date or
the termination of this Agreement, Parent shall deliver to Purchaser a complete
and correct copy of the Monthly Management Reports for each such monthly period.
5.16 Transition Services. Promptly following the date hereof,
-------------------
representatives of Parent and Purchaser will meet to discuss whether Purchaser
or Parent will require transitional services relating to the Carve Out Business
(in addition to those to be provided under the Ancillary Documents) or Parent's
other businesses for a certain period of time following the Closing. If such
services are required, Parent and Purchaser will negotiate in good faith whether
and under what terms such services will be provided by Parent to Purchaser
following the Closing. After the Closing, Parent will continue to provide at no
cost to Purchaser the engineering services for the Port Xxxxxxx chipping
facility currently under construction in accordance with prior practice and at
no charge to Purchaser other than reimbursement of out of pocket costs.
5.17 Information Regarding Financing. From the date hereof until the
-------------------------------
earlier of the Closing or the termination of this Agreement, Purchaser shall
promptly inform Parent of any developments of which it becomes aware that might
reasonably be expected to prevent Purchaser from satisfying the condition to
Closing set forth in Section 6.1(c) on or prior to July 31, 2001, or if the
Closing shall not have occurred by such date, on or prior to the then-applicable
date referred to in Section 7.1(a)(v). In addition, Purchaser shall provide
Parent with such information as Parent shall reasonably request regarding the
status of the financing for the transactions contemplated hereby.
5.18 FERC Assets.
-----------
(a) The transfer to a U.S. subsidiary of Purchaser ("U.S. Sub") of the
--------
Maine FERC Assets and the Wisconsin FERC Assets (collectively, the "FERC
----
Assets") is conditioned upon the approval by the Federal Energy Regulatory
------
Commission ("FERC")
----
47
of the transfer to the U.S. Sub of the FERC Licenses that govern certain of
those FERC Assets. In case of the Nepco Lake Dam, the transfer is conditioned
upon the approval of the Wisconsin Department of Natural Resources and the
assignment of permits issued thereby to one or more wholly-owned State of
Wisconsin Subsidiaries of Purchaser ("Wisconsin Sub"). Notwithstanding any other
-------------
provision of this Agreement, the FERC Assets and the Nepco Lake Dam will not be
transferred on the Closing Date, but the related transfer documents will be
placed in escrow at Closing as contemplated by Section 2.2(a). Within three
Business Days following FERC approval of the transfer of the FERC Licenses to
U.S. Sub the transfer documents for the FERC Assets shall be released and
delivered to U. S. Sub for filing and recording in accordance with Applicable
Law. Within three Business Days following the requisite approval of the
Wisconsin Department of Natural Resources, the transfer documents for the Nepco
Lake Dam shall be released and delivered to Wisconsin Sub for filing and
recording in accordance with Applicable Law. Pending such transfer, the FERC
Assets and the Nepco Lake Dam shall be operated in accordance with the terms of
an Operating Agreement to be entered into on the Closing Date by Sellers and
Purchaser in the form of Exhibit M hereto. The FERC Assets and Nepco Lake Dam
will be deemed included in the Acquired Assets for all purposes under this
Agreement. The Parent Indemnitees will be entitled to indemnification in
accordance with Section 8.2 (iv) of this Agreement for any Losses incurred by
the Parent Indemnitees arising with respect to any breach of the Operating
Agreement by Purchaser prior to the transfer of the FERC Assets and the Nepco
Lake Dam or with respect to the use or operation of the FERC Assets and the
Nepco Lake Dam after the Closing.
(b) Notwithstanding any other provision in this Agreement, Sellers and
Purchaser shall cooperate fully so that as promptly as practicable after the
execution and delivery of this Agreement, the parties will file with FERC a
joint application for transfer of the FERC Licenses to U.S. Sub. Thereafter,
Purchaser and Sellers shall each use their good faith, commercially reasonable
efforts to cause FERC to grant its approval of the transfer of the FERC Licenses
as soon as possible. Such application will provide for Purchaser to be
substituted for Parent in the litigation identified as item IV(a)(iv) and (v)
under the heading "Woodland" in Section 3.5 of the Parent Disclosure Letter.
--------
Sellers and Purchaser shall take similar action with respect to obtaining
approval from the Wisconsin Department of Natural Resources.
(c) After the execution and delivery of this Agreement and until the
Closing, neither Sellers nor Purchaser, nor any of their Affiliates, shall (i)
file any application or other document of any kind relating to the FERC Assets,
the FERC Licenses, Nepco Lake Dam or the Maine Non-FERC Assets, with any
Governmental Entity; or (ii) initiate any communication (whether oral or
written) with any Governmental Entity regarding the proposed transfer of the
FERC Assets, Nepco Lake Dam, Maine Non-FERC Assets or the FERC Licenses without
the prior written approval of the other party which approval will not be
unreasonably withheld or delayed. In addition to the foregoing, each party will
48
promptly forward to the other copies of any and all written or electronic
communications it receives, and accurate and complete written summaries of any
oral communications between any representative of such party and any
representative of a Governmental Entity in which a representative of the other
party did not participate, regarding or affecting the proposed transfer of FERC
Assets, the FERC Licenses, Nepco Lake Dam or the Maine Non-FERC Assets.
(d) After the execution and delivery of this Agreement and until the
Closing, Sellers shall not (i) file any application, pleading or other document
-
of any kind relating to the FERC Assets, Nepco Lake Dam, or the Maine Non-FERC
Assets with any Governmental Entity, any Indian Tribe or Non-Governmental
Entity; or (ii) initiate any communication (whether oral or written) with any
--
Governmental Entity, Indian Tribe or Non-Governmental Entity regarding the FERC
Assets, Nepco Lake Dam, or the Maine Non-FERC Assets without the prior written
approval of Purchaser. In addition to the foregoing, Sellers will promptly
forward to Purchaser copies of any and all written or electronic communications
Sellers receive, and accurate and complete written summaries of any oral
communications between any representative of Sellers and any representatives of
a Governmental Entity, Indian Tribe or Non-Governmental Entity in which a
representative of Purchaser did not participate regarding the FERC Assets, Nepco
Lake Dam, or the Maine Non-FERC Assets.
5.19 Wisconsin Real Property Transfers. Prior to the Closing, Parent (a)
--------------------------------- -
shall cause NPI to acquire good and marketable title to the Wisconsin Sand Pit,
(b) shall obtain a ten-year recordable, enforceable and irrevocable option (the
-
"Wisconsin Landfill Extension Option"), in form and substance satisfactory to
-----------------------------------
Purchaser, assignable to Purchaser and permitting Purchaser to purchase the
Wisconsin Landfill Extension (x) at a price of $1,000 per acre for the first
-
five years and (y) at a price equal to the then fair market value of such
-
property for the second five years and (c) use all commercially reasonable
-
efforts to obtain access rights (with reasonable indemnities in favor of North
American Timber Company, Inc.) to all properties adjacent to Nepco Lake that are
owned by North American Timber Company, Inc. and a covenant from North American
Timber Company, Inc. not to alter or affect in any way the inflow of water to
Nepco Lake from the stream that forms part of the real property owned by North
American Timber Company, Inc. adjacent to Nepco Lake.
5.20 Return of Parent Information. After the Closing Date, Purchaser agrees
----------------------------
to promptly return to Parent, or upon Parent's reasonable request, to delete or
remove, at Parent's expense, any materials which are located at the Xxxxx and
are described in Section 1.2(ii) of the Parent Disclosure Letter, it being
understood that such activities will be undertaken in a manner that will not
disrupt the operations of the Xxxxx.
49
5.21 Inventory. Prior to the Closing, the parties will mutually agree on
---------
the segregation of the 20,000 tons of Woodland pulp Inventory and the 4,000 tons
of Woodland export pulp Inventory included in the Acquired Assets.
5.22 Black Liquor. Prior to Closing, Parent and Purchaser shall enter into
------------
a six-month agreement providing for the Mill in Ashdown, Arkansas to sell its
black liquor soap to Parent on a basis consistent with past practice, and Parent
and Purchaser will discuss in good faith a potential long-term supply
arrangement for such black liquor soap and related products.
5.23 Cluster Testing. Purchaser shall notify Parent and permit
---------------
representatives of Parent to observe the first round of MACT I cluster testing
that occurs at each of the Xxxxx following the Closing. Parent shall also be
given the opportunity to review the testing procedures in advance of each test.
5.24 Inventory Support. Parent will provide service support for
-----------------
distribution from public warehouses (other than Mill overflow warehouses) to end
users for six months following the Closing, and Purchaser will reimburse Parent
for its actual cost in providing this service.
ARTICLE VI
Conditions Precedent
--------------------
6.1 Conditions to Each Party's Obligation. The obligation of the parties to
-------------------------------------
consummate the transactions contemplated by this Agreement shall be subject to
the satisfaction prior to the Closing of the following conditions:
(a) Certain Waiting Periods. (i) Any waiting period under the HSR Act and
-----------------------
any other pre-merger notification law, whether U.S. or foreign, applicable to
any of the transactions contemplated hereby shall have expired or been earlier
terminated, and (ii) no antitrust authority shall have required Parent or any of
its Affiliates to continue to own any of the assets which constitute a part of
the Carve Out Business or to divest, separate or offer for sale any other assets
which do not constitute a part of the Carve Out Business or agree to any
restriction on the conduct of its business.
(b) No Injunctions or Restraints. No temporary restraining order,
----------------------------
preliminary or permanent injunction or other legal restraint or prohibition
preventing the consummation of the transactions contemplated by this Agreement
shall be in effect; provided, however, that subject to the second sentence of
-------- -------
Section 5.3(b), the party seeking to assert a failure of this condition to be
satisfied shall have used their reasonable best efforts to prevent the entry of
any such order, injunction or other restraint or
50
prohibition and to appeal as promptly as possible any such order, injunction or
other restraint or prohibition that may be entered.
(c) Financing. Purchaser shall have obtained, pursuant to the Financing
---------
Commitment, the funds necessary to consummate the transactions contemplated by
this Agreement and the Ancillary Documents.
(d) Purchaser IT Environment. The Purchaser IT Environment shall have been
------------------------
established and shall be operational in accordance in all material respects with
the standards set forth in a testing protocol to be reasonably agreed upon by
Parent and Purchaser prior to the Closing.
6.2 Conditions to Obligation of Purchaser. The obligation of Purchaser to
-------------------------------------
consummate the transactions contemplated by this Agreement is subject to the
satisfaction at and as of the Closing of each of the following conditions:
(a) Representations and Warranties. The representations and warranties of
------------------------------
each Seller set forth in this Agreement and in any Ancillary Agreement shall be
true and correct in all respects as of the Closing as though such
representations and warranties were made on and as of the Closing, except for
(i) those representations and warranties which address matters only as of a
-
particular date (which shall be true and correct only as of such date), and (ii)
--
such inaccuracies as would not, individually or in the aggregate, have a
Material Adverse Effect (but disregarding for such purposes limitations on such
representations and warranties based on "materiality" or "Material Adverse
Effect") and Purchaser shall have received a certificate from each Seller and
NPI signed by an authorized officer to such effect.
(b) Performance of Obligations. Sellers shall have performed or complied in
--------------------------
all material respects with all obligations, conditions and covenants required to
be performed or complied with by it under this Agreement and under the Human
Resources Agreement at or prior to the Closing, and Purchaser shall have
received a certificate from each Seller signed by an authorized officer to such
effect.
(c) Audited Financial Statements. Purchaser shall have received the Audited
----------------------------
Financial Statements at least 15 days prior to the Closing Date, and the
financial condition and results of operations of the Carve Out Business
reflected in the Audited Financial Statements and the notes thereto shall not
reflect any materially adverse deviations in the aggregate from the financial
condition and results of operations and notes reflected in the Year-End
Financial Statements.
(d) Title. Purchaser shall have received extended coverage 1992 form of
-----
American Land Title Association owner's policies of title insurance issued on
the Closing Date by the Title Company for the Real Property (collectively, the
"Title Policies").
--------------
51
Each Title Policy shall be in an amount designated by Purchaser and shall insure
Purchaser's ownership of fee title to the Real Property, subject to the terms of
Section 5.8, free and clear of all Title Defects other than Permitted Real
Property Exceptions.
(e) Survey. Purchaser shall have received surveys for each parcel of Real
------
Property used or held for use in any material respect in the operations of any
of the Xxxxx (other than surveys for the FERC Assets and lakes and rivers and
dams) in each case in form sufficient to delete the "standard survey exception"
with respect to the parcels surveyed in the Title Policies and to enable
Purchaser to obtain extended coverage Title Policies in accordance with the
further provisions of this Section. Each Survey shall be certified to Purchaser
and the Title Company and shall show the absence of any Title Defect other than
Permitted Real Property Exceptions.
