EXHIBIT 10.37
AGREEMENT AND PLAN OF MERGER dated as of July 30, 1997,
between SDW ACQUISITION II CORPORATION, a Delaware
corporation ("SDW Acquisition"), and SDW HOLDINGS
---------------
CORPORATION, a Delaware corporation ("Holdings").
--------
WHEREAS, the respective Boards of Directors of SDW Acquisition and Holdings
have approved the merger of SDW Acquisition into Holdings (the "Merger"), upon
------
the terms and subject to the conditions set forth in this Agreement;
WHEREAS, for U.S. Federal income tax purposes, the Merger will constitute
(i) a taxable stock purchase by Heritage Springer Limited, a company organized
under the laws of the British Virgin Islands ("HSL"), and Sappi Deutschland
---
GmbH, a company incorporated in Germany ("Sappi Deutschland"), of the shares of
-----------------
Holdings Common Stock held by Cash Holders (as defined below) and (ii) a
recapitalization to the extent that (A) Sappi Deutschland's shares of Holdings
Common Stock (as defined below) are recapitalized into shares of Class A Common
Stock of the Surviving Corporation (as defined below) and (B) HSL's shares of
Holdings Common Stock are recapitalized into shares of Class B Common Stock of
the Surviving Corporation; and
WHEREAS, SDW Acquisition and Holdings desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement the parties agree as
follows:
ARTICLE I
The Merger
----------
SECTION 1.01. The Merger. Upon the terms and subject to the conditions
-----------
set forth in this Agreement, and in accordance with the Delaware General
Corporation Law (the "DGCL"), SDW Acquisition shall be merged with and into
----
Holdings at the Effective Time (as hereinafter defined). Following the Merger,
the separate corporate existence of SDW Acquisition shall cease and Holdings
shall continue as the surviving corporation (the "Surviving Corporation") and
---------------------
2
shall succeed to and assume all the rights and obligations of SDW Acquisition in
accordance with the DGCL.
SECTION 1.02. Closing. The closing of the Merger (the "Closing") will
-------- -------
take place at a date and time to be specified by the parties, subject to
satisfaction or waiver of the conditions set forth in Sections 5.01, 5.02 and
5.03 (the "Closing Date"), at the offices of Cravath, Swaine & ▇▇▇▇▇, 825 Eighth
------------
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, unless another date or place is agreed to in
writing by the parties hereto.
SECTION 1.03. Effective Time. As soon as practicable following the
---------------
satisfaction or waiver of the conditions set forth in Article V, the parties
shall file a certificate of merger or other appropriate documents (in any such
case, the "Certificate of Merger") executed in accordance with the relevant
---------------------
provisions of the DGCL and shall make all other filings or recordings required
under the DGCL. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Delaware Secretary of State, or at
such subsequent time as shall be specified in the Certificate of Merger (the
time the Merger becomes effective being the "Effective Time").
--------------
SECTION 1.04. Effects of the Merger. The Merger shall have the effects
----------------------
set forth in Section 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and By-Laws. (a) The Restated
-----------------------------------------
Certificate of Incorporation of Holdings, as in effect immediately prior to the
Effective Time, shall be amended as of the Effective Time so that Article FOURTH
of such Restated Certificate of Incorporation is as set forth in Annex A hereto;
provided however that such amendment shall not result in any amendment or
-------- -------
deletion of Holdings' Certificate of Designations of 15% Senior Exchangeable
Preferred Stock filed with the Secretary of State of the State of Delaware on
December 19, 1994, as corrected by the Certificate of Corrections filed with the
Secretary of State of the State of Delaware on January 25, 1995, as further
amended by the Certificate of Amendment of Restated Certificate of Incorporation
as filed with the Secretary of State of the State of Delaware on July 6, 1995
(the "Certificate of Designations").
---------------------------
(b) The By-laws of Holdings as in effect at the Effective Time shall be
the By-laws of the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
3
SECTION 1.06. Directors. The directors of Holdings at the Effective Time
----------
shall be the directors of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected or
appointed and qualified, as the case may be.
SECTION 1.07. Officers. The officers of Holdings at the Effective Time
---------
shall be the officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected or
appointed and qualified, as the case may be.
ARTICLE II
Effect of the Merger on the Capital Stock of the
------------------------------------------------
Constituent Corporations; Exchange of Certificates
--------------------------------------------------
SECTION 2.01. Effect on Capital Stock. As of the Effective Time, by
------------------------
virtue of the Merger and without any action on the part of the holder of any
shares of Common Stock, par value $0.01 per share, of Holdings ("Holdings Common
---------------
Stock") or preferred stock, par value $0.01 per share of Holdings or any shares
-----
of capital stock of SDW Acquisition:
(a) Cancellation of Treasury Stock. Each share of Holdings Common Stock
-------------------------------
that is owned by Holdings as treasury stock shall automatically be
cancelled and retired and cease to exist and each share of capital stock of
SDW Acquisition that is owned by SDW Acquisition as treasury stock shall
automatically be cancelled and retired and cease to exist.
