EXHIBIT 10.2
BOWATER CANADA FINANCE CORPORATION
7.95% NOTES DUE 2011
UNCONDITIONALLY GUARANTEED AS TO PAYMENT OF PRINCIPAL, PREMIUM,
IF ANY, AND INTEREST, BY
BOWATER INCORPORATED
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PURCHASE AGREEMENT
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October 31, 2001
Xxxxxxx, Xxxxx & Co.,
X.X. Xxxxxx Securities Inc.
As Representatives of the several Purchasers
named in Schedule I hereto,
c/o Goldman, Xxxxx & Co.,
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Ladies and Gentlemen:
Bowater Canada Finance Corporation, an unlimited liability company
organized under the laws of Nova Scotia, Canada (the "Company") and a wholly
owned subsidiary of Bowater Incorporated, a Delaware corporation (the
"Guarantor"), proposes, subject to the terms and conditions stated herein, to
issue and sell to the Purchasers named in Schedule I hereto (the "Purchasers")
an aggregate of $600,000,000 principal amount of the Notes specified above (the
"Notes") of the Company.
The Notes are to be issued under an indenture to be dated as of
November 6, 2001 among the Company, the Guarantor and The Bank of New York, as
trustee (the "Trustee") (the "Indenture"). The Securities will be fully and
unconditionally guaranteed as to the payment of principal, premium, if any, and
interest (the "Guarantees") by the Guarantor. The Notes and the Guarantees are
hereinafter collectively called the "Securities".
The Purchasers and other holders (including subsequent transferees) of
the Securities will be entitled to the benefits of an Exchange and Registration
Rights Agreement (the "Registration Rights Agreement"), to be dated the Time of
Delivery (as defined below) in the form attached hereto as Exhibit A. Pursuant
to the Registration Rights Agreement, the Company and the Guarantor have jointly
and severally agreed to file with the Securities and Exchange Commission (the
"Commission"), under the circumstances set forth therein, (i) a registration
statement under the Securities Act of 1933,
as amended (the "Exchange Offer Registration Statement"), relating to the
Exchange Securities (as defined in the Registration Rights Agreement) to be
offered in exchange for the Securities (the "Exchange Offer") and, (ii) under
certain circumstances, a shelf registration statement pursuant to Rule 415 under
the Securities Act of 1933, as amended (the "Shelf Registration Statement" and,
together with the Exchange Offer Registration Statement, the "Registration
Statements,") relating to the resale by certain holders of the Securities.
1. Each of the Company and the Guarantor, jointly and severally,
represents and warrants to, and agrees with, each of the Purchasers that:
(a) A preliminary offering circular, dated October 26,
2001 (the "Preliminary Offering Circular") and an offering circular,
dated October 31, 2001 (the "Offering Circular") have been prepared in
connection with the offering of the Securities. Any reference to the
Preliminary Offering Circular or the Offering Circular shall be deemed
to refer to and include the Guarantor's Annual Report on Form 10-K for
the year ended December 31, 2000 as amended by the Guarantor's Annual
Report on Form 10-K/A for the year ended December 31, 2000 and all
subsequent documents filed with the Commission pursuant to Section
13(a), 13(c) or 15(d) of the United States Securities Exchange Act of
1934, as amended (the "Exchange Act") on or prior to the date of the
Preliminary Offering Circular or the Offering Circular, as the case may
be, and any reference to the Preliminary Offering Circular or the
Offering Circular, as the case may be, as amended or supplemented, as
of any specified date, shall be deemed to include (i) any documents
filed with the Commission pursuant to Section 13(a), 13(c) or 15(d) of
the Exchange Act after the date of the Preliminary Offering Circular or
the Offering Circular, as the case may be, and prior to such specified
date and (ii) any Additional Issuer Information (as defined in Section
5(f)) furnished by the Guarantor prior to the completion of the
distribution of the Securities; and all documents filed under the
Exchange Act and so deemed to be included in the Preliminary Offering
Circular or the Offering Circular, as the case may be, and any
amendment or supplement thereto are hereinafter called the "Exchange
Act Reports". The Exchange Act Reports, when they were filed or are
filed with the Commission, conformed or will conform in all material
respects to the applicable requirements of the Exchange Act and the
applicable rules and regulations of the Commission thereunder. The
Preliminary Offering Circular or the Offering Circular and any
amendments or supplements thereto and the Exchange Act Reports did not
and will not, as of their respective dates, contain an untrue statement
of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by a Purchaser through Xxxxxxx,
Sachs & Co. and X.X. Xxxxxx Securities Inc. expressly for use therein;
(b) The documents incorporated by reference in the
Offering Circular, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects to
the requirements of the Securities Act of 1933 (the "Act") or the
Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; and any further documents so filed and
incorporated by reference in the Offering Circular or any further
amendment or supplement thereto, when such documents become effective
or are
filed with the Commission, as the case may be, will conform in
all material respects to the requirements of the Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
(c) Neither the Company, the Guarantor nor any of their
subsidiaries has sustained since the date of the latest audited
financial statements included or incorporated by reference in the
Offering Circular any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental
action, order or decree, in each case otherwise than as set forth or
contemplated in the Offering Circular; and, since the respective dates
as of which information is given in the Offering Circular, there has
not been any change in the capital stock or long-term debt of the
Company, the Guarantor or any of their subsidiaries or any material
adverse change, or any development involving a prospective material
adverse change, that has or could reasonably be expected, individually
or in the aggregate, to have a material adverse effect on the general
affairs, management, financial position, stockholders' equity or
results of operations of the Guarantor and its subsidiaries taken as a
whole (a "Material Adverse Effect"), otherwise than as set forth or
contemplated in the Offering Circular;
(d) The Company, the Guarantor and their subsidiaries
have good and marketable title in fee simple to all real property and
good and marketable title to all personal property owned by them, in
each case free and clear of all liens, encumbrances and defects except
such as are described in the Offering Circular or such as do not have a
Material Adverse Effect; and any real property and buildings held under
lease by the Company or the Guarantor and their subsidiaries are held
by them under valid, subsisting and enforceable leases with such
exceptions as do not have a Material Adverse Effect;
(e) The Company has been duly incorporated and is validly
existing as an unlimited liability company in good standing under the
laws of the Canadian province of Nova Scotia, with power and authority
to own its properties and conduct its business as described in the
Offering Circular, and has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases properties or
conducts any business so as to require such qualification, except where
the failure to be so qualified or to be in good standing would not have
a Material Adverse Effect;
(f) The Guarantor has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of Delaware, with power and authority to own its properties
and conduct its business as described in the Offering Circular, and has
been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, except where the failure
to be so qualified or to be in good standing would not have a Material
Adverse Effect; and each subsidiary of the Guarantor has been duly
incorporated or organized, as the case may be, and is validly existing
as a corporation (to the extent applicable) in good standing under the
laws of its jurisdiction of incorporation or organization, as the case
may be, and has been duly qualified as a foreign corporation (to the
extent applicable) for the transaction of business and is in good
standing
under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such
qualification, except such jurisdictions where the failure to be so
qualified would not, individually or in the aggregate, have a Material
Adverse Effect, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction;
(g) Each of the Company and the Guarantor has an
authorized capitalization as set forth in the Offering Circular, and
all of the issued and outstanding shares of capital stock of the
Company and the Guarantor have been duly and validly authorized and
issued and are fully paid and non-assessable; and, except as disclosed
in the Offering Circular, all of the issued and outstanding shares of
capital stock of each subsidiary of the Company and the Guarantor have
been duly and validly authorized and issued, are fully paid and
non-assessable and are owned directly or indirectly by the Company or
the Guarantor, as the case may be, free and clear of all liens,
encumbrances, equities or claims, other than the rights relating to
Xxxxxxx Newsprint Company held by the minority shareholder of that
subsidiary;
(h) This Purchase Agreement has been duly authorized,
executed and delivered by each of the Company and the Guarantor;
(i) The Registration Rights Agreement has been duly
authorized by each of the Company and the Guarantor and when executed
and delivered by the Company and the Guarantor (assuming due
authorization, execution and delivery by the Purchasers), the
Registration Rights Agreement will constitute a valid and legally
binding instrument, enforceable against each of them in accordance with
its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles and,
