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Title: |
Acquisition Agreement |
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Date: |
2004 |
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Preview shows 28KB of 229KB total |
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$74 |
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#367163 |
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ACQUISITION AGREEMENT
relating to the sale by
INTERNATIONAL PAPER COMPANY
of the only issued and outstanding share of
WELDWOOD OF CANADA LIMITED
to
WEST FRASER TIMBER CO. LTD.
Dated the 21st day of July, 2004
{PAGE}
TABLE OF CONTENTS
{TABLE}
{CAPTION}
Page
----
{S} {C}
PART 1 INTERPRETATION................................................................1
RULES OF INTERPRETATION AND DEFINITIONS...........................................1
SCHEDULES AND APPENDIX............................................................1
PART 2 PURCHASE AND SALE.............................................................2
PURCHASE AND SALE OF PURCHASED SHARE..............................................2
PURCHASE PRICE....................................................................2
PAYMENT OF PURCHASE PRICE.........................................................4
SECTION 116 CERTIFICATE...........................................................5
CLOSING PAYMENT STATEMENT.........................................................8
CLOSING DATE STATEMENTS...........................................................8
NO DUPLICATION....................................................................9
DISPUTE RESOLUTION................................................................9
TAX RETURNS......................................................................10
REIMBURSEMENT OF VENDOR PAID EXPENSES............................................10
REIMBURSEMENT OF TRIGGERING EVENT ADJUSTMENT AMOUNT..............................11
PART 3 REPRESENTATIONS AND WARRANTIES...............................................11
REPRESENTATIONS AND WARRANTIES OF THE VENDOR.....................................11
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER..................................11
PART 4 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS AND INDEMNIFICATION....11
EXPIRATION OF REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE VENDOR............11
EXPIRATION OF THE REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.....12
INDEMNITY........................................................................12
LIMITATIONS ON INDEMNITY.........................................................15
EXCEPTIONS TO LIMITATIONS........................................................15
NO SPECIAL DAMAGES...............................................................16
NOTICE OF CLAIM..................................................................16
DIRECT CLAIMS....................................................................16
CONTROL OF THIRD PARTY CLAIMS....................................................16
SETTLEMENT OF THIRD PARTY CLAIMS.................................................17
COOPERATION......................................................................17
SUBROGATION......................................................................17
CLAIMS TO BE NET OF INSURANCE AND NET TAX CONSEQUENCES...........................17
ADDITIONAL PROVISIONS FOR ENVIRONMENT MATTERS....................................18
ADDITIONAL PROVISIONS FOR TAX MATTERS............................................20
LIMITATION RE APPLICABLE PLANS...................................................21
EXCLUSIVE REMEDY.................................................................22
PART 5 COVENANTS OF THE PARTIES.....................................................22
INVESTIGATION OF BUSINESS........................................................22
CONDITIONS OF DISCLOSURE.........................................................23
PERSONAL INFORMATION.............................................................23
DISCLOSURE STATEMENT.............................................................24
NOTICE OF CERTAIN MATTERS........................................................24
PRELIMINARY PROSPECTUS...........................................................25
CONDUCT PRIOR TO CLOSING (TARGET)................................................25
DELIVERY OF AUTHORIZING DOCUMENTATION............................................26
PURCHASER'S CONDUCT PRIOR TO CLOSING.............................................26
COMPETITION ACT FILING...........................................................27
{/TABLE}
{PAGE}
-ii-
{TABLE}
{S} {C}
INVESTMENT CANADA ACT FILING.....................................................27
COLLECTION OF PRE-CLOSING DATE DUTY REFUNDS......................................27
ELECTIONS AND DESIGNATIONS.......................................................28
PART 6 PRE-CLOSING MATTERS..........................................................28
LOSS BEFORE CLOSING..............................................................28