(b) Capital Stock of SDW Acquisition. Each issued and outstanding share
---------------------------------
of Class B Common Stock of SDW Acquisition shall be converted into the
right to receive one share of Class B Common Stock of the Surviving
Corporation and each issued and outstanding share of Class A Common Stock
of SDW Acquisition shall be converted into the right to receive one share
of Class A Common Stock of the Surviving Corporation.
(c) Holdings Common Stock. Subject to Sections 2.01(a) and 2.01(e), (x)
----------------------
each issued and outstanding share of Holdings Common Stock held by HSL,
Sappi Deutschland, Sappi Limited, a company organized under the laws of
South Africa, and any affiliate of Sappi Limited (together, the "Non-Cash
--------
Holders") shall be canceled and (y) each issued and outstanding share of
-------
Holdings Common Stock held by any holder other than
4
a Non-Cash Holder (a "Cash Holder") shall be converted into the right to
-----------
receive $17.60 per share in cash (the "Cash Consideration"). As of the
------------------
Effective Time, all such shares of Holdings Common Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing any such shares of
Holdings Common Stock shall cease to have any rights with respect thereto,
except Cash Holders shall have the right to receive the Cash Consideration
per share paid in consideration therefor upon surrender of such certificate
in accordance with Section 2.02, without interest.
(d) Holdings Preferred Stock. Each issued and outstanding share of 15%
-------------------------
Senior Exchangeable Preferred Stock of Holdings shall remain outstanding as
15% Senior Exchangeable Preferred Stock of the Surviving Corporation.
(e) Dissenting Shares. Notwithstanding anything in this Agreement to the
------------------
contrary, shares of Holdings Common Stock and 15% Senior Exchangeable
Preferred Stock of Holdings ("Holdings Preferred Stock") outstanding
------------------------
immediately prior to the Effective Time held by a holder (if any) who is
entitled to demand, and who properly demands, appraisal of such Holdings
Common Stock or Holdings Preferred Stock, as applicable, in accordance with
Section 262 of the DGCL shall not be subject to Sections 2.01(c) and (d),
as applicable, unless such holder fails to perfect or otherwise loses such
holder's rights to appraisal, if any. If after the Effective Time, any
such holder fails to perfect or loses any such right to appraisal, the
shares of such holder shall be treated as if they had been subject to
Section 2.01(c) and (d), as applicable, as of the Effective Time.
(f) Withholding Rights. The Surviving Corporation shall be entitled to
-------------------
deduct and withhold from the consideration otherwise payable pursuant to
this Agreement to stockholders such amounts as it is required to deduct and
withhold with respect to the making of such payment under the provision of
federal, state, local or foreign tax law. To the extent that amounts are
so withheld by the Surviving Corporation, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the
holder of the shares in respect of which such deduction and withholding was
made by the Surviving Corporation.
5
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent. As of the
------------------------- ---------------
Effective Time, the Surviving Corporation shall deposit with a bank or trust
company as may be designated by it prior to the Effective Time (the "Exchange
--------
Agent"), for the benefit of the Cash Holders, for exchange in accordance with
-----
this Article II, through the Exchange Agent, an amount equal to the Cash
Consideration multiplied by the aggregate number of shares of Holdings Common
Stock held by the Cash Holders (the "Cash Fund").
---------
(b) Exchange Procedures. As soon as reasonably practicable after the
--------------------
Effective Time, the Surviving Corporation shall cause to be mailed to each
holder of record of a certificate or certificates (a "Certificate") which
-----------
immediately prior to the Effective Time represented Holdings Common Stock
converted into the right to receive the Cash Consideration, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Holdings may specify) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the Cash Consideration
therefor. Upon surrender of a Certificate for cancellation to the Exchange
Agent or to such other agent or agents as may be appointed by the Company,
together with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor a payment equal to the
aggregate Cash Consideration payable in respect of the shares of Holdings Common
Stock held by such Cash Holder, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Holdings
Common Stock which is not registered in the transfer records of Holdings, the
Cash Consideration with respect to such shares may be paid to a person other
than the person in whose name the Certificate so surrendered is registered, if
such Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment of any Cash Consideration to a person
other than the registered holder of such Certificate or establish to the
satisfaction of Holdings that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.02, each Certificate held by
a Cash Holder shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Cash Consideration payable
6
with respect to such shares of Holdings Common Stock as contemplated by this
Section 2.02. No interest will be paid or will accrue on any Cash Consideration
payable.
(c) No Further Ownership Rights in Company Common Stock. All Cash
----------------------------------------------------
Consideration paid upon the surrender for exchange of Certificates in accordance
with the terms of this Article II shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of Holdings Common Stock
theretofore represented by such Certificates, and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Holdings Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Exchange Agent
for any reason, they shall be canceled as provided in this Article II.
(d) Termination of Cash Fund. Any portion of the Cash Fund which remains
-------------------------
undistributed to the Cash Holders of the Certificates for six months after the
Effective Time shall be delivered to the Surviving Corporation, upon demand, and
any Cash Holders of the Certificates who have not theretofore complied with this
Article II shall thereafter look only to the Surviving Corporation for payment
of their claim for Holdings Common Stock.