except as rights to indemnity and contribution may be limited by
applicable law; the Registration Rights Agreement will conform to the
description thereof in the Offering Circular and will be substantially
in the form previously delivered to you;
(j) The Securities have been duly authorized by the
Company and, when issued and delivered by the Company and delivered
against payment therefor pursuant to this Agreement, will have been
duly executed, authenticated, issued and delivered and will constitute
valid and legally binding obligations of the Company (assuming due
authentication by the Trustee), enforceable in accordance with their
terms and entitled to the benefits provided by the Indenture, subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to general equity principles; the Indenture has been duly
authorized by each of the Company and the Guarantor and, when executed
and delivered by the Company, the Guarantor and the Trustee, the
Indenture will constitute a valid and legally binding instrument,
enforceable in accordance with its terms, subject, as to enforcement,
to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
equity principles; the Securities and the Indenture will conform to the
descriptions thereof in the Offering Circular and will be substantially
in the form previously delivered to you;
(k) The Guarantees have been duly authorized by the
Guarantor and, when executed and delivered in accordance with the terms
of the Indenture and when the Notes have been duly executed,
authenticated, issued and delivered in accordance with the terms of the
Indenture and delivered against payment therefor in accordance with the
terms hereof and thereof, will constitute valid and legally binding
obligations of the Guarantor, enforceable in accordance with their
terms and entitled to the benefits of the Indenture, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting creditors' rights and
to general equity principles; the Guarantees will conform to the
description thereof in the Offering Circular and will be substantially
in the form previously delivered to you;
(l) The Exchange Securities have been duly authorized by
the Company and, when issued and delivered pursuant to the Registration
Rights Agreement, will have been duly executed, authenticated, issued
and delivered and will constitute valid and legally binding obligations
of the Company (assuming due authentication by the Trustee) entitled to
the benefits of the Indenture under which they are to be issued; the
Exchange Securities will conform to the description thereof in the
Offering Circular;
(m) The Guarantees with respect to the Exchange
Securities have been duly authorized by the Guarantor and, when
executed and delivered in accordance with the terms of the Indenture
and when the Exchange Securities have been issued duly executed,
authenticated, issued and delivered in accordance with the terms of the
Exchange Offer and the Indenture, will constitute valid and legally
binding obligations of the Guarantor, enforceable in accordance with
their terms and entitled to the benefits of the Indenture, subject, as
to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to general equity principles; the Guarantees with respect to
the Exchange Securities will conform to the description thereof in the
Offering Circular;
(n) None of the transactions contemplated by this
Agreement (including, without limitation, the use of the proceeds from
the sale of the Securities) will violate or result in a violation of
Section 7 of the Exchange Act, or any regulation promulgated
thereunder, including, without limitation, Regulations T, U, and X of
the Board of Governors of the Federal Reserve System;
(o) Prior to the date hereof, none of the Company, the
Guarantor or any of their affiliates has taken any action which is
designed to or which has constituted or which might have been expected
to cause or result in stabilization or manipulation of the price of any
security of the Company or the Guarantor in connection with the
offering of the Securities;
(p) The issue and sale of the Securities and the
compliance by the Company and the Guarantor with all of the provisions
of the Securities, the Indenture, this Agreement and the Registration
Rights Agreement and the consummation of the transactions herein and
therein contemplated will not (i) conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a
default under, (A) any indenture, mortgage, deed of trust, loan
agreement or (B) other agreement or instrument, in each case, to which
the Company, the Guarantor or any of their subsidiaries is a party or
by which the Company, the Guarantor or any of their subsidiaries is
bound or to which any of the property or assets of the Company, the
Guarantor or any of their subsidiaries are subject, except, in the case
of clause (i)(B), for any such conflict, breach, violation or default
that would not, individually or in the aggregate, have a Material
Adverse Effect, or (ii) result in any violation of the provisions of
the Certificate of Incorporation or By-laws (or similar organizational
documents) of the Company or the
Guarantor or any of their subsidiaries or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company, the Guarantor or any of their
subsidiaries or any of their properties; no consent, approval,
authorization, order, registration or qualification of, or with any
such court or governmental agency or body is required for the issue and
sale of, the Securities or the consummation by the Company or the
Guarantor of the transactions contemplated by this Agreement, the
Registration Rights Agreement or the Indenture, except for the filing
of a registration statement by the Company and the Guarantor with the
Commission pursuant to the Act pursuant to the Registration Rights
Agreement and such consents, approvals, authorizations, registrations
or qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Securities
by the Purchasers;
(q) Neither the Company nor the Guarantor or any of their
subsidiaries is in violation of its Certificate of Incorporation or
By-laws (or similar organizational documents) or in default in the
performance or observance of any material obligation, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound;
(r) The statements set forth in the Offering Circular
under the caption "Description of Notes", insofar as they purport to
constitute a summary of the terms of the Securities, Guarantees and the
Exchange Securities, under the caption "Certain Income Tax
Considerations" and under the caption "Plan of Distribution", insofar
as they purport to describe the provisions of the laws and documents
referred to therein, fairly summarize in all material respects the
matters referred to therein;
(s) Other than as set forth in the Offering Circular,
there are no legal or governmental proceedings pending to which the
Company or the Guarantor or any of their subsidiaries is a party or of
which any property of the Company or the Guarantor or any of their
subsidiaries is the subject which, if determined adversely to the
Company or the Guarantor or any of their subsidiaries, would,
individually or in the aggregate, have a Material Adverse Effect; and,
to the best knowledge of the Company and the Guarantor, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others;
(t) When the Securities are issued and delivered pursuant
to this Agreement, the Securities will not be of the same class (within
the meaning of Rule 144A under the Securities Act) as securities which
are listed on a national securities exchange registered under Section 6
of the Exchange Act or quoted in a U.S. automated inter-dealer
quotation system;
(u) The Guarantor is subject to Section 13 or 15(d) of
the Exchange Act;
(v) Neither the Company, the Guarantor or any of their
subsidiaries is and, after giving effect to the offering and sale of
the Securities and the transactions described in the Offering Circular,
will be an "investment company", as such term is defined in the United
States Investment Company Act of 1940, as amended (the "Investment
Company Act");
(w) None of the Company, the Guarantor or any person
acting on its or their behalf (except the Purchasers, as to whom no
such representation or warranty is made) has offered or sold the
Securities by means of any general solicitation or general advertising
within the
meaning of Rule 502(c) under the Act or, with respect to Securities
sold outside the United States to non-U.S. persons (as defined in Rule
902 under the Act), by means of any directed selling efforts within the
meaning of Rule 902 under the Act and the Company and the Guarantor,
any of their affiliates and any person acting on their behalf (except
the Purchasers, as to whom no such representation or warranty is made)
have complied with and will implement the "offering restriction" within
the meaning of such Rule 902;
(x) Within the preceding six months, none of the Company,
the Guarantor or any other person acting on their behalf has offered or
sold to any person any Securities, or any securities of the same or a
similar class as the Securities, other than Securities offered or sold
to the Purchasers hereunder. The Company and the Guarantor will take
reasonable precautions designed to insure that any offer or sale,
direct or indirect, in the United States or to any U.S. person (as
defined in Rule 902 under the Act) of any Securities or any
substantially similar security issued by either the Company or the
Guarantor, within six months subsequent to the date on which the
distribution of the Securities has been completed (as notified to the
Company by Xxxxxxx, Xxxxx & Co.), is made under restrictions and other
circumstances reasonably designed not to affect the status of the offer
and sale of the Securities in the United States and to U.S. persons
contemplated by this Agreement as transactions exempt from the
registration provisions of the Act;
(y) KPMG LLP, who have certified certain consolidated
financial statements of the Company, the Guarantor and their
subsidiaries, are independent public accountants as required by the Act
and the rules and regulations of the Commission thereunder; such