(f) Section 338(h)(10) Elections; FIRPTA Certification. Purchaser shall
--------------------------------------------------
have received from Parent properly executed Forms 8023 as provided in Section
9.5(c) and the certifications provided for in Section 9.5(j).
(g) Ancillary Documents. Parent (and/or its Affiliates, as the case may be)
-------------------
shall have executed and delivered each of the Ancillary Documents to which they
are a party.
(h) No Material Adverse Change. Since December 31, 2000, no events,
--------------------------
occurrences, conditions, facts or change shall have occurred that, individually
or in the aggregate, have had or would reasonably be expected to have, a
Material Adverse Effect.
(i) Opinion of Counsel. Purchaser shall have received an opinion, addressed
------------------
to it and dated the Closing Date, from counsel to Parent, in form and substance
satisfactory to Parent in its reasonable judgment, containing the opinions set
forth in Exhibit K.
(j) Software. Parent shall have obtained for Purchaser the assignments or
--------
sublicenses listed in Section 6.2(j) of the Purchaser Disclosure Letter, which
will provide Purchaser with the right to use as of the Closing the Computer
Software listed in such section of the Purchaser Disclosure Schedule.
6.3 Conditions to Obligation of Sellers. The obligation of Sellers to
-----------------------------------
consummate the transactions contemplated by this Agreement is subject to the
satisfaction at and as of the Closing of each of the following conditions:
(a) Representations and Warranties. The representations and warranties of
------------------------------
Purchaser set forth in this Agreement and in the Ancillary Documents shall be
true and correct in all respects as of the Closing as though such
representations and warranties were made on and as of the Closing, except for
(i) those representations and warranties which address matters only as of a
-
particular date (which shall be true and correct only as
52
of such date), (ii) such inaccuracies as would not, individually or in the
--
aggregate, have a material adverse effect on the ability of Purchaser to perform
its obligations under the Agreement, and Parent shall have received a
certificate from Purchaser signed by an authorized officer of Purchaser to such
effect.
(b) Performance of Obligations. Purchaser shall have performed or complied
--------------------------
in all material respects with all obligations, conditions and covenants required
to be performed or complied with by it under this Agreement and under the Human
Resources Agreement at or prior to the Closing, and Parent shall have received a
certificate signed by an authorized officer of Purchaser to such effect.
(c) Ancillary Documents. Purchaser shall have executed and delivered each
-------------------
of the Ancillary Documents to which it is a party.
ARTICLE VII
Termination, Amendment and Waiver
---------------------------------
7.1 Termination.
-----------
(a) Notwithstanding anything to the contrary in this Agreement, this
Agreement may be terminated and the transactions contemplated hereby abandoned
at any time prior to the Closing:
(i) by mutual written consent of the parties hereto;
(ii) by Parent if any of the conditions set forth in Section 6.1 or
6.3 shall have become incapable of fulfillment, and shall not have been
waived by Parent;
(iii) by Purchaser if any of the conditions set forth in Section 6.1
or 6.2 shall have become incapable of fulfillment, and shall not have been
waived by Purchaser;
(iv) by Purchaser, pursuant to Section 5.8 or 5.9; or
(v) by Parent or Purchaser if the Closing does not occur on or prior
to July 31, 2001, provided that either Parent or Purchaser shall be
--------
entitled to extend such date to no later than August 15, 2001 (but only if
it has complied with its obligations under Section 5.3(a)) if necessary to
satisfy the Closing condition set forth in Section 6.1(d); further provided
------- --------
that either Parent or Purchaser shall be entitled to re-extend such date to
no later than August 31, 2001 (but only if it has complied with its
obligations under Section 5.3(a)) if further necessary to satisfy the
Closing condition set forth in Section 6.1(d);
53
provided, however, that the party seeking termination pursuant to clause (ii),
-------- -------
(iii), (iv) or (v) is not in breach in any material respect of any of its
representations, warranties, covenants or agreements contained in this
Agreement.
(b) In the event of termination of this Agreement pursuant to this Section
7.1, written notice thereof shall promptly be given to the parties hereto and
the transactions contemplated by this Agreement shall be terminated, without
further action by any party. If the transactions contemplated by this Agreement
are terminated as provided herein:
(i) Purchaser shall return all documents and other material received
from Parent or its Affiliates relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to
Parent; and
(ii) all confidential information received by Purchaser with respect
to the business of Parent or its Affiliates shall be treated in accordance
with the Confidentiality Agreement which shall remain in full force and
effect notwithstanding the termination of this Agreement.
(c) If this Agreement is terminated and the transactions contemplated
hereby are abandoned as described in this Section 7.1, this Agreement shall
become null and void and of no further force and effect, except for the
provisions of (i) Section 5.2 and Section 5.5(a) (relating to the obligation of
-
Purchaser to keep confidential certain information and data obtained by it from
Parent or its Affiliates), (ii) the provisions of this Agreement relating to
--
expenses (including Section 9.3), (iii) this Section 7.1 and (iv) Article X.
--- --
Nothing in this Section 7.1 shall be deemed to release any party from any
liability for any breach by such party of the terms and provisions of this
Agreement or to impair the right of any party to compel specific performance by
any other party hereto of its obligations under this Agreement.
7.2 Amendments and Waivers. No amendment, modification or discharge of this
----------------------
Agreement, and no waiver hereunder, shall be valid or binding unless set forth
in writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought. Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party granting such waiver
in any other respect or at any other time. Neither the waiver by any of the
parties hereto of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any of the parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder. The rights and remedies of any party based upon, arising
out of or otherwise in respect of any inaccuracy or breach of any
representation, warranty, covenant or agreement or failure to fulfill any
condition shall in no way be limited by the fact that the act, omission,
54
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement as to which there is no inaccuracy or breach.
ARTICLE VIII
Indemnification
---------------
8.1 Indemnification by Parent. Parent covenants and agrees to defend,
-------------------------
indemnify and hold harmless Purchaser, its Affiliates (including the Transferred
Subsidiaries from and after the Closing) and the officers, directors, employees,
agents, advisers and representatives of each such Person (collectively, the
"Purchaser Indemnitees") from and against, and pay or reimburse the Purchaser
---------------------
Indemnitees for, any and all claims, liabilities, obligations, losses, fines,
costs, royalties, proceedings, deficiencies or damages (whether absolute,
accrued, conditional or otherwise and whether or not resulting from third party
claims), including out-of-pocket expenses and reasonable attorneys',
accountants' and consultants' fees incurred in the investigation or defense of
any of the same or in asserting any of their respective rights hereunder
(collectively, "Losses"), resulting from or arising out of:
------
(i) (A) any inaccuracy of any representation or warranty made by
Sellers in Article III or in the Human Resources Agreement or the IT
Support Services Agreement (in the case of any such representation or
warranty, without taking into account any qualification as to materiality
or Material Adverse Effect contained in such representation or warranty) or
(B) subject to Section 8.2(vi), any Assumed Pre-Closing Liability;
(ii) any failure of any Seller to perform any covenant or agreement
hereunder or under the Human Resources Agreement or the IT Support Services
Agreement;
(iii) any Excluded Liability (including any Excluded Environmental
Liability and any Pending Litigation) or Excluded Asset;
(iv) any failure of any Seller to comply with applicable bulk sales
laws (in consideration of which indemnification obligation Purchaser hereby
waives compliance by Parent with any applicable bulk sales laws), except to
the extent the Loss results from Purchaser's failure to discharge an
Assumed Liability;
(v) the Assumed Parent Environmental Liabilities until such time as
the Losses incurred by Parent and its Affiliates resulting from or arising
out of the Assumed Parent Environmental Liabilities, whether incurred
directly or as a result
55
of Parent's indemnification of Purchaser Indemnitees under this clause (v),
exceed $100,000,000 (the "Environmental Indemnity Cap"); or
---------------------------
(vi) the claims of any Person referred to in Section 3.19 with respect
to a matter described in such section.
8.2 Indemnification by Purchaser. Purchaser covenants and agrees to defend,
----------------------------
indemnify and hold harmless Parent, its respective Affiliates and the officers,
directors, employees, agents, advisers and representatives of each such Person
(collectively, the "Parent Indemnitees") from and against, and pay or reimburse
------------------
the Parent Indemnitees for, any and all Losses resulting from or arising out of:
(i) any inaccuracy in any representation or warranty by Purchaser in
Article IV or in the Human Resources Agreement or the IT Support Services
Agreement (in the case of any such representation or warranty, without
taking into account any qualification as to materiality contained in such
representation or warranty);
(ii) any failure of Purchaser to perform any covenant or agreement
hereunder or under the Human Resources Agreement or the IT Support Services
Agreement;
(iii) the Assumed Liabilities (other than the Assumed Parent
Environmental Liabilities and the Assumed Pre-Closing Liabilities);
(iv) the use, operation or ownership of the Acquired Assets after the
Closing Date;
(v) the Assumed Parent Environmental Liabilities from and after such
time as the Losses incurred by Parent and its Affiliates resulting from or
arising out of the Assumed Parent Environmental Liabilities, whether
incurred directly or as a result of Parent's indemnification of the
Purchaser Indemnitees, under Section 8.1(v), exceed the Environmental
Indemnity Cap;
(vi) the Assumed Pre-Closing Liabilities (A) until such time as the
-
Losses incurred by the Purchaser Indemnitees resulting from or arising out
of Assumed Pre-Closing Liabilities (whether directly or as a result of
Purchaser's indemnification of the Parent Indemnitees under this clause
(vi)) and the Losses referred to in Section 8.1(i)(A) exceed the Deductible
(as defined in Section 8.3(a)(i)) and (B) from and after the earlier to
-
occur of (1) such time as the Losses incurred by Parent and its Affiliates
resulting from or arising out of the Assumed Pre-Closing Liabilities,
whether incurred directly or indirectly as a result of Parent's
indemnification of the Purchaser Indemnitees under Section 8.1(i), and
56
any amounts paid by Parent to the Purchaser Indemnitees under clause (v) of
Section 8.1 exceed the General Indemnity Cap (as defined in Section
8.3(a)(i)) and (2) March 31, 2003;
(vii) the claims of any Person referred to in Section 4.8 with respect
to a matter described in such section; or
(viii) any public or private offering of securities by Purchaser or
any of its Affiliates based on a prospectus or similar document that
incorporates all or any part of the financial statements and other
information provided by Parent to Purchaser under Section 5.14; provided
that this clause shall not limit Parent's indemnification obligations under
Section 8.1(a)(i)(A).
except, in the case of clause (iv), to the extent such Losses result from or
arise out of the Excluded Liabilities or constitute Losses for which Parent is
required to indemnify Purchaser Indemnitees under Section 8.1.
8.3 Limitations on Indemnity Obligation.
-----------------------------------
(a) Notwithstanding anything in Section 8.1 or 8.2 to the contrary, the
indemnification obligations set forth in Sections 8.1 and 8.2 shall be subject
to the following limitations:
(i) If an indemnification claim is made under clause (i) of Section
8.1 (other than claims made for breach of the representations and
warranties in Sections 3.2, 3.6(a), 3.6(c) and 3.17) or clause (i) of
Section 8.2 (other than claims made for breach of the representations and
warranties in Section 4.2), Parent or Purchaser, as the case may be, (A)
-
shall not be required to indemnify the other party for any individual Loss
or series of Losses arising out of the same or similar facts or
circumstances totaling less than $250,000 ("De Minimis Losses") and (B)
----------------- -
shall be required to provide indemnification only at such time as the
aggregate amount of Losses (other than De Minimis Losses) arising under
clause (i) of Section 8.1 (other than claims made for breach of the
representations and warranties in Sections 3.2, 3.6(a), 3.6(c) and 3.17) or
clause (i) of Section 8.2 (other than claims made for breach of the
representations and warranties in Section 4.2), as the case may be, exceeds
on a cumulative basis an amount equal to $16,500,000 (the "Deductible") in
----------
which event the Indemnifying Party shall indemnify only to the extent of
any excess over such Deductible up to a maximum total liability of
$500,000,000 (not including any amounts excluded under the Deductible but
including the amount of the Environmental Indemnity Cap, the "General
-------
Indemnity Cap");
-------------
57
(ii) the indemnification obligations of Parent or Purchaser, as the
case may be, under (A) clauses (ii), (iii), (iv) and (vi) of Section 8.1
-
and under clauses (ii), (iii), (iv), (v), (vi), (vii) and (viii) of Section
8.2, respectively, and (B) Section 9.5 shall not be subject to the
-
Deductible, the General Indemnity Cap or the Environmental Indemnity Cap;
(iii) any indemnification obligations of Parent under clause (i) of
Section 8.1 arising as a result of a Title Objection or any Title Defect
(other than Permitted Real Property Exceptions) that is not disclosed by
the Surveys or the Title Commitments and that is not cured by Parent prior
to Closing shall not be subject to the Deductible or considered a De
Minimis Loss;
(iv) none of the Purchaser Indemnitees shall be entitled to
indemnification (A) under Section 8.1 with respect to the condition or
current or past operation of, or any Loss arising with respect to, any of
the Impaired Assets, (B) under Section 8.1(i) with respect to any
Pre-Closing Environmental Liabilities or (C) under clause (A) of Section
8.1(i) with respect to any Assumed Pre-Closing Liabilities;
(v) subject to the other limitations set forth herein, the
indemnification obligations of Parent with respect to any Pre-Closing
Environmental Liabilities shall only include Losses incurred in response to
any Environmental Claim and/or as necessary to comply with Applicable Law;
and
(vi) any indemnification obligations of Parent with respect to the New
Source Review/Prevention of Significant Deterioration regulations as a
result of the Section 114 investigations at the Xxxxx relating to the
period prior to the Closing which are identified as Assumed Parent
Environmental Liabilities on Exhibit A-1 shall be limited to any fines
imposed by any Governmental Entity and any attorney's and consultant's fees
and expenses incurred in connection with such fines, and Purchaser shall be
responsible for all other Losses arising from such matters.