(e) No Liability. None of SDW Acquisition, Holdings, the Surviving
-------------
Corporation or the Exchange Agent shall be liable to any person in respect of
any Cash Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificates shall not have
been surrendered prior to seven years after the Effective Time (or immediately
prior to such earlier date on which any Cash Consideration in respect of such
Certificate would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 4.01)), any such Cash Consideration
shall, to the extent permitted by applicable law, become the property of the
Surviving Corporation, free and clear of all claims or interest of any person
previously entitled thereto.
(f) Investment of Cash Fund. The Exchange Agent shall invest the Cash
------------------------
Fund as directed by the Surviving Corporation, on a daily basis. Any interest
and other income resulting from such investments shall be paid to the Surviving
Corporation.
7
ARTICLE III
Representations and Warranties
------------------------------
SECTION 3.01. Representations and Warranties of Holdings. Holdings
-------------------------------------------
represents and warrants to SDW Acquisition as follows:
(a) Organization, Standing and Corporate Power. Each of Holdings and each
-------------------------------------------
of its subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it is
incorporated and has the requisite corporate power and authority to carry
on its business as now being conducted. Each of Holdings and each of its
subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to
be so qualified or licensed (individually or in the aggregate) would not
have a material adverse effect on Holdings and its subsidiaries taken as a
whole.
(b) Authority. Holdings has the requisite corporate power and authority
----------
to enter into this Agreement and, subject to approval and adoption of this
Agreement by the holders of a majority of the outstanding shares of
Holdings Common Stock, to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by Holdings and
the consummation by Holdings of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on
the part of Holdings, subject, in the case of this Agreement, to approval
and adoption of this Agreement by the holders of a majority of the
outstanding shares of Holdings Common Stock. This Agreement has been duly
executed and delivered by Holdings and constitutes a valid and binding
obligation of Holdings, enforceable against Holdings in accordance with its
terms.
(c) Voting Requirements. The affirmative vote of the holders of a
--------------------
majority of the outstanding shares of Holdings Common Stock approving and
adopting this Agreement is the only vote of the holders of any class or
series of Holdings' capital stock necessary to approve this Agreement and
the transactions contemplated by this Agreement.
8
(d) No Conflict. The execution and delivery of this Agreement by Holdings
------------
do not, and, upon satisfaction of the conditions to Holdings' obligations
hereunder, the performance of this Agreement by Holdings will not, (i)
conflict with or violate the Certificate of Incorporation or By-Laws of
Holdings, (ii) conflict with or violate any law, rule, regulation, order,
judgment or degree applicable to Holdings or any of its subsidiaries or by
which any of its respective properties is bound or affected, or (iii)
result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration, or cancellation
of, or result in the creation of a lien or encumbrance on any of the
properties or assets of Holdings or any of its subsidiaries pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Holdings is a
party or by which Holdings or any of its properties is bound or affected,
except, in each case, for any such conflicts, violations, breaches,
defaults, or other occurrences which have not been waived or would not,
individually or in the aggregate, have a material adverse effect on
Holdings and its subsidiaries taken as a whole.
SECTION 3.02. Representations and Warranties of SDW Acquisition. SDW
--------------------------------------------------
Acquisition represents and warrants to Holdings as follows:
(a) Organization, Standing and Corporate Power. SDW Acquisition is a
-------------------------------------------
corporation duly organized, validly existing and in good standing under the
laws of Delaware and has the requisite corporate power and authority to
carry on its business as now being conducted. SDW Acquisition is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing necessary,
other than in such jurisdictions where the failure to be so qualified or
licensed (individually or in the aggregate) would not have a material
adverse effect on SDW Acquisition.
(b) Authority. SDW Acquisition has the requisite corporate power and
----------
authority to enter into this Agreement and, subject to approval and
adoption of this Agreement by the holders of a majority of the outstanding
shares of Class A Common Stock of SDW Acquisition, to consummate the
transactions contemplated by this Agreement. The execution and delivery of
this Agreement and the consummation of the transactions
9
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of SDW Acquisition, subject (in the case of
such consummation) to approval and adoption of this Agreement by the
holders of a majority of the outstanding shares of Class A Common Stock of
SDW Acquisition. This Agreement has been duly executed and delivered by SDW
Acquisition and constitutes a valid and binding obligation of SDW
Acquisition, enforceable against it in accordance with its terms.
(c) Voting Requirements. The affirmative vote of the holders of a majority
--------------------
of the outstanding shares of SDW Acquisition's Class A Common Stock
approving and adopting this Agreement is the only vote of the holders of
any class or series of SDW Acquisition's capital stock necessary to approve
and adopt this Agreement and the transactions contemplated by this
Agreement.