CLAIM AFTER CLOSING..............................................................28
REIMBURSEMENT....................................................................29
INDEMNIFICATION..................................................................29
NOTICE OF LOSS...................................................................29
PURCHASER'S OPTION...............................................................30
CLOSING POSTPONED................................................................30
NO SOLICITATION..................................................................30
PART 7 TERMINATION OF AGREEMENT.....................................................31
TERMINATION......................................................................31
AUTOMATIC TERMINATION............................................................33
FAILURE TO GIVE NOTICE...........................................................33
EFFECT OF STATUS OF AGREEMENT AFTER TERMINATION..................................33
PART 8 CONDITIONS OF CLOSING........................................................33
CONDITIONS OF CLOSING IN FAVOUR OF THE PURCHASER.................................33
CONDITIONS OF CLOSING IN FAVOUR OF THE VENDOR....................................34
MUTUAL CONDITIONS PRECEDENT......................................................34
PART 9 CLOSING ARRANGEMENTS.........................................................35
PLACE OF CLOSING.................................................................35
TRANSFER.........................................................................35
DELIVERY OF BOOKS AND RECORDS....................................................36
DELAWARE SALES COMPANY BOOKS AND RECORDS.........................................36
FUTURE ACCESS TO BOOKS, RECORDS AND EMPLOYEES....................................36
CLOSING DOCUMENTS................................................................37
INTERIM SERVICES.................................................................37
EXECUTIVE PENSION AGREEMENTS.....................................................38
POST-CLOSING COVENANTS...........................................................38
TAX APPEAL.......................................................................38
PHANTOM PLAN.....................................................................38
MANAGEMENT INCENTIVE PLAN........................................................38
FURTHER ASSURANCES...............................................................39
PART 10 MISCELLANEOUS...............................................................39
NOTICES..........................................................................39
CONSULTATION.....................................................................40
COMMERCIALLY REASONABLE EFFORTS..................................................40
COUNTERPARTS.....................................................................40
NON-MERGER.......................................................................41
EXPENSES.........................................................................41
INTEREST.........................................................................41
{/TABLE}
{PAGE}
ACQUISITION AGREEMENT
THIS AGREEMENT is made July 21, 2004
BETWEEN:
INTERNATIONAL PAPER COMPANY, a New York corporation with an office at
400 Atlantic Street, Stamford, Connecticut 06921
(the "Vendor")
AND:
WEST FRASER TIMBER CO. LTD., a British Columbia corporation with an
office at 1000 - 1100 Melville Street, Vancouver, British Columbia V6E
4A6
(the "Purchaser")
WHEREAS:
(A) The Vendor is the registered and beneficial owner of the Purchased Share;
and
(B) The Vendor wishes to sell to the Purchaser and the Purchaser wishes to
purchase from the Vendor the Purchased Share on the terms and conditions set out
in this Agreement;
THEREFORE THIS AGREEMENT WITNESSES THAT the Parties agree as follows:
PART 1
INTERPRETATION
Rules of Interpretation and Definitions
1.1 The rules of interpretation set out in Part A of Appendix 1 apply to this
Agreement. Terms and expressions defined in Part B of Appendix 1 have those
meanings when used in this Agreement.
Schedules and Appendix
1.2 The following Schedules and Appendix are attached to and form part of this
Agreement:
Schedule A - Prohibited Activity
Schedule 3.1 - Representations and Warranties of the Vendor
{PAGE}
-2-
Schedule 3.2 - Representations and Warranties of the Purchaser
Schedule 3.7 - Subsidiaries and Other Ownership Interests
Schedule 5.7(g) - Target Information and Financial Data
Schedule 7.1(c) - Vendor's Bring Down Certificate (Due
Diligence Satisfaction Date)
Schedule 7.1(d) - Purchaser's Bring Down Certificate
Schedule 7.1(j) - Vendor's Bring Down Certificate (Closing Date)
Appendix 1 - Part A - Rules of Interpretation
Appendix 1 - Part B - Definitions
PART 2
PURCHASE AND SALE
Purchase and Sale of Purchased Share
2.1 On the Closing Date the Vendor will sell, assign and transfer to the
Purchaser and the Purchaser will purchase from the Vendor the Purchased Share
free and clear of all Encumbrances.