(b) To the extent any Indemnified Party is seeking indemnification for
Losses in respect of the breach of any representation or warranty (i.e., a claim
under clause (i) of Section 8.1 or clause (i) of Section 8.2, as the case may
be), such Indemnified Party shall be entitled to indemnity only for those Losses
as to which such Indemnified Party has given written notice thereof to the
Indemnifying Party prior to the termination of any applicable survival period
for such representation or warranty applicable to such Loss pursuant to Section
9.1. Such Indemnified Party may at its option give notice under this
58
Article VIII as soon as it has become aware of a potential claim in respect of
any breach of such representation or warranty, regardless of whether any Losses
have been suffered, so long as such Indemnified Party shall in good faith
determine that such potential claim is not frivolous or that such Indemnified
Party may be liable or otherwise incur Losses as a result of such claim or
otherwise and shall give written notice of such claim to the Indemnifying Party.
Any written notice delivered by such Indemnified Party pursuant to this Section
8.3 shall set forth with reasonable specificity the basis of the claim for
Losses and, if practicable, an estimate of the amount thereof.
(c) If an Indemnified Party receives, prior to or subsequent to its receipt
of any indemnification from an Indemnifying Party, an amount in respect of the
Losses for which it has received indemnification under insurance coverage, then
such Indemnified Party shall promptly reimburse the Indemnifying Party for any
indemnification payment made by such Indemnifying Party with respect such Losses
up to the amount received under such insurance coverage, provided that the
--------
Indemnified Party shall have no obligation to seek reimbursement under any such
insurance coverage.
(d) Purchaser acknowledges and agrees that to the extent any Losses are
specifically attributable to any change in any Applicable Law occurring after
the Closing Date (other than a change in law relating to Taxes), Parent shall
not be liable for indemnification pursuant to this Article VIII to the extent
such Losses are so attributable to such change in Applicable Law.
(e) Notwithstanding anything to the contrary contained herein, no
indemnification shall be provided under this Article VIII in respect of any
consequential, punitive (other than as part of a loss resulting from a third
party claim), special, exemplary or similar damages or lost profits.
(f) Parent shall be required to indemnify Purchaser Indemnitees under
clause (i) of Section 8.1 and under clause (ii) of Section 8.1 with respect to
breaches of the covenants in Section 5.1 only for those Losses as to which a
Purchaser Indemnitee has given Parent written notice on or prior to March 31,
2003.
(g) Parent shall be required to indemnify Purchaser Indemnitees under
clause (v) of Section 8.1 with respect to Losses resulting from or arising out
of Assumed Parent Environmental Liabilities only for those Losses as to which a
Purchaser Indemnitee has given Parent written notice on or prior to the tenth
anniversary of the Closing Date (subject in all cases to the Environmental
Indemnity Cap).
(h) The indemnification obligations of Parent and Purchaser under clauses
(ii) (subject to applicable statutes of limitation), (iii), (iv) and (vi) of
Section 8.1 and under clauses (ii), (iii), (iv), (v), (vi), (vii) and (viii) of
Section 8.2, respectively, and under Section 9.5 shall not expire.
59
8.4 Procedures Relating to Third Party Claims (other than Pre-Closing
-----------------------------------------------------------------
Environmental Liabilities). In the case of any claim asserted by a third party
-------------------------
(a "Third Party Claim") against a party entitled to indemnification under this
-----------------
Agreement (the "Indemnified Party"), notice shall be given by the Indemnified
-----------------
Party to the party required to provide indemnification (the "Indemnifying
------------
Party") promptly after such Indemnified Party has actual knowledge of any claim
-----
as to which indemnity may be sought, and the Indemnified Party shall permit the
Indemnifying Party (at the expense of such Indemnifying Party) to assume the
defense of any claim or any litigation resulting therefrom, provided that (i)
-------- -
the counsel for the Indemnifying Party who shall conduct the defense of such
claim or litigation shall be reasonably satisfactory to the Indemnified Party,
(ii) the Indemnified Party may participate in such defense at such Indemnified
--
Party's expense, and (iii) the failure by any Indemnified Party to give notice
---
as provided herein shall not relieve the Indemnifying Party of its
indemnification obligation under this Agreement except to the extent that such
Indemnifying Party is materially prejudiced as a result of such failure to give
notice (except that the Indemnifying Party shall not be liable for any expenses
incurred by the Indemnified Party during the period in which the Indemnified
Party failed to give such notice other than expenses reasonably incurred in
respect of any such claim or litigation). Such notice shall specify the
subsection of Section 8.1 or 8.2 (as applicable) under which indemnification is
being sought; provided that any failure to specify shall not relieve the
Indemnifying Party of its indemnification obligation except to the extent the
Indemnifying Party is materially prejudiced thereby. Except with the prior
written consent of the Indemnified Party, no Indemnifying Party, in the defense
of any such claim or litigation, shall consent to entry of any judgment or
order, interim or otherwise, or enter into any settlement that provides for
injunctive or other nonmonetary relief affecting the Indemnified Party or that
does not include as an unconditional term thereof the giving by each claimant or
plaintiff to such Indemnified Party of a release from all liability with respect
to such claim or litigation. In the event that the Indemnified Party shall in
good faith determine that the conduct of the defense of any claim subject to
indemnification hereunder or any proposed settlement of any such claim by the
Indemnifying Party might be expected to affect adversely the ability of
Purchaser to conduct its business, or that the Indemnified Party may have
available to it one or more defenses or counterclaims that are inconsistent with
one or more of those that may be available to the Indemnifying Party in respect
of such claim or any litigation relating thereto, the Indemnified Party shall
have the right at all times to participate with its own counsel in the defense,
settlement, negotiations or litigation relating to any such claim at the sole
cost of the Indemnifying Party. In the event that the Indemnifying Party does
not accept the defense of any matter as above provided, the Indemnified Party
shall have the full right to defend against any such claim or demand and shall
be entitled to settle or agree to pay in full such claim or demand. In any
event, the Indemnifying Party and the Indemnified Party shall cooperate in the
defense of any claim or litigation subject to this Section 8.4 and the records
of each shall be available to the other with respect to such defense.
60
8.5 Procedures Relating to Pre-Closing Environmental Liabilities.
------------------------------------------------------------
(a) Control. For purposes of this Section 8.5, "exclusive control" over
-------
Pre-Closing Environmental Liabilities shall mean the exclusive right to (i)
-
obtain any tests and studies reasonably necessary to define and delineate the
extent of any contamination or noncompliance, (ii) contact Governmental
--
Entities, make any reports to Governmental Entities, submit any remediation or
compliance plans to such entities, negotiate with such entities, and otherwise
deal with such entities, (iii) prepare the work plan for any remediation or
---
correction of noncompliance to be submitted to a Governmental Entity, and (iv)
--
conduct or direct any such remediation or correction of noncompliance.
Notwithstanding the foregoing, all Pre-Closing Environmental Liabilities shall
be managed in good faith and all activities conducted in connection therewith
shall be undertaken promptly and concluded expeditiously using all reasonable
efforts, subject to the schedules and approvals required by the Governmental
Entity asserting jurisdiction thereover. The parties shall consult in good faith
and provide such information as is reasonably requested in connection with the
management of all Pre-Closing Environmental Liabilities. The parties shall
comply with all Applicable Laws with respect to the resolution of any
Pre-Closing Environmental Liability. Purchaser shall provide Parent with
reasonable access to the Real Property in order for Parent to manage any
Pre-Closing Environmental Liability under its control. Parent shall manage such
liability so as not to unreasonably interfere with Purchaser's operations, the
Carve Out Business or the Real Property.
(b) Control by Purchaser. After the Closing, Purchaser shall have Exclusive
--------------------
Control over all Pre-Closing Environmental Liabilities that are (i) Assumed
-
Purchaser Environmental Liabilities or (ii) Assumed Parent Environmental
--
Liabilities but, in the case of clause (ii) of this Section 8.5(b), only (x) if
-
Parent's indemnification obligations under clause (v) of Section 8.1 have
terminated pursuant to the terms of such clause or (y) if the survival period
-
specified in Section 8.3(g) has expired.
(c) Control by Parent. After the Closing, Parent shall have exclusive
-----------------
control over all Pre-Closing Environmental Liabilities that are (i) Excluded
-
Environmental Liabilities or (ii) Assumed Parent Environmental Liabilities but,
--
in the case of this clause (ii) of this Section 8.5(c), only (x) if the
-
indemnification provided for in such clause has not terminated pursuant to the
terms of such clause and (y) if the survival period in Section 8.3(g) has not
-
expired.
(d) Allocation Between Pre-Closing and Post-Closing Activities. If there is
----------------------------------------------------------
a dispute as to whether, and the extent to which an environmental condition or
instance of non-compliance constitutes a Pre-Closing Environmental Liability,
the parties shall meet and try to resolve the dispute, and then (if
unsuccessful) submit their positions, including
61
all supporting factual and technical information, to a licensed professional
employed by a reputable environmental consulting firm having no existing
relationship with either Parent or Purchaser and mutually acceptable to both
parties (the "Arbitrator"). The Arbitrator shall allocate responsibility for
----------
such condition or non-compliance between Parent and Purchaser based on a
reasonable assessment of all the available evidence, provided, however, in the
-------- -------
event that the Arbitrator determines that post-closing activities have
contributed to the condition or non-compliance, that Purchaser's responsibility
shall be apportioned based on the period of time and the volume of Materials of
Environmental Concern that Purchaser contributed to the contamination or
non-compliance. As soon as practicable, but in no event later than twenty
Business Days after referral of the dispute to the Arbitrator (and in any event,
prior to any deadline set by a Governmental Entity with jurisdiction over such
matter), the Arbitrator shall issue a written report to the parties setting
forth in reasonable detail its determination of the disputed issues. Expenses of
the Arbitrator shall be borne equally by the parties. The decision of the
Arbitrator shall be final and binding.
8.6 Acknowledgment; Exclusive Remedies. The parties acknowledge and agree
----------------------------------
that their sole and exclusive remedy with respect to any and all claims relating
to the subject matter of this Agreement (other than any claim of fraud or
intentional misrepresentation) shall be pursuant to the indemnification
provisions set forth in Section 9.5(a) and this Article VIII, provided that
--------
nothing herein shall limit the rights of either party to seek and obtain
injunctive relief to specifically enforce the other party's obligations. In
furtherance of the foregoing, the parties hereto hereby waive, to the fullest
extent permitted under Applicable Law, any and all rights, claims and causes of
action (other than any claim of fraud or intentional misrepresentation) with
respect to the subject matter of this Agreement that they may have against each
other, their respective affiliates and their respective officers, directors,
employees, stockholders, agents and representatives arising under or based upon
any Federal, state, local or foreign statute, law, ordinance, rule or regulation
or common law, except pursuant to the indemnification provisions set forth in
Section 9.5(a) and this Article VIII.
ARTICLE IX
Additional Agreements
---------------------
9.1 Survival of Representations and Warranties, etc. Except as set forth in
-----------------------------------------------
Section 8.3, the covenants and agreements of the parties shall continue in full
force and effect and shall survive the Closing. The representations and
warranties contained in this Agreement shall survive the execution and delivery
of this Agreement, any examination by or on behalf of the parties hereto and the
completion of the transactions contemplated herein, but only to the extent
specified below:
62
(a) except as set forth in clauses (b), (c) and (d) below, the
representations and warranties contained in Article III and Article IV shall
survive until March 31, 2003;
(b) the representations and warranties contained in Sections 3.1, 3.2,
3.6(a), 3.6(c), 4.1 and 4.2 shall survive without limitation;
(c) the representations and warranties of Parent contained in Section 3.17
shall survive as to any Tax covered by such representations and warranties for
so long as any statute of limitations for such Tax remains open, in whole or in
part, including without limitation by reason of waiver of such statute of
limitations; and
(d) the representations and warranties in Section 3.16 shall terminate at
Closing.