ARTICLE IV
Covenants
---------
SECTION 4.01. Reasonable Efforts; Further Action. Upon the terms and
----------------------------------
subject to the conditions set forth in this Agreement, each of the parties
agrees to use all reasonable efforts to take, or cause to be taken, all actions,
and do, or cause to be done, and to assist and cooperate with the other party in
doing, all things necessary, proper or advisable, to consummate and make
effective, in the most expeditious manner practicable, the Merger and the other
transactions consummated by this Agreement, including (i) obtaining all
consents, approvals, orders, authorizations, declarations and making filings
with, any Federal, state or local government or any court, administrative agency
or commission or other governmental authority or agency, domestic or foreign (a
"Governmental Entity") and taking all reasonable steps as may be necessary to
-------------------
obtain an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) obtaining all necessary consents, approvals or waivers
from third parties, the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this Agreement or the
transactions contemplated hereby and (iii) the execution and delivery of any
additional instruments necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, this Agreement. In case at any time
after the Effective
10
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers and directors of each party to this
Agreement shall use their reasonable efforts to take all such necessary action.
SECTION 4.02. Notices. Holdings and SDW Acquisition shall (x) give all
-------
notices, if any, required by Section 228(d) of the DGCL in connection with the
approval by its shareholders of the Merger and (y) give all notices, if any, of
appraisal rights required by Section 262 of the DGCL. If the condition in
Section 5.01(g)(i) has been satisfied, Holdings shall give a redemption notice
in respect of the Holdings Preferred Stock in accordance with the Certificate of
Designations concurrently with or promptly following the effectiveness of the
Merger and take such other action as may be required thereunder in connection
with such redemption.
SECTION 4.03. Rule 13E-3. If required under the Securities Exchange Act
-----------
of 1934 (the "Exchange Act"), as soon as practicable following the date of this
------------
Agreement, Holdings and SDW Acquisition shall prepare and file with the
Securities and Exchange Commission a Transaction Statement on Schedule 13E-3 (a
"Transaction Statement") pursuant to Rule 13e-3 under the Exchange Act and mail
---------------------
such statement to persons required by law to receive it.
SECTION 4.04. Public Announcements. SDW Acquisition and Holdings shall
---------------------
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Merger and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law or any listing agreement with a national securities
exchange.
ARTICLE V
Conditions Precedent
--------------------
SECTION 5.01. Conditions to Each Party's Obligation To Effect the Merger.
-----------------------------------------------------------
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. This Agreement shall have been approved and
---------------------
adopted by (x) the affirmative vote or consent of the holders of a majority
of the outstanding shares of Holdings Common Stock in
11
accordance with applicable law and Holdings' Restated Certificate of
Incorporation and (y) the affirmative vote or consent of the holders of a
majority of the outstanding shares of Class A Common Stock of SDW
Acquisition in accordance with applicable law and SDW Acquisition's
Certificate of Incorporation.
(b) No injunctions or Restraints. No temporary restraining order,
-----------------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger shall be in effect; provided, however, that
-------- -------
each of the parties shall have used its reasonable efforts to prevent the
entry of any such injunction or other order and to appeal as promptly as
possible any such injunction or other order that may be entered.
(c) Chase Consent. Any consents required under the Amended and Restated
--------------
Credit and Guarantee Agreement, dated as of April 26, 1996, as amended to
date, among Holdings, S.D. ▇▇▇▇▇▇ Company, a Pennsylvania corporation, the
several banks, financial institutions and other entities from time to time
parties thereto (the "Lenders"), and The Chase Manhattan Bank (formerly
-------
known as Chemical Bank), a New York banking corporation, as agent for the
Lenders thereunder, in order for Holdings to consummate the Merger and for
the Surviving Corporation to comply with its obligations arising as a
result thereof (including in respect of warrants to purchase Holdings
Common Stock) shall have been obtained.
(d) Warrant Agreements. All notices required under the Warrant Agreement
-------------------
between Holdings and The Bank of New York dated as of December 20, 1994
(with respect to the Class A Warrants) and the Amended and Restated Class B
Warrant Agreement between Holdings and The Bank of New York dated as of
July 6, 1995 (with respect to the Class B Warrants), shall have been given.
(e) Transaction Statement. If a Transaction Statement was required to be
----------------------
prepared and filed with the SEC and to be mailed to applicable security
holders, the required time period for such dissemination shall have lapsed.
(f) Financing. HSL shall have performed its obligations under the Stock
----------
Subscription Agreement (the "Subscription Agreement") among HSL, Sappi
Deutschland
12
and SDW Acquisition dated as of June 24, 1997, to the satisfaction of
Holdings; and SDW Acquisition shall have received (including from HSL under
the Subscription Agreement) the aggregate amount of Cash Consideration (as
defined in the Subscription Agreement) plus the Additional Funding Amount
(as defined in the Subscription Agreement) to be contributed to SDW
Acquisition under Section 2.01(d)(i) of the Subscription Agreement.
(g) Preferred Stock. Either (i) if Holdings shall have determined to
----------------
redeem the Holdings Preferred Stock in connection with the Merger, Holdings
shall have taken such steps as are reasonably necessary to permit it to
give notice of redemption in respect thereof concurrently with or promptly
following the effectiveness of the Merger and the amount in paragraph (f)
above shall include an amount representing the aggregate redemption price
for all of the Holdings Preferred Stock or (ii) Holdings' transfer agent
shall have received the opinion of counsel and officer's certificate
referred to in Section 8(a) of the Certificate of Designations and Holdings
and SDW Acquisition shall be satisfied in every respect that a class vote
of the holders of Holdings Preferred Stock is not necessary with respect to
the transactions contemplated hereby and that such preferred stock need not
be called for redemption as a result of the transactions contemplated
hereby.