consolidated financial statements incorporated by reference into the
Offering Circular, together with related schedules and notes thereto,
comply as to form in all material respects with the applicable
requirements of Regulation S-X under the Exchange Act and present
fairly in all material respects the financial position and results of
operations of the Company, the Guarantor and their subsidiaries at the
dates and for the periods indicated; such consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the
periods presented; the pro forma financial statements incorporated by
reference into the Offering Circular have been prepared on a basis
consistent with such historical statements of the Company and the
Guarantor except for the pro forma adjustments specified therein, and
give effect to assumptions made on a reasonable basis; and such pro
forma financial statements comply as to form in all material respects
with the requirements applicable to pro forma financial statements
under Regulation S-X, except as expressly stated therein;
(z) Xxxxxxx Xxxxxx Xxxxx Xxxxxxxx General Partnership,
who have audited certain consolidated financial statements of Alliance
Forest Products Inc., are independent public accountants as required by
the Act and the rules and regulations of the Commission thereunder;
such consolidated financial statements incorporated by reference into
the Offering Circular, together with related schedules and notes
thereto, comply as to form in all material respects with the applicable
requirements of Regulation S-X under the Exchange Act and present
fairly in all material respects the financial position and results of
operations of Alliance Forest Products Inc. and its subsidiaries at the
dates and for the periods indicated; such consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles in Canada applied on a consistent basis
throughout the periods presented;
(aa) The Guarantor and each of its subsidiaries, including
the Company, owns or possesses such permits, licenses, approvals,
consents and other authorizations (collectively, "Governmental
Licenses") of the appropriate federal, state, local or foreign
regulatory and quasi-regulatory agencies or bodies necessary to conduct
any business now conducted by them and as contemplated to be conducted
by them upon consummation of the transactions contemplated under this
Agreement. The Guarantor and each of its subsidiaries, including the
Company, is in compliance in all material respects with the terms and
conditions of all such Governmental Licenses; all of the Governmental
Licenses are, and upon consummation of the transactions contemplated
under this Agreement will be, valid and in full force and effect;
neither the Company, the Guarantor or any of their subsidiaries has
received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, individually or
in the aggregate, would have a Material Adverse Effect on the current
or future financial position, stockholders' equity or results of
operations of the Company, the Guarantor and their subsidiaries; and
(bb) Except as described in the Offering Circular and
except as would not, individually or in the aggregate, have a Material
Adverse Effect, (A) neither the Guarantor or any of its subsidiaries,
including the Company, is in violation of any federal, state, local or
foreign statute, law, rule, regulation, ordinance or code, or rule of
common law or any judicial or administrative interpretation thereof,
including any applicable judicial or administrative order, consent,
decree or judgment, regulating, or imposing liability concerning,
pollution, the protection of human health or the environment
(including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) there is no action, suit, proceeding or investigation
(including, without limitation, a claim for remediation) now pending
or, to the knowledge of the Company or the Guarantor, threatened, under
any Environmental Laws to which the Company, the Guarantor or any of
their subsidiaries is a party, (C) the Guarantor and its subsidiaries,
including the Company, have all permits, authorizations and approvals
required under any applicable Environmental Laws and are in compliance
with such requirements, (D) there are no administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigations or proceedings
relating in any way to Environmental Laws pending or threatened against
the Company, the Guarantor or any of their subsidiaries and (E) neither
the Company, the Guarantor or any of their subsidiaries has any
knowledge of any events or circumstances that could reasonably be
expected to form the basis of an order for clean-up or remediation, or
an action, suit or proceeding by any private party or governmental body
or agency, against or affecting any of the Company, the Guarantor or
any of their subsidiaries relating to Hazardous Materials or any
Environmental Laws. In the ordinary course of its business, the
Guarantor conducts a periodic review of the effect of Environmental
Laws on the business, operations and properties of the Guarantor and
its subsidiaries. On the basis of such review, the Guarantor has
reasonably concluded that, with respect to those Environmental Laws in
effect as of the date hereof or as to which a future effective date has
been established and publicly announced, the cost of complying
therewith or any liabilities thereunder which may be incurred by the
Guarantor or any of its subsidiaries (including, without limitation,
any liabilities to third parties), except as
disclosed in the Offering Circular, would not, individually or in the
aggregate, have a Material Adverse Effect;
(cc) The Company, the Guarantor and each of their
subsidiaries have filed all necessary federal, state and foreign income
and franchise tax returns, and have paid all taxes shown as due
thereon; and there is no tax deficiency that has been asserted against
the Company, the Guarantor or any of their subsidiaries;
(dd) No strike, labor problem, dispute, slowdown, work
stoppage or disturbance with the employees of the Guarantor or any of
its subsidiaries exists or, to the knowledge of the Company or the
Guarantor, is threatened.
(ee) The Guarantor and each of its subsidiaries, including
the Company, maintains insurance covering its properties, operations,
personnel and businesses, insuring against such losses and risks as are
consistent with industry practice to protect the Guarantor and its
subsidiaries and their respective businesses; and neither the Guarantor
nor any of its subsidiaries is currently negotiating the renewal of any
insurance coverages which contemplate terms that are materially
different from those insurance coverages presently in force, including
existing exclusions from such insurance coverages.
2. Subject to the terms and conditions herein set forth, the
Company and the Guarantor agrees to issue and the Company agrees to sell to each
of the Purchasers, and each of the Purchasers agrees, severally and not jointly,
to purchase from the Company, at a purchase price of 99.033% of the principal
amount thereof, plus accrued interest, if any, from November 6, 2001 to the Time
of Delivery hereunder, the principal amount of Securities set forth opposite the
name of such Purchaser in Schedule I hereto.
3. Upon the authorization by you of the release of the
Securities, the several Purchasers propose to offer the Securities for sale upon
the terms and conditions set forth in this Agreement and the Offering Circular
and each Purchaser hereby represents and warrants to, and agrees with the
Company that:
(a) It will offer and sell the Securities only to: (i)
persons who it reasonably believes are "qualified institutional buyers"
("QIBs") within the meaning of Rule 144A under the Act in transactions
meeting the requirements of Rule 144A, or (ii) upon the terms and
conditions set forth in Annex I to this Agreement;
(b) It is an Institutional Accredited Investor within the
meaning of Rule 501 under the Act; and
(c) It will not offer or sell the Securities by any form
of general solicitation or general advertising, including but not
limited to the methods described in Rule 502(c) under the Act.
4. (a) The Securities to be purchased by each Purchaser hereunder
will be represented by one or more definitive global Securities in book-entry
form which will be deposited by or on behalf of the Company with The Depository
Trust Company ("DTC") or its designated custodian. The Company will deliver the
Securities to Xxxxxxx, Xxxxx & Co., for the account of each Purchaser, against
payment by or on behalf of such Purchaser of the purchase price therefor by wire
transfer to the Company in Federal (same day) funds, by causing DTC to credit
the Securities to the account of
Xxxxxxx, Sachs & Co. at DTC. The Company will cause the certificates
representing the Securities to be made available to Xxxxxxx, Xxxxx & Co. for
checking at least twenty-four hours prior to the Time of Delivery at the office
of DTC or its designated custodian (the "Designated Office"). The time and date
of such delivery and payment shall be 9:30 a.m., New York City time, on November
6, 2001 or such other time and date as Xxxxxxx, Sachs & Co. and the Company may
agree upon in writing. Such time and date are herein called the "Time of
Delivery".
(b) The documents to be delivered at the Time of Delivery
by or on behalf of the parties hereto pursuant to Section 7 hereof, including
the cross-receipt for the Securities and any additional documents requested by
the Purchasers pursuant to Section 7(g) hereof, will be delivered at such time
and date at the offices of King & Spalding, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx
Xxxx, XX 00000 (the "Closing Location"), and the Securities will be delivered at
the Designated Office, all at the Time of Delivery. A meeting will be held at
the Closing Location at 2:00 p.m., New York City time, on the New York Business
Day next preceding the Time of Delivery, at which meeting the final drafts of
the documents to be delivered pursuant to the preceding sentence will be
available for review by the parties hereto. For the purposes of this Section 4,
"New York Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to close.