9.2 Confidentiality. The Confidentiality Agreement shall terminate as of
---------------
the Closing. Except as otherwise provided in this Agreement after the Closing,
(i) Parent will cause its Subsidiaries (and their respective accountants,
-
counsel, consultants, employees and agents to whom they disclose such
information) to keep confidential all information in the possession of Parent,
or to which Parent is given access pursuant to Section 5.2 or 9.4, after the
Closing that constitutes a part of the Acquired Assets and (ii) Purchaser will,
--
and will cause its Subsidiaries (and their respective accountants, counsel,
consultants, employees and agents to whom they disclose such information) to,
keep confidential all information in the possession of Purchaser, or to which
Purchaser is given access pursuant to Section 5.2 or 9.4, that relates to Parent
and is not information related primarily to the Acquired Assets. The provisions
of this Section 9.2 shall not apply to the disclosure by either party hereto or
their respective Subsidiaries of any information, documents or materials (w)
-
which are, or become, publicly available, other than by reason of a breach of
this Section 9.2 by the disclosing party or any Affiliate of the disclosing
party, (x) received from a third party not bound by any confidentiality
-
agreement with the other party hereto, (y) required by Applicable Law to be
-
disclosed by such party, or (z) necessary to establish such party's rights under
-
this Agreement or any Ancillary Document, provided that, in the case of clauses
(y) and (z), the Person intending to make disclosure of confidential information
will promptly notify the party to whom it is obliged to keep such information
confidential and, to the extent practicable, provide such party a reasonable
opportunity to prevent public disclosure of such information.
9.3 Expenses. Whether or not the Closing takes place, and except as
--------
otherwise specifically provided in this Agreement, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such costs or expenses provided that
--------
Purchaser shall reimburse Parent for $280,000 for the fees of Xxxxxx Xxxxxxxx in
connection with the audit of the Audited Financial Statements.
63
9.4 Certain Information. After the Closing, upon reasonable written notice,
-------------------
each of the parties hereto shall furnish or cause to be furnished to each other
and their respective accountants, counsel and other representatives access,
during normal business hours and upon reasonable prior notice, to such
information, including records pertinent to the Carve Out Business (other than
information or records which are the subject of attorney-client privilege or the
disclosure of which is prohibited by law or personnel or employee medical
files), and assistance relating to the Carve Out Business as is reasonably
necessary for financial reporting and accounting matters, the preparation and
filing of any returns, reports or forms or the defense of, or response required
under, or pursuant to, any lawsuit, action or proceeding (including any
proceeding involving Parent or its Affiliates and any environmental matters
related to the Carve Out Business). Each party shall make its personnel
available as reasonably requested by the other party to provide depositions,
testimony or other assistance with respect to any lawsuit, claims or
proceedings. After the Closing, each of Parent and its Affiliates, on the one
hand, and Purchaser, on the other, agrees to deliver promptly to each other all
mail and other documents (other than any mail or document which is the subject
of attorney-client privilege or the disclosure of which is prohibited by law or
personnel or employee medical files) received by such party which relate to any
business conducted by such other party or its Affiliates after the Closing. Each
such party shall also furnish or cause to be furnished to the other and their
respective accountants, counsel and other representatives access, during normal
business hours and upon reasonable prior notice, to such information for any
other reasonable business purpose. Each such party shall, and shall cause its
affiliates to, retain until five years after the Closing Date all such records
pertinent to the Carve Out Business which are owned by such Person immediately
after the Closing; after the end of such period, before disposing of any such
records, the applicable party shall give notice to such effect to the other, and
shall give the other, at the other's cost and expense, a reasonable opportunity
to remove and retain all or any part of such records as the other may select.
Cooperation with respect to Tax matters shall be governed by Section 9.5.
9.5 Tax Matters.
-----------
(a) Tax Indemnification. Notwithstanding anything in this Agreement or the
-------------------
Ancillary Documents to the contrary other than Section 9.5(k), Parent shall be
responsible for, shall indemnify and hold Purchaser and Purchaser Indemnitees
harmless from and against, and shall pay (i) all Taxes payable with respect to,
-
incurred by, or asserted against any of the Transferred Subsidiaries for all
Pre-Closing Tax Periods, to the extent the liability for such Taxes exceeds the
accrual (if any) for such Taxes as a liability on the Closing Working Capital
Statement as finally determined in accordance with Section 2.3 and Exhibit B,
(ii) all Taxes for which any Transferred Subsidiary may be held liable because
--
it was, prior to the Closing, a member of any combined, consolidated or unitary
group for purposes of filing Tax Returns or paying Taxes or a transferee or
successor of any other Person, (iii) all Taxes resulting from the making of
---
64
the Section 338(h)(10) Elections, (iv) all Taxes imposed on, with respect to or
--
relating to the Acquired Assets for all Pre-Closing Tax Periods and (v) all
-
Taxes imposed with respect to, relating to or as a result of the Ashdown #64
Lease or the termination of such lease, in each of the above cases together with
interest, additions and penalties and any out-of-pocket fees and expenses
(including reasonable attorneys' and accountants' fees) incurred by Purchaser or
any Purchaser Indemnitee.
(b) Straddle Periods. For purposes of Section 9.5(a), any liability of a
----------------
Transferred Subsidiary or liability with respect to the Acquired Assets
attributable to a Straddle Period shall be apportioned between the portion of
such period ending on the Closing Date and the portion beginning on the day
after the Closing Date (i) in the case of real and personal property Taxes, by
apportioning such Taxes on a per diem basis and (ii) in all other cases, by a
closing of the books as of the close of the Closing Date as if the relevant
taxable period ended on the Closing Date.
(c) Section 338(h)(10) Elections.
----------------------------
(i) Election. Sellers and Purchaser shall join in an election pursuant
--------
to Section 338(h)(10) of the Code with respect to the purchase and sale of
the U.S. Shares and all comparable elections under state and local Tax law
(together with the elections under Section 338(h)(10) of the Code, the
"Section 338(h)(10) Elections").
----------------------------
(ii) Forms.
-----
(A) Purchaser shall be responsible for the preparation of all
forms and schedules required to be filed in connection with the
Section 338(h)(10) Elections (the "Section 338 Forms"), including
-----------------
without limitation IRS Form 8023 (or any successor form) and all
attachments required to be filed therewith pursuant to applicable
Treasury Regulations ("Form 8023"). Parent and Purchaser shall
---------
cooperate in drafting and making final the Section 338 Forms.
Purchaser shall be responsible for filing the Section 338 Forms with
the proper taxing authorities, provided that Parent shall be
--------
responsible for filing any Section 338 Form that must be filed with a
Tax Return described in Section 9.5(e)(i).
(B) At least 10 days prior to the Closing Date, Purchaser shall
furnish Parent with four copies of each Form 8023 prepared by
Purchaser and executed by the proper party on behalf of Purchaser. On
or prior to the Closing Date, Parent shall deliver to Purchaser three
copies of each such Form 8023 executed by the proper party on behalf
of Parent. Purchaser shall not file any Form 8023 with any Tax
authority until the earlier of (x) the date the parties have agreed to
-
a Final Allocation
65
pursuant to Section 9.5(c)(iii) or (y) five business days prior to the
last day for - filing the Section 338(h)(10) Elections. If Purchaser
files any Form 8023 prior to an agreement between Purchaser and Parent
regarding a Final Allocation pursuant to Section 9.5(c)(iii),
Purchaser shall file such Form 8023 without completing Section E or F
of such Form 8023 (unless failure to complete those sections would
render the Section 338(h)(10) Election invalid).
(C) Purchaser shall prepare (x) any corrections, amendments or
-
supplements to any Form 8023 as executed by Purchaser and Parent
pursuant to Section 9.5(c)(ii)(B), (y) each IRS Form 8594 ("Form
- ----
8594") and (z) any state or local reports or forms that are each
---- -
necessary or appropriate for purposes of complying with the
requirements for making the Section 338(h)(10) Elections (each, an
final each Additional Section 338 Form. At least 30 days prior to the
---------------------------
latest date for the filing of each Additional Section 338 Form,
Purchaser shall furnish Parent with four copies of such Additional
Section 338 Form prepared by Purchaser and executed by the proper
party on behalf of Purchaser for Parent's review and approval. At
least 15 days prior to the latest date for the filing of each
Additional Section 338 Form, Purchaser and Parent shall agree upon the
final form and content of such Additional Section 338 Form, and Parent
shall deliver to Purchaser three copies of such Additional Section 338
Form executed by the proper party on behalf of Parent. Parent and
Purchaser shall cooperate in determining the final form and content of
such Additional Section 338 Form, and any dispute with respect thereto
shall be resolved in favor of Purchaser, provided that Purchaser's
position is reasonable. Purchaser shall cause each Additional Section
338 Form to be executed by the proper party on behalf of Purchaser,
and shall be responsible for filing such Additional Section 338 Form
with the proper taxing authorities, provided that Parent shall be
--------
responsible for filing any Additional Section 338 Form that must be
filed with a Tax Return described in Section 9.5(e)(i).
(iii) Allocation. On or before the date that is 90 days after the
----------
Closing Date, Purchaser shall provide to Parent an allocation of the
"aggregate deemed sales price" (the "ADSP") and the adjusted grossed-up
----
basis ("AGUB") for the deemed sale and purchase of assets resulting from
----
the making of the Section 338(h)(10) Elections, reflecting the portion of
the Purchase Price allocated to the U.S. Shares pursuant to Section
9.5(d)(i). The allocation shall indicate the fair market values of the
assets of the Transferred U.S. Subsidiary as of the Closing Date by class
of assets described in Section 1.338-6(b) of the Treasury Regulations and,
with respect to Class V assets (as defined in such Treasury
66
Regulation), the fair market value of the groups of assets within such
class with the same tax recovery period and subject to the same applicable
depreciation method in the hands of Purchaser. Parent and Purchaser shall
cooperate in determining a final allocation of such purchase price for the
sale of assets resulting from the making of the Section 338(h)(10)
Elections (the "Final Allocation"), and any dispute with respect thereto
----------------
shall be resolved in favor of Purchaser, provided that Purchaser's position
is reasonable. Parent and Purchaser shall complete each executed Form 8023
and Form 8594 in accordance with the Final Allocation.
(iv) Modification; Revocation. Purchaser and Parent agree that neither
------------------------
of them shall, or shall permit any of their Affiliates to, take any action
to modify the Section 338 Forms following the execution thereof, or to
modify or revoke the Section 338(h)(10) Elections following the filing of
the Section 338 Forms, without the written consent of Parent and Purchaser,
as the case may be, unless required to by any Tax authority (provided that
any such requirement does not result from any act or omission of either
party) after reasonable defense thereof, which shall not include seeking
judicial review unless the other party shall have agreed to assume and pay
all reasonable legal fees and expenses incurred in connection therewith.
(v) Consistent Treatment. Purchaser and Parent shall, and shall cause
-------------------
their respective Affiliates to, file all Tax Returns in a manner consistent
with the information contained in the Section 338 Forms and the Additional
Section 338 Forms as filed, and neither shall take any position for Tax or
financial purposes (including, without limitation, by agreeing to or
accepting any proposed audit adjustment or assessment) that is inconsistent
with such information without the express written consent of the other,
which shall not be unreasonably withheld.
(vi) Expenses. Notwithstanding any other provision of this Agreement
--------
or the Ancillary Documents, Purchaser and its Affiliates (including the
Transferred U.S. Subsidiaries following the Closing), on the one side, and
Parent and the Non-Transferred Subsidiary Affiliates, on the other side,
shall bear their respective administrative, appraisal, legal, accounting
and similar expenses resulting from the making of the Section 338(h)(10)
Elections.
(vii) Notices. All notices and other materials required to be provided
--------
pursuant to this Section 9.5(c) shall be provided as set forth in Section
10.1, but if to Purchaser, additional copies shall be sent to Xxxx X.
Xxxxxxxx, Xxxxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxxxx (until July 9, 2001), 000
Xxxxx Xxxxxx (after July 9, 2001), Xxx Xxxx, Xxx Xxxx 00000 (Fax: (212)
000-0000).
67
(d) Allocation.