(h) Appraisal Rights. The period for demanding appraisal in connection
-----------------
with the Merger pursuant to Section 262 of the DGCL shall have expired with
respect to all capital stock of Holdings having appraisal rights and no
such demand shall have been received and not withdrawn.
SECTION 5.02. Conditions to Obligations of Holdings. The obligations of
--------------------------------------
Holdings to effect the Merger are further subject to the following conditions:
(a) Representations and Warranties. The representations and warranties of
-------------------------------
SDW Acquisition set forth in this Agreement that are qualified as to
materiality shall be true and correct, and the representations and
warranties of SDW Acquisition set forth in this Agreement that are not so
qualified shall be true and correct in all material respects, in each case
as of the date of this Agreement and as of the Closing
13
Date as though made on and as of the Closing Date, except as otherwise
contemplated by this Agreement.
(b) Performance of Obligations of SDW Acquisition. SDW Acquisition shall
----------------------------------------------
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date.
SECTION 5.03. Conditions to Obligation of SDW Acquisition. The
--------------------------------------------
obligations of SDW Acquisition to effect the Merger are further subject to the
following conditions:
(a) Representations and Warranties. The representations and warranties of
-------------------------------
Holdings set forth in this Agreement that are qualified as to materiality
shall be true and correct, and the representations and warranties of
Holdings set forth in this Agreement that are not so qualified shall be
true and correct in all material respects, in each case as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date, except as otherwise contemplated by this Agreement.
(b) Performance of Obligations of Holdings. Holdings shall have performed
---------------------------------------
in all material respects all obligations required to be performed by it
under this Agreement at or prior to the Closing Date.
ARTICLE VI
Termination, Amendment and Waiver
---------------------------------
SECTION 6.01. Termination. This Agreement may be terminated at any time
------------
prior to the Effective Time, whether before or after approval of matters
presented in connection with the Merger by the stockholders of Holdings or SDW
Acquisition:
(a) by mutual written consent of SDW Acquisition and Holdings;
(b) by Holdings if any holder of Holdings Common Stock or Holdings
Preferred Stock demands appraisal of such Holdings Common Stock or Holdings
Preferred Stock, as applicable, under Section 262 of the DGCL; or
(c) by either Holdings or SDW Acquisition if the Effective Time has not
occurred on or prior to November 30, 1997.
14
SECTION 6.02. Effect of Termination. In the event of termination of this
----------------------
Agreement by either Holdings or SDW Acquisition as provided in Section 6.01,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of SDW Acquisition or Holdings.
SECTION 6.03. Amendment. Subject to any contractual restriction to which
----------
Holdings or SDW Acquisition is a party, this Agreement may be amended by the
parties at any time before or after any required approval of matters presented
in connection with the Merger by the stockholders of Holdings and SDW
Acquisition; provided, however, that after any such approval, there shall be
-------- -------
made no amendment that by law requires further approval by such stockholders
without the further approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties.
SECTION 6.04. Extension; Waiver. At any time prior to the Effective Time,
------------------
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) subject to the proviso of
Section 6.03, waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of either party to this Agreement
to assert any of its rights under this Agreement or otherwise shall not
constitute a waiver of such rights.
SECTION 6.05. Procedure for Termination, Amendment, Extension or Waiver.
----------------------------------------------------------
A termination of this Agreement pursuant to Section 6.01, an amendment of this
Agreement pursuant to Section 6.03 or an extension or waiver pursuant to Section
6.04 shall, in order to be effective, require in the case of SDW Acquisition or
Holdings, action by its Board of Directors or the duly authorized designee of
its Board of Directors.
ARTICLE VII
General Provisions
------------------
SECTION 7.01. Nonsurvival of Representations and Warranties. None of the
---------------------------------- -----------
representations and warranties in this Agreement or in any instrument delivered
pursuant to
15
this Agreement shall survive the Effective Time. This Section 7.01 shall not
limit any covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time.
SECTION 7.02. Notices. All notices, requests, claims, demands and other
--------
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to SDW Acquisition, to
SDW Acquisition II Corporation
In care of Sappi Limited
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Financial Officer
Facsimile: 27 11 339 8297
(b) if to Holdings, to
SDW Holdings Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇
Attention: Chief Financial Officer
Facsimile: 1 914 696 55 33
with a copy separately delivered to:
Sappi Limited
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Financial Officer
Facsimile: 27 11 339 8297
16
SECTION 7.03. Definitions. For purposes of this Agreement:
------------
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person;
(b) "material adverse effect" means, when used in connection with Holdings
or SDW Acquisition, any change or effect (or any development that, insofar
as can reasonably be foreseen, is likely to result in any change or effect)
that is materially adverse to the business, properties, assets, condition
(financial or otherwise), results of operations or prospects of such party
and its subsidiaries taken as a whole;
(c) "person" means an individual, corporation, partnership, joint venture,
association, trust, unincorporated organization or other entity; and
(d) a "subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned directly
or indirectly by such first person.