5. Each of the Company and the Guarantor, jointly and severally,
agrees with each of the Purchasers:
(a) To prepare the Offering Circular in a form approved
by you; to make no amendment or any supplement to the Offering Circular
which shall be disapproved by you promptly after reasonable notice
thereof; and to furnish you with copies thereof;
(b) Promptly from time to time to take such action as you
may reasonably request to qualify the Securities for offering and sale
under the securities laws of such jurisdictions as you may request and
to comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Securities, provided that in
connection therewith neither the Guarantor nor the Company shall be
required to qualify as a foreign corporation, to file a general consent
to service of process in any jurisdiction or to take any action that
would subject it to taxation in any jurisdiction solely by reason of
such action;
(c) To furnish the Purchasers with copies of the Offering
Circular and each amendment or supplement thereto signed by an
authorized officer of the Company and the Guarantor with the
independent accountants' report(s) in the Offering Circular, and any
amendment or supplement containing amendments to the financial
statements covered by such report(s), signed by the accountants, and
additional written and electronic copies thereof in such quantities as
you may from time to time reasonably request, and if, at any time prior
to the expiration of nine months after the date of the Offering
Circular, any event shall have occurred as a result of which the
Offering Circular as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Offering Circular is
delivered, not misleading, or, if for any other reason it shall be
necessary or desirable during such same period to amend or supplement
the Offering Circular or to file under the Exchange Act any document
incorporated by reference into the Offering
Circular, to notify you and upon your request to file such document and
prepare and furnish without charge to each Purchaser and to any dealer
in securities as many written and electronic copies as you may from
time to time reasonably request of an amended Offering Circular or a
supplement to the Offering Circular which will correct such statement
or omission or effect such compliance;
(d) During the period beginning from the date hereof and
continuing until the date six months after the Time of Delivery, not to
offer, sell, contract to sell or otherwise dispose of, except as
provided hereunder any securities of the Company or the Guarantor that
are substantially similar to the Securities;
(e) Not to be or become, at any time prior to the
expiration of three years after the Time of Delivery, an open-end
investment company, unit investment trust, closed-end investment
company or face-amount certificate company that is or is required to be
registered under Section 8 of the Investment Company Act;
(f) Until the Exchange Offer has been completed, at any
time when the Guarantor is not subject to Section 13 or 15(d) of the
Exchange Act, for the benefit of holders from time to time of
Securities, to furnish at its expense, upon request, to holders of
Securities and prospective purchasers of securities information (the
"Additional Issuer Information") satisfying the requirements of
subsection (d)(4)(i) of Rule 144A under the Act;
(g) During a period of five years from the date of the
Offering Circular, to furnish to you copies of all reports or other
communications (financial or other) furnished to the stockholders of
the Guarantor, and to deliver to you (i) as soon as they are available,
copies of any reports and financial statements furnished to or filed
with the Commission or any securities exchange on which the Securities
or any class of securities of the Company or the Guarantor are listed;
and (ii) such additional information concerning the business and
financial condition of the Company or the Guarantor as you may from
time to time reasonably request (such financial statements to be on a
consolidated basis to the extent the accounts of the Company or the
Guarantor and its subsidiaries are consolidated in reports furnished to
its stockholders, generally or to the Commission);
(h) During the period of two years after the Time of
Delivery, the Company and the Guarantor will not, and will not permit
any of their respective "affiliates" (as defined in Rule 144 under the
Act) to, resell any of the Securities which constitute "restricted
securities" under Rule 144 that have been reacquired by any of them;
and
(i) To use the net proceeds received by the Company from
the sale of the Securities pursuant to this Agreement in the manner
specified in the Offering Circular under the caption "Use of Proceeds".
6. Each of the Company and the Guarantor, jointly and severally,
covenants and agrees with the several Purchasers that the Company and the
Guarantor will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of counsel and accountants of the Company and the
Guarantor in connection with the issue of the Securities and all other expenses
in connection with the preparation, printing and filing of the Preliminary
Offering Circular and the Offering Circular and any amendments and supplements
thereto and the mailing and delivering of copies thereof to the
Purchasers and dealers; (ii) the cost of printing or producing any Agreement
among Purchasers, this Agreement, the Indenture, the Registration Rights
Agreement, the Blue Sky Memorandum, if any, closing documents (including any
compilations thereof) and any other documents in connection with the offering,
purchase, sale and delivery of the Securities; (iii) all expenses in connection
with the qualification of the Securities for offering and sale under state
securities laws as provided in Section 5(b) hereof, including the fees and
disbursements of counsel for the Purchasers in connection with such
qualification and in connection with the Blue Sky Memorandum; (iv) any fees
charged by securities rating services for rating the Securities; (v) the cost of
preparing the Securities and the Exchange Securities; (vi) the fees and expenses
of the Trustee and any agent of the Trustee and the fees and disbursements of
counsel for the Trustee in connection with the Indenture, the Securities and the
Exchange Securities; and (vii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. It is understood, however, that, except as
provided in this Section, and Sections 8 and 11 hereof, the Purchasers will pay
all of their own costs and expenses, including the fees of their counsel,
transfer taxes on resale of any of the Securities by them, and any advertising
expenses connected with any offers they may make.
7. The obligations of the Purchasers hereunder shall be subject,
in their discretion, to the condition that all representations and warranties
and other statements of the Company and the Guarantor herein are, at and as of
the Time of Delivery, true and correct, the condition that each of the Company
and the Guarantor shall have performed all of their respective obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) King & Spalding, counsel for the Purchasers, shall
have furnished to you such opinion or opinions, dated the Time of
Delivery, with respect to certain of the matters covered in paragraphs
(i), (vi), (vii), (viii), (ix), (xii), (xiii), (xvii), (xviii) and
(xxi) of subsection (b) below as well as such other related matters as
you may reasonably request, and such counsel shall have received such
papers and information as they may reasonably request to enable them to
pass upon such matters;
(b) Xxxxx X. Xxxxx, Vice President, Secretary and
Assistant General Counsel of the Guarantor, shall have furnished to you
a written opinion, dated the Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) The Guarantor has been duly incorporated and
is validly existing as a corporation in good standing under
the laws of the State of Delaware, with power and authority to
own its properties and conduct its business as described in
the Offering Circular;
(ii) The Guarantor has an authorized
capitalization as set forth in the Offering Circular, and all
of the outstanding shares of capital stock of the Guarantor
issued since July 24, 1998, have been duly and validly
authorized and issued and are fully paid and non-assessable;
(iii) The Guarantor and each of its subsidiaries
has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases
properties or conducts any business
so as to require such qualification, except where the failure
to be so qualified or in good standing would not, individually
or in the aggregate, have a Material Adverse Effect;
(iv) Each "significant subsidiary" of the
Guarantor (as defined in Rule 1-02(w) of Regulation S-X) that
is incorporated under the laws of any State in the United
States is validly existing as a corporation under the laws of
its jurisdiction of incorporation; and, except as disclosed in
the Offering Circular, all of the issued shares of capital
stock of each such subsidiary of the Guarantor have been duly
and validly authorized and issued, are fully paid and
non-assessable, and are owned directly or indirectly by the
Guarantor, free and clear of all liens, encumbrances, equities
or claims, other than the rights relating to Xxxxxxx Newsprint
Company held by the minority shareholder of that subsidiary;
(v) To the best of such counsel's knowledge and
other than as set forth in the Offering Circular, there are no
legal or governmental proceedings pending to which the
Guarantor or any of its subsidiaries is a party or of which
any property of the Guarantor or any of its subsidiaries is
the subject which, if determined adversely to the Guarantor or
any of its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect and, to the best of
such counsel's knowledge, no such proceedings are threatened
or contemplated by governmental authorities or threatened by
others;
(vi) This Agreement has been duly authorized,
executed and delivered by the Guarantor;
(vii) The Registration Rights Agreement has been
duly authorized, executed and delivered by the Guarantor and
has been delivered by the Company and constitutes a valid and
legally binding instrument of the Company and the Guarantor,
enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting
creditors' rights, to general equity principles and to the
exercise of the discretionary authority of any court before
which a proceeding may be brought, and except as rights to
indemnity and contribution may be limited by applicable law;
(viii) The Securities have been duly authenticated
under the Indenture, and the Securities constitute valid and
legally binding obligations of the Company, enforceable in
accordance with their terms and entitled to the benefits
provided by the Indenture, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors'
rights, to general equity principles and to the exercise of
the discretionary authority of any court before which a
proceeding may be brought;
(ix) The Guarantees have been duly authorized,
executed and delivered in accordance with the terms of the
Indenture and constitute valid and legally binding obligations
of the Guarantor, enforceable in accordance with their terms
and entitled to the benefits of the Indenture, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting
creditors' rights, to general equity principles and to the
exercise of the discretionary authority of any court before
which a proceeding may be brought;
(x) When issued and delivered in the manner
provided for in the Indenture in exchange for the Securities,
the Exchange Securities will constitute valid and legally
binding obligations of the Company, enforceable in accordance
with their terms and entitled to the benefits provided by the
Indenture, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights, to
general equity principles and to the exercise of the
discretionary authority of any court before which a proceeding
may be brought;
(xi) The guarantees of the Exchange Securities
have been duly authorized by the Guarantor and, when executed
and delivered in accordance with the terms of the Indenture
and when the Exchange Securities have been duly executed,
issued and authenticated in accordance with the terms of the
Exchange Offer and the Indenture, will constitute valid and
legally binding obligations of the Guarantor, enforceable in
accordance with their terms and entitled to the benefits of
the Indenture, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights, to
general equity principles and to the exercise of the
discretionary authority of any court before which a proceeding
may be brought;
(xii) The Indenture has been duly authorized,