----------
(i) Allocation Statement. On or before the date that is 90 days after
--------------------
the Closing Date, Purchaser shall provide to Parent for Parent's review and
approval (i) an allocation of the consideration under the Agreement between
-
the Shares and the Acquired Assets, as contemplated under Section 1.5(b),
and (ii) a schedule indicating the fair market value of the Acquired Assets
--
as of the Closing Date by class of assets described in Section 1.338-6(b)
of the Treasury Regulations and, with respect to Class V assets (as defined
in such Treasury Regulation), the fair market value of the groups of assets
within such class with the same tax recovery period and subject to the same
applicable depreciation method in the hands of Purchaser (the "Allocation
----------
Statement"). Purchaser and Parent shall cooperate in connection with
---------
finalizing the form and content of the Allocation Statement, and any
dispute with respect thereto shall be resolved in favor of Purchaser,
provided that Purchaser's position is reasonable.
(ii) Reporting. Purchaser and Parent shall file and cause to be filed
---------
all Tax Returns and execute such other documents as may be required by any
taxing authority, in a manner consistent with the Allocation Statement, as
it may be revised from time to time, and shall not take any position
inconsistent therewith in any examination of any Tax Return, in any refund
claim or in any litigation or investigation, except as required by
applicable law, in which case the party taking such inconsistent position
shall make reasonable efforts to notify such other party in advance of
taking such inconsistent position. If any such allocation is audited by a
taxing authority, the party receiving notice thereof shall promptly notify
and consult with the other party and shall keep such other party informed
of the status of such audit. Purchaser shall prepare Form 8594 pursuant to
Section 1060 of the Code relating to the transactions contemplated by this
Agreement based on the Allocation Statement, as it may be revised from time
to time, and deliver such form to Parent. Purchaser and Parent shall file,
or cause the filing of, such form with each relevant taxing authority.
(e) Returns.
-------
(i) Parent's Responsibility. Parent shall cause to be prepared and
-----------------------
duly filed, and Parent and Purchaser shall cause the Transferred
Subsidiaries to join, to the extent permitted by Applicable Law, for all
taxable periods of the Transferred Subsidiaries ending on or prior to the
Closing Date (i) the consolidated federal Income Tax Returns of the group
-
of which Parent is the common parent and (ii) the combined, consolidated
--
or unitary Tax Returns for state, local and foreign Income Taxes which
includes Parent or any Non-Transferred Subsidiary Affiliate and with
respect to which any Transferred Subsidiary (x) filed such a Tax Return for
the most recent taxable period for which a Tax Return has been filed prior
to
68
the Closing Date and may file such a Tax Return for subsequent taxable
periods or (y) is required to file such a Tax Return. Parent shall file, or
-
shall cause to be filed, all other Tax Returns relating to the business or
assets of the Transferred Subsidiaries or to the Acquired Assets for all
taxable periods ending on or prior to the Closing Date. Parent shall cause
all such Tax Returns to be filed on a basis consistent with the last
previous such Tax Returns filed in respect of the Transferred Subsidiaries
or the Acquired Assets, as the case may be.
(ii) Purchaser's Responsibility. Purchaser shall prepare and file, or
--------------------------
cause to be prepared and filed, all Tax Returns relating to the business or
assets of the Transferred Subsidiaries or to the Acquired Assets other than
those Tax Returns described in clause (i) of this Section 9.5(e). Purchaser
shall cause all such Tax Returns, insofar as they relate to items for
periods including the Closing Date and to the extent permitted by
applicable Tax law, to be filed on a basis consistent with the last
previous such Tax Returns filed in respect of the Transferred Subsidiaries
or the Acquired Assets, as the case may be.
(f) Refunds. Parent shall be entitled to retain, or receive prompt payment
------
from the Transferred Subsidiaries or Purchaser of, any refund or credit with
respect to Taxes including interest received with respect thereto from the
applicable taxing authority (net of any cost or expenses to any Transferred
Subsidiary or Purchaser and excluding (i) any refund accrued as a current asset
on the Closing Working Capital Statement as finally determined in accordance
with Section 2.3, (ii) any refund attributable to or with respect to any item
--
described in Section 9.5(g) with respect to which the Transferred Subsidiaries
may not relinquish the right to carry back and (iii) any refund in respect of
---
any Transfer Tax to the extent such Transfer Tax is the responsibility of
Purchaser under Section 9.5(k) of this Agreement), relating to the Transferred
Subsidiaries or the Acquired Assets that are described as being the
responsibility of Parent in Section 9.5(a). Purchaser or the Transferred
Subsidiaries shall be entitled to retain, or receive prompt payment from Parent
of, any refund or credit with respect to Taxes (net of any cost or expenses to
Parent), plus any interest received with respect thereto from the applicable
taxing authority, relating to the Transferred Subsidiaries or the Acquired
Assets that Parent is not entitled to retain or receive pursuant to the
immediately preceding sentence. Purchaser and Parent shall cooperate with
respect to claiming any refund or credit with respect to Taxes referred to in
this Section 9.5(f), provided that such cooperation shall not unreasonably
--------
interfere with the conduct of the business of the parties.
(g) Carryback of Tax Items. To the extent permitted by law, Purchaser shall
----------------------
cause the Transferred Subsidiaries not to carry back any item of income, loss,
credit or deduction from any period beginning after the Closing Date to any
period including or ending prior to the Closing Date.
69
(h) Cooperation; Returns. Parent and Purchaser shall each provide the other
-------------------
with such assistance as may be reasonably requested (including making employees
reasonably available to provide information or testimony) in connection with the
preparation of any Tax Return, audit or other examination by any taxing
authority or judicial or administrative proceeding or the determination of
liability for Taxes with respect to the Transferred Subsidiaries and the
Acquired Assets, provided that the foregoing shall be done in a manner so as not
--------
to interfere unreasonably with the conduct of the business of the parties.
Parent and Purchaser each shall, and shall cause their Affiliates to, retain
until the longer of (x) seven years after the Closing Date or (y) the full
- -
period of the applicable statute of limitations, including any extension
thereof, all Tax Returns, schedules, work papers and other records that are
owned by such Person immediately after the Closing Date and that relate to any
of the Transferred Subsidiaries and the Acquired Assets. After the end of such
period, before disposing of any such Tax Returns, schedules, work papers or
other records, each shall give notice to such effect to the other, and shall
give the other, at the other's cost and expense, a reasonable opportunity to
remove and retain all or any part of such Tax Returns, schedules, work papers or
other records as the other may select.
(i) Audits.
------
(i) If any Tax authority provides Parent or Purchaser with any written
notice of a proposed or threatened audit, claim, assessment or other
dispute concerning Taxes (x) of any of the Transferred Subsidiaries or with
-
respect to the Acquired Assets, in each case for any taxable period ending
on or prior to the Closing Date, or for any Straddle Period or (y) of
-
Parent or any Affiliate thereof that could reasonably be expected to affect
the Tax liabilities of any of the Transferred Subsidiaries for taxable
periods ending on or prior to the Closing Date, the party so informed shall
in each case promptly notify the other party in writing within 10 days from
such party's receipt of written notice of such matter. Such notice shall
contain factual information (to the extent known) describing any asserted
Tax liability in reasonable detail and shall be accompanied by copies of
any notice or other documents received from any Tax authority with respect
to such matter.
(ii) The party responsible for filing the applicable Tax Return under
this Section 9.5 shall control any audits, disputes, administrative,
judicial or other proceedings related to such return. Subject to the
preceding sentence, if an adverse determination may result in each party
having responsibility for an amount of Taxes under this Section 9.5, each
party shall be entitled to fully participate in that portion of the
proceedings relating to the Taxes with respect to which it may incur
liability hereunder, and neither party shall enter into a settlement in
connection with any such proceedings without the consent of the other party
(which consent shall not be unreasonably withheld). For purposes of
70
this Section 9.5 the term "participation" shall include (A) participation
-
in conferences, meetings or - proceedings with any Tax authority, the
subject matter of which includes an item for which such party may have
liability hereunder, (B) participation in appearances before any court or
-
tribunal, the subject matter of which includes an item for which a party
may have liability hereunder, and (C) with respect to - the matters
-
described in the preceding clauses (A) and (B), participation in the
submission and determination of the content of the documentation, protests,
memorandum of fact and law, briefs, and the conduct of oral arguments and
presentations.
(iii) Between the date hereof and the Closing Date, Parent shall give
prompt notice to Purchaser of any material Tax audit, the assessment of any
material Tax, the receipt of any notice of material Tax due, or the
commencement or scheduling of any administrative or judicial proceeding
with respect to the determination, assessment, or collection of any
material Tax with respect to any of the Transferred Subsidiaries and the
Acquired Assets. Such notice shall provide reasonable detail of the
asserted material Tax liability and shall include copies of any written
notices or other documentation received from the applicable Tax authority.
(j) FIRPTA. At the Closing, Sellers shall deliver to Purchaser duly
------
executed certificates certifying that the transactions contemplated hereby are
exempt from withholding under Section 1445 of the Code.
(k) Transfer Taxes.
--------------
(i) Parent's Responsibility. Parent shall be responsible for, shall
----------------------
indemnify and hold Purchaser and Purchaser Indemnitees harmless from and
against, and shall pay, (A) 50% of the Joint Transfer Taxes and (B) all
` - -
Transfer Taxes in excess of the Joint Transfer Taxes.
(ii) Purchaser's Responsibility. Purchaser shall be responsible for,
--------------------------
shall indemnify and hold Parent and Parent Indemnitees harmless from and
against, and shall pay, 50% of the Joint Transfer Taxes.
(iii) Returns; Cooperation. Parent shall prepare and file all Tax
--------------------
Returns required to be filed in respect of the Transfer Taxes. Parent and
Purchaser shall cooperate in timely making and filing all Tax Returns as
may be required to comply with the provisions of any Transfer Tax laws and
in making arrangements that lawfully minimize Transfer Taxes without
increasing other Taxes above the amount that would otherwise be payable in
the absence of such arrangements and without materially interfering with
the conduct of the business of the parties. To the extent legally able to
do so, each party shall execute and deliver to the other
71
party exemption certificates satisfactory in form and substance to such
other party with respect to Transfer Taxes as either the Purchaser or
Parent may reasonably request. Such certificates shall be in the form, and
shall be signed by the proper party, as provided under applicable Tax law.
(l) Tax Treatment. Purchaser and Parent agree to treat any indemnity
-------------
payment made pursuant to Article VIII or Section 9.5(a) as an adjustment to the
Purchase Price for all Tax purposes.
(m) Tax Sharing Agreements. On the Closing Date, all Tax sharing agreements
----------------------
and other similar arrangements between any of the Transferred Subsidiaries, on
the one side, and Parent and its Affiliates, on the other side, shall be
terminated, and no additional payments shall be made thereunder.
(n) Effect of Disclosure. No disclosure pursuant to Section 3.17 shall
--------------------
affect the express obligations that Parent otherwise has under this Section 9.5,
provided that there shall not be any duplicative payments with respect to the
--------
same item.
(o) Coordination with Article VIII. In the case of any inconsistency
------------------------------
between Article VIII and this Section 9.5, this Section 9.5 shall control with
respect to Tax matters.
9.6 Name Changes.
------------
(a) No later than 30 days after the Closing Date, Purchaser shall cease
doing business under or utilizing as a trademark, trade name or service xxxx the
names "Georgia-Pacific" or "G-P", alone or in combination with any other words,
names or terms or variations of such words, names or terms, subject to
Purchaser's continuing right to sell or dispose in any manner of Inventory
bearing any trademark, tradename or tradenames or Parent or one of its
Affiliates that is completed or in process as of the Closing Date and to
continue for a period not exceeding 180 days from the Closing Date using any
stationary and any other physical assets that are held at the Xxxxx as of the
Closing Date, in each case, to the extent bearing any such xxxx, name or term.
(b) Following the Closing Date, Parent shall cease doing business under any
of the trademarks or trade names included in the Acquired Assets.
9.7 Use of Certain Information. Parent agrees that Purchaser shall have the
--------------------------
right to use in the operation of the Xxxxx any know-how, formula, process and
other proprietary information that is (i) owned by Parent or any of its
Affiliates, (ii) utilized in any material respect in the conduct of the Carve
Out Business, and (iii) is not an Acquired Asset. The preceding sentence does
not apply to any Computer Software, Computer Hardware or any computer services
or the business records listed on Section 1.2(ii) of the Parent Disclosure
Letter. Purchaser shall take reasonable steps to protect the
72
confidentiality of such information and will not disclose such information to
any third party or use such information for any purpose other than the operation
of the Xxxxx in each case to the extent that it is protected by Parent and
Parent otherwise retains a proprietary interest therein.
9.8 Woodland Landfill. Following the Closing, Purchaser will continue to
-----------------
process the runoff from the Woodland landfill through the Woodland Mill's
wastewater treatment facility on a basis consistent with past practice.
ARTICLE X
General Provisions
------------------
10.1 Notices. All notices and other communications hereunder shall be in
-------
writing (including facsimile or similar writing) and shall be sent, delivered or
mailed, addressed or faxed:
if to Purchaser,to: Domtar Inc.