SECTION 7.04. Interpretation. When a reference is made in this Agreement
---------------
to a Section or Annex, such reference shall be to a Section of, or an Annex to,
this Agreement unless otherwise indicated. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation".
SECTION 7.05. Counterparts. This Agreement may be executed in one or more
-------------
counterparts, all of, which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
SECTION 7.06. Entire Agreement; No Third-Party Beneficiaries. This
-------------------------------- --------------
Agreement and the Subscription Agreement (a) constitute the entire agreement,
and supersede all prior agreements and understandings, both, written and
17
oral, between the parties with respect to the subject matter of this Agreement
and the Subscription Agreement and (b) except for the provisions of Article II
from and after the Effective Time, are not intended to confer upon any person
other than the parties any rights or remedies.
SECTION 7.07. Governing Law. This Agreement shall be governed by, and
--------------
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 7.08. Assignment. Neither this Agreement nor any of the rights,
-----------
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by either of the parties without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.
SECTION 7.09. Enforcement. The parties agree that irreparable damage
------------
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than a Federal court sitting in the State of
Delaware or a Delaware state court.
SECTION 7.10. Further Assurances. Subject to the conditions hereof, each
-------------------
party hereto shall make, execute, acknowledge and deliver such other instruments
and documents, and take all such other actions, as may be reasonably requested
by the other party in order to
18
effectuate the purposes of this Agreement and to consummate the transactions
contemplated hereby.
SECTION 7.11 Waiver of Jury Trial. Each party waives, to the fullest
---------------------
extent permitted by applicable law, any right it may have to a trial by jury in
respect of any litigation arising out of or relating to this Agreement.
[Signatures on next page.]
19
IN WITNESS WHEREOF, SDW Acquisition and Holdings have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
SDW HOLDINGS CORPORATION,
By: /s/ W. E. ▇▇▇▇▇▇
-------------------------------
Name: W. E. ▇▇▇▇▇▇
Title: Vice President
SDW ACQUISITION II CORPORATION,
By: /s/ W. E. ▇▇▇▇▇▇
-------------------------------
Name: W. E. ▇▇▇▇▇▇
Title: Vice President
20
ANNEX A TO
AGREEMENT AND
PLAN OF MERGER
Article FOURTH of Holdings' Restated Certificate of Incorporation
shall be amended to read as follows, provided that such amendment shall not
-------- ----
result in any amendment or deletion of the Certificate of Designations of 15%
Senior Exchangeable Preferred Stock filed with the Secretary of State of the
State of Delaware on December 19, 1994, as corrected by the Certificate of
Corrections filed with the Secretary of State of the State of Delaware on
January 25, 1995, as further amended by the Certificate of Amendment of Restated
Certificate of Incorporation as filed with the Secretary of State of the State
of Delaware on July 6, 1995:
ARTICLE FOURTH
(a) The aggregate number of shares of stock that the Corporation
shall have authority to issue is 5,300,000 shares with a par value of $.01
per share. A total of 300,000 of such shares shall be designated "Common
Stock", comprised of 250,000 shares of "Class A Common Stock" and 50,000
shares of "Class B Common Stock". A total of 5,000,000 of such shares
shall be designated as "Preferred Stock".
(b) Each holder of shares of Class A Common Stock shall be
entitled to one vote for each share of Common Stock held of record on all
matters on which the holders of shares of Common Stock are entitled to
vote. Subject to the provisions of applicable law and any certificate of
designation providing for the issuance of any shares of Preferred Stock,
the holders of outstanding shares of Class A Common Stock shall have and
possess the exclusive right to notice of stockholders meetings and the
exclusive power to vote. No stockholder will be permitted to cumulate
votes at any election of directors. Except as otherwise provided herein or
required by law, the holders of Class B Common Stock shall have no voting
rights and shares of Class B Common Stock shall not be included in
determining the number of shares voting or entitled to vote on any such
matters; provided, however, that any amendment, repeal or modification to
-------- -------
the Restated Certificate of Incorporation which would have the effect of
changing the right of the Corporation's shares of Class B Common Stock to
be converted into Class A Common Stock (including the obligation of the
Corporation to reserve shares of Class A Common Stock to be issued upon
conversion of the Class B Common Stock) must be approved by the affirmative
vote of at least a majority of such shares.