Purchase Price
2.2
Purchase Price Calculation
(a) The purchase price (the "Purchase Price") payable by the Purchaser to
the Vendor for the Purchased Share will be an amount equal to the total of:
(i) $1,260,000,000 less,
(A) the Triggering Event Adjustment Amount; and
(B) the Vendor Paid Expenses;
(ii) the Duty Refund Amount;
(iii) the Pulp Amount; and
(iv) the Tax Refund Amount.
subject to adjustment as provided in Section 2.2(b).
Net Worth Adjustment
(b) If the Closing Date Net Worth is greater than the Target Net Worth, the
Purchase Price will be increased by the amount of such excess (the "Net
Worth Positive Adjustment Amount"). If the Target Net Worth is greater than
the Closing Date Net
{PAGE}
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Worth, the Purchase Price will be decreased by the amount of such excess
(the "Net Worth Negative Adjustment Amount").
Definitions
(c) In this Part 2, except as otherwise expressly provided or unless the
context otherwise requires,
(i) "Adjusted Closing Date Statements" has the meaning set out in
Section 2.6.
(ii) "Adjustment Date" means the later of the date on which the
Closing Date Statements or the Adjusted Closing Date Statements have
been finalized as provided in Section 2.6.
(iii) "Closing Date Balance Sheet" means the consolidated balance
sheet of the Target Companies as of the Closing Date included in the
Closing Date Statements or, if applicable, the Adjusted Closing Date
Statements.
(iv) "Closing Date Net Worth" means the amount that is the
Shareholder's Equity as set out in the Closing Date Balance Sheet.
(v) "Closing Date Statements" has the meaning set out in Section 2.6.
(vi) "Closing Payment Statement" has the meaning set out in Section
2.5.
(vii) "Duty Refund Amount" means 64.38% of any Pre-Closing Date Duty
Refunds received from time to time by the Target after the Closing
Date.
(viii) "Net Worth Negative Adjustment Amount" has the meaning set out
in Section 2.2(b).
(ix) "Net Worth Positive Adjustment Amount" has the meaning set out in
Section 2.2(b).
(x) "Pre-Closing Cash Dividends" means cash dividends paid by the
Target during the period commencing on the Execution Date and ending
at the Time of Closing, other than (1) any dividend in kind of the
shares of the Finance Company or (2) any dividend funded out of
amounts received on or prior to the Closing Date from the Finance
Company.
(xi) "Pulp Amount" means $50,000,000; provided that if the sum of the
Periodic Amounts for the Pulp Periods is less than $50,000,000, the
Pulp Amount will be reduced by such difference.
(xii) "Target Net Worth" means $750,000,000.
(xiii) "Triggering Event Adjustment Amount" has the meaning set out in
Part 3 of the Disclosure Statement.
{PAGE}
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(xiv) "Vendor Paid Expenses" means the sum of
(A) 64.38% of the amounts paid by any of the Target Companies
after the Closing Date, to the extent not reflected in the
Closing Date Balance Sheet, under any employee retention
agreement entered into between any of the Target Companies and
any of its employees prior to the Closing Date in connection with
the transactions contemplated under this Agreement; and
(B) 64.38% of the legal and other expenses (including any
non-refundable Taxes imposed on such expenses) paid by any of the
Target Companies after the Closing Date, to the extent not
reflected in the Closing Date Balance Sheet, in connection with
the transactions contemplated under this Agreement, including the
Finance Company Reorganization, but excluding any such expenses
(I) to be paid by the Purchaser under the terms of this
Agreement;
(II) incurred prior to the Closing Date at the written
request of the Purchaser; or
(III) incurred after the Closing Date.