000 xx Xxxxxxxxxxx Xxxx.
Xxxxxxxx, Xxxxxx
X0X 0X0
Attn: Corporate Secretary
Facsimile No.: 000-000-0000
with a copy to: Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx (xxxxx July 9, 2001)
000 Xxxxx Xxxxxx (after July 9, 2001)
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxx and Xxxx X. Xxxx
Facsimile No.: (000) 000-0000
if to any Seller,to: Georgia-Pacific Corporation
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attn: Office of General Counsel
Facsimile No.: (000) 000-0000
with a copy to: King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxx
Facsimile No.: (000) 000-0000
73
Each such notice or other communication shall be given (i) by hand
-
delivery, (ii) by nationally recognized courier service, or (iii) by facsimile,
-- ---
receipt confirmed. Each such notice or communication shall be effective (x) if
-
delivered by hand or by nationally recognized courier service, when delivered at
the address specified in this Section 10.1 (or in accordance with the latest
unrevoked direction from such party), and (y) if given by facsimile, when such
-
facsimile is transmitted to the facsimile number specified in this Section 10.1
(or in accordance with the latest unrevoked direction from such party), and
confirmation is received.
10.2 Severability. If any provision of this Agreement (or any portion
-------------
thereof) or the application of any such provision (or any portion thereof) to
any Person or circumstance is inoperative or unenforceable for any reason, the
remainder of this Agreement will continue in full force and effect and shall not
have the effect of rendering the provision (or portion thereof) in question
inoperative or unenforceable in any other case or circumstance, or of rendering
any other provision of this Agreement (or any portion thereof) invalid,
inoperative or unenforceable to any extent whatsoever. The parties further agree
to replace such invalid, illegal or unenforceable provision with a valid, legal
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such invalid, illegal or unenforceable
provision.
10.3 Counterparts. This Agreement may be executed in two or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered (including by facsimile) to the other parties.
10.4 Entire Agreement; No Third Party Beneficiaries. Except as set forth in
----------------------------------------------
this Section 10.4, this Agreement (including the Disclosure Letters and exhibits
referred to herein), the Ancillary Documents and the Confidentiality Agreement
(i) constitute the entire agreement and supersede all prior agreements and
-
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (ii) except as provided in Section 9.5 and Article
--
VIII with respect to indemnification of Indemnified Parties hereunder, are not
intended to confer upon any Person other than the parties identified herein and
their successors and permitted assigns any rights or remedies hereunder. Except
as expressly set forth in Article III, none of Parent, Parent's representatives,
Parent's Affiliates or any other person has made any representation or warranty,
expressed or implied, with respect to the Carve Out Business, the Acquired
Assets or the Assumed Liabilities or with respect to any information related
thereto furnished or made available to Purchaser and its representatives,
including any information prepared or provided by Xxxxxx Xxxxxxx & Co.
Incorporated and any information, documents or material made available in any
"data rooms" or management presentations or in any other form in expectation of
the transactions contemplated hereby.
74
10.5 Attachments. Every Disclosure Letter, Schedule and Exhibit referred to
----------
in this Agreement is incorporated into this Agreement by reference. The parties
hereto acknowledge and agree that (i) the Disclosure Letters are qualified in
-
their entirety by reference to specific provisions of the Agreement, and are not
intended to constitute, and shall not be construed as constituting,
representations or warranties of the parties hereto, except as and to the extent
specifically provided in the Agreement; (ii) inclusion of information in the
--
Schedules shall not be construed as an admission that such information is
material to the operation and use of the Carve Out Business or the business,
results of operations or financial condition of Parent, or NPI or their
respective Affiliates; (iii) matters reflected in the Disclosure Letters are not
---
necessarily limited to matters required by the Agreement to be reflected in the
Disclosure Letters and such additional matters are set forth for informational
purposes and do not necessarily include other matters of a similar nature; and
(iv) Disclosure Letter numbers and titles inserted on the Disclosure Letters are
--
for convenience of reference only and shall to no extent have the effect of
amending or changing the express description of such Disclosure Letter as set
forth in the Agreement.
10.6 Governing Law, etc. This Agreement shall be governed in all respects,
------------------
including as to validity, interpretation and effect, by the laws of the State of
New York, without giving effect to its principles or rules of conflicts of laws
to the extent that such principles or rules would require the application of the
law of another jurisdiction. Except as otherwise provided in this Agreement or
the Ancillary Documents, this Section 10.6 shall govern all disputes among the
parties hereto. Each of the parties hereto agrees to attempt in good faith to
resolve any controversy or claim arising out of or relating to this Agreement or
the Ancillary Documents promptly by negotiations between representatives of the
parties who have authority to settle the controversy. In the event that a
dispute arises between the parties with respect to a controversy or claim
arising out of or relating to this Agreement or the Ancillary Documents, the
disputing party shall give the other party written notice of the dispute. Within
ten days after receipt of the disputing party's notice, the other party hereto
shall submit to the disputing party a written response. The notice and response
shall include (i) a statement of each party's position and a summary of the
-
evidence and arguments supporting its position and (ii) the name and title of
the person who will represent that party. The representatives shall meet for
negotiations at a mutually agreed time and place within fifteen days of the date
of the disputing party's notice and thereafter as often as they reasonably deem
necessary to exchange relevant information and to attempt to resolve the
dispute. If the dispute between the parties has not been resolved within sixty
days of the disputing party's notice, then either party may initiate litigation.
Each of the parties hereto hereby irrevocably submits to the jurisdiction of the
courts of the State of New York and the Federal courts of the United States of
America located in the State, City and County of New York solely in respect of
the interpretation and enforcement of the provisions of this Agreement and of
the documents referred to in this Agreement, and hereby waives, and agrees not
to assert, as a defense in any action, suit or proceeding for the interpretation
or
75
enforcement hereof or of any such document, that it is not subject thereto or
that such action, suit or proceeding may not be brought or is not maintainable
in said courts or that the venue thereof may not be appropriate or that this
Agreement or any of such document may not be enforced in or by said courts, and
the parties hereto irrevocably agree that all claims with respect to such action
or proceeding shall be heard and determined in such a New York State or Federal
court. Each of the parties hereto hereby consents to and grants any such court
jurisdiction over the person of such party and over the subject matter of any
such dispute and agrees that mailing of process or other papers in connection
with any such action or proceeding in the manner provided in Section 10.1, or in
such other manner as may be permitted by law, shall be valid and sufficient
service thereof.
10.7 Assignment. Neither this Agreement nor any of the rights, interests or
----------
obligations hereunder (including any rights, interests or obligations under
Article VIII) shall be assigned by any party hereto without the prior written
consent of the other parties and any purported assignment or transfer shall be
void and unenforceable, except that Purchaser may make such an assignment (i) to
-
any Subsidiary of Purchaser, (ii) to any lender to Purchaser or any Subsidiary
--
or Affiliate thereof as security for obligations to such lender in respect of
the financing arrangements entered into in connection with the transactions
contemplated hereby and any refinancings, extensions, refundings or renewals
thereof, or (iii) subsequent to the Closing, to any transferee of all or
---
substantially all of the Acquired Assets and the Assumed Liabilities that
executes a written assumption of the obligations of Purchaser under this
Agreement, the Ancillary Documents and the Confidentiality Agreement.
Notwithstanding anything to the contrary in the foregoing, Purchaser shall
remain responsible as guarantor for the obligations of any Subsidiary assignee
under clause (i) and no assignment to a lender pursuant to clause (ii) of the
preceding sentence shall in any way affect Purchaser's obligations or
liabilities under this Agreement. Subject to the foregoing, this Agreement will
be binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
10.8 Headings. The headings contained in this Agreement are for purposes of
--------
convenience only and shall not affect the meaning or interpretation of this
Agreement.
ARTICLE XI
Definitions
-----------
11.1 Definitions. The following terms shall have the respective meanings
-----------
set forth below throughout this Agreement:
"Acquired Assets" has the meaning set forth in Section 1.1(a).
---------------
"Acquired Intellectual Property" has the meaning set forth in Section
------------------------------
1.1(a)(xiii).
76
"Additional Section 338 Forms" has the meaning set forth in Section
----------------------------
9.5(c)(ii)(C).
"ADSP" has the meaning set forth in Section 9.5(c)(iii).
----
"Affiliate" of a Person means a Person that directly or indirectly through
---------
one or more intermediaries, controls, is controlled by, or is under common
control with, the first person or entity. The Transferred Subsidiaries will be
deemed Affiliates of Parent hereunder unless provided otherwise (or unless such
provision relates to actions to be taken following the Closing). "Control"
(including the terms "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a person or entity, whether through the
ownership of voting securities, by contract, as trustee or executor, or
otherwise.
"Affiliated Party Transactions" has the meaning set forth in Section
-----------------------------
3.20(b).
"Agreement" has the meaning set forth in the preamble hereto.
---------
"AGUB" has the meaning set forth in Section 9.5(c)(iii).
----
"Allocation Statement" has the meaning set forth in Section 9.5(d)(i).
--------------------
"Ancillary Documents" means the Human Resources Agreement and each of the
-------------------
Agreements listed in Section 5.6.
"Applicable Law" means all applicable provisions of all (i) constitutions,
-------------- -
treaties, statutes, laws (including the common law), rules, regulations,
ordinances, codes or orders of any Governmental Entity, (ii) Governmental
--
Approvals and (iii) orders, decisions, injunctions, judgments, awards and
---
decrees of or agreements with any Governmental Entity.
"Arbitrator" has the meaning set forth in Section 8.5(e).
----------
"Xxxxxx Xxxxxxxx" means Xxxxxx Xxxxxxxx LLP.
---------------
"Ashdown Mill" means the pulp and paper mill in Ashdown, Arkansas that is
------------
included in the definition of NPI Xxxxx.
"Ashdown #64 Lease" means the lease agreement dated September 29, 1995
-----------------
between Georgia-Pacific Britain, LLC and NPI, of the #64 paper machine
equipment, and related converting equipment, pulp mill equipment, recovery
equipment, and power equipment located at the Ashdown Mill.
"Assumed Employee Liabilities" has the meaning set forth in Section 1.3(a).
----------------------------
77
"Assumed Liabilities" has the meaning set forth in Section 1.3(a).
-------------------
"Assumed Litigation" has the meaning set forth in Section 1.3(a).
------------------
"Assumed Parent Environmental Liabilities" has the meaning set forth in
----------------------------------------
Section 1.3(a).
"Assumed Pre-Closing Liabilities" has the meaning set forth in Section
-------------------------------
1.3(a).
"Assumed Purchaser Environmental Liabilities" has the meaning set forth in
-------------------------------------------
Section 1.3(a).
"Audited Financial Statements" has the meaning set forth in Section 5.13.
----------------------------
"Business Day" means any day other than a Saturday, a Sunday or a day on
------------
which banks in Xxx Xxxx Xxxx, Xxxxxxx, Xxxxxxx xxx Xxxxxxxx, Xxxxxx are
authorized or obligated by law or executive order to close.
"Carve Out Business" means all assets and activities (including the assets
------------------
of the Transferred Subsidiaries) involved in the manufacture and sale of
products of the Xxxxx prior to the Closing, including procurement,
manufacturing, sales, marketing, customer service and support and distribution
functions conducted at or for the Xxxxx prior to the Closing or made available
to the Xxxxx by Parent and its Subsidiaries, it being understood that certain
employees employed at the headquarters and divisional levels of Parent have
performed services for the Xxxxx but that none of such employees is dedicated
exclusively to servicing the operations of the Xxxxx.
"Closing" has the meaning set forth in Section 2.1.
-------
"Closing Date" has the meaning set forth in Section 2.1.
------------
"Closing Working Capital" has the meaning set forth in Section 2.3(a).
-----------------------
"Closing Working Capital Statement" has the meaning set forth in Section
---------------------------------
2.3(a)
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Collective Bargaining Agreement" means any collective bargaining agreement
-------------------------------
identified on Section 3.14(a) of the Parent Disclosure Letter.
"Combined Income Taxes" means (i) all federal Income Taxes in respect of
--------------------- -
which any Transferred Subsidiary has filed or is required to file pursuant to
Section 9.5(e)(i) a consolidated federal Income Tax Return of which Parent is
the common parent, payable with respect to such Transferred Subsidiary for any
taxable period (or a portion thereof)
78
ending on or prior to the Closing Date and (ii) all state and local Income Taxes
--
in respect of which any Transferred Subsidiary has filed or is required to file
pursuant to Section 9.5(e)(i) a combined, consolidated or unitary state or local
Income Tax Return with Parent or any Non-Transferred Subsidiary Affiliate,
payable with respect to such Transferred Subsidiary for any taxable period (or a
portion thereof) ending on or prior to the Closing Date.