21
(c) Except as provided in subsection (b) above regarding voting
rights, the Corporation's Common Stock shall be equal in every respect
insofar as their relationship to the Corporation is concerned (but such
equality of rights shall not imply equality of treatment as to redemption
or other acquisition of Common Stock by the Corporation). Subject to the
rights of the Preferred Stock, the holders of Common Stock shall be
entitled to share ratably, when, as and if declared by the Board of
Directors, out of funds legally available therefor, dividends and other
distributions (other than purchases, redemptions or other acquisitions of
Common Stock by the Corporation) payable in cash, stock or otherwise;
provided, however, that (x) in the case of dividends payable in shares of
-------- -------
Class A Common Stock, or options, warrants or rights to acquire shares of
Class A Common Stock, or securities convertible into or exchangeable for
shares of Class A Common Stock, the dividend payable with respect to the
Class B Common Stock shall be payable in shares of, or options, warrants or
rights to acquire, or securities convertible into or exchangeable for,
Class B Common Stock and (y) if any dividend consists of other voting
securities of the Corporation, the Corporation shall make available to each
holder of Class B Common Stock, dividends consisting of non-voting
securities of the Corporation that are otherwise identical to the voting
securities and that are convertible into or exchangeable for such voting
securities on the same terms as the Class B Common Stock is convertible
into the Class A Common Stock.
Upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, and after the holders of the
Preferred Stock of each series shall have been paid in full in cash the
amounts to which they respectively shall be entitled or a sum sufficient
for such payment in full shall have been set aside, the remaining net
assets of the Corporation shall be distributed pro rata to the holders of
the Common Stock in accordance with their respective rights and interests,
to the exclusion of the holders of Preferred Stock.
Each share of Class B Common Stock shall be convertible, to the
extent permitted by law, into one share of Class A Common Stock at the
election of the holder. The Corporation shall, as promptly as practicable
and in any event within fourteen days after receipt of written notice of
such election in respect of shares of Class B Common Stock, execute and
deliver
22
or cause to be executed and delivered, in accordance with such
notice, a certificate or certificates representing the shares of Class A
Common Stock in exchange for the certificate or certificates representing
the converted shares of Class B Common Stock. If less than all of the
shares of Class B Common Stock represented by a single certificate have
been converted, the Corporation shall, at the time of delivery of the
certificate or certificates, deliver to the holder thereof a new
certificate or certificates evidencing the remaining shares of Class B
Common Stock. The Corporation shall pay all expenses, taxes and other
charges payable in connection with the preparation, issuance and delivery
of share certificates, except that, if share certificates shall be
registered in a name or names other than the name of the holder thereof
prior to conversion, funds sufficient to pay all transfer taxes payable as
a result of such transfer shall be paid by such holder at the time of
delivering the aforementioned notice or promptly upon receipt of a written
request of the Corporation for payment. Such conversion, to the extent
permitted by law, shall be deemed to have been effected as of the close of
business on the date on which such notice shall have been received by the
Corporation, and at such time the rights of the holder of the shares of
Class B Common Stock so converted shall cease and the person or persons in
whose name or names the certificate or certificates for the shares of Class
A Common Stock are to be issued upon such conversion shall be deemed to
have become the holder or holders of record of the shares so converted and
the certificate or certificates representing such shares of Class B Common
Stock shall be deemed to represent such Class A Common Stock until
exchanged as provided above.
All shares of Class A Common Stock issued upon the conversion of
the Class B Common Stock shall be validly issued, fully paid and
nonassessable, free of all liens, taxes and other charges.
At all times while any Class B Common Stock is authorized, the
Corporation shall maintain its corporate authority to issue, and shall
reserve for issuance upon conversion of the Class B Common Stock, such
number of shares of Class A Common Stock as shall be sufficient to allow
full conversion of all Class B Common Stock.
If the Corporation shall in any manner subdivide (by stock split,
stock dividend, or otherwise) or
23
combine (by reverse stock split or otherwise) the outstanding shares of
Class A Common Stock or Class B Common Stock, then the outstanding shares
of Class A Common Stock or Class B Common Stock, as applicable, shall be
subdivided or combined, as the case may be, to the same extent, share and
share alike, and effective provision shall be made for the protection of
the conversion rights hereunder. In case of any reorganization,
reclassification or change of shares of Class A Common Stock or Class B
Common Stock (other than a change in par value or a change from par to no-
par value or as a result of a subdivision or combination), or in case of
any consolidation of the Corporation with one or more corporations, or any
merger of the Corporation with another corporation (other than a
consolidation or merger in which the Corporation is the resulting or
surviving corporation and that does not result in any reclassification or
change of outstanding shares of Class A Common Stock or Class B Common
Stock), each holder of any share of Class B Common Stock that remains
outstanding subsequent to such event shall have the right at any time
thereafter so long as the conversion right hereunder with respect to such
Class B Common Stock would exist had such event not occurred, to convert
its Class B Common Stock into the kind and amount of shares of stock and
other securities and properties (including cash) receivable upon such
reorganization, reclassification, change, consolidation or merger by a
holder of the number of shares of Class A Common Stock into which such
shares of Class B Common Stock might have been converted immediately prior
to such reorganization, reclassification, change, consolidation or merger.
In the event of such reorganization, reclassification, change,
consolidation or merger, effective provisions shall be made in the
Certificate of Incorporation of the resulting or surviving corporation or
otherwise for the protection of the conversion rights of the holders of any
shares of Class B Common Stock that remain outstanding subsequent to such
event that shall be applicable, as nearly as reasonably may be, to any such
other shares of stock and other securities and property deliverable upon
conversion of the Class A Common Stock into which such Class B Common Stock
might have been converted immediately prior to such event.