executed and delivered by the Guarantor and has been delivered
by the Company and, assuming due authorization, execution and
delivery by the Trustee, constitutes a valid and legally
binding instrument of the Company and the Guarantor,
enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting
creditors' rights, to general equity principles and to the
exercise of the discretionary authority of any court before
which a proceeding may be brought;
(xiii) The Securities, the Indenture and the
Registration Rights Agreement conform in all material respects
with the descriptions thereof in the Offering Circular;
(xiv) The issue and sale of the Securities and the
compliance by the Company and the Guarantor with all of the
provisions of the Securities, the Indenture, the Registration
Rights Agreement and this Agreement and the consummation of
the transactions herein and therein contemplated will not (i)
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any (A)
indenture, mortgage, deed of trust, loan agreement or (B)
other agreement or instrument, in each case, known to such
counsel, to which the Company, the Guarantor or any of their
subsidiaries is a party or by which the Company, the Guarantor
or any of their subsidiaries is bound or to which any of the
property or assets of the Guarantor or any of their
subsidiaries is subject, except, in the case of clause (i)(B),
for any such conflict, breach, violation or default that would
not, individually or in the aggregate, have a Material Adverse
Effect, or (ii) result in any violation of (A) the provisions
of the Certificate of Incorporation or By-laws (or similar
organizational documents) of the Company, the Guarantor or any
of their subsidiaries or (B) any statute, rule or regulation
(other than state securities or Blue Sky laws, as to which no
opinion need be expressed), or any order known to such counsel
(after due inquiry), of any court or governmental agency or
body having jurisdiction over the Company, the Guarantor or
any of their subsidiaries or any of their properties,
except, in the case of clause (ii)(B), for any such violation
that would not, individually or in the aggregate, have a
Material Adverse Effect;
(xv) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale
of the Securities or the consummation by the Company and the
Guarantor of the transactions contemplated by this Agreement,
the Indenture or the Registration Rights Agreement, except
such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution
of the Securities by the Purchasers;
(xvi) Neither the Company, the Guarantor or any of
their subsidiaries is in violation of its Certificate of
Incorporation or By-laws (or similar organizational
documents), or in default in the performance or observance of
any obligation, covenant or condition contained in any
indenture, mortgage, deed of trust or loan agreement to which
it is a party or by which it or any of its properties may be
bound, except for such defaults that do not, individually or
in the aggregate, have a Material Adverse Effect;
(xvii) The statements set forth in the Offering
Circular under the caption "Description of Notes", insofar as
they purport to constitute a summary of the terms of the
Securities and the Exchange Securities, under the caption
"United States Federal and Canadian Income Tax Considerations
- United States Federal Income Tax Consequences" and under the
caption "Underwriting", insofar as they purport to describe
the provisions of the laws and documents referred to therein,
fairly summarize in all material respects the matters referred
to therein;
(xviii) Neither the Company, the Guarantor or any of
their subsidiaries is an "investment company", as such term is
defined in the Investment Company Act;
(xix) The Exchange Act Reports (other than the
financial statements and related schedules and other financial
information therein, as to which such counsel need express no
opinion), when they were filed with the Commission, complied
as to form in all material respects with the requirements of
the Exchange Act, and the rules and regulations of the
Commission thereunder; and such counsel has no reason to
believe that any of such documents, when they were so filed,
contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made when such documents were so filed, not
misleading;
(xx) No registration of the Securities under the
Act, and no qualification of an indenture under the United
States Trust Indenture Act of 1939 with respect thereto, is
required for the offer, sale and initial resale of the
Securities by the Purchasers in the manner contemplated by
this Agreement; and
(xxi) Such counsel has no reason to believe that
the Offering Circular and any further amendments or
supplements thereto made by the Company prior to the Time of
Delivery (other than the financial statements and related
schedules and other financial information therein, as to which
such counsel need express no opinion) contained as of
its date or contains as of the Time of Delivery an untrue
statement of a material fact or omitted or omits, as the case
may be, to state a material fact necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading.
(c) Xxx Xxxxxx X'Xxxxxx Xxxxxxxx, Canadian counsel for
the Company, shall have furnished to you a written opinion, dated the
Time of Delivery, in form and substance satisfactory to you, to the
effect that:
(i) The Company has been duly incorporated and
is validly existing as an unlimited liability company under
the laws of its incorporation and has not been dissolved, with
power and authority to conduct its business as described in
the Offering Circular;
(ii) Each of Bowater Maritimes Inc., Bowater
Canadian Holdings Incorporated, Bowater Canada Inc., Bowater
Canadian Limited, Bowater Mersey Paper Company Limited,
Bowater Pulp and Paper Canada Inc. and Bowater Canadian Forest
Products Inc. has been incorporated and is validly existing
under the laws of its jurisdiction of incorporation and has
not been dissolved;
(iii) This Agreement, the Registration Rights
Agreement and the Indenture have been duly authorized,
executed and delivered by the Company;
(iv) The Securities have been duly authorized,
executed, issued and delivered by the Company;
(v) The Exchange Securities have been duly
authorized for issuance by the Company;
(vi) The issue and sale of the Securities and the
compliance by the Company with all of the provisions of the
Securities, the Indenture, the Registration Rights Agreement
and this Agreement and the consummation of the transactions
herein and therein contemplated will not (i) conflict with or
result in a breach or violation of any statute or any order,
rule or regulation of any federal or provincial court or
governmental agency or body in Nova Scotia having jurisdiction
over the Company or any of its subsidiaries or any of its
properties or (ii) result in any violation of the provisions
of the Memorandum of Association and Articles of Association
of the Company;
(vii) No consent, approval, authorization, order,
registration or qualification of or with any such federal or
provincial court or governmental agency or body having
jurisdiction in the province of Nova Scotia is required for
the issue and sale of the Securities or the consummation by
the Company of the transactions contemplated by this
Agreement, the Indenture or the Registration Rights Agreement;
(viii) The choice of New York law as the governing
law of the Notes, the Indenture, the Registration Rights
Agreement and this Agreement will be upheld as a valid choice
of law by the courts of the Province of Nova Scotia (a "Nova
Scotia Court"), provided that such choice of law is bona fide
(in the sense that it was not made solely with a view to
avoiding the consequences of the law of any other
jurisdiction) and provided that such choice of law is not
contrary to public policy, as that term is understood under
the laws of the Province of Nova Scotia and the federal laws
of Canada applicable therein ("Nova Scotia Laws");
(ix) The submission by the Company to the
non-exclusive jurisdiction of the Federal and state courts in
the state of New York is a valid submission to the
jurisdiction of such court and would be upheld by a Nova
Scotia court;
(x) In any proceeding undertaken in a Nova
Scotia Court to enforce and interpret the Notes, the
Indenture, the Registration Rights Agreement and this
Agreement, a Nova Scotia Court would, subject to the
provisions of Section 7(c)(viii), to the extent pleaded and
proved, recognize the choice of law and apply the laws of the
State of New York upon appropriate evidence as to such laws
being adduced, except that: (i) a court of the Province of
Nova Scotia will only apply Nova Scotia procedural laws; (ii)
a court of the Province of Nova Scotia may not enforce an
obligation enforceable under the laws of the State of New York
where performance of the obligations would be illegal by the
law of the place of performance; (iii) a court of the Province
of Nova Scotia may apply laws of mandatory application which
could impair the enforceability of agreements governed by
foreign laws; and (iv) a court of the Province of Nova Scotia
may, however, reserve to itself an inherent power to decline
to hear such an action if it is contrary to public policy, as
such term is understood under the laws of the Province of Nova
Scotia, for it to do so, or if it is not the proper forum to
hear such action, or if concurrent proceedings are being
brought elsewhere;
(xi) The laws of the Province of Nova Scotia
permit an action to be brought in a court of competent
jurisdiction in Nova Scotia to enforce any final, conclusive
and subsisting judgment in personam of the courts of the State
of New York, which is not impeachable as void or voidable
under the internal laws of New York, enforcing the rights of
the parties to the Notes, the Indenture, the Registration
Rights Agreement and this Agreement as against the Company, if
the judgment was for a sum certain in money and if: (i) the
courts of the State of New York had jurisdiction over the
judgment debtor, as recognized by Nova Scotia Courts and the
courts of the State of New York; (ii) the judgment was not
obtained by fraud or in a manner contrary to natural justice
and the enforcement thereof would not be inconsistent with
public policy, as that term is understood under the laws of
the Province of Nova Scotia; (iii) the enforcement of the
judgment would be consistent with Nova Scotia Laws of
mandatory application; (iv) the enforcement of such judgment
does not constitute, directly or indirectly, the enforcement
of foreign revenue, expropriatory or penal laws; (v) no new
admissible evidence, right or defense relevant to the action
accrues or is discovered prior to the rendering of judgments
by a Nova Scotia Court; and (vi) there has been compliance
with the limitations (if any) of Nova Scotia Laws requiring
that an action be commenced within a specified period of the
date of such New York judgment;
(xii) The attornment to the jurisdiction of the
courts of the State of New York in Section 16 of this
Agreement would be recognized by the Courts of the Province of
Nova Scotia as conferring jurisdiction on the courts of the
State of New York;
(xiii) The courts of the Province of Nova Scotia
will consider that service of process in the courts of the
State of New York may be effected in the manner set forth in
Section 16 of this Agreement;
(xiv) To ensure the legality, validity,
enforcement or admissibility into evidence in a legal or
administrative proceeding in the Province of Nova Scotia of
the Notes, the Indenture, the Registration Rights Agreement
and this Agreement, it is not necessary that the Notes, the
Indenture, the Registration Rights Agreement and this
Agreement be, as of the Time of Delivery, filed or recorded
with any court or other authority in Nova Scotia or that any
registration tax, stamp duty or similar tax be paid in Nova
Scotia on or in respect of any of the Notes, the Indenture,
the Registration Rights Agreement and this Agreement other
than court costs, including (without limitation) filing fees
and deposits to guarantee judgment required by a Nova Scotia
court of law;
(xv) The Company can xxx and be sued in its own
name under the laws of Nova Scotia; in any proceeding
undertaken in a Nova Scotia Court to enforce and interpret the
Notes, the Indenture, the Registration Rights Agreement and
this Agreement, a Nova Scotia Court would, subject to the
provisions of the Judicature Act (Nova Scotia) and the
discretion of a Nova Scotia Court to determine the method by
which issues coming before it are tried, uphold the Company's
waiver to a right to a trial by jury.