"Computer Hardware" means any computer hardware, equipment and peripheral
-----------------
of any kind and of any platform, including desktop and laptop personal
computers, handheld computerized devices, mid-range and mainframe computers,
process control and distributed control systems, network and telecommunications
equipment.
"Computer Software" means any and all computer programs, including
-----------------
operating system and applications software, associated databases and data,
implementations of algorithms, models and methodologies, printing utilities,
configurations and program interfaces, whether in source code or object code,
including all modifications and enhancements thereto through the Closing Date
and all documentation, including user manuals relating to the foregoing.
"Confidentiality Agreement" means that certain confidentiality letter
-------------------------
agreement between Purchaser and Parent, dated February 12, 2001, as amended.
"Consent" has the meaning set forth in Section 1.1(c).
-------
"Contract" means any contract, lease, indenture, joint venture and other
--------
agreement, commitment or other legally binding arrangement, whether oral or
written.
"cure" has the meaning set forth in Section 5.8.
----
"Deductible" has the meaning set forth in Section 8.3(a).
----------
"De Minimis Losses" has the meaning set forth in Section 8.3(a).
-----------------
"Dispute Notice" has the meaning set forth in Section 2.3(b).
--------------
"Employee" means each employee or former employee employed or formerly
--------
employed (i) by NPI or (ii) by Parent or any of its Affiliates in the operation
- --
of the Carve Out Business or the beneficiaries or dependents of any such
employee or former employee (collectively, the "Employees").
---------
"Employee-related Obligations" has the meaning set forth in the Human
----------------------------
Resources Agreement.
79
"Environmental Claims" means any complaint, notice, directive, order,
--------------------
claim, litigation, investigation, judicial or administrative proceeding or
judgment from any Person, involving violations of Environmental Laws or Releases
or threatened Releases of Materials of Environmental Concerns.
"Environmental Indemnity Cap" has the meaning set forth in Section 8.3(a).
---------------------------
"Environmental Laws" means any applicable foreign, Federal, state,
------------------
interstate or local statute, law or regulation, or any order, injunction,
judgment, decree, common law or other enforceable requirement of law as in
effect at any time on or prior to the Closing Date, and relating to the
protection of the human health or environment, including any of the foregoing
related to: (i) Remedial Actions, (ii) the reporting, licensing, permitting, or
- --
investigating of the emission, discharge, Release or threatened Release of
Materials of Environmental Concern into the air, surface water, ground water or
land, or (iii) the manufacture, Release, distribution, use, generation,
---
treatment, storage, disposal, transport or handling of Materials of
Environmental Concern.
"Environmental Permits" has the meaning set forth in Section 3.16(b).
---------------------
"Environmental Site Assessment" has the meaning set forth in Section 5.12.
-----------------------------
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
"Excluded Assets" has the meaning set forth in Section 1.2.
---------------
"Excluded Environmental Liabilities" has the meaning set forth in Section
----------------------------------
1.3(b).
"Excluded Inventory" means (i) Inventory of finished goods paper products
------------------ -
allocated to the Georgia-Pacific Office Products division of Parent and held in
public warehouses as of the Closing Date (other than Mill overflow warehouses),
(ii) Inventory of finished goods paper products allocated to the Xerox Paper
--
Group division of Parent and held in public warehouses (other than Mill overflow
warehouses) as of the Closing Date, (iii) Inventories of Woodland pulp products
---
(other than export) in excess of 20,000 tons located in the U.S. and Canada and
(v) Inventories of Woodland export pulp products in excess of 4,000 tons.
-
"Excluded Liabilities" has the meaning set forth in Section 1.3(b).
--------------------
"Excluded Woodland Facilities" has the meaning set forth in Section
----------------------------
1.2(ix).
"Exhibits" means the exhibits listed in the table of contents of this
--------
Agreement as attached hereto.
80
"FERC" has the meaning set forth in Section 5.18.
----
"FERC Assets" has the meaning set forth in Section 5.18.
----
"FERC Licenses" means, collectively, the following licenses issued to
-------------
Parent and NPI: (i) FERC License No. 2292 (covering the Nekoosa Project), FERC
License No. 2291 (covering the Port Xxxxxxx Project), FERC License No. 2255
(covering the Centralia Project), FERC License No. 2492 (covering the Vanceboro
Project), FERC License No. 2618 (covering the West Branch Project) and FERC
License No. 2660 (covering the Forest City Project).
"Final Allocation" has the meaning set forth in Section 9.5(c)(iii).
----------------
"Financial Statements" has the meaning set forth in Section 3.8.
--------------------
"Financing Commitment" has the meaning set forth in Section 4.4.
--------------------
"Form 8023" has the meaning set forth in Section 9.5(c)(ii)(A).
---------
"Form 8594" has the meaning set forth in Section 9.5(c)(ii)(C).
---------
"General Indemnity Cap" has the meaning set forth in Section 8.3(a).
---------------------
"Governmental Entity" means any court, administrative agency or commission
-------------------
or other governmental authority or instrumentality, domestic or foreign.
"Governmental Approvals" has the meaning set forth in Section 3.4(b).
----------------------
"G-P Resins" is defined in the preamble to this Agreement.
----------
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
-------
as amended.
"Human Resources Agreement" means the Human Resources Agreement, dated as
-------------------------
of the date hereof, by and among Parent, NPI and Purchaser.
"IDBs" has the meaning set forth in Section 5.11(a).
----
"IDB Assets" has the meaning set forth in Section 5.11(b).
----------
"Impaired Assets" means (i) the No. 9 power boiler at the Woodland Mill,
---------------
(ii) the Centralia Dam in Wisconsin, (iii) the sulfite recovery furnace at Port
Xxxxxxx, Wisconsin, (iv) the primary clarifier at the Woodland Mill, (v) the
wastewater pipelines at the Woodland Mill and (vi) the two obsolete recovery
boilers at the Woodland Mill.
81
"Impaired Asset Liabilities" has the meaning set forth in Section
--------------------------
1.3(a)(vii).
"Income Tax" means any Tax on or determined by reference to net or gross
----------
income or profit, or that are franchise, doing business or similar Taxes.
"Indemnified Party" has the meaning set forth in Section 8.4.
-----------------
"Indemnifying Party" has the meaning set forth in Section 8.4.
------------------
"Intellectual Property" means the United States (state and federal) and
---------------------
foreign trademarks, service marks, trade names, trade dress, copyrights, and
similar rights, whether common-law or registered, including registrations and
applications to register or renew the registration of any of the foregoing,
United States and foreign patents (including design patents, industrial designs
and utility models) and patent applications (including docketed patent
disclosures awaiting filing, reissues, divisions, continuations and extensions),
and inventions, processes, designs, manufacturing, engineering and technical
drawings, technical specifications, business and marketing plans, formulae,
business logos, product names, trade secrets, know-how, confidential
information, Computer Software, data and documentation, and all similar
intellectual property rights, tangible embodiments of any of the foregoing (in
any medium including electronic media), and licenses of any of the foregoing.
"Intellectual Property Licenses" has the meaning set forth in Section
------------------------------
3.12(b).
"Interim Financial Statements" has the meaning set forth in Section 3.8.
----------------------------
"Inventory" means all raw materials, work-in-process, finished goods,
---------
supplies, parts and other inventories, in each case, of pulp and paper products.
"IRS" means the Internal Revenue Service.
---
"IT Support Services Agreement" means the IT Support Services Agreement
-----------------------------
referred to in Section 5.6 to be executed at the Closing.
"Joint Transfer Taxes" means Transfer Taxes up to an aggregate maximum
--------------------
amount of $600,000.
"June 2001 Interim Financial Statements" has the meaning set forth in
--------------------------------------
Section 5.14(b).
"Knowledge" means, with respect to Parent, the actual knowledge of the
---------
Persons listed in Section 11.1(b) of the Parent Disclosure Letter, and with
respect to Purchaser, the actual knowledge of the persons listed in Section
11.1(c) of the Purchaser Disclosure Letter.
82
"Leased Real Property" has the meaning set forth in Section 3.11(c).
--------------------
"LIBOR", as of any date, means the London Interbank Offered Rates (3-month)
-----
on the Business Day immediately following such date (as set forth in the "Money
-----
Rates" section of The Wall Street Journal).
-----
"Lien" means mortgages, liens, security interests, easements, adverse
----
claims, rights of way, pledges, restrictions or encumbrances of any nature
whatsoever.
"Listed Contracts" has the meaning set forth in Section 3.14(a).
----------------
"Losses" has the meaning set forth in Section 8.1.
------
"Maine FERC Assets" means, collectively, the Vanceboro Project, the West
-----------------
Branch Project and the Forest City Project that are currently subject to FERC
License Nos. 2492, 2618 and 2660, respectively.
"Maine Non-FERC Assets" means, collectively, the Grand Falls, the Woodland,
---------------------
the Xxxxxxxx and the Canoose Dams and their associated property, facilities and
rights.
"Material Adverse Effect" means (a) any event, occurrence, condition, fact
----------------------- -
or change that has or would reasonably be expected to have or result in a
material and adverse effect on the business, assets, properties, operations,
financial condition or results of operations of the Carve Out Business; provided
--------
however, that (i) any adverse change resulting from conditions affecting the
------- -
United States or any foreign economy generally, (ii) any adverse change that is
--
primarily caused by conditions affecting the pulp and paper industry, (iii) any
---
failure to meet revenue or earnings projections for the Carve-Out Business
provided to Purchaser, (iv) any adverse change in the laws, regulations, rules
--
or orders of any Governmental Entity, and (v) any adverse change arising
-
primarily from actions required to be taken by any party under this Agreement or
any Ancillary Document, or which is primarily attributable to the announcement
of this Agreement and the transactions contemplated hereby, shall not be taken
into account in determining whether there has been or would be a "Material
Adverse Effect", or (b) a material impairment of the ability of Parent and its
-
Affiliates to perform their respective obligations under this Agreement.
"Materials of Environmental Concern" means any substance or material that
----------------------------------
(i) is defined as a "hazardous waste", "hazardous substance", "toxic substance"
-
or words of similar import under any Environmental Law, including petroleum,
petroleum products, asbestos, radon gas and polychlorinated biphenyls, (ii)
--
requires Remedial Action under any Environmental Law or (iii) is regulated by
---
Environmental Law.
"Mill Contracts" has the meaning set forth in Section 1.1(a)(ix).
--------------
83
"Mill Technology" has the meaning set forth in Section 1.1(a)(vii).
---------------
"Xxxxx" means, collectively, the Woodland Mill and the NPI Xxxxx.
-----
"Monthly Management Reports" has the meaning set forth in Section 5.15.
--------------------------
"Multiemployer Plan" has the meaning set forth in Section 3.15(c)(iv).
------------------
"Nepco Lake Dam" means the dam across Four Mile Creek creating Nepco Lake
--------------
situated in Wood County, Wisconsin, governed by the permit granted by the Public
Service Commission of Wisconsin No. WP-243, dated May 24, 1932, including the
real estate on which such dam is located.
"Non-Transferred Subsidiary Affiliate" means any Affiliate of Parent other
------------------------------------
than the Transferred Subsidiaries.
"NPI" means Nekoosa Papers Inc., a Wisconsin corporation.
---
"NPI Xxxxx" means NPI's pulp and paper xxxxx located in Nekoosa, Wisconsin;
---------
Port Xxxxxxx, Wisconsin; and Ashdown, Arkansas, each of which is described with
greater specificity in Sections 3.11(a) of the Parent Disclosure Letter.
"NPI Stand-Alone Plan" has the meaning set forth in Section 3.15(a)(i).
--------------------
"Other Employees" has the meaning set forth in the Human Resources
---------------
Agreement.
"Owned Intellectual Property" has the meaning set forth in Section 3.12(a).
---------------------------
"Owned Real Property" has the meaning set forth in Section 3.11(a).
-------------------
"Parent" means Georgia-Pacific Corporation, a Georgia corporation.
------
"Parent Disclosure Letter" means the letter delivered by Parent to
------------------------
Purchaser contemporaneously with the execution and delivery of this Agreement.
"Parent Indemnitees" has the meaning set forth in Section 8.2.
------------------
"Pending Litigation" has the meaning set forth in Section 1.3(b).
------------------
"Pension Plan" has the meaning set forth in Section 3.15(c)(i).
------------
"Permitted Liens" means (i) statutory liens for Taxes not yet due, (ii)
--------------- - --
statutory liens of warehousemen, mechanics and materialmen incurred in the
ordinary course of business for sums not yet due, (iii) liens incurred in the
---
ordinary course of business in
84
connection with workers' compensation, unemployment insurance and other types of
social security or to secure the performance of statutory obligations; and (iv)
--
liens that do not materially affect the value or use of any underlying asset.