Payment of Purchase Price
2.3 The Purchase Price will be paid by the Purchaser to the Vendor as follows:
Closing Date Payment
(a) on the Closing Date, the Purchaser will pay to the Vendor by way of
wire transfer to such bank account as is designated by the Vendor in a
notice given to the Purchaser before the Closing,
(i) if there is a Net Worth Positive Adjustment Amount, $1,260,000,000
plus the Vendor's reasonable estimate of the Net Worth Positive
Adjustment Amount as set out in the Closing Payment Statement, or
(ii) if there is a Net Worth Negative Adjustment Amount,
$1,260,000,000 minus the Vendor's reasonable estimate of the Net Worth
Negative Adjustment Amount as set out in the Closing Payment
Statement;
Payment on Adjustment Date
(b) on the Adjustment Date the Purchaser will pay to the Vendor, or the
Vendor will pay to the Purchaser, any difference between the Net Worth
Positive Adjustment Amount or the Net Worth Negative Adjustment Amount, as
the case may be, as set out in the
{PAGE}
-5-
Closing Date Statements or, if applicable, the Adjusted Closing Date
Statements, and the reasonable estimate of such amounts included in the
Closing Payment Statement;
Payment of Duty Refund Amount
(c) subject to Section 5.12, amounts in respect of the Duty Refund Amount
will be paid by the Purchaser to the Vendor not later than the 10th
Business Day after the day on which the corresponding Pre-Closing Date Duty
Refund is received, or, if funds are initially received by a Target Company
under conditions that do not qualify the funds as Pre-Closing Date Duty
Refunds on the basis of the impediments set out in the definition thereof,
not later than the 10th Business Day after the day on which such funds
become Pre-Closing Date Duty Refunds;
Payment of Tax Refund Amount
(d) amounts in respect of the Tax Refund Amount will be paid by the
Purchaser to the Vendor not later than the 10th Business Day after the day
on which a Tax Refund Amount arises; and
Payment of Pulp Amount
(e) in respect of the Pulp Amount, the Purchaser will pay to the Vendor its
reasonable estimate of the Periodic Amount for each Pulp Period on or
before the 10th Business Day following the Pulp Period and will make any
payment or withholding required to adjust such estimate to the actual
Periodic Amount concurrently with the payment made in respect of the
immediately succeeding Pulp Period, and the Parties will make such
adjustment in respect of the final Pulp Period not later than 30 Business
Days following the end of the final Pulp Period.
Section 116 Certificate
2.4 (a) If the Vendor does not deliver to the Purchaser on or before Closing an
appropriate certificate under subsection 116(2) of the Tax Act (a "S 116(2)
Certificate") in respect of the sale of the Purchased Share to the
Purchaser (the "Share Sale") specifying a "certificate limit" at least
equal to the Purchaser's Cost (as defined in Section 2.4(h)) for purposes
of subsection 116(5) of the Tax Act, the Vendor may deliver to the
Purchaser on Closing an irrevocable, unconditional letter of credit drawn
on a global commercial bank with a credit rating of not less than AA- or
equivalent, payable in Canadian dollars ("Letter of Credit") in an amount
(the "Potential Remittance Amount") equal to 25% of the amount by which the
Purchaser's Cost exceeds the certificate limit, if any, of any appropriate
certificate under subsection 116(2) of the Tax Act in respect of the Share
Sale delivered by the Vendor to the Purchaser on or before Closing. Such
Letter of Credit will not be drawn upon except as provided below.
(b) If the Vendor does not provide the Letter of Credit under Section
2.4(a), the Purchaser will withhold from the Purchase Price an amount equal
to the Potential Remittance Amount and deposit such amount at Closing into
escrow pursuant to an escrow agreement to be entered into by the Parties at
Closing, in form and substance satisfactory
{PAGE}
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to the Parties, acting reasonably and reflecting the provisions of this
Section 2.4 and preserving the Purchaser's ability to satisfy the Potential
Remittance Amount in full at the time or times as required under the Tax
Act with income from the escrowed funds (subject to withholding) being for
the benefit of the Vendor (the "Escrow Agreement").