(d) The Board of Directors of the Corporation shall have the
full authority permitted by law, at any time and from time to time, to
divide the authorized and unissued shares of Preferred Stock into classes
or
24
series, or both, and to determine the following provisions, designations,
preferences, qualifications, limitations, restrictions and the special or
relative rights for shares of any such class or series of Preferred Stock:
(i) the designation of such class or series, the number of
shares to constitute such class or series and the stated or
liquidation value thereof if different from the par value thereof;
(ii) whether the shares of such class or series shall have
voting rights, in addition to any voting rights provided by law, and,
if so, the terms of such voting rights;
(iii) the dividends, if any, payable on such class or
series, whether any such dividends shall be cumulative, and, if so,
from what dates, the conditions and dates upon which such dividends
shall be payable, the preference or relation which such dividends
shall bear to the dividends payable on any shares of stock of any
other class or any other series of the same class;
(iv) whether the shares of such class or series shall be
subject to redemption at the election of the Corporation and/or the
holders of such class or series and, if so, the times, price and other
conditions of such redemption, including securities or other property
payable upon any such redemption if any;
(v) the amount or amounts payable upon shares of such class
or series upon, and the rights of the holders of such class or series
in, the voluntary or involuntary liquidation, dissolution or winding
up, or any distribution of the assets of, the Corporation;
(vi) whether the shares of such class or series shall be
subject to the operation of a retirement or sinking fund and, if so,
the extent to and manner in which any such retirement or sinking fund
shall be applied to the purchase or redemption of the shares of such
class or series for retirement or other corporate purposes and the
terms and provisions relative to the operation thereof;
25
(vii) whether the shares of such class or series shall be
convertible into, or exchangeable for, shares of stock of any other
class or any other series of the same class or any securities, whether
or not issued by the Corporation, and, if so, the price or prices or
the rate or rates of conversion or exchange and the method, if any, of
adjusting the same, and any other terms and conditions or conversion
or exchange;
(viii) the limitations and restrictions, if any, to be
effective while any shares of such class or series are outstanding
upon the payment of dividends or the making of other distributions on,
and upon the purchase, redemption or other acquisition by the
Corporation of, the Common Stock or shares of stock of any other class
or any other series of the same class;
(ix) the conditions or restrictions, if any, upon the
creation of indebtedness of the Corporation or upon the issue of any
additional shares of stock, including additional shares of such class
or series or of any other series of the same class or of any other
class;
(x) the ranking (be it pari passu, junior or senior) of each
---- -----
class or series vis-a-vis any other class or series of any class of
Preferred Stock as to the payment of dividends, the distribution of
assets and all other matters; and
(xi) any other powers, preferences and relative,
participating, optional and other special rights, and any
qualifications, limitations and restrictions thereof, insofar as they
are not inconsistent with the provisions of this Certificate of
Incorporation, to the full extent permitted in accordance with the
laws of the State of Delaware.
(e) Such divisions and determinations may be accomplished by an
amendment to this Article FOURTH, which amendment may be made solely by
action of the Board of Directors, which shall have the full authority
permitted by law to make such divisions and determinations.
(f) The powers, preferences and relative, participating,
optional and other special rights of each class or series of Preferred
Stock, and the
26
qualifications, limitations or restrictions thereof, if any, may differ
from those of any and all other classes or series at any time outstanding.
(g) Holders of shares of Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors, out of funds
legally available for the payment thereof, dividends at the rates fixed by
the Board of Directors for the respective series, and no more, before any
dividends shall be declared and paid, or set aside for payment, on shares
of Common Stock with respect to the same dividend period.
(h) In the event of the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, holders of shares of each
series of Preferred Stock will be entitled to receive the amount fixed for
such series upon any such event plus, in the case of any series on which
dividends will have been determined by the Board of Directors to be
cumulative, an amount equal to all dividends accumulated and unpaid thereon
to the date of final distribution whether or not earned or declared before
any distribution shall be paid, or set aside for payment, to holders of
Common Stock. If the assets of the Corporation are not sufficient to pay
such amounts in full, holders of all shares of Preferred Stock will
participate in the distribution of assets ratably in proportion to the full
amounts to which they are entitled or in such order or priority, if any, as
will have been fixed in the resolution or resolutions providing for the
issue of the series of Preferred Stock. Neither the merger nor
consolidation of the Corporation into or with any other corporation, nor a
sale, transfer or lease of all or part of its assets, will be deemed a
liquidation, dissolution or winding up of the Corporation within the
meaning of this paragraph except to the extent specifically provided for
herein.
(i) The Corporation, at the option of the Board of Directors,
may redeem all or part of the shares of any series of Preferred Stock on
the terms and condition fixed for such series.
(j) Except as otherwise required by law, as otherwise provided
herein or as otherwise determined by the Board of Directors as to the
shares of any series of Preferred Stock prior to the issuance of any such
shares, the holders of Preferred Stock shall have no voting rights and
shall not be entitled to any notice of meetings of stockholders.