"Permitted Real Property Exceptions" means Title Defects, as they affect
----------------------------------
each of the Woodland Mill and each NPI Mill, that do not, individually or in the
aggregate, (i) interfere in any material respect with the use, occupancy or
-
operation of such Mill as currently used, occupied and operated (taking into
account reasonable requirements for expansion) or (ii) materially reduce the
--
fair market value of such Mill below the fair market value of such Mill but for
such Permitted Real Property Exceptions applicable thereto.
"Permits" has the meaning set forth in Section 1.1(a)(viii).
-------
"Person" means any individual, corporation, partnership, limited liability
------
company, joint venture, trust, business association or other entity, including
any Governmental Entity.
"Plan" means any "employee benefit plan", as such term is defined in
----
section 3(3) of ERISA, whether or not subject to ERISA, and each bonus,
incentive or deferred compensation, severance, termination, retention, change of
control, stock option, stock appreciation, stock purchase, phantom stock or
other equity-based, performance or other employee or retiree benefit or
compensation plan, program, arrangement, agreement, policy or understanding,
whether written or unwritten, that provides or may provide benefits or
compensation in respect of any Employee or under which any Employee is or may
become eligible to participate or derive a benefit and that is or has been
maintained or established by Parent or any of its Affiliates (including NPI), or
to which NPI contributes or is or has been obligated or required to contribute
or with respect to which NPI or the Carve Out Business may have any liability or
obligation following the Closing.
"Pre-Closing Employee Liabilities" means all Employment-related
--------------------------------
Obligations, whether direct or indirect, known or unknown, actual, current or
potential, past, present or future, relating to any Employee in respect of the
period ending on or prior to the Closing Date other than Assumed Employee
Liabilities.
"Pre-Closing Environmental Liabilities" shall mean all Losses, whether
-------------------------------------
direct or indirect, known or unknown, actual, current or potential, past,
present or future, imposed by, under or pursuant to any Environmental Law,
including, without limitation, all Losses related to Remedial Actions and Toxic
Tort Claims, to the extent arising out of or otherwise in respect of: (i) the
-
ownership or operation of the Carve Out Business, the Acquired Assets, the
Shares or the Real Property prior to the Closing Date; (ii) the environmental
--
conditions existing on the Closing Date on, under, above, about or
85
emanating from the Real Property or any currently or formerly owned, leased or
used real property (including any off-site disposal facility); (iii) the
---
activities or omissions of the Parent or any of its Affiliates prior to the
Closing Date; or (iv) actions necessary to cause the Real Property or any
--
currently or formerly owned, leased or used real property or any aspect of the
Carve Out Business that is not in compliance with all applicable Environmental
Laws as of the Closing Date to come into compliance with Environmental Laws as
in effect on the Closing Date, including, without limitation, all Environmental
Permits required for the operation of the Carve Out Business as conducted prior
to the Closing.
"Pre-Closing Tax Periods" means taxable periods ending on or before the
-----------------------
Closing Date and the portion of any Straddle Period ending on the Closing Date
(as determined in accordance with Section 9.5(b)).
"Premises" has the meaning set forth in Section 1.1(a)(i).
--------
"Purchase Price" has the meaning set forth in Section 1.5.
--------------
"Purchaser" means Domtar Inc., a Canadian corporation.
---------
"Purchaser Disclosure Letter" means the letter delivered by Purchaser to
---------------------------
Parent contemporaneously with the execution and delivery of this Agreement.
"Purchaser Indemnitees" has the meaning set forth in Section 8.1.
---------------------
"Purchaser IT Environment" has the meaning set forth in Section 5.4(a).
------------------------
"Real Property" has the meaning set forth in Section 3.11(d).
-------------
"Real Property Leases" has the meaning set forth in Section 3.11(c).
--------------------
"Real Property Permits" has the meaning set forth in Section 3.11(f).
---------------------
"Release" means any releasing, disposing, discharging, injecting, spilling,
-------
leaking, leaching, pumping, dumping, emitting, escaping, emptying, seeping,
dispersal, migration, transporting, placing and the like, including without
limitation, the moving of any materials through, into or upon, any land, soil,
surface water, groundwater or air, or otherwise entering into the environment.
"Remedial Action" means any response action, removal action, remedial
---------------
action, corrective action, monitoring program, sampling program, investigation
or other cleanup activity required by any Environmental Law to clean up, remove,
remediate or treat any Materials of Environmental Concern.
86
"Restricted Asset" has the meaning set forth in Section 1.1(c).
----------------
"Review Period" has the meaning set forth in Section 2.3(c).
-------------
"Section 338(h)(10) Elections" has the meaning set forth in Section
----------------------------
9.5(c)(i).
"Section 338 Forms" has the meaning set forth in Section 9.5(c)(ii)(A).
-----------------
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Sellers" means Parent, NPI and G-P Resins.
-------
"Shares" has the meaning set forth in Section 3.6.
------
"Side Letter" has the meaning set forth in Section 3.8.
-----------
"Straddle Period" means any Tax period that begins before and ends after
---------------
the Closing Date.
"Subsidiary" means, with respect to a given Person, any corporation,
----------
partnership, limited liability company or other entity of which such Person
owns, directly or indirectly, at least a majority of the securities or other
ownership interests having by the terms thereof ordinary voting power to elect a
majority of the board of directors or other individuals performing similar
functions of such corporation, partnership, limited liability company or other
entity.
"Superfund Claims" shall mean all claims associated with the release,
----------------
transport, handling, treatment, storage or disposal of Materials of
Environmental Concern at any off-site treatment, storage or disposal facility,
including claims brought under CERCLA and analogous state laws.
"Surveys" has the meaning set forth in Section 5.8.
-------
"Tax" means all federal, state, foreign or other governmental Taxes,
---
assessments, duties, fees, levies or similar charges of any kind, including all
income, alternative minimum, accumulated earnings, capital stock, gross
receipts, license, value added, transfer, registration, stamp, severance,
environmental (including Taxes imposed under Section 59 of the Code), ad
valorem, premium, occupancy, social security, disability, unemployment, workers'
compensation, estimated, profit, windfall profits, custom, duty, real property,
personal property, franchise, excise, property, use, intangibles, sales,
payroll, employment, withholding and other Taxes, and including all interest and
penalties imposed with respect to such amounts and additions thereto.
87
"Tax Return" means any return, report, form, declaration, statement,
----------
schedule or information return or any amendment to any of the foregoing or other
information filed with any taxing authority with respect to Taxes (including any
claim for a Tax refund).
"Third Party Accountants" has the meaning set forth in Section 2.3(c).
-----------------------
"Third Party Claim" has the meaning set forth in Section 8.4.
-----------------
"Title Commitments" has the meaning set forth in Section 5.8.
-----------------
"Title Company" has the meaning set forth in Section 5.8.
-------------
"Title Defects" means any mortgage, lien, pledge, security interest, claim,
-------------
lease, charge, option, right of first refusal, easement, restrictive covenant,
encroachment or other survey defect, encumbrance, lack of title or any other
restriction or limitation whatsoever.
"Title Objections" has the meaning set forth in Section 5.8.
----------------
"Toxic Tort Claims" shall mean all claims by private parties for personal
-----------------
injury and/or property damage with respect to allegations of exposure to
Materials of Environmental Concern.
"Transferring Employees" has the meaning set forth in the Human Resources
----------------------
Agreement.
"Transfer Taxes" means all transfer, documentary, sales, use, registration,
--------------
stamp, value-added and other similar Taxes (including all applicable real estate
transfer Taxes), including any penalties, interest and additions to Tax,
incurred in connection with, or arising out of, the transactions contemplated
hereby, but excluding any real property gains Tax or other similar Income Tax.
"Transferred Accounts Receivable" has the meaning set forth in Section
-------------------------------
1.1(a)(xi).
"Transferred Canadian Subsidiaries" means the Saint Croix Water Power
---------------------------------
Company and Xxxxxxx'x Falls Manufacturing Company (Limited).
"Transferred Subsidiaries" has the meaning set forth in the recitals to
------------------------
this Agreement.
"Transferred Subsidiary Pre-Closing Liability" means any liabilities,
--------------------------------------------
obligations or commitments of any Transferred Subsidiary of any nature
whatsoever, whether known or unknown, contingent or otherwise that relate to or
arise out of (i) the operation of the
-
88
Carve Out Business or the ownership of any assets used in the Carve Out Business
prior to the Closing Date or any other business activity of any Transferred
Subsidiary (including any activity of Parent or any of its Affiliates that are
attributed to any Transferred Subsidiary) prior to the Closing, including,
without limitation, any litigation, proceeding or claim by any Person with
respect to the Carve Out Business prior to or on the Closing Date, whether
asserted before, on or after the Closing Date, or (ii) any Affiliated Party
--
Transaction, excluding only any liability of a Transferred Subsidiary in respect
of a liability, obligation or commitment that constitutes an Assumed Liability
hereunder.
"Transferred Technology" has the meaning set forth in Section 5.4(b).
"Transferred U.S. Subsidiary" means St. Croix Water Power Company.
---------------------------
"Transferring Employees" has the meaning set forth in the Human Resources
Agreement.
"Treasury Regulations" means the regulations prescribed under the Code.
"U.S. Shares" means the Shares of the Transferred U.S. Subsidiary.
-----------
"Weirgor Xxxxxxxx" means the xxxxxxxx situated in the Town of Weirgor,
----------------
Xxxxxx County, Wisconsin, the exact location of which shall be established by a
survey to be prepared by either Xxxxxxx-Xxx & Associates or Xxxxxx Land
Surveying, Inc. and shall be subject to the approval of Purchaser.
"Wisconsin FERC Assets" means, collectively, the Nekoosa Project, the Port
---------------------
Xxxxxxx Project and the Centralia Project that are currently subject to FERC
License Nos. 2292, 2291 and 2255, respectively.
"Wisconsin Landfill Extension" means the landfill situated in the Town of
----------------------------
Saratoga, Wood County, Wisconsin, the exact location of which shall be
established by a survey to be prepared by either Xxxxxxx-Xxx & Associates or
Xxxxxx Land Surveying, Inc. and shall be subject to the approval of Purchaser.
"Wisconsin Landfill Extension Option" has the meaning set forth in Section
-----------------------------------
5.19.
"Wisconsin Sand Pit" means the sand xxxxxx situated in the Town of
------------------
Saratoga, Wood County, Wisconsin, the exact location of which shall be
established by a survey to be prepared by either Xxxxxxx-Xxx & Associates or
Xxxxxx Land Surveying, Inc. and shall be subject to the approval of Purchaser.
89
"Woodland Mill" means the pulp and paper mill of Parent and G-P Resins
-------------
located in Woodland, Maine, which is described with greater specificity in
Section 3.11(a) of the Parent Disclosure Letter.
"Working Capital Principles" has the meaning set forth in Section 2.3.
--------------------------
"Year-End Financial Statements" has the meaning set forth in Section 3.8.
-----------------------------
11.2 Construction and Interpretation of Certain Terms and Phrases. Unless
------------------------------------------------------------
the context of this Agreement otherwise requires, (i) words of any gender
-
include each other gender; (ii) words using the singular or plural number also
--
include the plural or singular number, respectively; (iii) the terms "hereof,"
---
"herein," "hereby" and derivative or similar words refer to this entire
Agreement; (iv) the terms "Article" or "Section" refer to the specified Article
--
or Section of this Agreement; and (v) the phrases "ordinary course of business"
-
and "ordinary course of business consistent with past practice" refer to the
business and practice of Parent, NPI, G-P Resins and their Affiliates in
connection with the Carve Out Business. Whenever this Agreement refers to a
number of days, such number shall refer to calendar days unless Carve Out
Business Days are specified. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. For purposes of any
indemnification provision in this Agreement, the word "expenses" shall mean
out-of-pocket expenses, and shall not include any allocations of internal
salaries and other expenses. Whenever the words "included," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." All references to "$" or "dollars" in this
Agreement are to U.S. dollars.
90
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be signed by their respective officers thereunto duly authorized, all as of the
date first written above.
GEORGIA-PACIFIC CORPORATION
By: /s/ A.D. Xxxxxxx
----------------
Name: A.D. Xxxxxxx
Title: President, Chairman and Chief Executive Officer
NEKOOSA PAPERS INC.
By: /s/ A.D. Xxxxxxx
----------------
Name: A.D. Xxxxxxx
Title: Chairman
GEORGIA-PACIFIC RESINS, INC.
By: /s/ A.D. Xxxxxxx
----------------
Name: A.D. Xxxxxxx
Title: Chairman
DOMTAR INC.
By: /s/ Xxxxxxx Xxxxx
-----------------
Name: Xxxxxxx Xxxxx
Title: President and Chief Executive Officer
1