(c) Subject to Section 2.4(e) below:
(i) if after Closing and on or before the 29th day of the month
following the calendar month during which the Closing Date occurred
(the "Deadline Date"), the Vendor delivers to the Purchaser either:
(A) a S 116(2) Certificate with a certificate limit at least
equal to the Purchaser's Cost, or
(B) an appropriate certificate under subsection 116(4) of the Tax
Act in respect of the Share Sale referencing proceeds of
disposition not less than the Purchaser's Cost (a "S 116(4)
Certificate")
the Purchaser will return the Letter of Credit, or release the
Potential Remittance Amount held under the Escrow Agreement to the
Vendor, as applicable; and
(ii) if neither a S 116(2) Certificate with certificate limit equal to
the Purchaser's Cost nor an appropriate S 116(4) Certificate is
delivered by the Vendor to the Purchaser on or before the Deadline
Date, the Purchaser will be entitled to draw under the Letter of
Credit or under the Escrow Agreement as applicable and remit to the
Receiver General for Canada ("Receiver General") immediately following
the Deadline Date for the account of the Vendor an amount equal to the
lesser of:
(A) the Potential Remittance Amount, and
(B) 25% of the excess of the Purchaser's Cost over the
certificate limit of a S 116(2) Certificate, if any, in respect
of the Share Sale delivered by the Vendor to the Purchaser on or
before Deadline Date;
(d) The Purchaser will provide to the Vendor a copy of a receipt of the
Receiver General in respect of any payment under Section 2.4(c) and will
either (i) return the Letter of Credit forthwith to the Vendor for
cancellation if less than the full amount has been drawn; or (ii) release
the amount, if any, remaining under the Escrow Agreement to the Vendor.
(e) The Letter of Credit will not be drawn nor any amount released to the
Purchaser from under the Escrow Agreement and no amount will be remitted by
the Purchaser to the Receiver General under Section 2.4(c)(ii) if the
Vendor delivers to the Purchaser, or the Purchaser otherwise receives, on
or before the Deadline Date (as extended from time to time under this
Section 2.4(e)), one or more appropriate comfort letters (each, a "Comfort
Letter") issued by CRA from time to time extending the time period within
which the Purchaser is required to remit an amount in respect of the
Purchase Price on behalf of the
{PAGE}
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Vendor and the latest of such Comfort Letters has not been withdrawn or
cancelled or otherwise ceases to have effect. In such case, the Deadline
Date will be deemed to be the second Business Day before the date, or the
end of any time period, specified in the latest of such Comfort Letters.
(f) If the Canadian Institute of Chartered Accountants issues any
accounting rules applicable to the Purchaser which, when implemented, would
have a material adverse effect on the Purchaser's financial reporting
status as a result of the Purchaser holding the Letter of Credit, the
Purchaser will give to the Vendor not less than 20 Business Days notice
requiring the Vendor to take commercially reasonable steps to replace the
Letter of Credit by either implementing the Escrow Agreement, or taking
other measures that are satisfactory to the Purchaser, acting reasonably,
and which alleviate or avoid the material adverse effect. If, at the end of
such period, or a reasonable extension thereof taking into account the
implementation date for the accounting rules, the Vendor has not
implemented measures as contemplated herein, the Purchaser may draw on the
Letter of Credit and make the remittance described in Section 2.4(c)(ii).
(g) If at any time the aggregate of the amounts paid or then payable by the
Purchaser on account of the Purchase Price under Section 2.3 exceeds the
Purchaser's Cost, the Purchaser will be entitled to deduct and withhold 25%
of any such excess if and to the extent the Purchaser is liable to pay an
amount on behalf of the Vendor under the Tax Act. If such deduction is made
and the Parties do not enter into alternative arrangements in form and
substance satisfactory to the Parties acting reasonably preserving the
Purchaser's ability to satisfy its obligations in respect of the amount so
deducted in full at the time or times as required under the Tax Act, the
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