(d) Ernst & Young, LLP, Canadian tax advisor for the
Company, shall have furnished to you a written opinion, dated the Time
of Delivery, in form and substance satisfactory to you, to the effect
that the statements set forth in the Offering Circular under the
caption "United States Federal and Canadian Income Tax Considerations -
Canadian Federal Income Tax Considerations" insofar as they purport to
describe the provisions of the laws and documents referred to therein,
fairly summarize in all material respects the matters referred to
therein;
(e) On the date of the Offering Circular prior to the
execution of this Agreement and, with respect to KPMG LLP, also at the
Time of Delivery, KPMG LLP and Xxxxxxx Xxxxxx Xxxxx Xxxxxxxx General
Partnership shall have furnished to you a letter or letters, dated the
respective dates of delivery thereof, in form and substance
satisfactory to you, to the effect set forth in Annex II hereto;
(f) (i) Neither the Company, the Guarantor or any of
their subsidiaries shall have sustained since the date of the latest
audited financial statements included in the Offering Circular any loss
or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, in each case
otherwise than as set forth or contemplated in the Offering Circular,
and (ii) since the respective dates as of which information is given in
the Offering Circular there shall not have been any change in the
capital stock or long-term debt of the Company, the Guarantor or any of
their subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, or stockholders' equity or results of operations of
the Company, the Guarantor and their subsidiaries, otherwise than as
set forth or contemplated in the Offering Circular, the effect of
which, in any such case described in clause (i) or (ii), is in the
judgment of the Representatives so material and adverse as to make it
impracticable or inadvisable to proceed
with the public offering or the delivery of the Securities on the terms
and in the manner contemplated in this Agreement and in the Offering
Circular;
(g) On or after the date hereof (i) no downgrading shall
have occurred in the rating accorded the Guarantor's or the Company's
debt securities by any "nationally recognized statistical rating
organization", as that term is defined by the Commission for purposes
of Rule 436(g)(2) under the Act, and (ii) no such organization shall
have publicly announced that it has under surveillance or review, with
possible negative implications, its rating of any of the Guarantor's or
the Company's debt securities;
(h) On or after the date hereof there shall not have
occurred any of the following: (i) a suspension or material limitation
in trading in securities generally on the New York Stock Exchange; (ii)
a suspension or material limitation in trading in the Guarantor's
securities on the New York Stock Exchange or the London Stock Exchange;
(iii) a general moratorium on commercial banking activities declared by
either Federal or New York State authorities or a material disruption
in commercial banking or securities settlement or clearance services in
the United States; (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of
a national emergency or war or (v) the occurrence of any other calamity
or crisis or any change in national or international financial,
political or economic conditions in the United States or elsewhere, if
the effect of any such event specified in clause (iv) or (v) in the
judgment of the Representatives makes it impracticable or inadvisable
to proceed with the offering or the delivery of the Securities on the
terms and in the manner contemplated in the Offering Circular;
(i) The Company and the Guarantor shall have furnished or
caused to be furnished to you at the Time of Delivery certificates of
officers of each of the Company and the Guarantor satisfactory to you
as to the accuracy of the representations and warranties of each of the
Company and the Guarantor herein at and as of such Time of Delivery, as
to the performance by each of the Company and the Guarantor of all of
their respective obligations hereunder to be performed at or prior to
such Time of Delivery, as to the matters set forth in subsections (f)
and (g) of this Section and as to such other matters as you may
reasonably request;
(j) The Company and the Guarantor shall have furnished or
caused to be furnished to you at the Time of Delivery the Registration
Rights Agreement executed by the Company and the Guarantor and such
agreement shall be in full force and effect at all time from and after
the Time of Delivery.
All such documents, opinions, certificates, letters, schedules or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Purchasers and counsel of the Purchasers. The Company and the Guarantor shall
furnish to the Purchasers such conformed copies of such documents, opinions,
certificates, letters, schedules and instruments in such quantities as the
Purchasers shall reasonably request.
8. (a) The Company and the Guarantor, jointly and severally, will
indemnify and hold harmless each Purchaser against any losses, claims, damages
or liabilities, joint or several, to which such Purchaser may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Offering Circular
or the Offering Circular, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact necessary to make the statements therein not misleading, and will
reimburse each Purchaser for any legal or other expenses reasonably incurred by
such Purchaser in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that neither the Company
nor the Guarantor shall be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Offering Circular or the Offering Circular or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by any Purchaser through Xxxxxxx, Sachs & Co. expressly
for use therein.
(b) Each Purchaser will indemnify and hold harmless the
Company and the Guarantor against any losses, claims, damages or liabilities to
which the Company or the Guarantor may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Offering
Circular or the Offering Circular, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Preliminary Offering Circular or the Offering Circular or any such amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by such Purchaser through Xxxxxxx, Xxxxx & Co. expressly for use
therein; and will reimburse the Company and the Guarantor for any legal or other
expenses reasonably incurred by the Company and the Guarantor in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection, unless it is found
that the indemnifying party has suffered actual and material loss as a result of
the failure to provide notice. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that the indemnifying party shall
not, in connection with any one such action or separate but substantially
similar actions arising out of the same general allegations, be liable for the
fees and expenses of more than one separate firm of attorneys at any time for
all indemnified parties, except to the extent that local counsel, in addition to
its regular counsel, is required in order to effectively defend against such
action. No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to, or an
admission of, fault, culpability or a failure to act, by or on behalf of any
indemnified party.
(d) If the indemnification provided for in this Section 8
is unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Guarantor on the one hand and
the Purchasers on the other from the offering of the Securities. If, however,
the allocation provided by the immediately preceding sentence is not permitted
by applicable law or if the indemnified party failed to give the notice required
under subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Guarantor on the one hand and the Purchasers on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Company and the Guarantor on the one hand and the Purchasers on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company and the Guarantor
bear to the total underwriting discounts and commissions received by the
Purchasers, in each case as set forth in the Offering Circular. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
and the Guarantor on the one hand or the Purchasers on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the Guarantor and
the Purchasers agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Purchasers were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), no Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to
investors were offered to investors exceeds the amount of any damages which such
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. The Purchasers' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company and the Guarantor
under this Section 8 shall be in addition to any liability which the Company and
the Guarantor may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Purchaser within the
meaning of the Act; and the obligations of the Purchasers under this Section 8
shall be in addition to any liability which the respective Purchasers may
otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and the
Guarantor and to each person, if any, who controls the Company and the Guarantor
within the meaning of the Act.
9. (a) If any Purchaser shall default in its obligation to
purchase the Securities which it has agreed to purchase hereunder, you may in
your discretion arrange for you or another party or other parties to purchase
such Securities on the terms contained herein. If within thirty-six hours after
such default by any Purchaser you do not arrange for the purchase of such
Securities, then the Company shall be entitled to a further period of thirty-six
hours within which to procure another party or other parties satisfactory to you
to purchase such Securities on such terms. In the event that, within the
respective prescribed periods, you notify the Company that you have so arranged
for the purchase of such Securities, or the Company notifies you that it has so
arranged for the purchase of such Securities, you or the Company shall have the
right to postpone the Time of Delivery for a period of not more than seven days,
in order to effect whatever changes may thereby be made necessary in the
Offering Circular, or in any other documents or arrangements, and the Company
agrees to prepare promptly any amendments to the Offering Circular which in your
opinion may thereby be made necessary. The term "Purchaser" as used in this
Agreement shall include any person substituted under this Section with like
effect as if such person had originally been a party to this Agreement with
respect to such Securities.
(b) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Purchaser or Purchasers by you and
the Company as provided in subsection (a) above, the aggregate principal amount
of such Securities which remains unpurchased does not exceed one-eleventh of the
aggregate principal amount of all the Securities, then the Company shall have
the right to require each non-defaulting Purchaser to purchase the principal
amount of Securities which such Purchaser agreed to purchase hereunder and, in
addition, to require each non-defaulting Purchaser to purchase its pro rata
share (based on the principal amount of Securities which such Purchaser agreed
to purchase hereunder) of the Securities of such defaulting Purchaser or
Purchasers for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Purchaser from liability for its default.
(c) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Purchaser or Purchasers by you and
the Company as provided in subsection (a) above, the aggregate principal amount
of Securities which remains unpurchased exceeds one-eleventh of the aggregate
principal amount of all the Securities, or if the Company shall not exercise the
right described in subsection (b) above to require non-defaulting Purchasers to
purchase Securities of a defaulting Purchaser or Purchasers, then this Agreement
shall thereupon terminate, without liability on the part of any non-defaulting
Purchaser or the Company or the Guarantor, except for the expenses to be borne
by the Company, the Guarantor and the Purchasers as provided in Section 6 hereof
and the indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Purchaser from liability for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company, the Guarantor and the several
Purchasers, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Purchaser or any controlling person of any
Purchaser, or the Company or the Guarantor, or any officer or director or
controlling person of the Company or the Guarantor, and shall survive delivery
of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, neither the Company nor the Guarantor shall be under any liability to
any Purchaser except as provided in Sections 6 and 8 hereof; but, if for any
other reason, the Securities are not delivered by or on behalf of the Company as
provided herein, the Company and the Guarantor, jointly and severally, will
reimburse the Purchasers through you for all out-of-pocket expenses approved in
writing by you, including fees and disbursements of counsel, reasonably incurred
by the Purchasers in making preparations for the purchase, sale and delivery of
the Securities, but neither the Company nor the Guarantor shall then be under
any further liability to any Purchaser except as provided in Sections 6 and 8
hereof.
12. In all dealings hereunder, you shall act on behalf of each of
the Purchasers, and the parties hereto shall be entitled to act and rely upon
any statement, request, notice or agreement on behalf of any Purchaser made or
given by you jointly or by Xxxxxxx, Sachs & Co. on behalf of you as the
Representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchasers shall be delivered or sent by mail, telex or
facsimile transmission to you as the Representatives in care of Xxxxxxx, Xxxxx &
Co., 00 Xxx Xxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Registration
Department; and if to the Company or the Guarantor shall be delivered or sent by
mail, telex or facsimile transmission to Bowater Incorporated, 00 Xxxx
Xxxxxxxxxx Xxx, X.X. Xxx 0000, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention:
Chief Financial Officer; provided, however, that any notice to a Purchaser
pursuant to Section 8(c) hereof shall be delivered or sent by mail, telex or
facsimile transmission to such Purchaser at its address set forth in its
Purchasers' Questionnaire, or telex constituting such Questionnaire, which
address will be supplied to the Company by you upon request. Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Purchasers, the Company and the Guarantor and, to the extent
provided in Sections 8 and 10 hereof, the officers and directors of the Company
and the Guarantor and each person who controls the Company, the Guarantor or any
Purchaser, and their respective heirs, executors, administrators, successors and
assigns, and no other person shall acquire or have any right under or by virtue
of this Agreement. No purchaser of any of the Securities from any Purchaser
shall be deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of this Agreement.
15. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
16. The Company hereby irrevocably submits to the non-exclusive
jurisdiction of the Federal and state courts in the State of New York in any
suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. The Company irrevocably appoints Corporation
Services Company as its authorized agent in the State of New York upon which
process may be served in any such suit or proceeding, and agrees that service of
process upon such agent, and written notice of said service to the Company by
the person serving the same to the address provided in Section 12, shall be
deemed in every respect effective service of process upon the Company in any
such suit or proceeding. The Company further agrees to take any and all action
as may be necessary to maintain such designation and appointment of such agent
in full force and effect for a
period of ten years from the date of this Agreement. If for any reason
Corporation Services Company shall cease to be available to act as such
authorized agent for the Company, the Company agrees to designate a new agent in
the State of New York on the terms and for the purpose of this Section 16
reasonably satisfactory to Xxxxxxx, Xxxxx & Co. and X.X. Xxxxxx Securities Inc.
The Company irrevocably and unconditionally waives, to the fullest extent
permitted by law, any objection that it may have to laying of venue in respect
of any action, suit or proceeding arising out of or in connection with this
Agreement or the transactions contemplated hereby to which it is a party brought
in any Federal or state court located in the State of New York and hereby agrees
not to plead or claim in any such court that any such action, suit or proceeding
has been brought in an inconvenient forum. The Company also waives, to the
fullest extent permitted by law, all right to trial by jury in any claim or
counterclaim (whether based upon contract, tort or otherwise) in any way arising
out of or relating to this Agreement.
17. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such respective counterparts shall together constitute
one and the same instrument.
18. The Company and the Guarantor are authorized, subject to
applicable law, to disclose any and all aspects of this potential transaction
that are necessary to support any U.S. federal income tax benefits expected to
be claimed with respect to such transaction, without the Purchasers imposing any
limitation of any kind.
[The remainder of this page intentionally left blank]
If the foregoing is in accordance with your understanding, please sign
and return to us five counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Purchasers, this letter and such acceptance hereof
shall constitute a binding agreement among each of the Purchasers, the Company
and the Guarantor. It is understood that your acceptance of this letter on
behalf of each of the Purchasers is pursuant to the authority set forth in a
form of Agreement among Purchasers, the form of which shall be submitted to the
Company for examination upon request, but without warranty on your part as to
the authority of the signers thereof.
Very truly yours,
BOWATER CANADA FINANCE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President and Treasurer
BOWATER INCORPORATED
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President and Chief
Financial Officer
Accepted as of the date hereof:
XXXXXXX, XXXXX & CO.
BY: /s/ Xxxxxxx, Sachs & Co.
-----------------------------------
(Xxxxxxx, Xxxxx & Co.)
X.X. XXXXXX SECURITIES INC.
BY: /s/ X.X. Xxxxxx Securities Inc.
-------------------------------------
Name: X.X. Xxxxxx Securities Inc.
Title:
SCHEDULE I
PRINCIPAL AMOUNT
OF SECURITIES TO
PURCHASER BE PURCHASED
--------- ----------------
Xxxxxxx, Xxxxx & Co........................................$180,000,000
X.X. Xxxxxx Securities Inc..................................180,000,000
Banc of America Securities LLC...............................60,000,000
SunTrust Capital Markets, Inc................................60,000,000
BNY Capital Markets, Inc.....................................24,000,000
BMO Xxxxxxx Xxxxx Corp.......................................24,000,000
First Union Securities, Inc..................................24,000,000
Scotia Capital (USA) Inc.....................................24,000,000
TD Securities (USA) Inc......................................24,000,000
Total..................................----------------
$600,000,000
================
ANNEX I
(1) The Securities have not been and will not be registered under
the Act and may not be offered or sold within the United States or to, or for
the account or benefit of, U.S. persons except in accordance with Regulation S
under the Act or pursuant to an exemption from the registration requirements of
the Act. Each Purchaser represents that it has offered and sold the Securities,
and will offer and sell the Securities (i) as part of their distribution at any
time and (ii) otherwise until 40 days after the later of the commencement of the
offering and the Time of Delivery, only in accordance with Rule 903 of
Regulation S, Rule 144A or pursuant to Paragraph 2 of this Annex I under the
Act. Accordingly, each Purchaser agrees that neither it, its affiliates nor any
persons acting on its or their behalf has engaged or will engage in any directed
selling efforts with respect to the Securities, and it and they have complied
and will comply with the offering restrictions requirement of Regulation S. Each
Purchaser agrees that, at or prior to confirmation of sale of Securities (other
than a sale pursuant to Rule 144A) or pursuant to Paragraph 2 of this Annex I,
it will have sent to each distributor, dealer or person receiving a selling
concession, fee or other remuneration that purchases Securities from it during
the restricted period a confirmation or notice to substantially the following
effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933 (the "Securities Act") and may not be
offered and sold within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their distribution at any time
or (ii) otherwise until 40 days after the later of the commencement of
the offering and the closing date, except in either case in accordance
with Regulation S (or Rule 144A if available) under the Securities Act.
Terms used above have the meaning given to them by Regulation S."
Terms used in this paragraph have the meanings given to them by Regulation S.
Each Purchaser further agrees that it has not entered and will not
enter into any contractual arrangement with respect to the distribution or
delivery of the Securities, except with its affiliates or with the prior written
consent of the Company.
(2) Notwithstanding the foregoing, Securities in registered form
may be offered, sold and delivered by the Purchasers in the United States and to
U.S. persons pursuant to Section 3 of this Agreement without delivery of the
written statement required by paragraph (1) above.
(3) Each Purchaser further represents and agrees that (i) it has
not offered or sold and prior to the date six months after the date of issue of
the Securities will not offer or sell any Securities to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995, (b) it
has complied, and will comply, with all applicable provisions of the Financial
Services Act of 1986 of Great Britain with respect to anything done by it in
relation to the Securities in, from or otherwise involving the United Kingdom,
and (c) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issuance of
the Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Xxx 0000 (Investment Advertisements) (Exemptions) Order 1996
of Great Britain or is a person to whom the document may otherwise lawfully be
issued or passed on.
(4) Each Purchaser agrees that it will not offer, sell or deliver
any of the Securities in any jurisdiction outside the United States except under
circumstances that will result in compliance with the applicable laws thereof,
and that it will take at its own expense whatever action is required to permit
its purchase and resale of the Securities in such jurisdictions. Each Purchaser
understands that no action has been taken to permit a public offering in any
jurisdiction outside the United States where action would be required for such
purpose. Each Purchaser agrees not to cause any advertisement of the Securities
to be published in any newspaper or periodical or posted in any public place and
not to issue any circular relating to the Securities, except in any such case
with Xxxxxxx, Sachs & Co.'s express written consent and then only at its own
risk and expense.
ANNEX II
(a) Pursuant to Section 7(e) of the Purchase Agreement, KPMG LLP
shall furnish letters to the Purchasers to the effect that:
(i) They are independent certified public accountants
with respect to the Company and its subsidiaries within the meaning of
the Securities Exchange Act of 1934 (the "Exchange Act") and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the consolidated financial
statements and financial statement schedules audited by them and
included in the Offering Circular comply as to form in all material
respects with the applicable requirements of the Exchange Act and the
related published rules and regulations;
(iii) The unaudited selected financial information with
respect to the consolidated results of operations and financial
position of the Guarantor for the five most recent fiscal years
included in the Offering Circular agrees with the corresponding amounts
(after restatements where applicable) in the audited consolidated
financial statements for such five fiscal years;
(iv) On the basis of limited procedures not constituting
an audit in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements of the Guarantor and its subsidiaries,
inspection of the minute books of the Guarantor and its subsidiaries
since the date of the latest audited financial statements included in
the Offering Circular, inquiries of officials of the Guarantor and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) the unaudited consolidated statements of
income, consolidated balance sheets and consolidated
statements of cash flows included in the Offering Circular are
not in conformity with generally accepted accounting
principles applied on the basis substantially consistent with
the basis for the unaudited condensed consolidated statements
of income, consolidated balance sheets and consolidated
statements of cash flows included in the Offering Circular;
(B) any other unaudited income statement data
and balance sheet items included in the Offering Circular do
not agree with the corresponding items in the unaudited
consolidated financial statements from which such data and
items were derived, and any such unaudited data and items were
not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited
consolidated financial statements included in the Offering
Circular;
(C) the unaudited financial statements which
were not included in the Offering Circular but from which were
derived any unaudited condensed financial statements referred
to in clause (A) and any unaudited income statement data and
balance sheet items included in the Offering Circular and
referred to in clause (B) were not determined on a basis
substantially consistent with the basis for the audited
consolidated financial statements included in the Offering
Circular;
(D) the unaudited pro forma consolidated
condensed financial statements included in the Offering
Circular do not comply as to form in all material respects
with the applicable accounting requirements or the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(E) as of a specified date not more than five
days prior to the date of such letter, there have been any
changes in the consolidated capital stock (other than
issuances of capital stock upon exercise of options and stock
appreciation rights, upon earn-outs of performance shares and
upon conversions of convertible securities, in each case which
were outstanding on the date of the latest financial
statements included in the Offering Circular) or any increase
in the consolidated long-term debt of the Guarantor and its
subsidiaries, or any decreases in consolidated net current
assets or stockholders' equity or other items specified by the
Representatives, or any increases in any items specified by
the Representatives, in each case as compared with amounts
shown in the latest balance sheet included in the Offering
Circular except in each case for changes, increases or
decreases which the Offering Circular discloses have occurred
or may occur or which are described in such letter; and
(F) for the period from the date of the latest
financial statements included in the Offering Circular to the
specified date referred to in clause (E) there were any
decreases in consolidated net revenues or operating profit or
the total or per share amounts of consolidated net income or
other items specified by the Representatives, or any increases
in any items specified by the Representatives, in each case as
compared with the comparable period of the preceding year and
with any other period of corresponding length specified by the
Representatives, except in each case for decreases or
increases which the Offering Circular discloses have occurred
or may occur or which are described in such letter; and
(v) In addition to the examination referred to in their
report(s) included in the Offering Circular and the limited procedures,
inspection of minute books, inquiries and other procedures referred to
in paragraphs (iii) and (iv) above, they have carried out certain
specified procedures, not constituting an audit in accordance with
generally accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by the Representatives,
which are derived from the general accounting records of the Guarantor
and its subsidiaries, which appear in the Offering Circular, and have
compared certain of such amounts, percentages and financial information
with the accounting records of the Guarantor and its subsidiaries and
have found them to be in agreement.
(b) Pursuant to Section 7(e) of the Purchase Agreement, Xxxxxxx
Xxxxxx Xxxxx Xxxxxxxx General Partnership shall furnish letters to the
Purchasers to the effect that:
(i) They are independent public accountants with respect
to Alliance Forest Products Inc. and its subsidiaries within the
meaning of the Securities Exchange Act of 1934 (the "Exchange Act") and
the applicable published rules and regulations thereunder;
(ii) In their opinion, the consolidated financial
statements and financial statement schedules audited by them and
incorporated by reference in the Offering Circular comply
as to form in all material respects with the applicable requirements of
the Exchange Act and the related published rules and regulations; and
(iii) On the basis of limited procedures not constituting
an audit in accordance with generally accepted auditing standards in
Canada, consisting of a reading of the unaudited consolidated financial
statements, a reading of the latest available interim consolidated
financial statements of Alliance Forest Products Inc., inspection of
the minute books of Alliance Forest Products Inc. and its subsidiaries
since the date of the latest audited financial statements included in
the Offering Circular, inquiries of officials of Alliance Forest
Products Inc. and its subsidiaries responsible for financial and
accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused
them to believe that:
(A) the unaudited consolidated statements of
income, consolidated balance sheets and consolidated
statements of cash flows incorporated by reference in the
Offering Circular are not in conformity with generally
accepted accounting principles applied on the basis
substantially consistent with the basis for the unaudited
condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows
incorporated by reference in the Offering Circular.
(iv) In addition to the examination referred to in their
report(s) included in the Offering Circular and the limited procedures,
inspection of minute books, inquiries and other procedures referred to
in paragraph (iii) above, they have carried out certain specified
procedures, not constituting an audit in accordance with generally
accepted auditing standards in Canada, with respect to certain amounts,
percentages and financial information specified by the Representatives,
which are derived from the general accounting records of the Company,
which appear in the Offering Circular, and have compared certain of
such amounts, percentages and financial information with the accounting
records of the Company and have found them to be in agreement.
